Brayman v. Keypoint Government Solutions, Inc.

          ORDER RESOLVING PENDING MOTIONS

          William J. Martinez United States District Judge.

         Plaintiff Rachel Brayman (“Brayman”) brings this action against Defendant KeyPoint Government Solutions, Inc., (“KeyPoint”) for alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. (ECF No. 1.) Brayman's FLSA claim concerns KeyPoint's alleged failure to properly compensate a certain class of employees known as “Investigators” for overtime hours worked, and an alleged policy of unlawfully prohibiting overtime in certain circumstances. (Id. ¶¶ 20-25.) Although the Court has yet to authorize notice to KeyPoint employees who might join Brayman in a collective action, roughly fifty of them have opted in to this lawsuit through notices of consent to join filed by Brayman's counsel.

         Currently before the Court is KeyPoint's Motion for Reconsideration, or in the Alternative, Certification of an Interlocutory Appeal (“Motion to Reconsider”). (ECF No. 73.) KeyPoint asks the Court to reconsider certain portions of its prior order granting conditional certification of this lawsuit as a collective action. (See ECF No. 69.)

         Also before the Court is Brayman's Motion for Equitable Tolling. (ECF No. 72.) Brayman requests that the Court toll the FLSA statute of limitations from the time she moved for conditional certification.

         Finally, before the Court are eight motions to compel arbitration filed by KeyPoint against twenty-seven opt-in plaintiffs who are subject to arbitration agreements (collectively, “Motions to Compel”). (ECF Nos. 84, 93, 106, 110, 124, 128, 129, 130.)

         For the reasons explained below, the Court grants the Motion to Reconsider as to the question of whether collective action notice should be transmitted to potential collective action members subject to an arbitration agreement. In addition, the Court strikes the notices of consent to join filed by current opt-in plaintiffs subject to arbitration agreements, and in turn denies the various Motions to Compel as moot. Finally, the Court grants the Motion for Equitable Tolling.

         I. BACKGROUND

         A. The Arbitration Agreement

         Brayman filed this lawsuit on March 8, 2018. (ECF No. 1.) On March 16, 2018, KeyPoint's counsel e-mailed a letter to Brayman's counsel announcing that one of the opt-in plaintiffs (Tschiffely) had signed an arbitration agreement. (ECF No. 29-21 at 2.)^[1]KeyPoint's counsel asked Brayman's counsel to “[p]lease let us know if Mr. Tschiffely will voluntarily withdraw his consent to join. Please be advised that if you will not agree to do so, we will proceed with a motion to compel arbitration and will seek our fees in doing so.” (Id. at 3.)

         The arbitration agreement in question “applies, without limitation, ” to essentially any conceivable dispute between the employee and KeyPoint, specifically including disputes about “compensation, classification, minimum wage, . . . overtime, [and] breaks and rest periods.” (ECF No. 84-2 § 1.) For good measure, it also specifically embraces “claims arising under the Fair Labor Standards Act.” (Id.) “Additionally, ” the agreement continues, “the Arbitrator, and not any federal, state, or local court or agency, shall have the exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement. However, the preceding sentence shall not apply to the ‘Class Action Waiver' described below.” (Id.)

         The Class Action Waiver reads,

Both KeyPoint and you agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective, or private attorney general representative basis; there will be no right or authority for any dispute to be brought, heard or arbitrated as a class, collective, representative or private attorney general action, or as a member in any purported class, collective, representative or private attorney general proceeding. . . . Disputes regarding the validity or enforceability of the Class Action Waiver may be resolved only by a civil court of competent jurisdiction and not by an arbitrator.

(Id. § 5.)

         Concerning the monetary aspects of arbitration, the agreement states,

Each party will pay the fees for his, her or its own attorneys, subject to any remedies to which that party may later be entitled under applicable law. However, in all cases where required by law, KeyPoint will pay the Arbitrator's and arbitration fees. If under applicable law KeyPoint is not required to pay all of the Arbitrator's and/or arbitration fees, such fee(s) will be apportioned between the parties in accordance with said applicable law, and any disputes in that regard will be resolved by the Arbitrator.

(Id. § 6.)

         Finally, the agreement contains a severability clause: “[I]n the event that any portion of this Agreement is deemed unenforceable, only the unenforceable language will be severed from this Agreement and the remainder of this Agreement will be enforceable.” (Id. § 9.)

         B. Representations About Arbitrating Opt-In Plaintiffs' Claims

         On March 22 and 23, 2018, KeyPoint's counsel followed up in the same e-mail thread in which she had sent the March 16 letter regarding Tschiffely's arbitration agreement. (ECF No. 29-20.) KeyPoint's counsel attached materially identical arbitration agreements for opt-in plaintiffs Betton, George, Jones-Rose, and Perry. (ECF No. 29-20 at 1-2; ECF Nos. 84-3 through 84-6.)

         On April 2, 2018, KeyPoint's counsel-having apparently heard nothing from Brayman's counsel-continued the e-mail thread: “I would appreciate receiving an update on the issue regarding the opt-ins who are subject to the dispute resolution agreement. Please advise.” (Id. at 1.) The following day, Brayman's counsel replied, “No need to file a motion to compel arbitration. We will pursue these claims in arbitration. What do you know about the recent opt-ins? Do you have a proposal that you want me to consider for sending them to arbitration?” (Id.)

         C. Conditional Certification Proceedings

         1. Brayman's Conditional Certification Motion

         Brayman moved for conditional certification on April 6, 2018 (“Certification Motion”). (ECF No. 22.) As part of that motion, Brayman predicted that KeyPoint “will likely argue that the scope of any notice should be limited to those Investigators who did not sign an arbitration agreement.” (Id. at 13.) Brayman asserted that “such an argument should be rejected” because “[t]hose who did sign arbitration agreements should still be notified about the existence of this lawsuit and be provided with the opportunity to protect their claims from expiring. This is true even if it is later determined that certain collective members must arbitrate their claims.” (Id.) Later in the same brief, however, Brayman offered assertions suggesting that there would be no “later determin[ation]” about arbitrability because it was a given as to those who had signed arbitration agreements:

After Investigators are timely notified of the lawsuit and individuals make a claim, the parties can sort out whether [those] who actually join the case have arbitration agreements, as they have cooperatively done thus far. To explain, shortly after Plaintiff filed her Complaint, Defendant's counsel informed Plaintiff's counsel that while Named Plaintiff Rachel Brayman had not signed an arbitration agreement, several other current Opt-in Plaintiffs had. Plaintiff's counsel subsequently made clear that for those Opt-in Plaintiffs with signed arbitration agreements, they would voluntarily arbitrate their claims without the need for Defendant to file a motion to compel arbitration. In short, all Investigators are entitled to notice of their potential overtime claims regardless of the forum in which they may ultimately be required to assert them.

(Id. at 15 (citation omitted).)

         2. Negotiations Over a Stipulation Regarding Arbitration

         On April 12, 2018-after the filing of the Certification Motion but before KeyPoint's deadline to respond-KeyPoint's counsel submitted a draft stipulation regarding arbitration to Brayman's counsel. According to Brayman's counsel (in a declaration submitted in opposition to the Motion to Reconsider), “The parties' negotiations on that stipulation ultimately broke down after multiple rounds of red-lined edits because the parties could not agree on the terms of the stipulation. As part of the parties' negotiations on the proposed stipulation, Plaintiff specifically sought to preserve her right to make any enforceability arguments.” (ECF No. 79-1 ¶ 5.) According to KeyPoint's counsel (in a declaration submitted with KeyPoint's reply in support of the Motion to Reconsider), “In reviewing the correspondence exchanged between counsel, I see no statements reflecting an intention or indication by Plaintiff that she believed the agreements were not enforceable in the first place, or that she intended to subsequently challenge the enforceability of the arbitration agreement before this Court.” (ECF No. 80-1 ¶ 6.)

         The parties redlined drafts are in the record, along with the cover e-mails transmitting them. (ECF Nos. 89-3, 89-4.) These documents show that the parties' major disagreements centered around Brayman's proposal that KeyPoint stipulate to pay for the arbitrator's fees and costs and Brayman's proposal that this action be stayed, rather than dismissed, as to the opt-in plaintiffs subject to an arbitration agreement. (See id.)

         3. KeyPoint's Response Brief

         In its response to the Certification Motion, KeyPoint estimated that about 2, 600 of the potential collective members, out of a total of about 4, 200, are subject to “identical” arbitration agreements. (ECF No. 29 at 6.) KeyPoint further stated, “Counsel for Plaintiff has agreed that [potential collective action members] who have executed arbitration agreements will submit those claims individually to individual arbitration, and the parties are in the process of discussing a stipulation regarding the same.” (Id.)

         KeyPoint went on to argue that providing notice even to those who cannot join an FLSA collective action, simply because they might have an FLSA claim through an arbitral forum, is an improper use of the notice process. (Id. at 12-13.) KeyPoint asserted that “there is no dispute here as to the enforceability of the arbitration agreements, ” referring to Brayman's counsel's April 2, 2018 e-mail quoted above. (Id. at 13.) “Thus[, ] issuing notice to individuals with arbitration ...