COLUMBUS (LN) — U.S. District Judge Algenon L. Marbley on Monday granted National Entertainment Group, LLC’s motion to stay the Fair Labor Standards Act collective action pending arbitration, rejecting opt-in plaintiffs’ arguments that the club waived its right to arbitrate by waiting more than 20 months after they joined the case.
The ruling resolves a limited remand from the Sixth Circuit, which had vacated Marbley’s August 2024 order that had denied the defendant’s motion to stay. The appellate court had instructed the district court to evaluate the remaining factors under the Stout test to determine whether the arbitration agreements were enforceable and whether the case should be stayed.
Plaintiff Jessica Hines, who worked as a dancer at the defendant’s Columbus club, Vanity, from 2014 to 2023, alleged the club failed to pay minimum wages and violated state wage laws. Hines signed three identical Lease Agreement Waivers between October 2020 and June 2023 that contained arbitration provisions.
In its August 2024 opinion, Marbley had found the arbitration agreement substantively unconscionable because it lacked mutuality and forced Hines to release her claims. He also found procedural unconscionability due to the power imbalance and Hines’s declaration that she felt “vulnerable and rushed” to sign.
The Sixth Circuit disagreed, finding the agreement neither procedurally nor substantively unconscionable. The appellate court noted Hines signed the agreement three times and admitted she did not read it. It also held that unrelated provisions, such as an indemnification clause in a separate Club Activity Waiver, should not have prevented enforcement of the arbitration provision.
On remand, Marbley applied the Stout factors to Hines’s claims and found the arbitration agreement enforceable. He determined the claims fell within the scope of the agreement because they arose out of the employment relationship, and Congress did not intend for FLSA claims to be nonarbitrable.
The court then addressed the defendant’s motion to stay the claims of opt-in plaintiffs Alexandria Sparks and Amanda Watson. The plaintiffs argued the defendant waived its right to arbitrate by delaying its motion for over 20 months after they joined the case.
Marbley rejected the waiver argument, finding no evidence that the defendant acted “completely inconsistent” with arbitration. He noted that no discovery had occurred, the parties had not engaged in mediation, and the defendant had appealed the initial denial of its motion to stay.
The court also rejected the plaintiffs’ argument that the arbitration agreements were void because they required each party to bear its own attorney’s fees, conflicting with the FLSA’s mandatory fee-shifting provision. Marbley ruled that the fee-bearing provision could be severed from the arbitration agreement, leaving the rest of the agreement enforceable.
With all Stout factors satisfied for the opt-in plaintiffs, Marbley stayed the entire case pending arbitration. He ordered the parties to file a joint status report once arbitration concludes.