Court Opinion

ID: 4567698
Source: CourtListenerOpinion
Date Created: 2020-09-22 18:00:19.459446+00
Date Added: 2024-06-11T13:24:55.469937
License: Public Domain

NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                                ___________

                                      No. 19-2728
                                      __________

                                 PATRICIA THOMPSON,

                                           v.

    REAL ESTATE MORTGAGE NETWORK, INC.; SECURITY ATLANTIC
  MORTGAGE COMPANY, INC.; NOEL CHAPMAN, an Individual and; SAMUEL
                    LAMPARELLO, an Individual,
                                         Appellants
               ____________________________________

                   On Appeal from the United States District Court
                            for the District of New Jersey
                              (D.C. No. 2:11-cv-01494)
                     District Judge: Honorable Kevin McNulty
                    ____________________________________

                                  Argued: May 18, 2020

                Before: McKEE, BIBAS, and COWEN, Circuit Judges

                         (Opinion filed: September 22, 2020)
                                    ___________

Ari Karen, Esq.
4800 Montgomery Lane, 8th Floor
Bethesda, MD 20814

Katharine Thomas Batista, Esq.                  [ARGUED]
Offit Kurman
1801 Market Street
Ten Penn Center
Suite 2300
Philadelphia, PA 19103
      Counsel for Appellants

Mitchell A. Schley, Esq.                          [ARGUED]
Suite 3000
197 Route 18
East Brunswick, NJ 08816

Judith L. Spanier, Esq.
Abbey Spanier
212 East 39th Street
New York, NY 10016
       Counsel for Appellees
                                       ___________

                                        OPINION*
                                       ___________
McKEE, Circuit Judge.

       The defendant-appellants, Real Estate Mortgage Network, et al. (“REMN”),

appeal the district court’s denial of their Motion to Compel Arbitration. They argue the

district court erred in holding that REMN waived its right to arbitrate. For the reasons set

forth below, we hold that REMN is judicially estopped from relying on the arbitration

agreement at issue here. We will therefore affirm the order of the district court.

       Judicial estoppel is a discretionary doctrine that “prevents a party from prevailing

in one phase of the case on an argument and then relying on a contradictory argument to

prevail in another phase” of the case.1 It does not prevent the assertion of all inconsistent

*
  This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
1
  New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (quoting Pegram v. Herdrich, 530
U.S. 211, 227 n. 8 (2000)).

                                              2
positions but “is designed to prevent litigants from playing fast and loose with the

courts.”2 In deciding whether a position is unacceptably inconsistent, we start with “[t]he

basic principle [that]…a party should not be allowed to gain an advantage by litigation on

one theory, and then seek an inconsistent advantage by pursuing and incompatible

theory.”3 We also consider “whether the party seeking to assert an inconsistent position

would derive an unfair advantage or impose an unfair detriment on the opposing party if

not estopped.”4 Both inconsistent legal theories and detriment to the opposing party are

present here.

       REMN did not raise the issue of arbitration until September 2014, three and a half

years after the complaint was filed. It waited that long despite knowing the collective

nature of the suit and that potential plaintiffs may be covered by arbitration agreements.5

REMN’s failure to disclose this possible defense suggested that the arbitration

agreements were not applicable or that they would not be asserted as a defense.

Ultimately, REMN did not file the motion to compel arbitration until 2018, seven years

into this litigation.

2
  Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (3d Cir. 1996)
(internal citation omitted).
3
  Id. (citing 18 Charles A. Wright, Arthur R. Miller, & Edward H. Cooper, Federal
Practice and Procedure § 4477 (1981)).
4
  New Hampshire v. Maine, 532 U.S. at 751; see also Morgan v. Gay, 471 F.3d 469, 477
n. 9 (3d Cir. 2006).
5
  Thompson v. Real Estate Mortgage Network, Inc., No. 11-1494, 2019 WL 2636307 (D.
N.J. June 26, 2019), at *8 (“This action is and always was conceived of as a collective
action.”); see also id. at *2, *9.

                                             3
       The delay is significant. In addition, REMN claimed that potential putative class

members would be able to pursue their claims in court in its motion opposing tolling the

FLSA statute of limitations. REMN argued in the brief it filed with the court: “[t]he

filing of motions to dismiss do not preclude any potential member of the putative class

from opting into this lawsuit prior to a decision on class certification or from initiating

their own lawsuit alleging claims under the FLSA.”6 REMN made that assertion despite

the existence of the arbitration clause in the post-restructuring agreements.

       REMN now argues the motion to compel arbitration was timely because they

could not have filed it before late 2017.7 REMN had the opportunity to disclose the

arbitration agreements both in their motion to dismiss the amended complaint—filed in

2012 after restructuring their employee agreements—and in the mediation sessions that

followed shortly after.8 Moreover, we are left with the clear conflict with the assertions

REMN made in opposing Thompson’s motion to toll the FLSA statute of limitations.

6
  Defendants’ Opposition to Plaintiff’s Motion to Toll the Running of the FLSA Statute
of Limitations Period, at 5–6, Thompson v. Real Estate Mortgage Network, Inc., No. 11-
1494, 2019 WL 2636307 (D. N.J. Sept. 4, 2012).
7
  Appellants’ Br. 6.
8
  Thompson, 2019 WL 2636307, at *8 (“[T]he arbitration agreements existed and [the
defendants knew] that they would be asserting them in opposition to class certification.”)
See also id. at *9 (“I agree…that an actual motion to compel arbitration was not yet ripe
at that point.…I also agree…that Defendants behaved opportunistically.”).

                                              4
       REMN’s failure to rely upon the arbitration clause has cost Thompson extensive

“time, effort, and money.”9 It has also prevented Thompson from making an informed

response to REMN’s settlement offers; two of which were rejected.10

       Inasmuch as REMN’s litigation history here exemplifies playing “fast and loose

with the court[],”11 we will affirm the district court’s refusal to compel arbitration.

9
  Id. at *9 (The issues before the court could have “been mooted or transformed by the
timely disclosure.”) (internal citation omitted).
10
   Appellee’s Br. 20.
11
   Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (3d Cir.
1996) (internal citation omitted).

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