Herrington v. Waterstone Mortg. Corp.

993 F.Supp.2d 940

Pamela HERRINGTON, individually and on behalf of all others similarly situated, Plaintiff,

v.WATERSTONE MORTGAGE CORPORATION, Defendant.

No. 11–cv–779–bbc.

United States District Court, W.D. Wisconsin.

Jan. 28, 2014.

Dan Getman, Matthew Dunn, Getman & Sweeney, PLLC, New Paltz, NY, for Plaintiff.

Ari Karen, Russell B. Berger, Offit Kurman, Fulton, MD, for Defendant.

OPINION AND ORDER

BARBARA B. CRABB, District Judge.

In 2011, plaintiff Pamela Herrington filed this proposed class action under the Fair Labor Standards Act and state law, alleging that defendant Waterstone Mortgage Corporation failed to pay its loan officers for overtime work. In an order dated March 16, 2012, dkt. # 57, 2012 WL 1242318, I concluded that plaintiff's claims would have to be resolved through arbitration under an agreement between the parties. However, in accordance with In re D.R. Horton, Inc., 357 NLRB No. 184 (2012), available at 2012 WL 36274, I also concluded that the National Labor Relations Act gave plaintiff the right to join other employees to her claims, despite a provision in the arbitration agreement to the contrary. I closed the case administratively to allow the parties to proceed with arbitration.

Now before the court is defendant's fourth request to reopen the case since I sent it to arbitration. The first time defendant challenged a decision by the arbitrator that the arbitration agreement permits class arbitration, dkt. # 61; the second time defendant challenged the arbitrator's order limiting communication with potential class members, dkt. # 64; the third time defendant challenged an interim award of attorney fees, dkt. # 74. I denied the first two requests because they were premature and because defendant failed to show that it was entitled to relief on the merits under the applicable standard of review. Dkt. # 72. Defendant withdrew its third request the day after plaintiff filed her opposition brief. Dkt. # 80.

In defendant's fourth and most recent request, it asks this court to reconsider the portion of the March 16, 2012 decision in which I concluded that “plaintiff must be allowed to join other employees to her case.” Dkt. # 57 at 18. Defendant relies primarily on D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir.2013), which overturned the decision of the National Labor Relations Board. It seeks relief under Fed.R.Civ.P. 60(b)(6), which allows a court to vacate a final judgment or order for “any other reason that justifies relief.”

After considering the standard of review for a motion brought under Rule 60(b)(6) and the reasoning of the Court of Appeals for the Fifth Circuit and the other cases defendant cites, I am declining to vacate the March 2012 order. Although I acknowledge that the weight of authority developed since that order favors defendant's view, I am not persuaded that the answer is so clear as to justify the relief that defendant seeks. It may be that ultimately the Supreme Court or the Court of Appeals for the Seventh Circuit will agree with defendant, but until that time, I will adhere to the decision of the board.

OPINION

As it did in some of its other motions to reopen, defendant initially ignored a threshold question, which is whether this court even has jurisdiction to reconsider a previous order while a case is proceeding in arbitration, almost two years after the court issued the order defendant is challenging. In her opposition brief, plaintiff cites various cases for the general proposition that only one tribunal may have jurisdiction over the same proceeding at one time. Patterson v. Wendel, 983 F.2d 1073 (7th Cir.1992); Shevlin v. Schewe, 809 F.2d 447, 451 (7th Cir.1987); United States v. One 1979 Rolls–Royce Corniche Convertible, 770 F.2d 713, 716 (7th Cir.1985); Canterbery v. Petrovich, 07 Civ. 0584–MJR, 2008 WL 63263, *3 (S.D.Ill. Jan. 3, 2008). However, none of these cases involved an arbitration proceeding, much less raised the specific question whether a district court has authority to reconsider its own decisions while a related arbitration is pending. In its reply brief, defendant cites various cases for the proposition that arbitrability is a question for the court, e.g., Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002), but that argument is a non sequitur. There is no dispute that district courts may decide in the first instance whether an arbitration clause is valid; the question is whether a district court may reconsider that decision while the case is proceeding in arbitration.

Defendant also cites Nielsen v. Piper, Jaffray & Hopwood, Inc., 66 F.3d 145, 147 (7th Cir.1995), which is closer to the mark. In Nielsen, the district court had granted a motion to reconsider an order compelling arbitration, even though the motion was filed approximately nine months after the court issued the order. However, Nielsen provides limited guidance because no party challenged the district court's authority to reconsider its decision and the court of appeals did not state whether the arbitration proceedings had begun at the time the motion for reconsideration was filed. In my own research, I uncovered University Life Insurance Co. of America v. Unimarc Ltd., 699 F.2d 846, 850 (7th Cir.1983), in which the court stated in dicta that, “[i]f [the district court] had ordered arbitration, and left it at that, it would still be open to the parties—as it would be to the parties to any completed litigation—to go back to [it] for interpretation or modification of an order, the order to arbitrate, having an ongoing effect.” This statement suggests that a motion for reconsideration of an order regarding arbitrability should be treated like any other motion brought under Fed.R.Civ.P. 60, at least while the order has “an ongoing effect.” (Another aspect of University Life Insurance was superseded by 9 U.S.C. § 16(b), as noted in Amgen, Inc. v. Kidney Center of Delaware County, Ltd., 95 F.3d 562, 565 (7th Cir.1996), but that aspect is not relevant to the quoted language.)

Even if I assume that I have jurisdiction to consider defendant's motion, defendant has not shown that “extraordinary circumstances” exist to justify a grant of relief under Rule 60(b)(6). Arrieta v. Battaglia, 461 F.3d 861, 865 (7th Cir.2006). Defendant's sole reason for seeking relief is new case law supporting a view that employees cannot rely on the NLRA to invalidate arbitration provisions that prohibit joint litigation. However, as the Court of Appeals for the Seventh Circuit recently reaffirmed, “a change in law showing that a previous judgment may have been incorrect is not an ‘extraordinary circumstance’ justifying relief under Rule 60(b)(6).” Nash v. Hepp, 740 F.3d 1075, 1078 (7th Cir.2014). In its reply brief, defendant argues that the general rule does not apply because most motions brought under Rule 60 involve situations in which the case is no longer pending in any forum. Although that argument has some force, defendant cites no authority to support it. Further, as plaintiff points out, the decision of the Court of Appeals of the Fifth Circuit is neither final (because it could be overturned en banc or by the Supreme Court) nor binding (because neither this court nor the National Labor Relations Board is bound to follow the Court of Appeals for the Fifth Circuit. Nielsen Lithographing Co. v. NLRB, 854 F.2d 1063, 1066 (7th Cir.1988)). Under these circumstances, it would be premature to grant defendant's requested relief.

Finally, I am not persuaded that the board's decision is incorrect. The reasoning followed by the board is straightforward: (1) under the NLRA, “[e]mployees shall have the right to ... engage in ... concerted activities for the purpose of ... mutual aid or protection,” 29 U.S.C. § 157, and employers may not “interfere with, restrain, or coerce employees in the exercise of” that right, 29 U.S.C. § 158(a)(1); (2) both courts and the board have found consistently that lawsuits for unpaid wages brought by multiple plaintiffs may be one type of “concerted activity” protected by §§ 157 and 158(a)(1); (3) an employer interferes with an employee's right to engage in concerted activities by requiring her to sign an agreement that includes a prohibition on collective actions by employees; (4) there is no conflict between the Federal Arbitration Act and the NLRA because the Federal Arbitration Act does not require the enforcement of arbitration agreements that conflict with substantive provisions of federal law. In re D.R. Horton, Inc., 357 NLRB No. 184 (2012), available at 2012 WL 36274.

On appeal, the Court of Appeals for the Fifth Circuit did not explicitly question the board's first three conclusions or identify any reason why those conclusions were not entitled to deference. ABF Freight System, Inc. v. NLRB, 510 U.S. 317, 324, 114 S.Ct. 835, 127 L.Ed.2d 152 (1994) (board's views regarding scope of NLRA are entitled to “the greatest deference”); Sure–Tan, Inc. v. NLRB, 467 U.S. 883, 891, 104 S.Ct. 2803, 81 L.Ed.2d 732 (1984) (interpretations of NLRA by board will be upheld if “reasonably defensible”) (internal citation omitted). See also Delock v. Securitas Security Services USA, Inc., 883 F.Supp.2d 784, 789 (E.D.Ark.2012) (“When employees band together to assert FLSA claims, the Board concluded in Horton, they are pursuing concerted activities for mutual aid and protection, which the NLRA protects. This conclusion is a reasonable reading of the statute.... The Court therefore defers and follows the Board's reading on this point.”) (citations omitted). Instead, the court of appeals seemed to take issue with the board's conclusion regarding the absence of a conflict between the FAA and the NLRA.

First, the court of appeals seemed to question whether §§ 157 and 158(a)(1) create rights that could overcome a class action waiver. The court of appeals did not challenge the general rule that the FAA does not require the enforcement of...