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Judd v. Keypoint Government Solutions, Inc.

United States District Court, D. Colorado

July 23, 2018

ORSON JUDD, Plaintiff,



         This matter comes before the Court on the Motion to Compel Arbitration of Opt-In Kristin Hettler's Claims (the “Motion”) [#51], filed by Defendant KeyPoint Government Solutions, Inc. (“KeyPoint”). The Court has considered the Motion and the related briefing, the entire case file, and the applicable case law. The Court also held oral argument on the Motion on July 20, 2018. [#90] For the following reasons, this Court respectfully RECOMMENDS that KeyPoint's Motion to Compel Arbitration be GRANTED. [1]

         I. BACKGROUND

         KeyPoint provides background checks for the federal government. [#1 at ¶ 4] As investigators for KeyPoint, Plaintiff Orson Judd and others performed investigations, including acquiring and interviewing witnesses and reviewing public records, and preparing reports on those investigations for KeyPoint to submit to the government. [Id.] Investigators, including Judd, routinely worked in excess of 40 hours per week. [Id.] Judd alleges that KeyPoint violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b), by improperly classifying him and other investigators as independent contractors, enabling KeyPoint to withhold overtime wages due to them for working over 40 hours a week. [See generally #1]

         Kristin Hettler is also a former investigator who worked for KeyPoint. [#21-1 at 3] Ms. Hettler filed her consent to join Judd's suit on September 27, 2017. [Id.]

         A. 2015 Smith Action and KeyPoint's Independent Contractor Engagement Agreement

         In 2015, Richard Smith, a former KeyPoint investigator, filed a FLSA action against KeyPoint on behalf of a nationwide proposed class of similarly situated investigators in the United States. Smith v. KeyPoint Government Solutions, Inc., Civil Action No. 15-cv-00865-REB-KLM (D. Colo. 2015) (“Smith Action”), Docket No. 1-1.[2]On April 24, 2015, that suit was transferred to the U.S. District Court for the District of Colorado. Id., Docket No. 1.

         In June 2015, while the Smith Action remained pending, KeyPoint revised its Independent Contractor Engagement Agreement (“ICEA”). [#51-5] KeyPoint emailed its independent contractors, including Ms. Hettler, notifying them of the ICEA changes. [#51-5 at 2] KeyPoint included the following documents with the email: a cover letter highlighting an arbitration agreement within the ICEA and options for the independent contractors to opt-out of arbitration; the ICEA with the attached opt-out form; a copy of the complaint in the Smith Action; and an auto insurance form. [#51-5]

         The ICEA arbitration agreement stated that “KeyPoint and Contractor mutually agree to resolve any justiciable disputes between them exclusively through final and binding arbitration instead of filing a lawsuit in court.” [Id. at 7] The arbitration agreement applied to “any and all claims arising out of or relating to [the ICEA], the Contactor's classification as an independent contractor, . . . and claims arising under or related to the . . . Fair Labor Standards Act, ” among other statutes and causes of action. [Id.] Furthermore, the agreement applied to “all pending and future litigation between Contractor and KeyPoint in state or federal courts, ” as of the date the agreement was executed by the contractor [id.], with the exception of contractors completing the opt-out form in order to “opt out of mandatory arbitration of litigation pending at the time of execution” of the ICEA [id. at 9 (emphasis omitted)]. The ICEA arbitration agreement also explicitly stated that “[a]ny arbitration shall be governed by the American Arbitration Association Commercial Arbitration Rules (“AAA Rules”), ” with some limited exceptions. [Id. at 7]

         In October 2015, Ms. Hettler executed the ICEA and also completed the opt-out form. [#51-2] By completing both forms, the ICEA arbitration provision would not have impacted Ms. Hettler's “ability to participate in the Smith collective action” [#51-5 at 3], but she never sought to join the Smith Action. Smith's motion for conditional certification was ultimately denied, Smith Action, Docket No. 83, and the Court granted KeyPoint's Motion for Summary Judgment, finding that Smith's claims were barred by the FLSA statute of limitations, id., Docket No. 95. The Court entered final judgment in favor of KeyPoint. Id., Docket No. 97.

         B. Instant Suit

         Judd filed the instant suit in the United States District Court for the District of Arizona on March 10, 2017. [#1] Judd requests that this matter be certified as a collective action. [#1 at 18; #43] Judd seeks compensatory and statutory damages, including lost wages, earnings, and all other money owed to him and members of the collective, and an order directing KeyPoint to identify and restore restitution and compensation for lost wages to all current and former investigators classified as independent contractors, among other relief. [#1 at 18-19]

         In April 2017, KeyPoint moved to transfer the action to this Court. [#9] Ms. Hettler filed her consent to join the instant suit on September 27, 2017, while the case remained pending in the District of Arizona. [#21-1] On November 8, 2017, counsel for KeyPoint sent a letter to Ms. Hettler's counsel, indicating that they were in receipt of her consent to join, and requesting that she withdraw her consent and “submit her claims to binding arbitration pursuant to the terms of her ICEA.” [#51-7]

         A few months later, the Arizona federal district court granted KeyPoint's motion to transfer and transferred the instant suit to this Court. [#24] Judd refiled his Motion for Conditional Certification in this Court on February 16, 2018.[3] [#43] KeyPoint filed its Motion to Compel Arbitration [#51] in March 2018. The Motion is fully briefed. [##59, 62] Additionally, the parties addressed the Motion to Compel Arbitration at a status conference before this Court on April 10, 2018. [#64] As ordered by the Court [#73], the parties filed supplemental briefing, addressing the impact of the United States Supreme Court's decision in Epic ...

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