Droesch v. Wells Fargo Bank, N.A.

Opinion

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 DENISE DROESCH, et al., Case No. 20-cv-06751-JSC

9 Plaintiffs, ORDER RE: WELLS FARGO’S 10 v. MOTION FOR RECONSIDERATION

11 WELLS FARGO BANK, N.A., Re: Dkt. No. 47 Defendant. 12

13 14 Plaintiffs Denise Droesch and Shakara Thompson, on behalf of themselves and all others 15 similarly situated, filed this Fair Labor Standards Act (FLSA) collective action against their 16 former employer Wells Fargo Bank N.A.1 Wells Fargo moved to compel arbitration of Plaintiff 17 Droesch and certain Opt-in Plaintiffs’ claims, which the Court granted. (Dkt. No. 40.) The Court 18 also granted Plaintiff Thompson’s motion for conditional certification under Section 216(b) of the 19 FLSA. (Dkt. No. 42.) Wells Fargo thereafter requested leave to file a motion for reconsideration 20 of the portion of the Court’s conditional certification order which required notice of the FLSA 21 action to individuals who signed arbitration agreements. (Dkt. No. 45.) The Court granted Wells 22 Fargo’s motion for leave to file a motion for reconsideration. (Dkt. No. 46.) The motion is now 23 fully briefed. (Dkt. Nos. 47, 48.) After carefully considering the parties’ briefs and the relevant 24 legal authority, the Court concludes that oral argument is unnecessary, see Civ. L.R. 7-1(b), and 25 GRANTS the motion for reconsideration in part. Wells Fargo will be given the opportunity to 26 show by a preponderance of the evidence that employees signed valid and enforceable arbitration 27 1 agreements. 2 DISCUSSION 3 A motion for reconsideration is an “extraordinary remedy, to be used sparingly in the 4 interests of finality and conservation of judicial resources.” Kona Enters. v. Estate of Bishop, 229 5 F.3d 877, 890 (9th Cir. 2000). Thus, “a motion for reconsideration should not be granted, absent 6 highly unusual circumstances, unless the district court is presented with newly discovered 7 evidence, committed clear error, or if there is an intervening change in the controlling law.” 389 8 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999). Under Civil Local Rule 7-9(b), 9 a party seeking reconsideration of an interlocutory order must show one of the following: (1) “a 10 material difference in fact or law exists from that which was presented to the Court before entry of 11 the interlocutory order for which reconsideration is sought”; (2) “[t]he emergence of new material 12 facts or a change of law occurring after the time of such order; or (3) [a] manifest failure by the 13 Court to consider material facts or dispositive legal arguments which were presented to the Court 14 before such interlocutory order.” N.D. Cal. Civ. L.R. 7-9(b).2 In addition, a district court retains 15 jurisdiction to “reconsider its prior rulings so long as it retains jurisdiction over the case.” United 16 States v. Smith, 389 F.3d 944, 948 (9th Cir. 2004) (citing City of Los Angeles v. Santa Monica 17 Baykeeper, 254 F.3d 882, 888 (9th Cir. 2001)). 18 Wells Fargo moves for reconsideration of the portion of the Court’s FLSA conditional 19 certification order which deferred ruling on whether employees who had signed arbitration 20 agreements with Wells Fargo should be excluded from the conditional certification order. (Dkt. 21 No. 42 at 8.) In doing so, the Court concluded that the question of enforceability of arbitration 22 agreements is better reserved for step two FLSA certification and noted that this was consistent 23 with the approach of other courts in this District. (Id. at 8 (citing Herrera v. EOS IT Mgmt. Sols., 24 Inc., No. 20-CV-01093-LHK, 2020 WL 7342709, at *9 (N.D. Cal. Dec. 14, 2020) (collecting 25 cases))). 26 2 Plaintiffs’ argument that Local Rule 7-9 does not apply because it deals with interlocutory orders 27 is misplaced. Plaintiffs are conflating an interlocutory order—any order before final judgment— 1 Wells Fargo argues that the Court erred in doing so because here—unlike in Herrera and 2 the other cases—the Court has already ruled on the enforceability of the at-issue arbitration 3 agreement. Wells Fargo insists that its records show that of the 34,000 current and former 4 employees who fall within the scope of the Court’s Conditional Certification Order, 27,000 have 5 signed binding arbitration agreements. Wells Fargo offers a declaration from Alesha Lusk-Herron 6 who attests that since December 11, 2015, Wells Fargo has required employees to sign arbitration 7 agreements as a condition of employment and that the arbitration agreements have remained 8 substantially the same.3 (Dkt. No. 47-2 at ¶¶ 3-5.) Under these circumstances, Wells Fargo 9 argues that sending notice to these 27,000 individuals would result in (1) confusion and frustration 10 among those who receive the notice, (2) administrative burdens on the Court to add thousands of 11 individuals who claims must then be stayed; and (3) “manifest injustice” to Wells Fargo by 12 stirring up litigation. (Dkt. No. 47 at 8.) 13 Plaintiffs counter that this evidence is not new and that Wells Fargo could have presented 14 it with its opposition to the certification motion. Plaintiffs also suggest that the Court lacks the 15 ability to reconsider its prior ruling. (Dkt. No. 48 at 13.) As to the latter point, not so. The Court 16 retains inherent authority to modify the FLSA conditional certification order and reconsider its 17 prior rulings. Campbell v. City of Los Angeles, 903 F.3d 1090, 1110 (9th Cir. 2018) (“[T]he 18 proper means of managing a collective action ... is largely a question of ‘case management,’ and 19 thus a subject of substantial judicial discretion.”) (internal citations omitted); see also City of Los 20 Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 888 (9th Cir. 2001) (holding that the “district 21 court[ ha]s power to reconsider its own interlocutory order provided that the district court has not 22 been divested of jurisdiction over the order”). 23 The Court thus turns to the merits of Wells Fargo’s arguments. While the Ninth Circuit 24 25 3 The Court will not consider Plaintiffs’ separately filed objections to the Declaration of Ms. Luck- Herron or the Declaration of Becky Sanchez as these separate filings violate Civil Local Rule 7- 26 3(c), which requires that “[a]ny evidentiary and procedural objections to the motion . . . be contained within the [opposition] brief or memorandum.” N.D. Cal. Civ. L.R. 7-3(a). “Courts in 27 this district regularly strike separately-filed evidentiary objections and responses for violating 1 has not had the opportunity to consider whether FLSA notice should be provided to individuals 2 who signed arbitration agreements, the Seventh and the Fifth Circuits have considered this issue 3 and both have concluded that it is not appropriate to send notice to employees with valid 4 arbitration agreements. See Bigger v. Facebook, Inc., 947 F.3d 1043, 1050 (7th Cir. 2020) (“we 5 conclude that a court may not authorize notice to individuals whom the court has been shown 6 entered mutual arbitration agreements waiving their right to join the action.”); In re JPMorgan 7 Chase & Co., 916 F.3d 494, 501 (5th Cir. 2019) (“we hold that district courts may not send notice 8 to an employee with a valid arbitration agreement unless the record shows that nothing in the 9 agreement would prohibit that employee from participating in the collective action”). In both 10 Bigger and JPMorgan, the courts held that the employer must be provided the opportunity to show 11 that the employees entered into a valid arbitration agreement. Bigger, 947 F.3d at 1050 (“if a 12 plaintiff contests [the arbitration agreement], then—before authorizing notice to the alleged 13 ‘arbitration employees’—the court must permit the parties to submit additional evidence on the 14 agreements’ existence and validity. The employer seeking to exclude employees from receiving 15 notice has the burden to show, by a preponderance of the evidence, the existence of a valid 16 arbitration agreement for each employee it seeks to exclude from receiving notice.”); JP Morgan, 17 916 F.3d at 503 (“The court should permit submission of additional evidence, carefully limited to 18 the disputed facts, at the conditional-certification stage. Where a preponderance of the evidence 19 shows that the employee has entered into a valid arbitration agreement, it is error for a district 20 court to order notice to be sent to that employee as part of any sort of certification.”). 21 A similar pragmatic approach is warranted here. First, in opposing Wells Fargo’s motion 22 to compel arbitration, Plaintiffs’ arguments—which the Court rejected—related entirely to the 23 alleged procedural and substantive unconscionability of the arbitration agreement; that is, 24 Plaintiffs did not argue that there was something beyond the agreement itself or unique to 25 Plaintiffs which precluded enforcement of the agreements. (Dkt. No. 30.) Nor do Plaintiffs 26 suggest in their motion for reconsideration opposition that there might be individual issues which 27 preclude enforcement of the nearly identical arbitration agreements allegedly signed by these 1 Second, that Wells Fargo moved to compel arbitration early—rather than after the FLSA 2 class had been conditionally certified—weighs in favor of reconsideration of the scope of notice. 3 Wells Fargo moved to compel arbitration the day before Plaintiffs moved for conditional 4 certification and the Court set both motions for hearing the same day. (Dkt. Nos. 28, 29, 33.) The 5 Court ultimately vacated the hearing and granted both motions on the same day. (Dkt Nos. 40, 6 41.) The Court thus will not fault Wells Fargo—as Plaintiffs suggest it should—for not raising in 7 its opposition to the motion for conditional certification the issues that it now raises. At the time 8 Wells Fargo filed its opposition, the Court had not ruled on the motion to compel arbitration. That 9 the Court was simultaneously considering the arbitration question and the conditional certification 10 question distinguishes this case from the cases upon which Plaintiff relies—and those the Court 11 cited in its Conditional Certification Order. See, e.g., Herrera v. EOS IT Mgmt. Sols., Inc., No. 12 20-CV-01093-LHK, 2020 WL 7342709, at *10 (N.D. Cal. Dec. 14, 2020) (reserving question of 13 whether notice to individuals with arbitration agreements was appropriate where defendants had 14 not moved to compel arbitration); Conde v. Open Door Mktg., LLC, 223 F. Supp. 3d 949, 969 15 (N.D. Cal. 2017) (same). 16 Third, given that the Court has now ruled on the enforceability of the arbitration 17 agreement, it would make little sense to provide notice to 27,000 individuals whose claims appear 18 barred from being prosecuted here. Bigger, 947 F.3d at 1050 (“In the specific situation where the 19 court has been shown certain individuals may not join the action, it may be inefficient to send 20 notice to those people—because the notice may serve only to prompt futile attempts at joinder or 21 the assertion of claims outside the collective proceeding.”). 22 Accordingly, the Court will allow Wells Fargo the opportunity to present evidence in 23 support of its argument that 27,000 of the employees in the collective action signed valid and 24 enforceable arbitration agreements. In accordance with Wells Fargo’s offer to allow Plaintiffs to 25 propound discovery (Dkt. No. 47 at 15), and in the interests of fairness, Plaintiffs shall be 26 permitted obtain limited discovery—including documents and a Rule 30(b)(6) deposition— 27 regarding this issue. The parties shall meet and confer to develop a discovery plan. The parties 1 the interim or whether a tolling agreement can be reached so that the appropriate class members 2 are not prejudiced by any delay in notice. The parties shall file a joint statement regarding their 3 meet and confer efforts and their proposed joint or competing plan(s) for discovery and notice by 4 || July 22, 2021. The Court sets a video Status Conference for July 29, 2021 at 1:30 p.m. 5 IT IS SO ORDERED. 6 || Dated: July 6, 2021 . Sut g net ACQUELINE SCOTT CORL 9 United States Magistrate Judge 10 11 12

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