Walker v. Ryan’s Family Steak Houses
United States Court of Appeals for the Sixth Circuit
400 F.3d 370 (2005)
- Written by Alexander Hager-DeMyer, JD
Facts
Ryan’s Family Steak Houses, Inc. (Ryan’s) (defendant) gave its employees an arbitration agreement as part of the application packet to work at Ryan’s, and failure to sign the agreement terminated the application process. The agreement was a contract between the applicant and Employment Dispute Services, Inc. (Dispute Services), a corporation that administered an arbitration system for several companies. The agreement stated that Ryan’s had paid Dispute Services to arbitrate and resolve all employment-related disputes between Ryan’s and its employees. Ryan’s paid substantial fees to Dispute Services, making up almost half of Dispute Services’ gross income. Subject to Dispute Services’ contract, certain employees and supervisors were selected to be adjudicators of the arbitration program. Under the program, all arbitration claims were decided by a panel of three adjudicators selected from three pools. One pool consisted of supervisors from the employers contracted with Dispute Services. A second pool consisted of employees from the contracted employers. Dispute Services required no minimum qualifications for employees to serve as arbitrators, including no education requirement, no experience requirement, and no requirement to be unbiased. The employers chose the employees and supervisors who served as arbitrators in the selection pool. The final pool consisted of attorneys, retired judges, and other legal professionals not associated with the employers. Erric Walker (plaintiff), an employee at Ryan’s, filed a suit against Ryan’s for failing to properly pay wages in violation of the Fair Labor Standards Act (FLSA). Ryan’s filed a motion to dismiss the suit and compel arbitration under the Federal Arbitration Act (FAA). The district court denied the motion, finding the arbitration agreement unenforceable because it did not allow employees to vindicate their rights under the FLSA.
Rule of Law
Issue
Holding and Reasoning (Clay, J.)
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