## Facts

- Current and former employees sued their employer under the Fair Labor Standards Act (FLSA) for unpaid wages and overtime.
- Many employees had signed a “Mutual Agreement to Arbitrate Claims” when hired; the arbitration agreement was a separate contract signed by the employee and a management representative.
- The agreement required arbitration of broadly defined employment-related disputes, including “claims for wages or other compensation due,” and applied to past, present, and future claims.
- Pep Boys had used multiple versions of the agreement; relevant terms were materially similar across versions, and some versions incorporated AAA rules while others incorporated JAMS rules.
- Plaintiffs challenged provisions: (1) a clause barring equitable or other tolling of limitations, (2) limits on discovery including a presumptive one-deposition rule with additional discovery only on arbitrator approval for substantial need, and (3) provisions requiring employees to pay a portion of arbitration-related fees and addressing attorneys’ fees.
- Plaintiffs argued the discovery limit was effectively one-sided because the employer could defend with limited discovery while employees would need testimony from multiple supervisors to prove misclassification or off-the-clock work.

## Issues

1. Whether the employees’ arbitration agreements were valid and enforceable under the Federal Arbitration Act (FAA) and applicable state contract law.
2. Whether the challenged clauses (tolling waiver, discovery limits, and fee/cost provisions) were unconscionable or prevented effective vindication of FLSA rights.

## Decision

- The court held the arbitration agreements were valid and enforceable.
- The court granted the employer’s motion to compel arbitration for plaintiffs who signed an arbitration agreement and stayed or dismissed their court claims accordingly.
- Plaintiffs who did not sign an arbitration agreement were not compelled to arbitrate.

## Legal Principles

- Under the FAA, courts enforce arbitration agreements according to their terms, and doubts about arbitrability are generally resolved in favor of arbitration.
- Mutual promises to arbitrate can constitute sufficient consideration; an arbitration promise is not illusory where the agreement cannot be modified or revoked except by a writing signed by both parties.
- Arbitration may permissibly involve streamlined discovery; discovery limits are not unconscionable where the arbitrator may authorize additional discovery upon an adequate showing and governing arbitration rules allow management of fairness.
- A contractual provision barring tolling doctrines does not necessarily invalidate arbitration where it does not shorten the statutory limitations period or expressly waive the underlying statutory claim.
- Fee and cost provisions do not render an agreement unenforceable absent a concrete showing that the costs will likely be prohibitive; institutional arbitration rules may mitigate cost concerns through allocation or reduction mechanisms.
- An employment arbitration agreement covering FLSA claims is enforceable if it does not eliminate substantive statutory rights and allows a meaningful opportunity to pursue the claim in the arbitral forum.

## Conclusion

The court compelled arbitration of FLSA wage claims for employees who signed Pep Boys’ arbitration agreement, rejecting challenges based on consideration, discovery limits, tolling waivers, and cost provisions because the agreement remained mutual, modifiable only by both parties in writing, and consistent with meaningful pursuit of statutory rights in arbitration.


Wilks v. Pep Boys, 241 F. Supp. 2d 860 (M.D. Tenn. 2003)