Case: 22-40039 Document: 00516304963 Page: 1 Date Filed: 05/03/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
May 3, 2022
No. 22-40039 Lyle W. Cayce
Clerk
In re A&D Interests, Incorporated, doing business as
Heartbreakers Gentleman’s Club; Mike Armstrong;
Peggy Armstrong,
Petitioners.
Petition for a Writ of Mandamus
to the United States District Court
for the Southern District of Texas
USDC No. 3:20-CV-8
Before Smith, Higginson, and Willett, Circuit Judges.
Per Curiam:
A&D Interests, Incorporated (doing business as the “Heartbreakers
Gentlemen’s Club”), Mike Armstrong, and Peggy Armstrong, petition us for
a writ of mandamus. They argue that the district court 1 should not have
certified a Fair Labor Standards Act collective action comprised of “exotic”
dancers who had worked at Heartbreakers in the last three years. We must
decide whether the district court’s decision to send notice to potential opt-in
plaintiffs who signed arbitration agreements ran afoul of our holding in In re
JPMorgan Chase & Co., 916 F.3d 494, 499 (5th Cir. 2019). And, if the district
1
This matter was decided by the magistrate judge, to whom the parties jointly
ceded authority per 28 U.S.C. § 636(c).
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court did err, we must also decide whether Petitioners have cleared the
remaining hurdles for mandamus relief. For the following reasons, we grant
Petitioner’s motion.
I
Respondent Stacey Kibodeaux worked as an exotic dancer for
Petitioners in Dickinson, Texas. She alleges that Petitioners unlawfully
misclassified her (along with all other exotic dancers) as an independent
contractor, resulting in Petitioners’ unlawfully withholding wages she was
due in violation of the Fair Labor Standards Act (“FLSA”). 28 U.S.C. § 203
et seq. Shortly after Kibodeaux filed her complaint, three other former
dancers joined the lawsuit. The plaintiffs moved the district court to certify
the case as an FLSA “collective action” comprised of dancers who worked
at Heartbreakers in the preceding three years.
The district court granted Kibodeaux’s motion for “conditional
certification.” Kibodeaux v. A&D Ints., Inc., No. 3:20-CV-00008, 2020 WL
6292551 (S.D. Tex. Oct. 27, 2020) (“Kibodeaux I”), order vacated on
reconsideration,
2021 WL 6344723 (S.D. Tex. Mar. 4, 2021). Petitioners
moved the district court for permission to seek interlocutory review of that
order, which the district court denied. Petitioners then petitioned us for a
writ of mandamus. We denied that petition. 2
While the first mandamus action was pending, we decided Swales v.
KLLM Transport Services, L.L.C., which did away with conditional
certification in FLSA cases. 985 F.3d 430, 436 (5th Cir. 2021). In light of this
change in the law, the district court vacated its conditional certification order
2
As our dissenting colleague notes, this petition involves the same legal question
as another petition we denied two years ago in this same litigation. But no party argues that
our prior decision bars Petitioners from raising the same argument under the doctrines of
res judicata, the law of the case, or any other ground.
2
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and ordered the parties to conduct preliminary discovery. Armed with new
discovery, the district court granted the plaintiffs’ motion for certification
and issuance of notice. Kibodeaux v. A&D Ints., Inc., No. 3:20-CV-008, 2022
WL 92856 (S.D. Tex. Jan. 10, 2022) (“Kibodeaux II”). Petitioners then filed
a second mandamus petition asking us to vacate the district court’s order
certifying the collective action. To facilitate orderly appellate review, the
district court stayed its order certifying the collective action pending
resolution of this petition.
II
When deciding whether mandamus is warranted, “[w]e ask (1)
whether the petitioner has demonstrated that it has ‘no other adequate
means to attain the relief [it] desires’; (2) whether the petitioner’s ‘right to
issuance of the writ is clear and indisputable’; and (3) whether we, in the
exercise of our discretion, are ‘satisfied that the writ is appropriate under the
circumstances.’” In re Itron, Inc., 883 F.3d 553, 567 (5th Cir. 2018) (quoting
Cheney v. U.S. Dist. Ct. for D.C.,
542 U.S. 367, 380–81 (2004)).
A
The first requirement is that the error must be “truly ‘irremediable
on ordinary appeal.’” JPMorgan, 916 F.3d at 499 (quoting In re Depuy
Orthopaedics, Inc.,
870 F.3d 345, 350 (5th Cir. 2017)). While “[t]hat is a high
bar,” Petitioners meet it.
Id. (quoting Depuy, 870 F.3d at 352–53) (alteration
in original). In JPMorgan we held that orders facilitating notice to potential
opt-in plaintiffs (called “conditional certification” before Swales) meet this
requirement because the issue will be moot after notice is sent. See id.; see also
In re Citizens Bank, N.A.,
15 F.4th 607, 621 (3d Cir. 2021) (noting that
mandamus was the only remedy to address a district court’s pretrial error in
an FLSA opt-in collective action). The same is true here. Because this issue
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will become moot before Petitioners can file an appeal, the first requirement
is met.
B
The second requirement is that we “must be satisfied that the writ is
appropriate under the circumstances.” JPMorgan, 916 F.3d at 499 (quoting
Cheney,
542 U.S. at 380). This generally means that the moving party must
show that “the issues implicated have ‘importance beyond the immediate
case.’”
Id. (quoting In re Volkswagen of Am., Inc.,
545 F.3d 304, 319 (5th Cir.
2008) (en banc)). We also consider “such factors as the need for judicial
neutrality and the avoidance of rulings that unnecessarily stimulate
litigation.” In re Spiros Partners, Ltd.,
816 F. App’x 985, 987 (5th Cir. 2020)
(per curiam).
The question of whether district courts may send notice of a collective
action to plaintiffs who have signed arbitration agreements was important
enough in JPMorgan to justify mandamus relief. 916 F.3d at 499–500. It
remains important. Federal district courts have splintered over the issue, see
id. at 499 n.6, and permitting district courts to ignore JPMorgan’s clear
holding would sow needless confusion. Ensuring judicial neutrality and
preventing district courts from needlessly stirring up litigation is good cause
for a writ to issue. See In re Spiros Partners, Ltd., 816 F. App’x at 987.
C
Finally, mandamus is only appropriate if Petitioners can show a
“‘clear and indisputable’ right to the writ.” In re Am. Lebanese Syrian
Associated Charities, Inc., 815 F.3d 204, 206 (5th Cir. 2016) (quoting Cheney,
542 U.S. at 380). It is not enough for Petitioners to show that the district
court erred or abused its discretion.
Id. Rather, they must show that the
district court clearly and indisputably erred such that “there has been a
4
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usurpation of judicial power.” JPMorgan, 916 F.3d at 500 n.8 (quoting Will,
389 U.S. at 95).
Petitioners argue that the district court erred by “certifying” 3 the
collective action runs afoul of our holding in JPMorgan that district courts
may not issue notice to potential plaintiffs who have signed valid, enforceable
arbitration agreements. 4 The relevant language in JPMorgan is, “district
courts may not send notice to an employee with a valid arbitration agreement
unless the record shows that nothing in the agreement would prohibit that
employee from participating in the collective action.” 916 F.3d at 501.
The district court held that while it would be a “rare case in which a
district court issues notice to a group of plaintiffs who have executed
agreements calling for arbitration,” “this is one of those atypical cases.”
Kibodeaux I, 2020 WL 6292551, at *5. The district court found that this case
was atypical because while the arbitration agreement mandated that all claims
(including FLSA claims) be resolved by arbitration, the agreement went on
to say that no disputes between them may be handled through class action
lawsuits.
Id. at 3. This case involves a “collective action” not a class action,
and the two mechanisms have important differences—chief among them
being that plaintiffs must opt into collective actions, while members of a Rule
23 class action are bound unless they opt out. See, e.g., Genesis Healthcare
3
We use the word “certification” for simplicity. But as we noted in Swales “the
word ‘certification,’ much less ‘conditional certification,’ appears nowhere in the FLSA.”
985 F.3d at 434. When we speak of certification, we are really referring to the district
court’s exercise of its discretionary authority to oversee the notice and opt-in process—a
process that differs in important ways from the certification of a Rule 23 class action. See
id. at 435.
4
Petitioners also argue that the district court erred by authorizing notice to parties
who were not “similarly situated,” misapplying our holding in Swales. Because we find that
mandamus relief is appropriate based on Petitioners’ first theory, we need not reach this
issue.
5
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Corp. v. Symczyk, 569 U.S. 66, 74 (2013) (noting that “Rule 23 actions are
fundamentally different from collective actions under the FLSA”); Swales,
985 F.3d at 435. And because of this difference, the district court found that
the arbitration agreement bar on participating in class actions did not bar
dancers from participating in collective actions. 5
This was in error. Mindful of the Supreme Court’s instruction that
courts must “rigorously enforce agreements to arbitrate,” we look to the text
of the arbitration agreement. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213,
221 (1985). The arbitration agreement contains three separate provisions that
govern how disputes between the parties would be handled. The first says
that the parties “agree that any controversy or claim [between them] . . . shall
be resolved by arbitration.” Kibodeaux I,
2020 WL 6292551, at *3. 6 The
second says that “the only parties to the arbitration shall be [Petitioners] and
[the individual dancer].”
Id. (second alteration in original). The third says
that “any dispute between them shall not be the subject of a class action
lawsuit or arbitration proceeding.”
Id. While the district court correctly
noted that the third clause does not bar potential plaintiffs from joining the
collective action, that still leaves the other two clauses. Both make it equally
impossible for potential opt-in plaintiffs who signed arbitration agreements
5
Our dissenting colleague cites Vine v. PLS Financial Servs., Inc. for the proposition
that class or collective action waivers are in effect conditional, only effective after a party
moves to compel arbitration. 807 F. App’x 320, 328 (5th Cir. 2020) (per curiam)
(unpublished). Not so. Vine held that a party who waived an arbitration clause also waived
a class action waiver because the two were intertwined. See
id. Indeed, Vine provides
support for our holding. We agree that a party gives up “their right to participate in a class
action by virtue of their agreement to resolve disputes exclusively through individual
arbitration.”
Id. The same logic holds here. By agreeing to individual arbitration,
Respondents agreed not to participate in collective and class actions.
6
Quotations from the arbitration agreement have been placed in normal typeface
rather than all caps for ease of reading.
6
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to participate in a collective action in federal court. The first clause dictates
that any dispute must be before an arbitrator, and not a court—including of
course a federal district court. And the second clause dictates that the dispute
must be an individual, one-on-one arbitration. That second clause rules out
collective actions, class actions, joinder, and any other similar mechanism for
joining multiple parties together. See, e.g., Szilassy v. Ameriprise Fin. Servs.,
Inc., No. 07-CV-80559, 2007 WL 9677242, at *1 (S.D. Fla. Aug. 2, 2007)
(arbitration agreement prevented plaintiffs from participating in a FLSA
collective action in federal court). Even if the third clause left the door open
to collective actions, the other two clauses slam that door shut.
Indeed, the district court seems to have recognized that these two
clauses bar potential plaintiffs from joining the collective action. See
Kibodeaux I, 2020 WL 6292551, at 5 (noting that the plaintiffs could pursue a
collective action “at least for the time being”). But it justified sending notice
to plaintiffs who signed admittedly valid arbitration agreements because
Petitioners have not yet moved to compel arbitration. The district court
reasoned that “[t]he parties can certainly waive or renounce their right to
insist upon arbitration,” and that it could send notice despite an apparently
valid arbitration agreement until Petitioners moved to compel arbitration.
Kibodeaux I,
2020 WL 6292551, at *3. But that would be true even if the
arbitration agreement explicitly forbade participation in collective actions.
The district court did not explain why an anti-collective action clause would
have deserved respect, while other clauses that have the same effect lie
dormant until a party moves to compel arbitration. The difference between
the first, second, and third clauses—all of which have the same legal effect
here—is a distinction without a difference.
Worse still, we rejected this exact argument in JPMorgan. That
district court similarly reasoned that “even if [the petitioner] was correct that
notice may not be sent to individuals who signed arbitration agreements and
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thus might be compelled to arbitrate, ‘the Court cannot determine that there
is no possibility that putative class members will be able to join the suit until
Defendant files a motion to compel arbitration against specific individuals.’”
JPMorgan, 916 F.3d at 498. We responded that the failure of the petitioner
to compel arbitration did not matter.
Id. at 503 n.19. 7 Nor should it matter—
far from waiving their right to enforce the arbitration agreement, Petitioners
have attempted to enforce it by opposing certification. Instead, a district
court’s focus should be on whether those receiving notice will be able to
“ultimately participate in the collective [action].” Swales,
985 F.3d at 441
(emphasis added) (quoting Tyson Foods, Inc. v. Bouaphakeo,
577 U.S. 442, 502
(2016)). Issuing notice to those who will not ultimately be able to participate
“‘merely stirs up litigation,’ which is what Hoffmann-La Roche flatly
proscribes.”
Id. (citing Hoffmann-La Roche Inc. v. Sperling,
493 U.S. 165, 170
(1989)).
In sum, the district court apparently recognized that the arbitration
agreement would prevent the opt-in plaintiffs from ultimately participating
in the collective action, but approved class notice anyways. This was not
merely an erroneous exercise of discretion. In light of JPMorgan, it was wrong
as a matter of law. Because the district court clearly and indisputably erred,
mandamus relief is appropriate.
The petition for writ of mandamus is GRANTED.
7
In his twenty-page January 10, 2022, order that is under review, the magistrate
judge—remarkably—never even mentioned our controlling decision in JPMorgan.
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Stephen A. Higginson, Circuit Judge, dissenting:
With respect, I dissent because I do not see that this lower court—
devotedly applying our JPMorgan 1 decision two years ago in Kibodeaux I 2 and
then, in the decision on review, equally devotedly applying Swales 3—has
been shown to have clearly and indisputably erred.
Preliminarily, to my eye, the petition we grant today is
indistinguishable from the one our court denied two years ago in this same
litigation. Our court’s assessment then was searching, not only at the panel
stage but also in our consideration of the petition for rehearing en banc, to
which we ordered a response. It is difficult to see indisputable error justifying
this “drastic and extraordinary remedy,” JPMorgan, 916 F.3d at 499, when
a previous panel and, on request, review by the full court found none.
More importantly, not only was mandamus denied in JPMorgan, 916
F.3d at 505, but that case, significantly, involved an agreement that explicitly
precluded collective actions, which the agreement here does not.
Relatedly, the potential plaintiffs here, unlike in JPMorgan, only
waived their right to bring a collective action if their disputes are channeled
to arbitration. 4 Cf. Vine v. PLS Financial Servs., Inc., 807 F. App’x 320, 328
1
In re JPMorgan Chase & Co., 916 F.3d 494 (5th Cir. 2019).
2
Kibodeaux v. A&D Interests, Inc., No. 3:20-CV-00008, 2020 WL 6292551 (S.D.
Tex. Oct. 27, 2020).
3
Swales v. KLLM Transp. Servs. L.L.C., 985 F.3d 430 (5th Cir. 2021).
4
This is evident from the two provisions in the agreement on which the majority
focuses: (1) “[The parties] agree that any controversy or claim arising out of or relating to
this contract or relationship between the parties . . . shall be resolved by arbitration,” and
(2) “The only parties to the arbitration shall be [Petitioners] and [the individual dancer].”
(emphasis added). As the majority notes, the third clause governing disputes between the
parties does not bar collective actions.
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(5th Cir. 2020) (per curiam) (affirming the district court’s determination that
“a class action waiver in the middle of an arbitration provision” was not “an
independently effective waiver of the right to pursue a class action outside of
the arbitration context”). As of yet, Petitioners have not moved to compel
arbitration and the district court has not addressed whether Petitioners
waived their right to do so or whether the arbitration agreements are
enforceable. Cf. id. JPMorgan did not hold that notice should never be sent
to potential plaintiffs who might, at some point, be compelled to arbitrate,
and if the case here proceeds, as it has, in federal court, “nothing in the
agreement would prohibit [the potential plaintiffs] from participating in the
collective action.” JPMorgan,
916 F.3d at 503. No one would disagree that
wronged employees should receive notice under the FLSA that their
employer might have violated their federally protected rights unless they are
prohibited from participating in the collective action.
In sum, at this stage, none of the three clauses of the arbitration
agreement prohibits potential plaintiffs from participating in a collective
action. Therefore, the district court’s decision to grant the motion for
certification and issuance of notice was not error, let alone indisputable error.
10
