Countrywide Financial Corp. v. Bundy
| Decision Date | 06 August 2010 |
| Docket Number | B215912,No. BS117996,BS117996 |
| Parties | COUNTRYWIDE FINANCIAL CORP. et al., Plaintiffs and Respondents, v. THOMAS BUNDY et al., Defendants and Appellants. |
| Court | California Court of Appeals Court of Appeals |
Boies, Schiller & Flexner, Caryl L. Boies, Sigrid S. McCawley and Lauren E. Fleischer for Defendants and Appellants.
Seyfarth Shaw, Andrew M. Paley, Gregg A. Fisch and Jennifer Sloane Abramowitz for Plaintiffs and Respondents.
CERTIFIED FOR PUBLICATION
APPEAL from an order of the Superior Court of Los Angeles County, Elizabeth A. White, Judge. Reversed.
Defendants, Thomas Bundy, Misty Sanchez, Kevin Prevost and David Godina, appeal from an order vacating partial arbitration awards against plaintiffs, Countrywide Financial Corporation and Full Spectrum Lending, Inc. Judge Elizabeth A. White vacated the partial arbitration awards on the ground the arbitrator committed a number of legal errors. Because of the unambiguous choice of law language in the agreements to arbitrate, we conclude we must apply the vacatur provisions applicable before a United States District Court in a case subject to the Federal Arbitration Act. (9 U.S.C. § 1 et seq.) When we apply the vacatur provisions of the Federal Arbitration Act, we conclude no grounds permitted the partial awards to be vacated. Although it is uncertain whether the manifest disregard of the law vacatur rule remains extant, we apply it and the federal excess of powers standard of judicial review to the partial awards. Thus, we reverse the order vacating the partial arbitration awards. We do not address the parties' other contentions including their statute of limitations analysis.
On August 19, 2006, defendants filed two separate arbitration demands on behalf of themselves and others similarly situated before the American Arbitration Association case Nos. 111600185806 (the Bundy-Sanchez-Prevost arbitration) and 111600185706 (the Godina arbitration). Both arbitration demands were filed against Countrywide Financial Corporation and its wholly owned subsidiary, Full Spectrum Lending, Inc. which was formed in 1996. Full Spectrum Lending, Inc. primarily handled the sub-prime loans of Countrywide Financial Corporation. But Full Spectrum Lending, Inc. also handled "prime quality" loans. The Bundy-Sanchez-Prevost arbitration was brought on behalf of "Account Executive(s)" employed at all Full Spectrum Lendingbranches whose principal function was the sale of loan products. The Godina arbitration was bought on behalf of specified "Call Center" employees. The two arbitration cases were ultimately consolidated.
The Bundy-Sanchez-Prevost arbitration demand sought classwide arbitration of claims for unpaid wages including incentive compensation, waiting penalties, costs and attorney fees pursuant to Labor Code section 200 et seq., Business and Professions Code section 17200 et seq., and common law principles. Additionally, the Bundy-SanchezPrevost arbitration demand alleged defendants failed to pay incentive compensation earned on loans originated and closed in California on a semi-monthly basis as required by Labor Code section 204 and upon termination of employment pursuant Labor Code sections 201 and 202. The precise nature of the alleged forfeiture of wages will be discussed later.
According to the Bundy-Sanchez-Prevost arbitration demand: plaintiffs employed Mr. Bundy between April and November 2005 as an account executive at Full Spectrum Lending, Inc.; classified as a "non exempt employee" under federal and state wage and hour laws, Mr. Bundy was to be paid $18,000 plus incentive compensation annually; and Mr. Bundy was to receive monthly and quarterly incentive bonuses based on the number of loans funded during the relevant pay period. According to the arbitration demand, Mr. Bundy was not paid as required by Labor Code section 204. In addition, Mr. Bundy did not receive his monthly incentive compensation for November 1 through 22, 2005. Further, he did not receive quarterly incentive compensation and quarterly compensation for loans funded between July 1 and November 22, 2005. When Mr. Bundy left plaintiffs' employ, he was owed at least $6,000 in incentive compensation.
As to Ms. Sanchez, the arbitration demand alleged she was employed by plaintiffs as an account executive between May 2004 and May 4, 2006. Prior to January 1, 2005, Ms. Sanchez was unlawfully classified as an exempt employee. Under the terms of her employment agreement she was to be paid: $2,500 for her first two months of employment; $2,000 for her third month; and $800 per month thereafter. In addition, she was to receive monthly and quarterly incentive compensation. Throughout heremployment, Ms. Sanchez did not receive compensation to which she was entitled in violation of Labor Code section 204. Further, when she left plaintiffs' employ, Ms. Sanchez did not receive monthly and quarterly incentive compensation for April 1 through May 4, 2006, and January 1 through May 4, 2006, respectively.
Mr. Prevost was a Full Spectrum Lending, Inc. account executive between August 2005 and May 17, 2006. Classified as an exempt employee, he was to be paid $18,000 annually plus monthly and quarterly incentive bonuses. Throughout his term of employment, Mr. Prevost was not paid as required by Labor Code section 204. And upon the termination of his employment, Mr. Prevost was not paid his monthly and quarterly incentive compensation between April 1, 2005, through May 17, 2006, and January 1 through May 17, 2006, respectively.
The arbitration claims were brought in the individual capacities of Mr. Bundy, Ms. Sanchez and Mr. Prevost and as members of a class of plaintiffs' former and present employees. The class members were not paid monthly and quarterly incentive compensation during the four years prior to the filing of the arbitration demand. All account executives were provided a copy of plaintiffs' "Incentive Plan." Under the terms of the "Incentive Plan," account executives were required to forfeit any monthly and quarterly bonuses earned in the last partial months and quarters respectively of their employment. The Bundy-Sanchez-Prevost arbitration demand alleges account executives have no power to negotiate different provisions.
The alleged class is, "All persons other than officers, directors or controlling persons of [plaintiffs] who were employed by [plaintiffs], were paid according to the Plan and therefore were not properly paid within the time frame set forth in California Labor Code § 204." The Bundy-Sanchez-Prevost arbitration demand refers to this class as the "Claimant Class." Additionally, the Bundy-Sanchez-Prevost arbitration demand seeks to represent the following subclass, "Persons, other than officers, directors, or controlling persons of [plaintiffs] who were employed by [plaintiffs], were paid according to the Plan, and left the employment of [plaintiffs], but were not paid incentive compensation earned on loans that funded during their employment."
The Godina arbitration demand alleges many of the same matters in terms of plaintiffs' operations. Mr. Godina was an account executive at the Full Spectrum Lending, Inc. Call Center in Rosemead, California between December 2, 2002, and December 8, 2005. Mr. Godina was to be paid $18,000 per year plus incentive compensation. The amount of incentive compensation payable to employees was calculated on funded loans under specified circumstances. The incentive compensation was to be paid on a monthly and quarterly basis. Prior to January 1, 2005, Mr. Godina was improperly classified as an exempt employee. Since January 1, 2005, Mr. Godina was classified as a non-exempt employee under federal and state wage and hour laws.
According to his arbitration demand, plaintiffs failed to compensate Mr. Godina as required by Labor Code section 204. And upon his discharge, Mr. Godina was not paid his monthly incentive compensation for loans funded from November 1 through December 8, 2005. Moreover, Mr. Godina did not receive quarterly incentive compensation for loans that funded July 1 through December 8, 2005. When Mr. Godina left plaintiffs' employ, he was owed in excess of $6,000 in incentive compensation.
Mr. Godina also brought his arbitration demand on behalf of similarly situated Call Center employees who had not been paid their monthly or quarterly incentive compensation in compliance with Labor Code section 204. Moreover, Mr. Godina filed the arbitration demand on behalf of former employees who were not paid their monthly and quarterly incentive compensation in the "last full and partial months and quarters respectively, of employment" while employed by plaintiffs. As in the case of the BundySanchez-Prevost arbitration demand, the forfeiture clause in Mr. Godina's employment agreement required he and other class members retain employment with plaintiffs in order to receive all incentive compensation due to employees. Apart from the different employee groups, the two potential classes in the Godina arbitration demand are the same as those alleged in the Bundy-Sanchez-Prevost arbitration demand. The claims and relief sought in the Godina arbitration demand are the same being pursued in the BundySanchez-Prevost arbitration.
In their arbitration demands, defendants seek class certification on behalf of themselves and others similarly situated regarding fellow employees' incentive compensation clauses contained in their employment agreements. The continuing tenure provision required an employee to work throughout what was designated as the "Plan Month" and the entire following month in order to receive the monthly incentive payment. Under the terms of the plan, an employee, who leaves defendants' employment either voluntarily or involuntarily before the last day of the month following the "Plan Month," will not receive any portion of the...
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