United States District Court, D. New Jersey
PATRICIA THOMPSON, on behalf of herself and all others similarly situated, Plaintiff,
REAL ESTATE MORTGAGE NETWORK, INC., et al., Defendants.
Kevin McNulty United States District Judge.
an FLSA collective action brought by Patricia Thompson, the
named plaintiff. In 2011, Thompson brought this collective
action complaint against her prior employers, defendants Noel
Chapman, Samuel Lamparello, Real Estate Mortgage Network,
Inc. ("REMN"), and Security Atlantic Mortgage
Company, Inc. ("SAMC", and together with Chapman,
Lamparello, and REMN, the "Defendants"). Today,
over eight years after this action was Filed, plaintiff has
yet to obtain conditional certification. Nevertheless, seven
plaintiffs have learned of the action by other means and have
before this Court are three motions. First is the motion of
Defendants for summary judgment, arguing that all seven of
the opt-in plaintiffs' claims are fully or partially
time-barred under the FLSA. (DE 223). Second is the motion to
compel arbitration for opt-ins McCourt and Pietryka.
(Id.). Third is the motion of Thompson to equitably
toll the statute of limitations applicable to Thompson and
other putative collective members from May 6, 2011, the date
Defendants filed their first motion to dismiss, until the
Court rules on conditional certification. (DE 224).
BACKGROUND[2" name="ftn.FN2" id=
survey the history of this action in two parts: first, the
broader history of this interminable action and, second, the
more recent happenings.
Broader procedural history
first filed her Complaint on March 16, 2011. On March 30,
2011, Defendants were fully served with the complaint. (DE
3-6, 8; see also DSOF, PR 110).
December 30, 2011, District Judge Dennis M. Cavanaugh granted
Defendants'motion to dismiss the complaint under
Fed.R.Civ.P. 12(b)(6) for failure to plead with the requisite
specificity. (DE 23, 24).
January 26, 2012, Thompson filed her Amended Complaint. (DE
25). She brought claims under the FLSA, 29 U.S.C. § 207
(Count I) and the NJWHL, N.J. Stat. Ann. §§ 34:1
l-56a-34:l l-56a38 (Count II). On February 24, 2012,
Defendants filed a motion to dismiss the Amended Complaint.
30, 2012, while awaiting Judge Cavanaugh's decision on
the motion to dismiss, Thompson filed a motion to toll the
statute of limitations. (DE 35). The period of tolling she
sought extended from the date Defendants filed their first
motion to dismiss until the grant of Thompson's
anticipated motion for conditional certification and
dissemination of notice to the class members. (Id.).
That motion for equitable tolling was eventually
August 31, 2012, Judge Cavanaugh, again, granted
Defendants' motion to dismiss the Amended Complaint for
failure to state a claim under Fed.R.Civ.P. 12(b)(6). (DE 38,
September 28, 2012, Thompson filed a notice of appeal of
Judge Cavanaugh's January 26, 2012 opinion and order. (DE
40). On April 3, 2014, the Third Circuit vacated the
dismissal and remanded. Thompson v. Real Estate Mortgage
Network, 2');">748 F.3d 142 (3d Cir. 2014) (DE 44).
March 13, 2013, Thompson filed a notice of consent on behalf
of Ms. Cheryl Matthews, who is, apparently, no longer an
opt-in to this action. (DE 42). Seen. 1, supra.
remand from the Third Circuit, in May 2014, the case was
reassigned to me and Judge Hammer. (DE 45).
2014, Defendants filed their answer without raising the
subject of the arbitration agreement, (see DE 49).
2014, Defendants filed a motion for partial judgment on the
pleadings (DE 52), which I denied in April 2015. (DE 106).
September 2014, Magistrate Judge Hammer held a teleconference
with the parties, in which they discussed equitable tolling
and discovery related to the putative class members.
(Teleconference Transcr., DE 67). According to Thompson, it
was two days prior to that teleconference that Defendants
first advised Thompson of any arbitration agreement. (DE 67,
p. 5:20-25, 6:1-14). Defendants do not dispute that this was
the first time they raised the arbitration agreement. (DE 226
p. 5). Magistrate Judge Hammer instructed the parties to
renew the motion for equitable tolling. (DE
October 2014, Thompson filed a renewed motion for equitable
tolling. She also sought a "protective order"
invalidating the arbitration agreements signed by putative
class members and requiring the Defendants to
"correct" prior communications with them, which had
not revealed the pendency of this collective FLSA action. (DE
70). Thompson also requested that the proposed corrective
order instruct Defendants to provide Thompson with the names
and contact information for all putative class members.
2015, Magistrate Judge Hammer denied Thompson's motions
without prejudice. As yet, no one had opted in (aside from
Ms. Matthews, who withdrew, see n. 1,
supra). The issue, he found, would therefore be more
appropriately decided with the benefit of discovery, in
connection with class certification. (DE 108).
December 2015, Thompson had not yet filed her motion for
conditional certification. That month, Defendants filed a
"motion to dismiss," treated as a motion on the
pleadings, against opt-in plaintiff Matthews on statute of
limitations grounds. (DE 127). Plaintiffs Thompson and opt-in
Matthews opposed the motion and filed a cross-motion for
equitable tolling. (DE 132).
August 2016, I denied both motions. I believed that the
statute of limitations issue was intertwined with the
equitable tolling issue, which would be decided in the
context of Thompson's anticipated motion for conditional
certification. (DE 152).
October 2016, Magistrate Judge Hammer filed a discovery order
directing Defendants to produce the contact information of
certain potential class members, "any and all
underwriters, closers, and HUD reviewers in Georgia and New
Jersey" from "March 16, 2008 to present." (DE
160). Defendants appealed (DE 162); I affirmed Judge
Hammer's order. (DE 178).
Recent procedural history
December 12, 2017, Thompson filed a motion for: (1)
conditional certification, (2) notice, and (3) equitable
tolling. (DE 196).
February 2018, Defendants filed (1) a brief in opposition to
Thompson's motion for conditional certification (DE 207),
and (2) a motion for partial summary judgment denying
equitable tolling, as well as a motion to compel arbitration.
March 2018, Thompson filed a motion to summarily deny or
strike the Employer's motion for partial summary
judgment, claiming that it should have been filed as a
cross-motion. (DE 213). In the meantime, Thompson filed no
response to that motion.
September 2018, I denied Thompson's motion to strike. The
matter having become hopelessly tangled in procedural
disputes, I administratively terminated the remaining motions
and granted the Defendants permission to refile on the
ordinary motion schedule. (DE 222).
October 2018, Defendants refiled their motion for summary
judgment and to compel arbitration. (DE 223). That same
month, Thompson filed an opposition to arbitration (DE 224-2)
as well as her own cross-motion for summary judgment and
opposition to Defendants' summary judgment motion, (DE
1, 2019, I directed the parties to submit supplemental
briefing regarding the effects of a recent New Jersey Supreme
Court opinion on the motion to compel arbitration. (DE 228
(citing Kemahan v. Home Warranty Adm'r of Fla.,
Inc., No. 07980 (N.J. Jan. 10, 2019)). Both parties
complied. (DE 231, 232).
10, 2019, both parties appeared before me for oral argument.
(DE 234). I reserved decision and informed the parties I
would issue a written opinion.
consider the parties' motions, ruling that Defendants
have waived their right to arbitration and that the claims of
the now-existing opt-ins are equitably tolled, running from
July 30, 2012 until further order of this Court,
the motion for summary judgment and equitable tolling, I
begin by surveying the circumstances of the opt-in
Plaintiffs. I then review the history of the arbitration
agreements. Because I have determined that Defendants'
right to enforce the arbitration agreements has been waived,
I do not consider the arguments that the arbitration
provisions are themselves invalid.
consider the claims of Thompson and seven opt-in Plaintiffs
on this motion for summary judgment. Two of the opt-ins,
Arraya and Jones, are former HUD reviewers. (DSOF, PR TJ116,
20). Jones worked for the Defendants from November 5, 2007 to
May 17, 2011. (Id. J 6). Arraya, who is also a
former closer, worked for the Defendants from June 3, 2008 to
December 27, 2016. [Id. H 20). It is an issue of
fact whether Arraya was always classified as non-exempt and
paid overtime. (DSOF, PR | 21). It is also an issue of fact
whether Defendants included all overtime or bonus pay from
April 2014 forward. (Id. ¶ 22).
of the opt-ins are former underwriters: Sentman, Galida,
McCourt, Haines, and Pietyrka. (Id. ¶¶
14-15, 17, 19, 23). Sentman worked for the Defendants from
approximately June 2009 to November 2010. (DSOF, PR ¶
14). Galida worked for the Defendants from approximately
October 2007 to February 2011. (Id. 15).
McCourt worked for the Defendants from August 3, 2004 to June
27, 2012. (Id. ¶ 17). Haines worked for the
Defendants from March 1, 2011 to May 6, 2014. (Id.
¶ 19). Pietyrka worked for the Defendants from May 12,
2014 to February 3, 2017. (Id. ¶ 23).
McCourt and Pietyrka have at-will employment agreements with
REMN, dated March 22, 2011 and May 12, 2014, respectively.
(Id. ¶¶ 18, 24). McCourt signed his
agreement several years into his employment with the
Defendants, whereas Pietryka signed her agreement on her
first day of employment. Both agreements include an
arbitration provision, a reference that the employee has a
nonexempt status, and the employee's pay rate.
(Id.). As discussed infra, plaintiffs
dispute the validity of the arbitration provisions and assert
that, by law, McCourt and Peityrka were not nonexempt. (PR
¶¶ 18, 24).
The arbitration agreements
According to Defendants, in September 2010, REMN began to
consider implementing a new compensation structure for
multiple positions, including, but not limited to, its
underwriters. (DSOF ¶ 5 (citing Schild Decl. ¶
5)).Further, Defendants assert that they
began to consider this new compensation structure in response
to the Second Circuit's opinion in Davis v. J.P.
Morgan Chase & Co., 29');">587 F.3d 529, 534 (2d Cir. 2009)
and new legislation created by the Dodd-Frank Financial
Reform Act. (DSOF ¶ 5) (citing Schild Decl. ¶¶
allege that, over several months, REMN determined to revise
underwriter compensation. (DSOF ¶ 7).
Defendants assert that the new compensation agreements for
underwriters included an arbitration clause, which was also
included in the non-underwriter compensation agreements
drafted at the same time. (DSOF ¶ 9 (citing Schild Decl.
¶ 4; Ex. A to Schild Decl.)).
March 16, 2011, as noted in the procedural history, Thompson
first filed her Complaint. (DE 1). At that point Defendants
had not been served. (DE 3-6, 8). However, Plaintiff asserts
that she also issued a press release regarding the action on
March 18, 2011. (PR ¶ 10). On March 30, 2011, Defendants
were served with the complaint. (DE 3-6, 8; see also
DSOF, PR ¶ 10).
assert that on March 22, 2011, between the date the complaint
was filed and the date the Defendants were served, they
rolled out the underwriter compensation agreements that
included the arbitration clause. (DSOF ¶ 9). In support,
Defendants rely on the statement of Philip Schild, General
Counsel for REMN. (Schild Decl. ¶ 4). Defendants also
rely on a sample Wholesale Underwriter Employment Agreement
dated April 1, 2011, (Sample Agrmt. p. 1), and
signed on March 22, 2011. (Id. p.
4). Although Defendants have at times seemed to imply that
the arbitration provisions had something to do with the
requirements of Dodd-Frank, at oral argument they ...