Dispute with Successor Employer Not Covered by Agreement

Israel Garza, Larrie Gurule, and Heather Bustos (Plaintiffs) filed a federal lawsuit alleging Ayvaz Pizza, LLC (Ayvaz) violated the Fair Labor Standards Act (FLSA) by failing to correctly reimburse costs of using their vehicles on the job.  Garza and Gurule did not oppose arbitration but Bustos did.

Plaintiffs initially worked for Ayvaz’s predecessor MUY Pizza-Tejas, LLC (MUY).  The arbitration agreement they signed with Muy read in part: 

MUY companies on behalf of itself and its affiliated companies, officers, directors, and managers (hereinafter MUY) and I agree to use confidential binding arbitration, instead of going to court, for any disputes or claims involving pay/wages, overtime or other form of compensations, arising under the Fair Labor Standards Act or any similar state or federal laws concerns (sic) wages, pay, overtime, or other compensation, including any claims now in existence or that may exist in the future (a) that I may have against MUY, its affiliates, and/or their current or former officers, directors or managers or (b) that MUY and/or its affiliates may have against me.”

Since Garza and Gurule did not oppose Alvaz’s motion for arbitration, the court granted Alvaz’s motion as to Garza and Gurule.

Bustos opposed Alvaz’s motion to compel arbitration.  The Court observed that even if a non-signatory can enforce an arbitration agreement, this does not preclude a party making the quite different argument that the claims do not fall within the scope of the arbitration cause.  The arbitration clause in issue only covered disputes between the employees and MUY.  Even if the contract had been assigned to Ayvaz, the only issues to be submitted to arbitration could be disputes between the employees and Muy.  Accordingly, the motion to compel Buston to arbitration with Alvaz was denied. 

Garza v Alvaz Pizza, LLC, Civil Action H-23-1379 (S.D. Tex October 5, 2023).