Carter v. Countrywide Credit Industries, Inc

362 F.3d 294 (5th Cir. 2004)

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Nature of the Case

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Facts

Carter and others (Ps) are current and former employees of D. When they agreed to employment at D, they also agreed to mandatory arbitration. They sued D to recover overtime compensation due under the provisions of the Fair Labor Standards Act. D moved to compel arbitration under arbitration agreements which all employees sign as a condition of their employment with the company. Ps claimed that the Agreements were invalid because FLSA claims are not subject to arbitration; the Agreements are unconscionable; the Agreements infringe on substantive rights otherwise granted by the FLSA; and the fee-splitting arrangement contained in the Agreements imposes impermissibly prohibitive arbitration costs on them. The court disagreed with the first three but held that the fee-splitting agreements imposed prohibitive costs and it simply severed this provision from the Agreements under the severability clause. It then granted D's motion to compel arbitration. Ps appealed.