A federal court in Houston issued a ruling in a lawsuit for unpaid wages filed against TransCanada USA Services Inc. and Onshore Quality Control Specialists, LLC. In the lawsuit, a former inspector alleged that he was paid a day rate without overtime compensation, in violation of the federal labor laws. The plaintiff sought to certify a class of “All workers employed by, or working on behalf of, TransCanada, staffed by OCS, that were paid a day-rate with no overtime at any time within the past three (3) years.” The defendants moved to dismiss and compel the case to arbitration, citing an arbitration provision between the plaintiff and OCS. In opposing arbitration, the plaintiff made three arguments:
(1) pipeline inspectors are workers in interstate commerce and cannot be compelled to arbitrate their claims under the FAA because the statute exempts such workers;
(2) a federal court exercising federal question jurisdiction cannot send the claims to arbitration under the Texas Arbitration Act (“TAA”), because state arbitration laws apply only when a court exercises diversity jurisdiction; and
(3) even if he may be compelled to arbitrate with Onshore, he cannot be compelled to arbitrate with TransCanada because TransCanada is not a party to the Agreement.
The court sided with the defendants. First, it held that because pipeline inspectors do not “handle, control, direct, or otherwise directly engage with the flow of” oil and gas, he was not exempt from arbitration under the FAA interstate commerce exemption. Secondly, it held that the arbitration provision at issue, while referencing the FAA, did not reject application of state law, and thus the court could compel arbitration under the TAA. Finally, it held that the equitable estoppel and intertwined-claims doctrines permitted Transglobal to compel arbitration because the plaintiff treated the defendants as indistinguishable.
Hundreds of workers have filed claims for unpaid overtime against pipeline inspection companies over the past few years. In 2021, the federal government announced that it had recovered $3.8 million in overtime back wages owed to 1,100 employees of Frontier Integrity Solutions Operations. That same year, Kinder Morgan settled a class action lawsuit, agreeing to pay $3.9 million to pipeline inspectors for unpaid overtime.
What does this mean? It means that the plaintiff in this case will have to arbitrate his claims. It does not affect the ability of others who worked as pipeline inspectors for TransCanada and/or Onshore Quality Control Specialists from pursuing their own unpaid overtime claims. If you are a pipeline inspector who was paid a day rate within the past three years, you should visit with an experienced overtime attorney as soon as possible. For a free, confidential, no-obligation consultation, call Josh Borsellino at 817.908.9861 or email him through this link.