SD Texas Holds Mediation Agreement May Not Reduce Statute of Limitations for Federal ADA, FLSA Claims

The Southern District of Texas has held that a class action waiver in a mediation agreement was enforceable, but a reduced statute of limitations was not.  In Mazurkiewicz v. Clayton Homes, Inc., No. 6:12-CV-49, (S. D. Texas, August 02, 2013), a salesperson, Kevin Mazurkiewicz, went to work for Clayton Homes, Inc. (“CMH”).  Prior to his employment, Mazurkiewicz signed a voluntary mediation agreement that included a class action waiver and limited the amount of time during which he could bring a lawsuit against CMH to six months.  About one year later, Mazurkiewicz was terminated by the company.  After consulting with the nation’s Equal Employment Opportunity Commission (“EEOC”), Mazurkiewicz filed a lawsuit alleging CMH unlawfully discriminated against him in violation of the Americans with Disabilities Act (“ADA”) and Fair Labor Standards Act (“FLSA”).  CMH responded by filing a motion to dismiss the lawsuit with the Southern District of Texas.

After stating that the mediation agreement applied to the issues before the court, the Southern District of Texas examined whether the contract permissibly limited the applicable statute of limitations.  The court said, “With respect to the ADA claim, the contractual limitations period effectively bars Mazurkiewicz from bringing suit.”

The federal court then examined a number of similar cases and held,

The Court therefore agrees with the majority view of the lopsided split in the federal courts on this issue, and holds that a six-month limitations period is unenforceable against claims that require an EEOC right-to-sue letter.  CMH’s motion to dismiss the ADA claim on this basis is therefore denied.

Next, the Southern District of Texas examined the contractual time limit with regard to Mazurkiewicz’s FLSA claim,

The FLSA does not require administrative action prior to filing suit, so the contractual limitations period does not effectively bar an FLSA claim as it does an ADA claim. But limiting the time in which an FLSA plaintiff can sue to six months causes other problems beyond just shortening the period in which a suit must be filed: it substantially limits an FLSA plaintiff’s damages and eliminates a key distinction Congress made based on a defendant’s culpability.

The interplay between the FLSA limitations period and available remedies demonstrates why a contractual shortening of the limitations period curtails a plaintiff’s potential recovery. The FLSA establishes a two-year statute of limitations for ordinary violations and a three-year period for willful violations. 29 U.S.C. § 255(a).

The court held,

Because the six-month contractual limitations period has the effect of substantially reducing a plaintiff’s potential recovery and contravenes the two-tiered liability scheme Congress created, the provision is unenforceable as to the individual FLSA claim.

Finally, the court turned to the class action waiver included in the parties’ mediation agreement,

Although the Court concludes that the contractual limitations period does not bar Mazurkiewicz from pursuing ADA and FLSA claims for individual relief, the contractual waiver on his ability to serve as a representative party for others similarly situated does not affect his substantive rights and is thus enforceable.

Because the class action waiver included in the mediation agreement was enforceable and the contractual time limit during which Mazurkiewicz was permitted to file a lawsuit was unenforceable, the court disposed of the case by stating,

Mazurkiewicz’s individual ADA and FLSA claims may proceed, but the FLSA collective action allegations are dismissed.