Patterson v. Nine Energy Serv., LLC
Opinion
James O. Browning, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court on the Plaintiff's Reconsideration Motion, filed September 15, 2018 (Doc. 25) ("Reconsideration Motion"). The Court held a hearing on October 25, 2018. The primary issues are: (i) whether the Court committed manifest legal error in its Memorandum Opinion and Order,
*1075MOO at 20,
FACTUAL BACKGROUND
The Court recites the factual background as stated in its MOO, as neither party has objected to the Court's recitation of facts in the MOO. The footnotes associated with the quoted text are also quoted in full from the MOO.
Patterson worked for Nine Energy, an oilfield services company, from March to October of 2017. See First Amended Class Action Complaint ¶ 5, at 2, filed November 13, 2017 (Doc. 3) ("Amended Complaint"). His "primary job duty consisted of operating pressure control equipment and tools." Amended Complaint ¶ 15, at 3. Nine Energy first offered Patterson employment via letter on February 28, 2017. See Letter from Sally Haynes, Human Resources Manager, to Ryan Patterson at 1-2, (dated February 28, 2017), filed January 3, 2018 (Doc. 14-2) ("Offer Letter"). Patterson's Offer Letter states that his employment is contingent upon an enumerated list of items, including drug testing, physical capacity testing, and other things. See Offer Letter at 1. The Offer Letter does not mention arbitration. See Offer Letter at 1-2. Patterson accepted the employment offer by signing the Offer Letter on March 1, 2017. See Offer Letter at 2. Patterson did not begin work at Nine Energy until March 20, 2017. See Supplemental Declaration of Sharon Warren ¶ 7, at 2 (dated January 3, 2018), filed January 3, 2018 (Doc. 14-1).
On March 1, 2017 -- the same day that Patterson signed the Offer Letter -- he also signed the Confidentiality and Dispute Resolution Agreement at 6, filed December 6, 2017 (Doc. 5-2) ("Arbitration Agreement"). The Arbitration Agreement states that "the Company and the Employee agree to submit exclusively to final and binding arbitration any and all Disputes as defined herein in accordance with the following understanding and terms." Arbitration Agreement at 3. The Arbitration Agreement defines the word "dispute" as
all legal and equitable claims, demands, disputes, controversies, issues, and disagreements, of whatever nature or kind, whether in contract, tort, under statute or regulation, or any other law or source of legal obligation, including but not limited to those relating to, concerning, or arising out of this Agreement; the interpretation or subject matter of this Agreement or program ... wages or other compensation received by or owed to any Employee, including minimum wage and overtime pay.
Arbitration Agreement at 2. The Arbitration Agreement continues:
Each Dispute shall be arbitrated on an individual basis. The parties forego and waive any right to join or consolidate their Disputes or claims with those of any other employee ... or to assert any Disputes or claims in arbitration as a representative or as a member of a class.... Neither the Company nor any employee or applicant for employment may pursue any Dispute or claim on a class action, collective action, or consolidated basis or in a representative capacity on behalf of other individuals, or participate *1076as a class or collective action member in such a proceeding.... The Parties waive any right to a jury trial and to pursue or participate in class or collective actions with respect to Disputes that are subject of this Agreement and for which a jury trial, class action, and collective action would otherwise be available.
Arbitration Agreement at 3. The Arbitration Agreement contains several other important provisions. See Arbitration Agreement at 3-4. One states that "arbitration shall be commenced by either Party filing a demand for arbitration with the AAA[1 ] within 60 days after such Dispute has arisen." Arbitration Agreement at 3. Another notes:
Notwithstanding the provisions of this Agreement, the Company may bring an action in any court of competent jurisdiction for injunctive relief to enforce the Employee's obligations with respect to the confidentiality and protection of trade secrets and other non-public information belonging to the Company, or with respect to any non-competition, non-solicitation, or any other restrictive covenant provisions in any separate agreement between the Company and the Employee.
Arbitration Agreement at 4. Still another provision states: "The Parties acknowledge and agree that this Agreement and the Parties' employment relationship affect and involve interstate commerce, and that this Agreement is governed by the Federal Arbitration Act."2 Arbitration Agreement at 5. Finally, the Arbitration Agreement contains an integration clause, stating:
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James O. Browning, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court on the Plaintiff's Reconsideration Motion, filed September 15, 2018 (Doc. 25) ("Reconsideration Motion"). The Court held a hearing on October 25, 2018. The primary issues are: (i) whether the Court committed manifest legal error in its Memorandum Opinion and Order,
*1075MOO at 20,
FACTUAL BACKGROUND
The Court recites the factual background as stated in its MOO, as neither party has objected to the Court's recitation of facts in the MOO. The footnotes associated with the quoted text are also quoted in full from the MOO.
Patterson worked for Nine Energy, an oilfield services company, from March to October of 2017. See First Amended Class Action Complaint ¶ 5, at 2, filed November 13, 2017 (Doc. 3) ("Amended Complaint"). His "primary job duty consisted of operating pressure control equipment and tools." Amended Complaint ¶ 15, at 3. Nine Energy first offered Patterson employment via letter on February 28, 2017. See Letter from Sally Haynes, Human Resources Manager, to Ryan Patterson at 1-2, (dated February 28, 2017), filed January 3, 2018 (Doc. 14-2) ("Offer Letter"). Patterson's Offer Letter states that his employment is contingent upon an enumerated list of items, including drug testing, physical capacity testing, and other things. See Offer Letter at 1. The Offer Letter does not mention arbitration. See Offer Letter at 1-2. Patterson accepted the employment offer by signing the Offer Letter on March 1, 2017. See Offer Letter at 2. Patterson did not begin work at Nine Energy until March 20, 2017. See Supplemental Declaration of Sharon Warren ¶ 7, at 2 (dated January 3, 2018), filed January 3, 2018 (Doc. 14-1).
On March 1, 2017 -- the same day that Patterson signed the Offer Letter -- he also signed the Confidentiality and Dispute Resolution Agreement at 6, filed December 6, 2017 (Doc. 5-2) ("Arbitration Agreement"). The Arbitration Agreement states that "the Company and the Employee agree to submit exclusively to final and binding arbitration any and all Disputes as defined herein in accordance with the following understanding and terms." Arbitration Agreement at 3. The Arbitration Agreement defines the word "dispute" as
all legal and equitable claims, demands, disputes, controversies, issues, and disagreements, of whatever nature or kind, whether in contract, tort, under statute or regulation, or any other law or source of legal obligation, including but not limited to those relating to, concerning, or arising out of this Agreement; the interpretation or subject matter of this Agreement or program ... wages or other compensation received by or owed to any Employee, including minimum wage and overtime pay.
Arbitration Agreement at 2. The Arbitration Agreement continues:
Each Dispute shall be arbitrated on an individual basis. The parties forego and waive any right to join or consolidate their Disputes or claims with those of any other employee ... or to assert any Disputes or claims in arbitration as a representative or as a member of a class.... Neither the Company nor any employee or applicant for employment may pursue any Dispute or claim on a class action, collective action, or consolidated basis or in a representative capacity on behalf of other individuals, or participate *1076as a class or collective action member in such a proceeding.... The Parties waive any right to a jury trial and to pursue or participate in class or collective actions with respect to Disputes that are subject of this Agreement and for which a jury trial, class action, and collective action would otherwise be available.
Arbitration Agreement at 3. The Arbitration Agreement contains several other important provisions. See Arbitration Agreement at 3-4. One states that "arbitration shall be commenced by either Party filing a demand for arbitration with the AAA[1 ] within 60 days after such Dispute has arisen." Arbitration Agreement at 3. Another notes:
Notwithstanding the provisions of this Agreement, the Company may bring an action in any court of competent jurisdiction for injunctive relief to enforce the Employee's obligations with respect to the confidentiality and protection of trade secrets and other non-public information belonging to the Company, or with respect to any non-competition, non-solicitation, or any other restrictive covenant provisions in any separate agreement between the Company and the Employee.
Arbitration Agreement at 4. Still another provision states: "The Parties acknowledge and agree that this Agreement and the Parties' employment relationship affect and involve interstate commerce, and that this Agreement is governed by the Federal Arbitration Act."2 Arbitration Agreement at 5. Finally, the Arbitration Agreement contains an integration clause, stating:
No agreements or representations, oral or otherwise express or implied, with respect to the subject matter hereof have been made by either Party that are not set forth expressly in this Agreement.... This Agreement sets forth the entire agreement of the Parties hereto with respect to the subject matter herein, in particular the Parties' agreement regarding the protection of Confidential Information and the procedural mechanism for the final resolution of Disputes and supersedes all prior understandings, agreements, clauses, provisions, representations, or promises, whether oral or written, of the Parties to the extent they relate to or concern the subject matter herein.
Arbitration Agreement at 5. Patterson now alleges in this class action that Nine Energy failed to pay him and other employees overtime wages in violation of the New Mexico Minimum Wage Act,N.M. Stat. Ann. § 50-4-22 (D). See Amended Complaint ¶ 3, at 1.
MOO at 2-3,
PROCEDURAL BACKGROUND
The Court adopts the procedural background until the filing of MOO, as the MOO recites it. The footnotes associated with the quoted text are also quoted in full from the MOO.
Patterson filed his original Complaint on November 8, 2017. See Original Class Action Complaint, filed November 8, 2017 (Doc. 1) ("Original Complaint"). Patterson subsequently filed the Amended Complaint on November 13, 2017. See Amended Complaint at 1. Nine Energy filed the Motion on December 6, 2017. See Motion at 1.
*10771. The Motion.
Nine Energy moves the Court to dismiss this case for lack of subject-matter jurisdiction and to compel arbitration. See Motion at 1. Nine Energy first contends that Patterson's claims fall within the Arbitration Agreement's scope, because the Arbitration Agreement's provisions "cover all disputes, claims, or disagreements relating to Plaintiff's employment." Motion at 5. Nine Energy then argues that the Arbitration Agreement contains adequate consideration, asserting that "the bargained for exchange in this case was Plaintiff's offer of employment with Nine Energy in exchange for signing the Confidentiality and Dispute Resolution Agreement as well as the Parties' mutual agreement to submit all employment disputes to arbitration." Motion at 6. Turning to the class action allegations, Nine Energy avers that the Arbitration Agreement expressly states that the parties waive any right to participate in a class or collective action regarding any disputes subject to the agreement. See Motion at 7-8. Nine Energy concludes that the Court should grant the Motion and compel Patterson to arbitrate his claims on an individual basis. See Motion at 8.
2. The Response.
Patterson responds. See Response to Defendant's Motion to Dismiss the First Amended Class Action Complaint and Compel Arbitration, filed January 2, 2018 (Doc. 13-1) ("Response"). Patterson first asserts that the Arbitration Agreement is substantively unconscionable. See Response at 4. According to Patterson, the Arbitration Agreement section allowing Nine Energy to bring an action for injunctive relief in court to enforce an employee's confidentiality obligations, such as the protection of trade secrets, represents a unilateral carve-out favoring Nine Energy and is therefore unconscionable. See Response at 4-5. Second, Patterson avers that the Arbitration Agreement contains no consideration and is thus illusory. See Response at 5. According to Patterson "continued at-will employment cannot serve as consideration for an agreement to arbitrate," which Patterson asserts is the Arbitration Agreement's purported consideration. Response at 6-7.3
2. The Reply.
Nine Energy replies. See Defendant's Reply in Support of Motion to Dismiss the First Amended Class Action Complaint and Compel Arbitration, filed January 3, 2018 (Doc. 14) ("Reply"). Nine Energy first asserts that the Arbitration Agreement's consideration is Patterson's initial offer of employment and not continued at-will employment, because Patterson signed the Arbitration Agreement on the same day he accepted his employment offer and did not begin working for Nine Energy until twenty days later. See Reply at 5. Additionally, Nine Energy contends that "there was *1078separate, valid consideration for the Agreement. In exchange for Plaintiff agreeing to arbitrate his employment-related disputes, Nine Energy promised not only to hire Plaintiff, but also to provide him access to its confidential information and trade secrets." Reply at 11.
Second, Nine Energy argues that, while part of the Arbitration Agreement may exempt Nine Energy from arbitration, other parts of the agreement contain "exclusions for numerous types of employment-related claims that Plaintiff alone would be able to pursue." Reply at 9. Nine Energy continues that "the exclusion of which Plaintiff complains relates to one limited form of relief -- injunctive relief -- that only the employer might be able to pursue to protect its confidential information and trade secrets." Reply at 9. According to Nine Energy, "[i]t is impossible that the Plaintiff would be able to bring such a claim, just as it is impossible that Nine Energy would be able to bring any of the claims excluded for Plaintiff (i.e. EEOC charges, NLRB charges, unemployment claims)." Reply at 9.
Finally, Nine Energy contends that, "[e]ven if the Court were to find this provision unconscionable, the Court can and should modify or sever the provision rather than invalidating the entire Agreement." Reply at 11. According to Nine Energy, the provision allowing it to bring an action for injunctive relief to protect confidential information "is not relevant or intertwined with the agreement to arbitrate compensation disputes, and severability is in line with the strong federal policy underlying the FAA favoring enforcement of arbitration agreements." Reply at 11-12.
3. The Surreply.
Patterson filed a surreply. See Surreply in Opposition to Defendant's Motion to Dismiss the Class Action Complaint and Compel Arbitration, filed January 10, 2018 (Doc. 16-1) ("Surreply").4 Patterson first asserts that Nine Energy's employment offer was not contingent on signing the Arbitration Agreement, so the employment offer is not consideration for the agreement. See Surreply at 4. According to Patterson, Nine Energy's employment offer cannot be consideration for Patterson agreeing to arbitration, because the Offer Letter provides a list of contingencies, none of which include signing the Arbitration Agreement. See Surreply at 6. Further, according to Patterson, the Arbitration Agreement "contains an explicit merger clause that prevents the Offer Letter --*1079or any other oral/written agreement -- from being incorporated into the Arbitration Agreement or for serving as the consideration for the Agreement." Surreply at 6.
Second, Patterson takes issue with Nine Energy's assertion that it promised to provide confidential information and trade secrets to Patterson as consideration for him signing the Arbitration Agreement. See Surreply at 6-7. According to Patterson, the Arbitration Agreement "does not require Defendant to disclose any specific confidential information or trade secrets." Surreply at 7. Patterson adds that "no New Mexico court has reached the conclusion that an agreement to provide confidential information is adequate consideration for an agreement to arbitrate." Surreply at 7.
Third, Patterson argues for the first time that the Arbitration Agreement is unconscionable, because "the terms of the agreement prevent Plaintiff from vindicating his statutory rights under the FLSA."5 Surreply at 7. Specifically, Patterson contends that the Arbitration Agreement's provision requiring arbitration to commence within 60 days after a dispute arises is unconscionable, because "the FLSA's limitations period may not be shortened by contract." Surreply at 8. Finally, Patterson avers that the Court should not sever any allegedly unconscionable provisions of the Arbitration Agreement, because the agreement contains no severance clause. See Surreply at 9-10. Patterson instead concludes that the Court should refuse to enforce the entire Arbitration Agreement and deny the Motion. See Surreply at 10.
4. The Hearing.
The Court held a hearing. See Draft Transcript of Motion Hearing at 1:10-11 (taken June 27, 2018) (Court) ("Tr.").6 Nine Energy began by asserting that "Mr. Patterson in the briefing concedes that this Court has recognized ... that an offer of at will employment is sufficient consideration for an arbitration agreement. And that's exactly what we have here." Tr. at 4:19-24 (Mann). Patterson responded that the Arbitration Agreement's integration clause precludes any outside oral or written agreement -- including Patterson's employment offer -- from being incorporated into the Arbitration Agreement. See Tr. at 10:1-9 (Siegel). Patterson added that the Offer Letter lists several contingencies that Patterson had to meet to accept his employment offer, none of which includes signing the Arbitration Agreement. See Tr. at 13:2-9 (Siegel).
The parties then discussed unconscionability. See Tr. at 17:1-5 (Mann). Nine Energy asserted that Patterson "latches onto a portion of the agreement ... that reserves to Nine the right to seek injunctive relief to enforce certain aspects of the agreement pertaining to confidential information.... What Mr. Patterson chooses to ignore [is] that the same paragraph on which he bases this argument contains multiple carve-outs solely for the ... plaintiff here." Tr. at 17:1-14 (Mann). Nine Energy thus contended that the carve-outs in the Arbitration Agreement are bilateral and not unilateral. See Tr. at 18:3-6 (Mann).
Patterson then returned to the podium and asserted that the Arbitration *1080Agreement is substantively unconscionable for the separate reason that it "has effectively shortened the statute of limitations period." Tr. at 22:15-16 (Siegel). Specifically, Patterson argued that the Arbitration Agreement shortens the limitations period from three years to sixty days. See Tr. at 22:21-24 (Siegel). Nine Energy responded that "the parties cannot limit statute[s] of limitations by contract. So even if that language is contained in the agreement [, were] it be attempted to be enforced it could not." Tr. at 25:9-13 (Mann).
The Court then asked if Nine Energy contended that, if the Court were to find any provision unconscionable, it should sever the provision rather than not enforcing the entire agreement. See Tr. at 28:25-29:7 (Court, Mann). Nine Energy responded that, if the Court concluded that a provision is unconscionable, then Nine Energy would prefer the rest of the agreement enforced. See Tr. at 29:8-16 (Mann). At the hearing's conclusion, the Court stated that it was inclined to grant the Motion. See Tr. at 35:2 (Court).
MOO at 3-10,
5. The MOO.
In the MOO, the Court concludes "that the parties have not established diversity jurisdiction, so the Court will order the parties to show cause why the Court should not dismiss this case for lack of subject-matter jurisdiction." MOO at 1,
The Court now summarizes the portions of the Court's MOO that Patterson requests the Court to reconsider -- specifically, the severability analysis of the injunctive relief provision. In the MOO, the Court began its analysis regarding the injunctive relief provision's severability by quoting Cordova: "If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term." MOO at 41,
*1081MOO at 41,
The Court also performed a severability analysis for the sixty-day limitations period provision at issue in the Arbitration Agreement. See MOO at 45-46,
6. The Reconsideration Motion.
In the Reconsideration Motion, Patterson contends that the Court committed manifest legal error in reaching the MOO's conclusion that, "although the injunctive relief provision in the Arbitration Agreement is substantively unconscionable, it is also severable." Reconsideration Motion at 1 (quoting MOO at 20,
Patterson contends that the Supreme Court of New Mexico distinguished Padilla in Cordova as follows:
In Padilla ,2003-NMSC-011 , ¶¶ 10, 18,133 N.M. 661 ,68 P.3d 901 , this Court *1082struck from a contract an invalid post-arbitration appeal provision but left intact the underlying mutual arbitration clause. By contrast, the invalidity in this case involves the arbitration scheme itself, not just the procedures for appeal to the courts after the arbitration phase is over. We are reluctant to try to draft an arbitration agreement the parties did not agree on. This is particularly so in light of the categorization in the agreements of specific kinds of access to the courts World Finance had insisted on for itself. As we concluded in Fiser [v. Dell Comp. Corp. ],2008-NMSC-046 , ¶ 24,144 N.M. 464 ,188 P.3d 1215 , we must strike down the arbitration clause in its entirety to avoid a type of judicial surgery that would inevitably remove provisions that were central to the original mechanisms for resolving disputes between the parties. As courts in similar situations have found appropriate under these circumstances, we determine that the arbitration agreements are unenforceable in their entirety, and must be severed from the accompanying loan agreements.
Cordova,
Patterson asserts that, like the arbitration clauses in Rivera and Cordova, the clause at issue here is so central to the Arbitration Agreement that it may not be separated, irrespective of any savings clause. See Reconsideration Motion at 3 (citing Figueroa v. THI of N.M. at Casa Arena Blanca, LLC,
In light of the Supreme Court of New Mexico precedent in Rivera v. American General Financial Services, Inc.,2011-NMSC-033 , ¶¶ 51-54,150 N.M. 398 ,259 P.3d at 818-19 , and Cordova v. World Fin. Corp. of N.M.,2009-NMSC-021 , ¶ 20,146 N.M. 256 ,208 P.3d at 907 , the Court is inclined to conclude that the Supreme Court of New Mexico would hold that this unilateral carve-out to benefit exclusively the stronger party is substantively unconscionable under New Mexico law and thus unenforceable.
Reconsideration Motion at 4 (quoting MOO at 21,
Patterson argues that, although the Court correctly determined that the injunctive relief provision is substantively unconscionable, the Court's determination that the provision is severable constitutes manifest legal error. See Reconsideration Motion at 5. Patterson contends that the *1083Court should not have relied on Padilla in determining the provision's severability, because Padilla dealt with a "post-arbitration appeal provision that has nothing to do with the unilateral carve out for injunctive relief here." Reconsideration Motion at 4 (internal quotation marks omitted) (quoting Padilla,
Patterson argues that the parties never agreed on the arbitration that the Court, by severing the injunctive relief provision, drafted, because the provision that the Court severed involves the arbitration scheme itself. See Reconsideration Motion at 5. Patterson cites to two Court of Appeals of New Mexico cases determining that unreasonably one-sided provisions exempting certain claims from arbitration could not be severed. See Reconsideration Motion at 5-6 (citing Ruppelt v. Laurel Healthcare Providers, LLC,
7. The Reconsideration Response.
On October 5, 2018, Nine Energy responded to the Reconsideration Motion. See Defendant's Memorandum in Opposition to Plaintiff's Reconsideration Motion, filed October 5, 2018 (Doc. 27) ("Reconsideration Response"). Nine Energy argues that the Court should reject the Reconsideration Motion in its entirety, "because even if the injunctive relief provision in the [Arbitration Agreement] is unconscionable, the Court did not commit clear legal error by severing it, and Plaintiff has not met his burden to demonstrate that certification is proper." Reconsideration Response at 1. First, Nine Energy argues that the Reconsideration Motion is procedurally deficient, because: (i) it prematurely seeks reconsideration before the Court has dismissed the action or compelled arbitration; and (ii) Patterson does not seek the Court's leave to file what Nine Energy contends is no more than a supplemental briefing, not requiring a response. See Reconsideration Response at 1 n.1.7
*1084Nine Energy argues that Patterson uncritically analyzes Cordova, which confronts "predatory lending agreements." Reconsideration Response at 1. Nine Energy contends that the Supreme Court of New Mexico has never held that an unconscionable arbitration provision may not be severed as a matter of law and contends that the Supreme Court of New Mexico has never overruled Padilla. See Reconsideration Response at 1-2. First, Nine Energy argues that Cordova and cases like it are distinguishable from the present case. See Reconsideration Response at 2. Nine Energy asserts that the arbitration agreement at issue in Cordova was attached to a loan agreement and permitted the lender to litigate all claims important to it, while prohibiting borrowers from litigating any claims important to them. See Reconsideration Response at 2. Nine Energy contends that Patterson's reliance on Cordova ignores the differences between the Cordova agreement, and the Arbitration Agreement. See Reconsideration Response at 3. Nine Energy contends that the Arbitration Agreement is unlike that in Cordova, because: (i) "the Agreement does not concern a predatory lending or consumer loan agreement," Reconsideration Response at 3; (ii) the Agreement permitted Patterson to pursue multiple claims outside of arbitration, and to file complaints with State and Federal administration agencies which could litigate claims against Nine Energy on Patterson's behalf, see Reconsideration Response at 3; and (iii) the injunctive relief provision at issue is narrow in scope and situated in a stand-alone section of the Agreement, Nine Energy "can only seek injunctive relief to enforce Plaintiff's obligations under restrictive covenants," and there is a low likelihood that Nine Energy could enforce the restrictive covenants against Patterson, Reconsideration Response at 3. Nine Energy argues, accordingly, that the Arbitration Agreement is less one-sided than the agreement in Cordova, and that the injunctive relief provision that the Court severed in the MOO is not so central to the Arbitration Agreement that it is incapable of severance. See Reconsideration Response at 4.
Next, Nine Energy argues that Padilla, in which the Supreme Court of New Mexico recognized a court's discretion to sever a provision in an arbitration agreement, is still good law. See Reconsideration Response at 4. Nine Energy argues that even Cordova recognized the remedy of severance:
There are two possible remedial actions we can take to give effect to our holding that the one-sided arbitration provisions separately attached to the loan agreements are unenforceable: We can strike the arbitration provisions in their entirety, or we can attempt to refashion parts of them into a fair and balanced arbitration agreement.
Reconsideration Response at 5 (emphasis and internal quotation marks omitted) (quoting Cordova,
Last, Nine Energy argues that the Court should decline to grant certification. See Reconsideration Response at 6. Nine *1085Energy argues that the Arbitration Agreement's enforceability "is not determinative of the merits of Plaintiff's underlying claims." Reconsideration Response at 6. Nine Energy also argues that the Reconsideration Motion does not present a "novel, significant, and unsettled issue of law under the New Mexico Constitution, nor does it present an issue of significant public interest." Reconsideration Response at 6. Nine Energy argues, accordingly, that Patterson has not met his burden to demonstrate that certification is warranted. See Reconsideration Response at 5.
8. The Reconsideration Reply.
On October 20, 2018, Patterson replied to Nine Energy. See Reply in Support of Reconsideration Motion, filed October 20, 2018 (Doc. 29) ("Reconsideration Reply"). In the Reconsideration Reply, Patterson asserts:
Defendant was Plaintiff's employer and drafted a form contract without any input or negotiations with Plaintiff. Defendants took advantage of being the stronger party by drafting a one-sided, stand-alone arbitration agreement ("Agreement") that contains a non-mutual exclusion from the "Agreement" that allows it unilateral access to the courts to obtain injunctive relief to enforce any restrictive covenant in any separate agreement between the parties.
Reconsideration Reply at 1 (emphasis omitted). Patterson reiterates the arguments from the Reconsideration Motion, see Reply at 1-2, and asserts that the unilateral carve-out provision here contains no language that limits Nine Energy's unilateral ability to seek permanent injunctive relief to enforce Patterson's obligations with respect to any other restrictive covenant in any other agreement between Patterson and Nine Energy in any court of competent jurisdiction, see Reconsideration Reply at 2. Patterson contends, therefore, that the provision at issue here is more unconscionable than the provision at issue in Cordova, because, here, Nine Energy can take advantage of its employees by having them sign separate agreements with restrictive covenants and then enforce those agreements at will. See Reconsideration Reply at 2-3.
Patterson argues that courts of other jurisdictions agree with the Supreme Court of New Mexico that unfairly one-sided contract provisions are unconscionable and non-severable. See Reconsideration Reply at 3-4 (citing Taylor v. Butler,
Patterson next argues that California courts faced with similar issues, and to which Patterson contends the Supreme *1086Court of New Mexico often cites, do not sever similar agreements. See Reconsideration Reply at 5. Patterson requests that the Court follow the guidance of the United States Court of Appeals for the Ninth Circuit and decline to sever the provision. See Reconsideration Reply at 5-6. Patterson argues that, under United States Court of Appeals for the Tenth Circuit precedent, the Court should strictly construe the Arbitration Agreement against Nine Energy as the drafter. See Reconsideration Reply at 6 & n.3 (citing Dumais v. Am. Golf Corp.,
Next, Patterson cites to decisions by the Honorable Karen B. Molzen, United States Magistrate Judge for the District of New Mexico, and by the Honorable Gregory B. Wormuth, United States Magistrate Judge for the District of New Mexico, in which Judge Molzen and Judge Wormuth determined that the Court's task in deciding a provision's severability is to determine "whether the arbitration clause must be struck in its entirety or can be reformed into a 'fair and balanced' agreement." Reconsideration Reply at 9 (citing Clark v. UnitedHealth Grp., Inc., No. CIV 13-0372 MV/CG,
Patterson likens this case to several other New Mexico cases which have held that unilateral carve-outs favoring the stronger party are unenforceable and not severable. See Reconsideration Reply at 10-11 (citing Ruppelt v. Laurel Healthcare Providers, LLC,
9. The Notice of Supplemental Authorities.
On October 25, 2018, Patterson filed a Notice of Supplemental Authorities. See Notice of Supplemental Authorities, filed October 25, 2018 (Doc. 30) ("Reconsideration Notice"). In the Reconsideration Notice, Patterson asserts that, since the time he filed his Reconsideration Reply, he has become aware of a District of New Mexico case supporting his position, which Patterson requests the Court consider. See Reconsideration Notice at 1. Patterson cites to Tatum v. ProBuild Co., LLC, No. CIV 12-1060 LH/LFG,
10. The Hearing.
The Court held a hearing on October 25, 2018. See Draft Transcript of Reconsideration Motion Hearing at 1 (taken Oct. 25, *10872018) (Court) ("Oct. 25 Tr.").8 Patterson began by asserting that the Court's decision in the MOO is contrary to Supreme Court of New Mexico precedent, which, Patterson contended, dictates that the provision at issue "renders the agreement unenforceable, and severance is not proper because the provision is central to the agreement." Oct. 25 Tr. at 2:20-22 (Siegel). Patterson asserted that, while the Court based its substantive unconscionability determination in the MOO on Rivera and Cordova, it cited to neither Cordova nor Rivera in its analysis of the appropriateness of severance of the provision at issue. See Oct. 25 Tr. at 2:23-25 (Siegel); id. at 3:7-10 (Siegel). Patterson contends that the Court instead relied on Padilla, which Patterson alleges was "improper," because Padilla, unlike the present case, concerns an appeals provision that came into effect only after arbitration was over. Oct. 25 Tr. at 3:10-17 (Siegel). Patterson argues that, in Clay v. New Mexico Title Loans, Inc.,
Patterson asserted: "This all boils down to whether the unilateral carve-out for judicial relief is central to the agreement or collateral." Oct. 25 Tr. at 3:23-4:2 (Siegel). Patterson contended that the carve-out provision at issue in the Arbitration Agreement is central to the Arbitration Agreement, and therefore, the entire Arbitration Agreement is unenforceable if it is unconscionable. See Oct. 25 Tr. at 4:2-12 (Siegel). Patterson argues that the key is that the provision at issue is not merely a unilateral carve-out, but a unilateral carve-out for judicial relief. See Oct. 25 Tr. at 4:18-21 (Siegel). Patterson argues that, although the Court in its MOO and Nine Energy in its briefing pointed to provisions in the Arbitration Agreement allowing Patterson to bring unemployment or workers compensation claims outside of the arbitration context, many courts have found that these provisions are not carve-outs for judicial relief, because they have their own adjudicatory frameworks. See Oct. 25 Tr. at 4:2-5:3 (Siegel). Patterson asserted that the provision at issue is entirely one-sided. See Oct. 25 Tr. at 5:6-8 (Siegel).
The night before the hearing, Patterson discovered Tatum v. ProBuild Co., LLC., and filed the Notice of Supplemental Authorities to inform the Court of that case. See Oct. 25 Tr. at 5:9 (Siegel). See also Tatum v. ProBuild Co., LLC Opinion at 1. Patterson contended that the most important claim he might raise against Defendant is for injunctive relief. See Oct. 25 Tr. at 6:4-6 (Siegel). Patterson contended that in the Arbitration Agreement, Nine Energy is the only person that has the unilateral right to go to court and enforce the provisions for injunctive relief. See Oct. 25 Tr. at 7:8-10 (Siegel).
Nine Energy then argued that Senior Judge Hansen did not discuss severability at all in Tatum v. ProBuild Co., LLC.See Oct. 25 Tr. at 9:7-11 (Mann). Nine Energy noted that, in several of the cases which Patterson cites, the courts opted to sever the provisions at issue. See Oct. 25 Tr. at 9:10-14 (Mann). Nine Energy argued that the "key, as the Court noticed, is whether the substantive unconscionability clause is essential to the agreement as a whole." Oct. 25 Tr. at 9:14-16 (Mann). Nine Energy noted that the provision at issue in the *1088Arbitration Agreement contains eleven paragraphs, addressing eleven separate points, but that the Court opted to strike only one sentence in one paragraph out of eleven, so that the remaining agreement requires both parties to submit all disputes to arbitration. See Oct. 25 Tr. at 9:20-25 (Mann). Nine Energy argued that the Court found a justifiable way to sever and quoted from the MOO: "Further, it would make little sense for the Court to trash the entire Arbitration Agreement because of an unconscionable provision unrelated to this case." Oct. 25 Tr. at 10:12-15 (Mann) (quoting MOO at 42,
Patterson then argued that the provision at issue pertains to the most likely actions that Nine Energy might bring against its employees. See Oct. 25 Tr. at 11:3-5 (Siegel). Patterson reiterated that no case in New Mexico has allowed the severance of an arbitration agreement provision that is a unilateral carve-out for judicial relief. See Oct. 25 Tr. at 11:5-8 (Siegel). Patterson argues that Nine Energy imposed the Arbitration Agreement on Patterson without negotiations and that Nine Energy is now asking the Court to "save them from themselves." Oct. 25 Tr. at 11:8-13 (Siegel).
Patterson quoted from Cordova:
By contrast, the invalidity in this case involves the arbitration scheme itself, not just the procedures for appeal to the courts after the arbitration phase is over. We are reluctant to try to draft an arbitration agreement the parties did not agree on. This is particularly so in light of the categorization in the agreements of specific kinds of access to the Courts World Finance had insisted on for itself.
Oct. 25 Tr. at 11:14-25 (Siegel) (internal quotation marks omitted) (quoting Cordova,
Patterson then argued that, in Tatum v. ProBuild Co., LLC, Senior Judge Hansen concluded that the provision at issue was one-sided, because both parties could not go to court to address the same occurrence at the same time. See Oct. 25 Tr. at 12:3-7 (Siegel). Patterson contends that, unlike in Cordova and Rivera, here the parties do not have bilateral access to the courts -- and that this is a major distinction between this case, and Cordova and Rivera. See Oct. 25 Tr. at 12:7-13 (Siegel). Patterson contended that the Arbitration Agreement here explicitly states that only Nine Energy may go to court. See Oct. 25 Tr. at 12:13-22 (Siegel).
The Court indicated that, while it believed it had "worked hard on the opinion," it would go back and look at the cases to which the parties referred in the hearing and would try to get them an opinion by the end of November. See Oct. 25 Tr. at 13:13-23 (Court). This is the Memorandum Opinion and Order that the Court promised the parties at the hearing.
LAW REGARDING ARBITRATION AGREEMENTS
An arbitration agreement is a contract or a provision in a contract whereby parties agree to "settle by arbitration a controversy ... arising out of such contract or transaction."
1. Federal Law.
"The FAA reflects the fundamental principle that arbitration is a matter of contract." Rent-A-Center, West, Inc. v. Jackson,
Under § 4 of the FAA, a party "aggrieved" by another party's failure "to arbitrate under a written agreement for arbitration" may petition a federal court "for an order directing that such arbitration proceed in the manner provided for in such agreement."
Upon a finding that a matter is referable to arbitration, the FAA also indicates that the district court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement."
The Tenth Circuit has cautioned that, when one of the parties petitions the court to stay an action pending compulsory arbitration,
2. New Mexico Law.
New Mexico's Uniform Arbitration Act,
Like the federal courts' interpretation of the FAA, New Mexico courts have viewed the NMUAA as an expression of a public policy favoring arbitration. See United Tech. & Res., Inc. v. Dar Al Islam,
When a broad and general arbitration clause is used, as in this case, the court should be very reluctant to interpose itself between the parties and the arbitration upon which they have agreed. When the parties agree to arbitrate any potential claims or disputes arising out of their relationships by contract or otherwise, the arbitration agreement will be given broad interpretation unless the parties themselves limit arbitration to specific areas or matters. Barring such limiting language, the courts only decide the threshold question of whether there is an agreement to arbitrate. If so, the court should order arbitration. If not, arbitration should be refused.
K.L. House Constr. Co. v. City of Albuquerque,
3. Public Policy Favoring Enforcement of an Arbitration Agreement.
"There is a strong federal policy encouraging the expeditious and inexpensive resolution of disputes through arbitration." Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
*1092Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
4. A Valid Arbitration Agreement's Existence.
The Supreme Court has noted that "[a]rbitration is simply a matter of contract between parties; it is a way to resolve those disputes -- but only those disputes -- that the parties have agreed to submit to arbitration." First Options of Chi., Inc. v. Kaplan,
In the Tenth Circuit, and in the courts of New Mexico, the "existence of an agreement to arbitrate is a threshold matter which must be established before the FAA can be invoked." Avedon Eng'g Inc. v. Seatex,
5. Consideration and Illusory Arbitration Agreements.
"To determine whether the agreement to arbitrate is valid, courts look to general state contract law, with the caveat that state laws that are specifically hostile to arbitration agreements are preempted by the FAA." Salazar v. Citadel Commc'ns Corp.,
"Consideration consists of a promise to do something that a party is under no legal obligation to do or to forbear from doing something he has a legal right to do." Talbott v. Roswell Hosp. Corp.,
Several cases arising in New Mexico provide examples of illusory agreements to arbitrate. For instance, in Dumais v. American Golf Corp.,
Additionally, in Heye v. American Golf Corp.,14 the Court of Appeals of New Mexico *1095considered a question like the one that the federal court addressed in Dumais v. American Golf Corp. See Heye v. American Golf Corp.,
Next, in Piano v. Premier Distributing Co.,15 the plaintiff worked as an administrative assistant for the defendant on an at-will employment basis. See
In *1096Lumuenemo v. Citigroup, Inc., No. 08-cv-0830,
Plaintiff cites Piano v. Premier Distributing Co.,137 N.M. 57 ,107 P.3d 11 (N.M. Ct. App. 2004), as support for her argument. However, the holding in Piano turned on the fact that the plaintiff was an at-will employee prior to signing the arbitration agreement, and therefore, the implied promise of continued at-will employment did not constitute consideration.Id. at 60 ,107 P.3d 11 . Piano is distinguishable from the facts before this Court. Here, Defendant's initial hiring of Plaintiff was conditioned on her consent to the terms of the Arbitration Agreement; thus, there was consideration in the form of employment. Further, Defendant does need Plaintiff's approval -- Plaintiff had up to 30 days to contest any changes to the Arbitration Agreement and/or to decide whether to continue employment based on such changes. Moreover, the holding in Piano is not binding on this court.
Lumuenemo v. Citigroup, Inc.,
Further, in Salazar v. Citadel Communications Corp., the Supreme Court of New Mexico held that, because Citadel Communications reserved the right to modify any provision of its employee handbook at any time, including the arbitration agreement contained therein, the agreement to arbitrate was "an unenforceable illusory promise." Salazar v. Citadel Commc'n Corp.,
In Laurich v. Red Lobster Restaurants, LLC,
*1097NEW MEXICO LAW ON CONTRACT INTERPRETATION AND EXTRINSIC EVIDENCE
In contract cases, "the role of the court is to give effect to the intention of the contracting parties." Bogle Farms Inc. v. Baca,
The parol evidence rule is a rule of substantive law that bars admission of evidence extrinsic to the contract to contradict and perhaps even to supplement the writing.... The rule should not bar introduction of evidence to explain terms. As Professor Corbin observes, "No parol evidence that is offered can be said to vary or contradict a writing until by process of interpretation the meaning of the writing is determined." [A.] Corbin, The Parol Evidence Rule,53 Yale L.J. 603 , 622 (1944). The operative question then becomes whether the evidence is offered to contradict the writing or to aid in its interpretation.
C.R. Anthony Co. v. Loretto Mall Partners,
The question whether an agreement contains an ambiguity is a matter of law. See Mark V, Inc. v. Mellekas,
The court may consider collateral evidence of the circumstances surrounding the execution of the agreement in determining whether the language of the agreement is unclear. C.R. Anthony,112 N.M. at 508-09 ,817 P.2d at 242-43 . If the evidence presented is so plain that no reasonable person could hold any way but one, then the court may interpret the meaning as a matter of law.Id. at 510 ,817 P.2d at 244 . If the court determines that the contract is reasonably and susceptible of different constructions, an ambiguity exists. Vickers v. North Am. Land Dev., Inc.,94 N.M. 65 , 68,607 P.2d 603 , 606 (1980). At that *1098point, if the proffered evidence of surrounding facts and circumstances is in dispute, turns on witness credibility, or is susceptible of conflicting inferences, the meaning must be resolved by the appropriate fact finder ....
Mark V,
LAW REGARDING NEW MEXICO'S UNCONSCIONABILITY DEFENSE TO CONTRACT ENFORCEMENT
In New Mexico, "unconscionability is an affirmative defense to contract enforcement." Strausberg v. Laurel Healthcare Providers, LLC,
"A contract can be procedurally or substantively unconscionable." Dalton v. Santander Consumer USA, Inc.,
"The weight given to procedural and substantive considerations varies with the circumstances of each case." Fiser v. Dell Comput. Corp.,
1. Procedural Unconscionability.
"Procedural unconscionability may be found where there was inequality in the contract formation." State ex rel. King v. B & B Inv. Grp., Inc.,
"When assessing procedural unconscionability, courts should consider whether the contract is one of adhesion." Rivera,
For example, in State ex rel. King v. B & B Investment Group, Inc., the Supreme Court of New Mexico decided whether loan contracts offered by certain small-loan lenders were unconscionable. See
the relative bargaining strength and sophistication of the parties is unequal. Moreover, borrowers are presented with Hobson's choice: either accept the quadruple-digit interest rates, or walk away from the loan. The substantive terms are preprinted on a standard form, which is entirely nonnegotiable. The interest rates are set by drop-down menus in a computer program that precludes any modification of the offered rate. Employees are forbidden from manually overriding the computer to make fee adjustments without written permission from the companies' owners: manual overrides will be considered in violation of company policy and could result with ... criminal charges brought against the employee and or termination.
2. Substantive Unconscionability.
Substantive unconscionability requires courts "to consider 'whether the contract terms are commercially reasonable and fair, the purpose and effect of the terms, the one-sidedness of the terms, and other similar public policy concerns' " to determine "the legality and fairness of the contract terms themselves." Dalton v. Santander Consumer USA, Inc.,
*1101Dalton v. Santander Consumer USA, Inc.,
"When its terms are unreasonably favorable to one party, a contract may be held to be substantively unconscionable." Monette v. Tinsley,
In determining reasonableness or fairness, the primary concern must be with the terms of the contract considered in light of the circumstances existing when the contract was made. The test is not simple, nor can it be mechanically applied. The terms are to be considered "in the light of the general commercial background and the commercial needs of the particular trade or case." Corbin suggests the test as being whether the terms are "so extreme as to appear unconscionable according to the mores and business practices of the time and place."
Guthmann v. La Vida Llena,
With respect to arbitration agreements specifically, the Supreme Court of New Mexico has held that arbitration agreements are substantively unconscionable and thus unenforceable where the arbitration agreement contains a unilateral carve-out that explicitly exempts from mandatory arbitration those judicial remedies that a lender is likely to need, while providing no such exemption for the borrower. See Rivera,
Next, in Rivera, the Supreme Court of New Mexico confronted a similar loan contract in which an arbitration agreement required the borrower to arbitrate any claims against the lender while exempting from mandatory arbitration the lender's "self-help or judicial remedies" concerning the property securing the transaction and any claims that the lender might have "[i]n the event of a default."
By contrast, in Dalton v. Santander Consumer USA, Inc., the Supreme Court of New Mexico held that an arbitration agreement between a lender and a borrower which included a bilateral exception for small claims less than $10,000.00 was not substantively unconscionable, "even if one party is substantively more likely to bring small claims actions."
The Supreme Court of the United States has also held that state courts may not use unconscionability to subvert the FAA's purposes. See AT & T Mobility LLC v. Concepcion,
The Tenth Circuit has held that the FAA "limits state-law grounds for refusing to enforce an arbitration clause." Walker v. BuildDirect.com Techs., Inc.,
LAW REGARDING CERTIFICATION TO THE SUPREME COURT OF NEW MEXICO
N.M.R.A.-Civ. Rule 12-607 provides:
A. Power to answer.
(1) The Supreme Court may answer by formal written opinion questions of law certified to it by a court of the United States, an appellate court of another state, a tribe, Canada, a Canadian province or territory, Mexico or a Mexican state if the answer may be determinative of an issue in pending litigation in the certifying court and the question is one for which answer is not provided by a controlling:
(a) appellate opinion of the New Mexico Supreme Court or the New Mexico Court of Appeals; or
(b) constitutional provision or statute of this state.
N.M.R.A.-Civ. § 12-607(A) (1). See, e.g., Walker v. United States,
The Supreme Court of New Mexico may answer questions that the federal district court certifies to it only " 'if the answer may be determinative of an issue in pending litigation in the certifying court and there is no controlling appellate decision, constitutional provision or statute of this state.' " Arnold v. Farmers Ins. of Ariz.,
To date, we by and large have limited our acceptance of certifications prior to judgment to those cases in which there is no dispute over the factual predicates to the Court's determination of the questions certified, and our answer either disposes of the entire case or controversy, or disposes of a pivotal issue that defines the future course of the case.
Schlieter v. Carlos,
In Stoner v. New York Life Insurance Co.,
In cases arising under diversity jurisdiction, the federal court's task is not to reach its own judgment regarding the substance of the common law, but simply to ascertain and apply the state law. The federal court must follow the most recent decisions of the state's highest court. Where no controlling state decision exists, the federal court must attempt to predict what the state's highest court would do. In doing so, it may seek guidance from decisions rendered by lower courts in the relevant state, appellate decisions in other states with similar legal principles, district court decisions interpreting the law of the state in question, and the general weight and trend of authority in the relevant area of law. Ultimately, however, the Court's task is to predict what the state supreme court would do. Our review of the district court's interpretation of state law is de novo.
*1105The Tenth Circuit "generally will not certify questions to a state supreme court when the requesting party seeks certification only after having received an adverse decision from the district court." Massengale v. Okla. Bd. of Exam'rs in Optometry,
LAW REGARDING MOTIONS TO RECONSIDER
Except where the Federal Rules of Civil Procedure specify, motions to reconsider fall into three categories:
(i) a motion to reconsider filed within [twenty-eight] days of the entry of judgment is treated as a motion to alter or amend the judgment under rule 59(e); (ii) a motion to reconsider filed more than [twenty-eight] days after judgment is considered a motion for relief from judgment under rule 60(b); and (iii) a motion to reconsider any order that is not final is a general motion directed at the Court's inherent power to reopen any interlocutory matter in its discretion. See Price v. Philpot,420 F.3d 1158 , 1167 & n.9 (10th Cir. 2005).
Pedroza v. Lomas Auto Mall, Inc.,
1. Motions for Reconsideration Under Rules 59(e) and 60(b).
Courts may treat motions for reconsideration as a rule 59(e) motion when the movant files within twenty-eight days of a court's entry of judgment. See Price v. Philpot,
Whether a motion for reconsideration should be considered a motion under rule 59 or rule 60 of the Federal Rules of Civil Procedure is not only a question of timing, but also "depends on the reasons expressed by the movant." Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc.,
*1106Phelps v. Hamilton,
[o]n motion and just terms, the court may relieve a party or its legal representatives from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b) ;
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b). Neither a rule 59 nor a rule 60 motion for reconsideration
are appropriate vehicles to reargue an issue previously addressed by the court when the motion merely advances new arguments, or supporting facts which were available at the time of the original motion.... Grounds warranting a motion to reconsider include (1) an intervening change in the controlling law, (2) new evidence previously unavailable, and (3) the need to correct clear error or prevent manifest injustice.
Servants of the Paraclete v. Does,
Rule 60 authorizes a district court to, "[o]n motion and just terms[,] ... relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons," including "any other reason that justifies relief." Fed. R. Civ. P. 60(b). A court cannot enlarge the time for filing a rule 59(e) motion. See Brock v. Citizens Bank of Clovis,
Under some circumstances, parties can rely on rule 60(b)(1) for a mistake by their attorney or when their attorney acted without their authority. See Yapp v. Excel Corp.,
Courts will not grant relief when the mistake of which the movant complains is the result of an attorney's deliberate litigation tactics. See Cashner v. Freedom Stores, Inc.,
voluntarily chose [the] attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent. Any other notion would be wholly inconsistent with our system of representative litigation, in which each party is deemed bound by the acts of his lawyer agent and is considered to have notice of all facts, notice of which can be charged upon the attorney.
Pioneer Inv. Servs. v. Brunswick Assocs. LP,
Rule 60(b)(6) is a "grand reservoir of equitable power to do justice in a particular case." Van Skiver v. United States,
Generally, the situation must be one beyond the control of the party requesting relief under rule 60(b)(6) to warrant relief. See Ackermann v. United States,
The kind of legal error that provides the extraordinary circumstances justifying relief under Rule 60(b)(6) is illustrated by Pierce [v. Cook & Co.,518 F.2d 720 , 722 (10th Cir. 1975) (en banc) ]. In that case, this court granted relief under 60(b)(6) when there had been a post-judgment change in the law "arising out of the same accident as that in which the plaintiffs ... were injured." Pierce v. Cook & Co.,518 F.2d at 723 . However, when the post-judgment change in the law did not arise in a related case, we have held that "[a] change in the law or in the judicial view of an established rule of law" does not justify relief under Rule 60(b)(6). Collins v. City of Wichita,254 F.2d 837 , 839 (10th Cir. 1958).952 F.2d at 1244-45 .
2. Motions to Reconsider Interlocutory Orders.
Considerable confusion exists among the bar regarding the proper standard for a district court to apply when ruling on a motion to reconsider one of its prior "interlocutory" or "interim" orders, i.e., an order that a district court issues while the case is ongoing, as distinguished from a final judgment. This confusion originates from the fact that the Federal Rules of Civil Procedure do not mention motions to reconsider, let alone set forth a specific procedure for filing them or a standard for analyzing them. A loose conflation in terminology in Servants of the Paraclete v. Does, which refers to rule 59(e) motions -- "motion[s] to alter or amend a judgment" -- as "motions to reconsider,"16 compounded that baseline confusion. Fed. R. Civ. P. 59(e) (emphasis added); Servants of the Paraclete v. Does,
Final judgments are different from interlocutory orders. See Fed. R. Civ. P. 54(a) (" 'Judgment' as used in these rules includes a decree and any order from which an appeal lies." (emphasis added) ). In addition to ripening the case for appeal, see
Final judgments implicate two important concerns militating against giving district courts free reign to reconsider their judgments. First, when a case is not appealed, there is an interest in finality. The parties and the lawyers expect to go home, quit obsessing about the dispute, and put the case behind them, and the final judgment -- especially once the twenty-eight-day window of robust district court review and the thirty-day window of appeal have both closed -- is the disposition upon which they are entitled to rely. Second, when a case is appealed, there is the need for a clean jurisdictional handoff from the district court to the Court of Appeals. "[A] federal district court and a federal court of appeals should not attempt to assert jurisdiction over a case simultaneously," as doing so produces a "danger [that] a district court and a court of appeals w[ill] be simultaneously analyzing the same judgment." Griggs v. Provident Consumer Discount Co.,
The Court of Appeals needs a fixed record on which to base its decisions -- especially given the collaborative nature of appellate decision-making -- and working with a fixed record requires getting some elbow room from the district court's continued interference with the case. The "touchstone document" for this jurisdictional handoff is the notice of appeal, not the final judgment, see Griggs v. Provident Consumer Discount Co.,
Basically, rather than suddenly divesting the district court of all jurisdiction over the case -- potentially resulting in the district court being unable to rectify easily *1110fixable problems with the final judgment before the case goes to the Tenth Circuit, or even requiring appeal of a case that might otherwise not need to be appealed -- the Federal Rules set forth a jurisdiction phased de-escalation process, wherein the district court goes from pre-final judgment plenary jurisdiction, to limited review for the first twenty-eight days post-final judgment, and, finally, to solely rule 60 review after twenty-eight days. In defining the "limited review" that rule 59(e) allows a district court to conduct in the 28-day flux period, the Tenth Circuit, in Servants of the Paraclete v. Does, incorporated traditional law-of-the-case grounds -- the same grounds that inform whether a court should depart from an appellate court's prior decision in the same case -- into rule 59(e). See United States v. Alvarez,
Neither of these concerns -- finality nor jurisdictional overlap -- is implicated when a district court reconsiders one of its own interlocutory orders. The Federal Rules do not specifically mention motions to reconsider interlocutory orders, but rule 54(b) makes the following open-ended proclamation about their mutability:
When an action presents more than one claim for relief -- whether as a claim, counterclaim, crossclaim, or third-party claim -- or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.
Fed. R. Civ. P. 54(b) (emphases added). Rule 54(b) thus (i) provides that a district court can freely reconsider its prior rulings; and (ii) puts no limit or governing standard on the district court's ability to do so, other than that it must do so "before the entry of judgment." Fed. R. Civ. P. 54(b).
The Tenth Circuit has not cabined district courts' discretion beyond what rule 54(b) provides: "[D]istrict courts generally remain free to reconsider their earlier interlocutory orders." Been v. O.K. Indus.,
The best approach, in the Court's eyes, is to analyze motions to reconsider differently depending on three factors. Cf. Been v. O.K. Indus., Inc.,
Second, the Court should consider the case's overall progress and posture, the motion for reconsideration's timeliness relative to the ruling it challenges, and any direct evidence the parties may produce, and use those factors to assess the degree of reasonable reliance the opposing party has placed in the Court's prior ruling. See 18B Charles Alan Wright, et al, Federal Practice & Procedure § 4478.1 (2d ed.) ("Stability becomes increasingly important as the proceeding nears final disposition .... Reopening should be permitted, however, only on terms that protect against reliance on the earlier ruling."). For example, if a defendant (i) spends tens of thousands of dollars removing legacy computer hardware from long-term storage; then (ii) obtains a protective order in which the Court decides that the defendant need not produce the hardware in discovery; then (iii) returns the hardware to long-term *1112storage, sustaining thousands more in expenses; and (iv) several months pass, then the plaintiffs should face a higher burden in moving the Court to reconsider its prior ruling that they faced in fighting the motion for protective order the first time.
Third, the Court should consider the Servants of the Paraclete v. Does grounds. The Court should be more inclined to grant motions for reconsideration if the movant presents (i) new controlling authority -- especially if the new authority overrules prior law or sets forth an entirely new analytical framework; (ii) new evidence -- especially if the movant has a good reason why the evidence was not presented the first time around; or (iii) a clear indication -- one that manifests itself without the need for in-depth analysis or review of the facts -- that the Court erred.
These three factors should influence the degree to which the Court restricts its review of a prior ruling, but they do not necessarily mean that the Court should always apply a deferential standard of review. The Court should pause before applying a standard of review to its own interlocutory orders that is more deferential than the standard that the Court of Appeals will apply to it, unless the Court concludes that the alleged error in the prior ruling was harmless, or the party moving for reconsideration waived their right to appeal the alleged error by not raising the appropriate argument. Even in circumstances where the Court concludes that it is insulated from reversal on appeal, there are principled reasons for applying a de novo standard. After all, if the Court was wrong in its earlier decision, then, generally speaking, it is unjust to maintain that result -- although the Court should weigh this injustice against any injustice that would result from upending the parties' reliance on the earlier ruling, which is the balancing test that the three factors above represent.
What the Court means by "restricting its review" is less about applying a deferential standard of review -- although that may be appropriate in some circumstances -- and more about reducing (i) the depth of the Court's analysis the second time around -- thus conserving judicial resources; and (ii) the impositions that relitigation of the prior ruling will impose on the party opposing the motion for reconsideration. The Court should consider the time and expense that the party opposing reconsideration spent in winning the earlier ruling, and should try to prevent that party from having to bear the same impositions again. Basically, even if the Court ultimately analyzes a motion to reconsider under the same standard that it analyzed the motion that produces the earlier ruling, it should analyze the motion in a different way -- one focused on reducing the litigation burdens of the party opposing reconsideration. For example, when a party moves the Court for a preliminary injunction, standard practice is that the Court holds an evidentiary hearing as a matter of course, regardless whether it looks as if the party has a good chance of prevailing. If the party loses and the Court denies the injunction, however, and the party moves for reconsideration, the party should not be entitled to the presumption of an evidentiary hearing merely because he or she received that presumption the first time the Court considered the motion.
In light of these statements, it is perhaps better to characterize the increased burden that a movant for reconsideration faces as one of production, and not of persuasion. The Court analyzes motions to reconsider by picking up where it left off in the prior ruling -- not by starting anew. Parties opposing reconsideration can do the same, and they may stand on whatever evidence and argument they used to win the earlier ruling. Movants for reconsideration, on the other hand, carry the *1113full burden of production: they must persuade the Court, using only the evidence and argument they put before it, that it should change its prior ruling; they must do all of the legwork, and not rely on the Court to do any supplemental fact-finding or legal research; and they must convincingly refute both the counterarguments and evidence that the opposing party used to win the prior ruling and any new arguments and evidence that the opposing party produces while opposing the motion to reconsider. Unlike the motion that produced the prior ruling, a motion to reconsider is not -- and is not supposed to be -- a fair fight procedurally. The deck is stacked against a movant for reconsideration, and if such a movant hopes to prevail, he or she must have not only a winning legal position, but the work ethic and tenacity to single-handedly lead the Court to his or her way of thinking. See N.M. v. Valley Meat Co., LLC, No. CIV 14-1100,
ANALYSIS
The Court will deny Patterson's Reconsideration Motion. The Court concludes that the Court's decision in the MOO to sever the unilateral carve-out provision from the parties' Arbitration Agreement did not constitute manifest legal error. Patterson has not, therefore, provided the Court with sufficient basis warranting it to reconsider its MOO under rule 54(b) of the Federal Rules of Civil Procedure. The Court will deny Patterson's Reconsideration Motion.
I. THE PARTIES ASK THE COURT TO RECONSIDER ONLY ITS DETERMINATION THAT THE UNILATERAL RELIEF PROVISION MAY BE SEVERED FROM THE ARBITRATION AGREEMENT.
Patterson asserts that the Court correctly determined that the injunctive relief provision was a unilateral carve-out provision benefitting exclusively the stronger party, Nine Energy, and therefore substantively unconscionable and unenforceable under New Mexico law. See Reconsideration Motion at 1. Nor does Patterson contest the Court's determination that the sixty-day provision is not unconscionable and, if it is, that the sixty-day provision is severable. See MOO at 2,
II. THE COURT JUSTIFIABLY AND NON-EXCLUSIVELY RELIED ON PADILLA IN DETERMINING THE SEVERABILITY OF THE UNILATERAL RELIEF PROVISION.
Patterson contends that the Court should have followed Cordova and Rivera in determining the unilateral relief provision's severability from the Arbitration Agreement and contends that, based on Cordova, the Court's reliance on Padilla constitutes manifest legal error. See Reconsideration Motion at 1-2. Patterson argues that, because Padilla dealt with a post-arbitration appeal provision, the Court should not have relied on Padilla in making the severability determination. See Reconsideration Motion at 4. Nine Energy responds that the Supreme Court of New Mexico has never overruled Padilla and *1114that the Supreme Court of New Mexico in Cordova cited favorably to Padilla for its recognition that severance is one possible remedial action a court may take to rectify unconscionability in arbitration agreements. See Response at 1-2.
Contrary to Patterson's implication, the Court did not rely on Padilla, "rather than Rivera or Cordova," to determine that the unilateral relief provision is severable from the Arbitration Agreement. Reconsideration Motion at 4. In the section of the Court's MOO analyzing the unilateral relief provision's severability, the Court cited to -- in order of their citation in the MOO -- Cordova , daltonDalton v. Santander Consumer USA, Inc., Padilla, Rivera, and State ex rel. State Hwy. Transp. Dep't v. Garley.See MOO at 41-42 & 42 nn.10 & 11,
If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.
Cordova,
III. THE COURT REAFFIRMS ITS DETERMINATION IN THE MOO THAT THE UNILATERAL RELIEF PROVISION IS SEVERABLE BECAUSE IT IS NOT CENTRAL TO THE ARBITRATION SCHEME.
Patterson acknowledges the centrality test from Cordova multiple times throughout his Motion. See Reconsideration Motion at 2-3, 5-7. The Court concludes, however, that Patterson misunderstands or misconstrues the centrality test to suggest that any provision exempting any claim from arbitration is central to the arbitration scheme. Patterson asserts that "the exemptions of certain claims from *1115arbitration are so central to the agreement that they are incapable of separation from the agreement to arbitrate, irrespective of any savings clause included in the agreement." Reconsideration Motion at 3 (quoting Figueroa v. THI of N.M. at Casa Arena Blanca, LLC,
While we agree that arbitration obligations do not have to be completely equal, and that parties may freely enter into reasonable agreements to exempt certain claims from arbitration, we refuse to enforce an agreement where the drafter unreasonably reserved the vast majority of his claims for the courts, while subjecting the weaker party to arbitration on essentially all of the claims that party is likely to bring. See Rivera,2011-NMSC-033 , ¶ 53, [150 N.M. 398 , 259] P.3d 803. Defendant cannot avoid the equitable doctrine of unconscionability by drafting an agreement that reserves its most likely claims for a judicial forum, and provides some exemptions from arbitration to the resident so that there is some appearance of bilaterality, when that exemption is completely meaningless in practicality because the resident would rarely, if ever, raise that type of claim against the nursing home.
Cordova had no rights under the form agreement to go to any court for any reason whatsoever, including disputes about the validity of any of World Finance's form loan or arbitration documents, issues about the terms of World Finance's contract, claims for fraud and misrepresentation, grievances related to servicing or collection, or claims based on federal or state consumer protections, such as the New Mexico Unfair Practices Act, and tortious debt-collection causes of action asserted in Cordova's complaint. Those are the claims a borrower is most likely to litigate in a dispute with a lender, and the very ones the lender is least likely to want to litigate. It is highly unlikely that World Finance will find itself at odds with the contractual terms of its own form agreements, *1116or the circumstances of its lending or collection practices, or claim it was the victim of a fraudulent consumer scheme, or have any other reason to make a claim against its borrowers for violation of consumer protection laws.
Here, the Arbitration Agreement states:
Notwithstanding the provisions of this Agreement, the Company may bring an action in any court of competent jurisdiction for injunctive relief to enforce the Employee's obligations with respect to the confidentiality and protection of trade secrets and other non-public information belonging to the Company, or with respect to any non-competition, non-solicitation, or any other restrictive covenant provisions in any separate agreement between the Company and the Employee.
Arbitration Agreement at 4. The Court did not conclude here that the trade secrets and restrictive-covenant-related claims are the claims that Patterson is most likely to bring, and that Nine Energy is least likely to litigate. This case is about a failure to pay overtime wages, for instance, and has "nothing to do with seeking injunctive relief to protect confidential information." MOO at 42,
All legal and equitable claims, demands, disputes, controversies, issues, and disagreements, of whatever nature or kind, whether in contract, tort, under statute or regulation, or any other law or source of legal obligation, including but not limited to those relating to, concerning, or arising out of this Agreement; the interpretation or subject matter of this Agreement or program; the application for employment and employment of any Employee; wages or other compensation received by or owed to any Employee, including minimum wage and overtime pay; employee benefits; any matters concerning the Parties' relationship; any matters concerning the Employee's working conditions, including allegations of discrimination, harassment, and retaliation; any personal injury or fatality allegedly incurred in any way relating to the workplace or employment by the Company; any prior resolution of settlement of a Dispute; and all others arising out of Employee's employment or application for employment with Company, including any past, present, and future employment, and including but not limited to those relating to the denial, separation, terms, conditions, and benefits of such employment, except for those matters described in the section entitled "Exclusions" in this Agreement.
Arbitration Agreement at 2. The Arbitration Agreement submits all disputes to final and binding arbitration. See Arbitration Agreement at 3. The Arbitration Agreement also permits Patterson to file a "complaint or charge regarding a Dispute with any federal, state, or local governmental agency, including without limitation the Equal Employment Opportunity Commission, the Department of Labor, and the National Labor Relations Board." Arbitration Agreement at 4. Patterson may, in other words, approach an agency to represent his interests in litigation. Unlike the agreement in Cordova, the Arbitration Agreement here does not leave Patterson with "no rights under the form agreement *1117to go to any court for any reason whatsoever," while Nine Energy enjoys those rights. Cordova,
Patterson seems to suggest that, the more unconscionable a provision is, the more central it is to the arbitration scheme. See Reconsideration Reply at 2 ("Clearly, the unilateral carve out here ... is more unconscionable than the Agreement in Cordova."). The Supreme Court of New Mexico, however, has not concluded that the degree of unconscionability of the provision at issue bears on the decision to sever. Instead, the Supreme Court of New Mexico has counseled that the agreement which remains after severance must be one on which the parties agreed, so as to "avoid a type of judicial surgery that inevitably would remove provisions that were central to the original mechanisms for resolving disputes between the parties." Cordova,
IV. THE LACK OF A SAVINGS CLAUSE DOES NOT INDICATE THE PARTIES' MANIFESTED INTENT TO DISCARD THE ENTIRE ARBITRATION AGREEMENT IF A SINGLE PROVISION IS FOUND UNCONSCIONABLE.
Patterson argues that, because the Arbitration Agreement lacks a savings or severance clause manifesting the parties' intent to save the contract if a particular provision is rendered unenforceable, and, under New Mexico law, the parties' manifested intention governs the severability determination, the Court committed manifest legal error in severing the provision despite the parties' lack of manifested intention to save the agreement. See Reconsideration Motion at 7-8 (citing Arrow Gas Co. of Dell City v. Lewis,
Considering the strong state and federal public policies in favor of arbitration, see Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
V. TATUM V. PROBUILD, INC. IS NOT BINDING ON THE COURT, AND, TAKEN FOR ITS PERSUASIVE VALUE, DOES NOT ALTER THE COURT'S ANALYSIS OR CONCLUSION.
Patterson cites to Tatum v. ProBuild Co., LLC, and contends that Senior Judge *1119Hansen concludes in Tatum v. ProBuild Co., LLC that a nearly mutual injunctive relief clause for the enforcement of restrictive covenants rendered the entire arbitration agreement at issue unenforceable. See Reconsideration Notice at 1. Patterson provides the Court with a copy of Judge Hansen's opinion in Tatum v. ProBuild Co., LLC. Nine Energy then argued that Senior Judge Hansen did not discuss severability in Tatum v. ProBuild Co., LLC.See Oct. 25 Tr. at 9:7-11 (Mann). Patterson argued that, in Tatum v. ProBuild Co., LLC, Senior Judge Hansen concluded that the provision at issue was one-sided, because both parties could not go to court to address the same occurrence at the same time. See Oct. 25 Tr. at 12:3-7 (Siegel).
Tatum v. ProBuild Co., LLC is a District of New Mexico opinion and is not binding on the Court. See, e.g., Nat'l Union Fire Ins. v. Allfirst Bank,
Without the injunctive relief provision, not only does the Arbitration Agreement "now contain[ ] a mutual agreement to binding arbitration,"2003-NMSC-011 , ¶ 18,133 N.M. 661 ,68 P.3d at 909 , it contains some unilateral carve-outs that benefit exclusively the weaker party with less bargaining power. See Arbitration Agreement at 3 (noting that the Arbitration Agreement "does not apply to claims for workers' compensation benefits, unemployment compensation benefits" and other claims that only an employee would bring).
MOO at 42 n.10,
VI. THE COURT DECLINES TO CERTIFY THE QUESTION TO THE SUPREME COURT OF NEW MEXICO, WHICH HAS ALREADY DECIDED THE RELEVANT QUESTION.
Patterson moves the Court to certify to the Supreme Court of New Mexico the question whether the unilateral carve-out provision is severable from the Arbitration Agreement. Because the Court concludes that the Supreme Court of New Mexico has spoken on the issue, the Court will not certify the question to the Supreme Court of New Mexico. Pursuant to *1120
While certifying questions to the state supreme court can "save time, energy, and resources," Lehman Bros. v. Schein,
*1121Martinez v. Martinez, No. CIV 09-0281 JB/LFG,
The Tenth Circuit disfavors late requests for certification. See Massengale v. Okla. Bd. of Exam'rs in Optometry,
IT IS ORDERED that: (i) the Court reaffirms its determination in the MOO, based on the Court's correct, but not exclusive, reliance in Padilla, that the injunctive relief provision in the Arbitration Agreement is severable; and (ii) the Court declines to certify the severability question to the Supreme Court of New Mexico. Accordingly, the Plaintiff's Reconsideration Motion, filed September 15, 2018 (Doc. 25) is denied.
355 F. Supp. 3d 1065 (Patterson v. Nine Energy Serv., LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.