(John Disney/ALM)

Atlanta-based 24-hour restaurant chain Waffle House Inc. has won a challenge to a Florida federal judge’s denial of a motion to compel arbitration in a class action employment lawsuit.

The U.S. Court of Appeals for the Eleventh Circuit ruled in favor of Waffle House with an opinion released Monday. Judge Stanley Marcus wrote for a panel that included Judge Frank Hull and Judge Raymond C. Clevenger III of the Federal Circuit, sitting by designation.

The unanimous panel reversed District Judge Roy Dalton Jr. of the Middle District of Florida and remanded the case with instructions to compel arbitration.

On the losing side is William Jones, who sued on behalf of himself and others similarly situated, alleging that Waffle House wrongfully denied him access and rebuttal to the background and credit check the restaurant chain ran on him before rejecting his employment application.

“This story began when William Jones applied for a job at a Waffle House restaurant in Ormond Beach, Florida, in December 2014,” Marcus wrote. “In connection with the application, the local restaurant managers informed Jones that they had to run a background check on him. Jones neither heard back from Waffle House nor received a copy of his background check, and his employment application was ultimately denied.”

On October 1, 2015, 10 months later, Jones sued Waffle House Inc., and its parent company, WH Capital, plus data-reporting companies collectively called PublicData in the Middle District of Florida. “Jones alleged that Waffle House and PublicData never provided him with a copy of the background report they ran on him and that they never gave him the opportunity to dispute the accuracy or completeness of the report as they were required to do by the Fair Credit Reporting Act,” Marcus said. Jones sought class certification and other considerations of a class action lawsuit.

But here’s the turn of events that led to Waffle House’s win with the Eleventh Circuit. “While his Florida class-action lawsuit was pending, Jones continued to seek employment with Waffle House elsewhere,” Marcus wrote. “Thus, on February 2, 2016, Jones applied to work at a Waffle House in Kansas City, Missouri, which is operated by the Waffle House subsidiary Ozark Waffles.”

Jones did not tell anyone at the Kansas City Waffle House that he had been denied employment in Florida or that he was suing the parent corporation in Orlando. The Kansas City Waffle House hired him.

“Nor did Jones tell his Florida lawyers that he had sought and gained employment at another Waffle House in another state,” Marcus said.

Likewise, Waffle House’s corporate management in Norcross, Georgia, was unaware of the Kansas City chapter.

“As part of his employee orientation, he signed an arbitration agreement,” Marcus wrote.

It was standard for all new Waffle House employees. It said in part: “Waffle House and I will resolve by arbitration all claims and controversies … past, present, or future, arising out of any aspect of or pertaining in any way to my employment,” Marcus wrote. “The arbitration agreements are preprinted with the signature of John Waller, Waffle House’s vice president and general counsel, already affixed; he does not sign each agreement individually. Every new employee receives an arbitration agreement that has already been countersigned by Waller.”

Marcus said the district judge “took issue” with the practice of the GC pre-signing employment agreements, saying the process has an “unsavory aroma.”

“But whether or not it was advisable for Waffle House’s vice president to pre-sign the agreements, doing so was not ‘abhorrent to good morals and conscience,’ nor is there any evidence that Waffle House was seeking to take fraudulent advantage of Jones,” Marcus wrote.

The corporate folks didn’t find out Jones was working in Kansas City until March 2016.

“Greg Newman, Waffle House’s vice president and litigation counsel, directed a paralegal to review Jones’ file in the company’s system in preparation for a quarterly litigation meeting,” Marcus wrote. “They noticed that Jones had a ‘last paid’ date of February 2016, meaning he was currently working for Waffle House and that he must have signed an arbitration agreement. The next day, counsel for Waffle House called Jones’ Florida counsel to inform them of these developments.”

Jones is represented by Joshua Eggnatz and Michael James Pascucci of Eggnatz Lopatin & Pascucci in Davie, Florida, along with Alexandria Kachadoorian, Justin Kachadoorian and Anthony Orshansky of CounselOne in Beverly Hills, California. Eggnatz said his policy generally is not to comment on pending litigation.

Waffle House is represented by David Michael Gettings and John Lynch of Troutman Sanders in Virginia Beach, Virginia, as well as Richard Wade Smith of Fisher Rushmer in Orlando.

Phone calls to the Waffle House attorneys were not immediately returned.

The case is Jones v. Waffle House, No. 16-15574.