•

. Civ. No. 11-1494 (KM) (MAR) Plaintiff,

V. OPINION

REAL ESTATE MORTGAGENETWORK, INC., et al.,

Defendants.

KEVIN MCNULTY. U.S.D.J.:

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 MortgageCompany, 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 havelearned of the action by other means and have opted in.1

1 Actually, the total of opt-ins was formerly eight. Defendants assert that opt-in

Plaintiff Cheryl Matthews has effectively withdrawn from this action. (DE 223 p. 6, n.

5). Allegedly, Plaintiff’s counsel advised Defendants, in writing, that opt-in PlaintiffCheryl Matthews did not attend a deposition because she “was withdrawing from the

action.” (Id.). Further, allegedly, “Plaintiffs’ counsel assured Defendants that her

withdrawal would be forthcoming, and that any delay was due to Matthew’s health

condition.” (Id.). For purposes of this opinion, I will assume these statements to be

true. (See DE 224-1 (failing to address the Matthews issue)). They do not bear on the

result.

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applicable to Thompson and other putative collective members from May 6,

2011, the date Defendants filed their first motion to dismiss, until the Courtrules on conditional certification. (DEl 224).

I. BACKGROUND2

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 ¶ 10).

On December 30, 2011, District Judge Dennis M. Cavanaugh granted

Defendants’ motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) forfailure to plead with the requisite specificity. (DEl 23, 24).

On January 26, 2012, Thompson filed her Amended Complaint. (DEl 25).

She brought claims under the FLSA, 29 U.S.C. § 207 (Count 1) and the NJWHL,N.J. Stat. Ann. § 34:11—56a—34:11—56a38 (Count II). On February 24, 2012,

2 For convenience, certain docket entries will be abbreviated as follows:

Schild Decl. = Declaration of Philip Schild [DEl 223-2]

Sample Agrmt. = Ex. A to the Schild Decl. [DE 223-2, p. 4]

This Court has subject matter jurisdiction over the federal law claim pursuant

to 28 U.S.C. § 1331 and the FLSA, 29 U.S.C. § 216(b). This Court exercisessupplemental jurisdiction over Thompson’s state-law claim pursuant to 28 U.S.C.

§ 1367(a).

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motion for conditional certification and dissemination of notice to the classmembers. (Id.). That motion for equitable tolling was eventually teiminated.’

On August 31, 2012, Judge Cavanaugh, again, granted Defendants’

motion to dismiss the Amended Complaint for failure to state a claim underFed. R. Civ. P. l2(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 ii. Real Estate

Mortgage Network, 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).

See Teleconference Transcr., DE 67 (Mag. Judge Hammer commenting that the

motion was terminated)).

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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 andcontact 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, seen. 1, supra). The issue, he found, would therefore be more

appropriately decided with the benefit of discovery, in connection with classcertification. (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 conditionalcertification. (DE 152).

Further, Judge Hammer noted his inclination that putative class discovery

should include even potential class members who stood the chance of being excluded

from this action because of the statute of limitations or arbitration agreements (DE 67pp. 18:17—25, 19:1—16; Id. pp. 18:24—25, 19:1—2 (“You can’t have it both ways wherethere’s no mention made of the arbitration provision until three years into a case, and

now it’s being used as both a sword and a shield.”); Id. pp. 21:23—25, 22:1—20).

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2. Recent procedural history

On December 12, 2017, Thompson flied 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 tocompel arbitration. (DE 212).

In March 2018, Thompson flied 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 noresponse 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 toreffle 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, 2242).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

6 Neither party’s arguments are very new—for several years, they have beendueling over equitable tolling and enforcement of the arbitration agreements. (See e.g.,DE 70, DE 75). Factual background on the arbitration agreements is provided infraI.C.

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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 areequitably 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 ofthe arbitration agreements. Because I have determined that Defendants’ rightto 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 ¶J 16, 20). Jones worked for the Defendants

from November 5, 2007 to May 17, 2011. (Id. ¶ 6). Arraya, who is also a formercloser, worked for the Defendants from June 3, 2008 to December 27, 2016.

(Id. ¶ 20). It is an issue of fact whether Arraya was always classified as nonexempt 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. ¶3J 14—15, 17, 19, 23). Sentman worked forthe Defendants from approximately June 2009 to November 2010. (DSOF, PR¶ 14). Galida worked for the Defendants from approximately October 2007 to

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REMN, dated March 22, 2011 and May 12, 2014, respectively. (Id. ¶j 18, 24).

McCourt signed his agreement several years into his employment with theDefendants, whereas Pietryka signed her agreement on her first day of

employment. Both agreements include an arbitration provision, a referencethat 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 ¶J 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)).8Further, Defendants assert that they began to consider this new compensation

structure in response to the Second Circuit’s opinion in Davis v. JP. Morgan

Chase & Co., 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)).°

7 The preamble to McCourt’s Agreement states that it is made and entered into

on April 1,2011. (Ex. 3 p. 1). However, on the signature page, the date is entered as March 22, 2010. (Id. p. 4). The month and date are hand-written, but the date is pre

typed. Because both parties presume the agreements were rolled out in 2011, I will dothe same. (DE 224 p. 25, DE 226 p. 7).8 Defendants assert that all compensation and employment changes wereplanned to go into effect simultaneously. (DSOF ¶ 6). Thompson responds that Defendants have produced no records to support this assertion and Thompson hasnot yet taken depositions. (PR ¶ 6).

o Without reference to any particular provision, the Defendants assert that Dodd

Frank mandated certain compensation changes which went into effect by April 1,2011. (DSQF ¶ 4 (citing Schild Decl. ¶ 2)). Defendants also present the alleged

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Deci.)).

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 outthe undenvriter 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, (SampleAgrmt. 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 todo with the requirements of Dodd-Frank, at oral argument they clarified that

the issues are independent; the Dodd-Frank revisions to employmentagreements merely provided the occasion or opportunin’ for the addition of the

implications of Davis and Dodd-Frank as material facts. (DSOF ¶7 1—4). In response, Thompson repeatedly asserts that such factual assertions are veiled legal conclusions.

(PR 9 1—4).

tO The alleged revisions include: categorizing undenvriters in different

departments based on seniority and loan time, compensating loan officers on anhourly basis, permitting and paying overtime, changing bonus structures, andrequiring time-keeping. (DSOF ¶ 8 (citing Schild Dccl. ¶ 4)).

11 One signature block to the contract, presumably, that of the undenvriter

employee, has been redacted while the signature on behalf of REMN is visible. (Sample

Agrmt. p. 4).

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explanations for the timing and content of the new underwriter compensationagreements. (PR ¶11 5_9).12 Further, Thompson points out that she has yet totake any depositions. (Id.).

The process by which Defendants, in September 2014, first revealed the

existence of the arbitration agreements is discussed infra.

II. DISCUSSION

A. Legal standards

1. Summary judgment

Federal Rule of Civil Procedure 56(a) provides that summary judgment

should be granted “if the movant shows that there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.”Fed. R. Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Kreschollek v. S. Stevedoring Co.,

223 F.3d 202, 204 (3d Cir. 2000). In deciding a motion for summary judgment,a court must construe all facts and inferences in the light most favorable to thenonmoving party. See Boyle v. County ofAllegheny Pennsylvania, 139 F.3d386, 393 (3d Cir. 1998). The moving party bears the burden of establishing

that no genuine issue of material fact remains. See Celotex Corp. v. Catrett, 477

U.s. 317, 322—23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “[W}ith respect to anissue on which the nonmoving party bears the burden of proof ... the burden

on the moving party may be discharged by ‘showing’—that is, pointing out to

12 Plaintiff also argues that if the Defendants had been in possession of such

records, they would have produced them. (PR ¶J 5—9). The Court will not engage in such speculation, and, as Plaintiff herself has highlighted, discovery is still ongoing.

(Id.).

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U.s. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The opposing party

must present actual evidence that creates a genuine issue as to a material factfor trial. Anderson, 477 U.S. at 248; see also Fed. R. Civ. P. 56(c) (setting forth

types of evidence on which nonmoving party must rely to support its assertion

that genuine issues of material fact exist). “[Ujnsupported allegations ... and

pleadings are insufficient to repel summary judgment.” Schoch v. First Fid.

Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also Gleason v. NonvestMortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) (“A nonmoving party has created

a genuine issue of material fact if it has provided sufficient evidence to allow a

jury to find in its favor at trial.”). If the nonmoving party has failed “to make a

showing sufficient to establish the existence of an element essential to that

party’s case, and on which that party will bear the burden of proof at trial,there can be ‘nq genuine issue of material fact,’ since a complete failure of proof

concerning an essential element of the nonmoving party’s case necessarily

renders all other facts immaterial.” Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53,55 (3d Cir. 1992) (quoting Celotex, 477 U.S. at 322—23).

In deciding a motion for summary judgment, the court’s role is not to

evaluate the evidence and decide the truth of the matter, but to determine

whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.

Ct. 2505. Credibility determinations are the province of the fact finder. Big

Apple BMW, Inc. z’. BMWof N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992).

The summary judgment standard, however, does not operate in a

vacuum. “[I]n ruling on a motion for summary judgment, the judge must view

the evidence presented through the prism of the substantive evidentiary

burden.” Anderson v. Liberty Lobby, ma, 477 U.S. 242, 254, 106 S. Ct. 2505,

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F.3d 173, 178-79 (3d Cir. 1999) (noting that FAA 

creates a body of federal

substantive law establishing and governing the duty to honor agreements to

arbitrate disputes.”).’3 To achieve that aim, the FAA authorizes a party to

enforce a valid arbitration agreement by moving to compel arbitration. 9 U.S.C.§ 2-4; In re Pharmacy Benefit Managers Antitrust Litig., 700 F.3d 109, 116 (3d

Cir. 2012).

Arbitration is a matter of contract between parties, so a judicial mandate

to arbitrate must be predicated on the parties consent. Guidotti v. Legal

Helpers Debt Resolution, L.L.C., 716 P.3d 764, 771 (3d Cir. 2013) (quoting ParKnit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir. 1980)).

When a district court is presented with a motion to compel arbitration, the

Court must first determine whether the agreement to arbitrate is valid, andthen decide whether the dispute falls within the agreement’s scope. Century

Indem. Co. v. Certain Underwriters at Lloyd’s, 584 F.3d 513, 523 (3d Cir. 2009).

In assessing a motion to compel arbitration, the court applies the same

summary judgment standard described above. ACE Am. Ins. Co. v. Guethero,

73SF. App’x 72, 77 (3d Cir. 2018). Thus, arbitration will be compelled if the

arbitrability issue presents no genuine, material issues of fact, with “jt]he partyopposing arbitration ... given the benefit of all reasonable doubts and

inferences that may arise.” Id. (quoting Kaneff v. Del. Title Loans, 587 F.3d 616,

620 (3d Cir. 2009)). If, on the other hand, there are material factual disputes

regarding arbitrability, the court should proceed to trial “regarding ‘the making

13 The FAA’s purpose is “to reverse the longstanding judicial hostility to arbitration

agreements that had existed at English common law and had been adopted by

American courts, and to place arbitration agreements upon the same footing as other

contracts.” Gilmer v Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S. Ct. 1647

(1991).

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arbitration. Because I find that Defendants have waived arbitration, I do notreach the parties’ arguments as to the formation and interpretation of the

arbitration agreements in dispute. The second motion before me is the

Defendants’ motion for partial summary judgment dismissing the opt-ins’

claims on statute of limitations grounds. In response, Plaintiff has filed a

motion for equitable tolling. I will grant in part Plaintiffs motion for equitable

tolling as to the current opt-in Plaintiffs, but I will deny the motion as to the

absent members of the putative, as-yet-uncertified class.

1. Waiver of the right to enforce arbitration

Plaintiff asserts that Defendants have waived their right to enforce

arbitration. Given the strong preference to enforce arbitration agreements, see

Harris, 183 F.3d at 178—179, waiver of the right to enforce arbitration will notbe inferred lightly. Nino v. Jewelry Exch., Inc., 609 F.3d 191, 208 (3d Cir.2010).

Typically, waiver will be found only when “the demand for arbitration came

long after the suit commenced and when both parties had engaged in extensive

discovery.” Id. at 208 (internal citations omitted). However, if a party acts“inconsistently with the right to arbitration, (the courtj will not hesitate to boldthat the right to arbitrate has been waived where a sufficient showing of

prejudice has been made by the party seeking to avoid arbitration.” In rePharmacy Ben. Managers Antitrust Litig., 700 F.3d 109, 117 (3d Cir. 2012).

The court considers six nonexclusive factors, known as the Hoxworth

factors, when determining whether a party has waived the right to arbitrate.

Gray Holdco v. Cassady, 654 F.3d 444, 451 (3d Cir. 2011) (citing Hoxwo,th ‘.‘.

Blinder, Robinson & Co., Inc., 980 F.2d 912, 926—27 (3d Cir.1992)). Those

Honuorth factors are: (1) “timeliness or lack thereof of the motion to arbitrate;”

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acquiescence to the court

s pretrial orders;

and (6) 

the extent to which the

parties have engaged in discovery.” In re Phannacy Ben. Managers AntitrustLitig., 700 F.3d 109, 117 (3d Cir. 2012) (citing Gray Holdco, 654 P.3d at 451).“The factors, however, are ‘nonexciusive’ and ‘not all the factors need be

present to justify a finding of waiver.’” Id. at 118 (quoting Nino, 609 F.3d at

209).

i. Timeliness

I begin with the Honvorth factor of timeliness. When the party’s motion

to compel arbitration occurred in a reasonably timely fashion, this factor

weighs against waiver. Paloko v. Airborne Express, Inc., 372 F.3d 588, 598 (3d

Cir.2004) (38 days); PaineWebber Inc. v. Faragalli, 61 F.3d 1063, 10669 (3d

Cir. 1995) (two months); Wood v. Prudential Ins. Co. ofAm., 207 F.3d 674, 680

(3d Cir.2000) (one-and-a-half months); Gaulik Constr. Co. v. H.F. Campbell Co.,

526 F.2d 777, 783—84 (3d Cir. 1975) (immediately after removal to federal

court). Where, on the other hand, a motion to compel arbitration is significantlydelayed, the Third Circuit has found a waiver. In re Pharmacy Ben. Managers

Antitrust Litig., 700 F.3d at 118 (ten months); Gray Holdco, 654 F.3d at 454

(ten months); Hoxwodh. 980 F.2d at 925 (11 months); Nino, 609 F.3d at 210(15 months); Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207, 223 (3d Cir.2007)(four years). The court may consider, not just the length of the delay, but

whether there is a satisfactory explanation for it. See In re Pharmacy Ben.

Managers Antitrust Litig., 700 F.3d at 118.

Defendants, who alone possess the pertinent facts, did not assert

arbitration as a defense, and indeed never raised the subject at all until

September 2014. The Defendants first filed a motion to compel arbitration on

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arbitration agreement, having left the job in advance of the restructuringpursuant to which arbitration clauses were inserted in the employmentagreements. Thus they assert that, “[p]rior to opt-in Plaintiffs McCourt and

Pietryka joining this action, there were no live claims by plaintiffs witharbitration agreements and no question of arbitrability for this court toresolve.” (DE 226 p. 2) Before that time, they say, the Court could not have

written anything but an impermissible advisory opinion on an absent, putativeclass member. (Id. p. 3). Defendants therefore urge the Court to measure the

timing of the motion to compel arbitration not from the date the action wasfiled, but from the date the first plaintiff with an arbitration agreement optedin. (DE 226 p. 4). Measured from that point, they say, the delay was only seven

weeks. (See Opt-in McCourt’s notice of consent, DE 202; Opt-in Pietiyka’s

notice of consent, DE 203; Defendants’ First Motion to Compel Arbitration, DE212).

Defendants’ contentions have significant force, but I cannot accept them

as a complete excuse. This action is and always was conceived of as a collectiveaction. Defendants’ protestations that their hands were tied as to an actualmotion to compel arbitration takes them only so far; it does not explain their

complete silence on the issue until 2014.

In addition, the plaintiffs have raised an issue of fact as to the timing of

the arbitration agreements. The timing, they say, is suspicious; the rollout ofthe new contracts containing the arbitration provisions occurred immediately

after the filing of this collective action ELSA complaint, and did not inform theemployees they might be signing away their right to opt in. The Defendants, tobe sure, have a contrary story to tell: the rollout, they say, was pursued in goodfaith, and had been in the works for some time.

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ii. Alerting adversary to arbitration provision

I jump ahead to factor three: whether the Defendants informed their

adversary of the right to pursue arbitration prior to filing the motion to compel.Here, the court will consider whether the party raised arbitration as a defensein their answer or elsewhere. In re Pharmacy Ben. Managers Antitrust Litig.,700 F.3d 109, 1119 (3d Cir. 2012). In this case, a collective action, the factor

weighs heavier than timeliness because, ripeness aside, the defendants are the

parties with knowledge and control over the facts about whether the claims ofthe putative class members are arbitrable.

The Defendants’ current protestations have a certain faux quality. The

status and viability of claims against the potential class members has been of

vital concern to the defendants from the very outset of this action.

Defendants’ motion to dismiss the amended complaint, for example, filed

on February 24, 2012, sought to dismiss the collective action because

Thompson’s claims were not representative or typical of those of the putative

class members, whose claims were fact-dependent and would requireindividualized scrutiny. (Brief in support of motion to dismiss, DE 28-1, pp.

12—18). Defendants had recently undergone a massive restructuring of

employment-related agreements, in which arbitration provisions were inserted.But not a peep about arbitration here.

Apparently a period of mediation followed. Such negotiations would

naturally include an assessment of the strengths and weaknesses of the caseas a collective action. Here, too, the subject of arbitration apparently never

came up.

Instead, the Defendants held the arbitration issue in reserve. They knew

very well, however, that the arbitration agreements existed and that they would

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arbitration agreements and therefore would not be part of any certified class.

A similar scenario played out in relation to the issue of equitable tolling.

The issue of equitable tolling of putative class members’ claims was first raised

in a motion by plaintiff filed on June 30, 2012. (DE 35). Defendants’ response

had much to say about the status of those putative class members, but saidnothing about their having signed arbitration agreements. In October 2014, itturned out that the now-revealed arbitration provisions would be relevant to

Plaintiffs motions for equitable tolling. (See Tr. of Conference, DE 67, passim.

See also renewed motion for equitable tolling, DE 70; response, DE 75).14

I agree with Magistrate Judge Hammer that an actual motion to compel

arbitration was not yet ripe at that point. I also agree with Judge Hammer,however, that Defendants behaved opportunistically. (See Tr. of conference, DE

67 pp. 18:24—25, 19:1—2 (“You can’t have it both ways where there’s nomention made of the arbitration provision until three years into a case, and

now it’s being used as both a sword and a shield.”)).

In short, from 2011 to the fall of 2014, Defendants never raised the

arbitration agreements— not in their motions to dismiss, (DE 9, 28), not in

their previous response to Plaintiffs motion for equitable tolling, (DE 35), not intheir answer to the amended complaint, (DE 49), not in their motion for

judgment on the pleadings, (DE 52), and not in any letters or discussions with

14 Plaintiff suggested, among other things, that the (unrevealed) arbitration

agreements, entered after the filing of this collective action, would have led the

potential opt-ins to believe they could not opt to assert their rights in federal court.

This, in plaintiffs view, interfered with those employees’ tights in the collective action

and required invalidation of the arbitration agreements. (DE 70) Magistrate Judge

Hammer denied the motion without prejudice, finding that it would more appropriatelybe resolved after discovery, in the context of the anticipated motion for classcertification. (DE 108)

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This factor weighs significantly against the Defendants.

iii. Extent to which Defendants contested the

merits

Coming back to factor two, I consider the extent to which the Defendants

contested the merits of the Plaintiffs claim. Here, the Defendants have filed a

motion to dismiss, (DE 9), a second motion to dismiss, (DE 28), a Third Circuitappeal (DE 47), a motion for judgment on the pleadings (DE 52), and a third

“motion to dismiss” (considered a motion for judgment on the pleadings) (DE

127, 152).

In effect, Defendants have required the Plaintiff to extend “substantial

amounts of time, effort, and money in prosecuting” issues that wouldpotentially have been mooted or transformed by the timely disclosure of thearbitration agreements. Nino, 609 F.3d at 212 (quoting Hoxworth, 980 F.2d at926). Defendants may assert that they were merely filing proper motions and

that they bear no responsibility for the late appearance of opt-ins. Defendants

did, however, set up additional procedural obstacles to the participation of optins, while back-pocketing the arbitration issue. (DE 162). Courts have found

waiver based on much less substantial motion practice than this. See e.g.,

Nino, 609 F.3d at 210—11 (no motions on the merits); Honvorth, 980 F.2d at

925—26 (motion to dismiss for failure to state a claim, and opposition to motion

for class certification).

This factor weighs against Defendants.

iv. Extent of non-merits motion practice

Moving to the fourth factor, I consider the extent to which Defendants

engaged in non-merits motion practice. First, as discussed supra, Defendants

appealed Magistrate Judge Hammer’s discovery order that the Defendants

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certification. (DE 184). For the very substantial delays in this action, there is

surely blame to go around. But I focus here on the Defendants’ actions, whichtended to string out issues seriatim and delay the notification of potential optins.

I do not say that Defendants’ conduct has been abusive or extreme. They

have not engaged in, for example, dilatory motions to disqualify counsel andthe like. Compare Hoxworth, 980 F.2d at 925—26 (finding waiver when the partyfiled motions to disqualify counsel and stay discovery, and opposed motions tocompel discovery), with Paicko, 372 F.3d at 598 (finding no waiver in theabsence of any non-merits motions). Nevertheless, the fourth factor “is not anabsolute requirement,” and the Third Circuit has found waiver “even where no

significant non-merits motion practice occurred.” In re Phamiacy Ben.

Managers Antitrust Lit., 700 F.3d at 119.

On balance, this factor weighs somewhat against Defendants, although I

would not find it dispositive in isolation.

v. Acquiescence to pre-trial orders

Continuing to the fifth factor, I consider the party’s acquiescence in pre

trial orders. Generally, cases in which the Third Circuit has found no waiver,the cases “were not litigated long enough to feature any acquiescence inpretrial orders.” Id. (citing Paine Webber, 61 F.3d at 1065; Gaulik, 526 F.2d at783—84. But see Wood, 207 F.3d at 680 (finding no waiver even where the courthad already filed a joint discovery plan). The Third Circuit has consideredorders setting hearings on motions to dismiss and instructions regarding

discovery plans to weigh against the moving party on this factor. Id. at 119—

120. Here, the Defendants, without raising the bar of arbitration, have litigated

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The sixth and final factor concerns the extent to which the parties have

engaged in discovery. In the recent past, it was uniform that cases finding

waiver featured “significant discovery activity in the district court.” In re

Pharmacy Ben. Managers Antitrust Lit., 700 F.Sd at 120; see also, e.g.,

Hoxworth, 980 F.2d at 925—26 (finding waiver when the parties engaged in

several depositions, answered several discovery requests, and litigated

discovery disputes). That being said, the Third Circuit has found waiver even

when no discovery at all had taken place. In re Pharmacy Ben. Managers

Antitrust Litig., 700 F.3d at 121.

Here, discovery has been meaningful. (See DE 124, 126, 141 (orders

compelling discovery)). Defendants have resisted discovery—for example,

appealing Magistrate Judge Hammer’s discretionary order requiring them to

supply basic information, such as the names and contact information for the

potential opt-ins, see supra. (DE 182, 184). Defendants also sought and were

granted leave to depose three plaintiffs in advance of certification. (DE 184).

Thus, this final factor also weighs against Defendants, who knowingly required

the Plaintiff (and the Court) to devote time, effort and money to discovery in

advance of certification.

vii. Weighing the factors

In sum, weighing all of the factors, I reach the conclusion that

Defendants have waived the right to compel arbitration. The “purpose behind

arbitration itself’ is to “streamline the proceedings, lower costs, and conserve

private and judicial resources,” Nino, 609 F.3d at 209, a goal which has been

frustrated here. Having found waiver, I do not reach the parties’ arguments on

the enforceability of the terms of the arbitration agreements.

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Defendants move for summary judgment, arguing that the opt-ins

claims are wholly or partially time-barred. (DE 223). In response, Plaintiff hasfiled an opposition and cross-moved for equitable tolling for all current and

putative opt-in members from May 6, 2011, the date the Defendants filed their

first motion to dismiss, until the date the Court rules on the Plaintiffs motion

for conditional certification. (DE 224). In support, Plaintiff asserts that the

delay was caused by Defendants’ failed motion practice and the fact that

Defendants actively misled Plaintiff regarding the arbitration agreements. Albeit

for different reasons, I will in part grant Plaintiffs motion for equitable tolling.

i. The FLSA statute of limitations

An ELSA claim must be commenced within two years after accrual15

(three years in the case of a willful violation). 29 U.S.C. § 255(a). When a

named plaintiff files the collective action complaint, that plaintiffs claim is

deemed commenced. Depalma a Scotts Co. LLC, Civ. No. 13-7740, 2017 WL

1243134, at *2 (D.N.J. Jan. 20, 2017). However, an opt-in plaintiffs claim is

deemed commenced only later, when her written consent is filed. Id. (citing 29

U.S.C. § 256(a)-(b)). Thus, if a potential opt-in plaintiff has not received notice

of an action, that person may be unaware of her right to halt the running of the

statute of limitations by opting in. Thus the statute of limitations, unless tolled,

may operate to bar such a person’s claim.

15 A claim for unpaid overtime accrues each and every time the employer fails to

pay the required compensation for any workweek at the regular pay day for the period

in which the workweek ends. 29 C.F.R. § 790.2 1(b); Henchy v. City ofAbsecon, 148 F.

Supp. 2d 435, 437 (D.N.J. 2001).

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interrupt’ it.” Id. (internal citations omitted). Id. One of those judge-made rules,

equitable tolling, “can rescue a claim othenvise barred as untimely by a statute

of limitations when a plaintiff has ‘been prevented from filing in a timely

manner due to sufficiently inequitable circumstances.’” Santos v. United

States, 559 F.3d 189, 198 (3d Cir. 2009) (citing Seitzingerv. ReathngHosp. &

Med. Cti-. 165 F.3d 236, 240 (3d Cir. 1999)).

ii. Application of statute of limitations

Here, the seven current opt-in Plaintiffs all filed their notices of consent

on December 28, 2017. (DSOF ¶ 13, 198—204). That implies that (for a violation

not found to be willful) their claims may encompass no more than the two-year

limitations period—i.a, they will be barred as to claims accruing before

December 28, 2015.16 See 29 U.S.C. § 255. The claims of five opt-in Plaintiffs,

Sentman, Galida, Jones, McCourt, and Haines, fall outside the limitations

period; they all ended their employment before December 2014. (See DSOF ¶J

13—17, 19) (listing employment dates).’7 The two remaining opt-in Plaintiffs,

Arraya and Peitrvka, remained employed within the limitations period, but

some portion of their claims may have arisen before December 28, 2015. (Id. ¶)

20, 23) (listing Arraya as having been employed for Defendants until December

16 In the case of a willful violation, the claims might date back an additional year

to December 28, 2024, see 29 U.S.C. § 255. Plaintiff appears to concede, however, that

the two-year statute applies, and the limitation date is December 28, 2015. (DE 224-1)

(“Unless the statute of limitations is tolled, the only employee who could obtain FLSA

relief is plaintiff Patricia Thompson. The eight other opt-in plaintiffs now on file would

get nothing.”).

‘7 Defendants argue that opt-in plaintiff Arraya, who worked for the company from

January 2008 to December 2016, and opt-in Peitnjka, who worked for the company

from May 2014 to February 2017, may have timely claims, but that any such claims

should be dismissed because they were properly paid overtime during that period. (DE

223 pp. 3. 8, 21). 1 will return to this argument after considering equitable tolling.

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Under the usual rules of equitable tolling, a plaintiff must establish two

elements: (1) “that he has been pursuing his rights diligently, and (2) that some

extraordinary circumstance stood in his way.” Pace v. DiGuilielmo, 554 U.S.

408. 418 (2005). While equitable tolling is an “extraordinary” remedy to be

used “only sparingly,” Santos, at 197, tolling relief has been found proper in

several situations. See, e.g.. Seitzinger, 165 F.3d at 242 (tolling may be

appropriate in some instances of attorney neglect, “when a claimant received

inadequate notice of her right to file suit, [or] where a motion for appointment

of counsel is pending”).

There are three classic, but nonexclusive, scenarios in which the inequity

of enforcing a statute of limitations against an unwary plaintiff is so obvious

that tolling may be appropriate: “(1) where the defendant has actively misled

the plaintiff respecting the plaintiffs cause of action; (2) where the plaintiff in

some extraordinary way has been prevented from asserting his or her rights; or

(3) where the plaintiff has timely asserted his or her rights mistakenly in the

wrong forum.” Id. (quoting Hedges v. United, 404 F.3d 744, 751 (3d Cir. 2005));

see also Santos, 559 F.3d at 197; Jones v. Morton, 195 F.3d 153, 159 (3d Cir.

1999). Equity. however, is flexible, and the list is not exhaustive. Oshiver v.

Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1387 (3d Cir. 1994) (“We

have instructed that there are three principal, though not exclusive, situations in

which equitable tolling may be appropriate: [reciting the three situationsj.”)

(emphasis added). Whether a statute of limitations should be tolled requires a

case-specific inquiry into what is fair and in the interests of justice. See Miller

v. New Jersey State Dept of Corn, 145 F.3d 616, 618 (3d Cir. 1988) (equitable

tolling is proper when “the principles of equity would make [the] rigid

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iv. Application of equitable tolling

I consider the facts of this case as a whole, in light of equity and the

interests ofjustice. I am presented with a plaintiff who did not file for

conditional certification until six years and nine months after the complaint

was initially filed. (DE 196). It was just two weeks after the Plaintiff filed for

conditional certification, however, that the opt-in Plaintiffs joined in. (DE 198—

204). Defendants, with cause, point out that a great deal of time has elapsed

since the action was first filed. In the Court’s experience, conditional

certification in the general run of FLSA cases has not been a cumbersome or

protracted process. Defendants, however, have aggressively defended the case.

They have attacked the case of the named plaintiff via multiple motions to

dismiss, and it required a lengthy sojourn in the Third Circuit to reverse Judge

Cavanaugh’s grant of the second of those motions. The Defendants have

thrown up procedural roadblocks to conditional certification, part of which, as

detailed above, involved the withholding of information about putative class

members’ arbitration agreements.

Plaintiff is not without fault here. There is reason to question whether

counsel pursued the case with maximum diligence. At least one motion—apettifogging application to “strike” certain of Defendants’ motions because they

were brought on a standalone basis, rather than as cross-motions—had the

effect, if not the intent, of needless delay. I would also be remiss if I did not

shoulder some of the blame on behalf of this overburdened district judge and

his predecessor. None of these considerations, however, persuade me thatinnocent third parties, current or potential opt-ins, should be denied equitable

tolling and their day in court.

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[Tihe picture that emerges is a case delayed somewhat by

unavoidable transfers among district judges and magistrate; an

early three month delay at Scotts request; commencement of pre

certification discovery without any evident dilatory conduct; the

prompt filing of a motion for conditional certification two months

after the close of that discovery; and, nine months later, the

plaintiffs filing of a motion for equitable tolling as the statute of

limitations loomed. Nothing about that procedural history suggests

that p].aintiffs have prosecuted this case with a lack of diligence or

without an eye towards protecting the rights of the opt-in plaintiffs.

Depalma, 2017 WL 1243134 at *7

Here, as in Depalma, I trace the delay to several sources. As already

outlined above, the Defendants have engaged in substantial pre-certification

motion practice. (See e.g., DE 9, 28, 52, 162). Two motions to dismiss occupied

the docket for over a year. (DE 9, 39). An appeal to the Third Circuit occupied

another year and a half. (DE 40, 44) On remand, after the case was reassigned

to me and to a new Magistrate Judge, neither of us familiar with the case. The

Plaintiff attempted without success to obtain equitable tolling, but the motion

was found to be premature. (DE 35). A third motion directed to the pleadings

ensued. (DE 52, 106). During that same period, the Plaintiff (having learned of

the arbitration agreements in the interim) filed another motion to toll the

statute of limitations. (DE 70, 108). Later, while the parties were engaged in

pre-certification discovery (see e.g., DE p. 14: 1—16), the Defendants engaged in

additional motion practice that delayed Plaintiff’s ability to file for conditional

certification. (See e.g., Appeal of Magistrate Judge Hammer’s Discovery Order,

DE 162).

Further, I note that the Defendants waited three years and six months

before even mentioning that the opt-ins may be subject to an arbitration

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present purposes, I will not consider these unproven accusations at the present

time.

On the whole, I will not blame the entirety of this mess on the

Defendants; judicial error played a part, as did the Plaintiff’s pokiness in filing

its motion for conditional certification. Plaintiff has acted perhaps not perfectly,

but diligently enough, and has attempted to preserve this tolling issue since

fourteen months after the action was first filed. (DE 35). Viewing the history as

a whole, I find that it is in the interest ofjustice to grant Plaintiffs motion forequitable tolling for the opt-in plaintiffs.

I will therefore grant Plaintiff’s motion for equitable tolling as to the optins who have already joined this action. The period of tolling shall be deemed to

begin as of July 30, 2012, the date that the Plaintiff first filed a motion for

equitable tolling. (DE 35). That display of initiative was derailed by rulings of

the Court to the effect that the motion was premature, but I think it was

sufficient to establish an equitable date for tolling to commence. It would not

be equitable, I find, to rule that a tolling motion was too early until it was too

late. 18

[8 Plaintiff seeks equitable tolling for the period beginning May 6, 2011, the date

that Defendants first filed their motion to dismiss. (DE 224; see also DE 9). (Plaintiff

also suggests her brief that tolling should being as of the date she filed the originalcomplaint.) (DE 224-1, p. 19). Defendants, on the other hand, argue that equitable

tolling should date only from December 12, 2017, when Plaintiff first filed forconditional certification. (DE 223 p. 17; see also DE 196). Plaintiffs counsel

“intentionally and consciously chose to wait to file her motion [for conditional

certiflcationj, focusing instead on collection claims by time and type over the years.”

(DE 223, p. 18). I find insufficient indication that Plaintiff or her counsel acted so

improperly or inequitably as to defeat tolling.

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likely, that will occur upon conditional certification (if granted) and areasonable period thereafter for notification and submission of opt-in claims.

3. Miscellaneous arguments

First, in tidbits sprinkled throughout their briefing, Defendants argue

that Arraya’s claim in particular must be dismissed. (DE 223, pp. 3, 8, n. 9,21). Defendants’ argument, however, is addressed to the more recent claimsand requires the assumption that equitable tolling would not apply. (See id. p.21). I therefore deny summary judgment as to opt-in Arraya.

Second, as to opt-ins Pietryka and McCourt, Defendants argue that

overtime was properly paid during the limitations period. (Id. pp. 27—28). Again,the application of equitable tolling subverts that argument, and I will deny

summary judgment on this basis.

III. CONCLUSION

For the reasons set forth above, Defendants’ motion (DE 223) for

summary judgment and to compel arbitration is DENIED.

Plaintiffs motion for equitable tolling (DE 224) is GRANTED in part. The

statute of limitations is tolled for current opt-ins starting from July 30, 2012,

until further order of the court. It is othenvise denied.

An appropriate order follows.

Dated: June 26, 2019

United States District Jui

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