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Mantooth v. Bavaria Inn Restaurant Inc.

United States District Court, D. Colorado

January 28, 2019

CHADA MANTOOTH, GALE RAFFAELE, ALEXIS NAGLE, and NICOLE BUJOK, individually and on behalf of all others similarly situated, Plaintiffs,
v.
BAVARIA INN RESTAURANT, INC., d/b/a Shotgun Willie's, and DEBRA MATTHEWS, Defendants.

          OMNIBUS ORDER ON PENDING MOTIONS

          WILLIAM J. MARTÍNEZ UNITED STATES DISTRICT JUDGE

         The underlying claims in this lawsuit concern whether a local landmark establishment, Defendant Bavaria Inn Restaurant Inc. d/b/a/ Shotgun Willie's (“Shotgun Willie's”), and its owner Defendant Debra Matthews (jointly, “Defendants”) improperly classified named Plaintiffs Chada Mantooth, Gale Raffaele, Alexis Nagle, Nicole Bujok (“named Plaintiffs”), in addition to opt-in plaintiffs (jointly, “Plaintiffs”) as independent contractors and underpaid Plaintiffs in violation of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”), the Colorado Wage Claim Act, Colo. Rev. Stat. §§ 8-4-101 et seq. (“CWCA”), and Colorado common law. (ECF No. 1.)

         Defendants moved to compel arbitration. The Court previously granted in part Defendants' motion to compel arbitration (the “Order”). (ECF No. 124.) The Court compelled arbitration but struck certain fee-shifting and arbitrator selection clauses in the parties' arbitration agreements, as well as the cost-shifting clause of the agreements for Bujok, Nagle, Raffaele, and opt-in plaintiff Alexandra Darr. (Id. at 23-24.)

         The parties were not wholly satisfied with the Court's resolution of Defendants' motion to compel. Defendants filed a “Motion for Partial Reconsideration” (“Reconsideration Motion”) asking the Court to revisit its decision to sever provisions under the effective vindication doctrine based on the Supreme Court's decision in Epic Systems Corporation v. Lewis, 138 S.Ct. 1612, 1619 (2018). (ECF No. 125.) Plaintiffs filed a version of a motion for reconsideration titled “Motion for Partial Relief from Order Granting In Part Defendants' Motion to Compel Arbitration” (“Relief Motion”) asking the Court to strike the cost-shifting provisions in the arbitration contracts of Mantooth and the remaining opt-in plaintiffs. (ECF No. 127.) Defendants then filed a motion to strike certain exhibits attached to Plaintiffs' reply in support of the Relief Motion or, in the alternative, to allow a sur-reply (“Motion to Strike”). (ECF No. 142.)

         For the reasons explained below, the Court grants in part Defendants' Reconsideration Motion; grants in part Defendants' Motion to Strike; and grants in part Plaintiffs' Relief Motion in the interest of justice.

         I. BACKGROUND & PROCEDURAL HISTORY

         The underlying factual basis for these motions is discussed in the Order. Familiarity with that factual background is presumed.

         In relevant summary, named Plaintiffs and opt-in plaintiffs Darr and Jessica Lopez signed “Entertainment License Agreements” to work at Shotgun Willie's. These agreements contained an arbitration provision.[1] (ECF No. 57-2 ¶ 22.) That provision delegated exclusive authority to resolve disputes over the validity or enforceability of the agreement to the arbitrator; allowed Defendants to insist on an arbitrator “experienced in the adult entertainment industry”; and contained four provisions concerning arbitration fees and costs:

• “The costs of the arbitration shall be borne equally by the entertainer and the club unless the arbitrator concludes that a different allocation is required by law.” (Id. ¶ 22.A.)
• “In the event that any party challenges, or is required to initiate proceedings to enforce, the arbitration requirements of this paragraph 22, the prevailing party to such challenges and/or enforcement proceedings shall be entitled to an award of all costs, including actual and reasonable attorney fees, incurred in litigation such issues.” (Id. ¶ 22.D.)
• “Any ruling arising out of a claim between the parties shall, to the extent not precluded by applicable law, award costs incurred for the proceedings and reasonable attorney fees to the prevailing party.” (Id. ¶ 22.E.)
• The arbitrator “shall be permitted to award, subject only to the restrictions contained in this paragraph 22, any relief available in a court.” (Id. ¶ 22.A.)

         On October 16, 2017, Defendants moved to compel “Plaintiffs”-defined as “named Plaintiffs, Alexandra Darr and Jessica Lopez”-to arbitrate their claims.[2] (ECF No. 57 at 2 n.2.) In response, “Plaintiffs”-defined as “Named and Opt-in Plaintiffs, and putative class/collective action members”-objected to the motion to compel in part because the fee- and cost-shifting provisions of their arbitration agreements prevented “Plaintiffs” from effectively vindicating their claims. (ECF No. 86 at 1 n.1, 11.) In support, these Plaintiffs submitted evidence from Bujok, Darr, Nagle, and Raffaele about their ability to share arbitration costs, as well as the financial hardship the cost-sharing provision would impose. (ECF Nos. 86-5, 86-6, 86-8 & 86-9.)

         In its Order, the Court granted in part the motion to compel. (ECF No. 124.) The Court also found that, for Bujok, Darr, Nagle, and Raffaele, arbitration costs would be thousands to tens of thousands of dollars; “the cost-sharing provisions of the arbitration clause would prevent effective vindication of their claims”; and thus the Court severed the cost-sharing provisions for those individuals. (Id. at 16-17.) The Court did not, however, sever the cost-sharing provisions for Mantooth or Lopez because they did not submit evidence of financial hardship. The Court also severed certain fee-shifting provisions and the arbitrator selection clause-a provision that would have allowed Defendants to demand an arbitrator “experienced in the adult entertainment industry”-for named Plaintiffs, Darr, and Lopez because in the Court's view such clauses would have prevented effective vindication of Plaintiffs' rights. (Id. at 14, 19-20.)

         Five days after the Court's Order, the Supreme Court issued its opinion in Epic Systems Corporation v. Lewis, resolving the question of whether “employees and employers [should] be allowed to agree that any disputes between them will be resolved through one-on-one arbitration.” 138 S.Ct. 1612, 1619 (2018). The Supreme Court held that the National Labor Relations Act, which “secures to employees rights to organize unions and bargain collectively, ” did not “manifest[ ] a clear intention to displace the Arbitration Act.” Id. at 1619, 1632. Thus, the arbitration contracts at issue in Epic-which required employees to arbitrate individually rather than collectively- were to be enforced as written.

         Based on Epic, Defendants filed their Reconsideration Motion arguing that Epic eviscerated the effective vindication doctrine. (ECF No. 125.) Defendants asked that the Court revisit its decision to strike the fee- and cost-shifting provisions under the effective vindication doctrine.[3] (Id. at 2.)

         Plaintiffs filed their Relief Motion asking the Court to invalidate the cost-sharing requirement for “the remaining Plaintiffs (named Plaintiff Chada Mantooth and opt-in Plaintiffs Ariel Cline, Samantha Hattlestad, Ashley Howard, Jessica Lopez, and Allison Bonham)” as “‘similarly situated employees' to the Plaintiffs who previously submitted declarations.” (ECF No. 127 at 2.) Plaintiffs attached affidavits from Mantooth, Cline, Hattlestad, Howard, Lopez, and Bonham about their inability to pay arbitration costs. (ECF Nos. 127-1, 127-2, 127-3, 127-4, 127-5 & 127-6.)

         Plaintiffs attached two exhibits to their reply in support of their Relief Motion about the expense of arbitration. (ECF Nos. 140-1 & 140-2.) Defendants then filed the Motion to Strike those exhibits and asked that the Court disregard any new arguments that relied on the newly-included information. (ECF No. 142.)

         II. LEGAL STANDARD

         While the Federal Rules of Civil Procedure do not directly provide for a motion to reconsider an interlocutory ruling, district courts have broad discretion to reconsider their interlocutory rulings before the entry of judgment. See Rimbert v. Eli Lilly & Co., 647 F.3d 1247, 1251 (10th Cir. 2011) (“[D]istrict courts generally remain free to reconsider their earlier interlocutory orders.”); Fed.R.Civ.P. 54(b) (“[A]ny order . . . that adjudicates fewer than all the claim or the rights and liabilities of fewer than all the parties . . . may be revised at any time before the entry of a judgment.”). Thus, a court can alter its interlocutory orders even where the more stringent requirements applicable to a motion to alter or amend a final judgment under Rule 59(e) or a motion for relief from judgment brought pursuant to Rule 60(b) are not satisfied. Spring Creek Expl. & Prod. Co., LLC v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1024 (10th Cir. 2018).

         “Notwithstanding the district court's broad discretion to alter its interlocutory orders, the motion to reconsider ‘is not at the disposal of parties who want to rehash old arguments.'” Nat'l Bus. Brokers, Ltd. v. Jim Williamson Prods., Inc., 115 F.Supp.2d 1250, 1256 (D. Colo. 2000) (quoting Young v. Murphy, 161 F.R.D. 61, 62 (N.D. Ill. 1995)). “Rather, as a practical matter, to succeed in a motion to reconsider, a party must set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision.” Id. (internal quotation marks omitted and alterations incorporated). Even under this lower standard, “[a] motion to reconsider should be denied unless it clearly demonstrates manifest error of law or fact or presents newly discovered evidence.” Id. (alterations incorporated); see Sanchez v. Hartley, 2014 WL 4852251, at *2 (D. Colo. Sept. 30, 2014) (refusing to reconsider an interlocutory order where the defendants did not show “an intervening change in the law, newly discovered evidence, or the need to correct clear error or manifest injustice”). The Court may be guided by Rules 59 and 60 standards in deciding whether to alter or vacate an interlocutory order. Perkins v. Fed. Fruit & Produce Co. Inc., 945 F.Supp.2d 1225, 1232 (D. Colo. 2013).

         III. ANALYSIS

         Before analyzing the parties' motions, the Court addresses two preliminary matters. First, the subject Order directed the Clerk of Court to administratively close this case, subject to reopening for good cause shown after the conclusion of the individual arbitration proceedings. The parties have not specifically requested reopening of the case in their motions currently pending before the Court. Nonetheless, ...


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