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Thompson v. Real Estate Mortgage Network, Inc.

United States District Court, D. New Jersey

June 26, 2019

PATRICIA THOMPSON, on behalf of herself and all others similarly situated, Plaintiff,
v.
REAL ESTATE MORTGAGE NETWORK, INC., et al., Defendants.

          OPINION

          Hon. Kevin McNulty United States District Judge.

         This is 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 opted in.[1]

         Now 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).

         I. BACKGROUND[2" name="ftn.FN2" id= "ftn.FN2">2]

         A. Procedural History

         I survey the history of this action in two parts: first, the broader history of this interminable action and, second, the more recent happenings.

         1. Broader procedural history

         Thompson 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).

         On 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).

         On 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).[3] On February 24, 2012, Defendants filed a motion to dismiss the Amended Complaint. (DE 28).

         On June 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 terminated.[4]

         On 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, 39).

         On 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).

         On 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.

         On remand from the Third Circuit, in May 2014, the case was reassigned to me and Judge Hammer. (DE 45).

         In June 2014, Defendants filed their answer without raising the subject of the arbitration agreement, (see DE 49).

         In July 2014, Defendants filed a motion for partial judgment on the pleadings (DE 52), which I denied in April 2015. (DE 106).

         In 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 67).[5]

         In 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. (Id., ).

         In June 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).

         As of 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).

         In 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).

         In 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).

         2. Recent procedural history

          On December 12, 2017, Thompson filed a motion for: (1) conditional certification, (2) notice, and (3) equitable tolling. (DE 196).

         In 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. (DE 212).

         In 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.

         In 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).

         In 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 224, 224-2).[6]

         On May 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).

         On June 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.

         I now 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, post-conditional certification.

         B. Facts

         As to 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.

         1. The opt-ins

         I 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).

         Several 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).

         Both McCourt and Pietyrka have at-will employment agreements with REMN, dated March 22, 2011 and May 12, 2014, respectively. (Id. ¶¶ 18, 24).[7] 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).

         2. 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)).[8]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. ¶¶ 2)).[9]

         Defendants allege that, over several months, REMN determined to revise underwriter compensation. (DSOF ¶ 7).[10] 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.)).

         On 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).

         Defendants 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[11] 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 ...


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