Droesch v. Wells Fargo Bank, N.A.

• Decision Date: 06 July 2021
• Docket Number: 20-cv-06751-JSC
• Parties: DENISE DROESCH, et al., Plaintiffs, v. WELLS FARGO BANK, N.A., Defendant.
• Court: U.S. District Court — Northern District of California

DENISE DROESCH, et al., Plaintiffs, v. WELLS FARGO BANK, N.A., Defendant.

No. 20-cv-06751-JSC

United States District Court, N.D. California

July 6, 2021

ORDER RE: WELLS FARGO'S MOTION FOR RECONSIDERATION RE: DKT. NO. 47

JACQUELINE SCOTT CORLEY, United States Magistrate Judge.

Plaintiffs Denise Droesch and Shakara Thompson, on behalf of themselves and all others similarly situated, filed this Fair Labor Standards Act (FLSA) collective action against their former employer Wells Fargo Bank N.A.^[1] Wells Fargo moved to compel arbitration of Plaintiff Droesch and certain Opt-in Plaintiffs' claims, which the Court granted. (Dkt. No 40.) The Court also granted Plaintiff Thompson's motion for conditional certification under Section 216(b) of the FLSA. (Dkt. No. 42.) Wells Fargo thereafter requested leave to file a motion for reconsideration of the portion of the Court's conditional certification order which required notice of the FLSA action to individuals who signed arbitration agreements. (Dkt. No. 45.) The Court granted Wells Fargo's motion for leave to file a motion for reconsideration. (Dkt. No. 46.) The motion is now fully briefed. (Dkt. Nos. 47, 48.) After carefully considering the parties' briefs and the relevant legal authority, the Court concludes that oral argument is unnecessary see Civ. L.R. 7-1(b), and GRANTS the motion for reconsideration in part. Wells Fargo will be given the opportunity to show by a preponderance of the evidence that employees signed valid and enforceable arbitration agreements.

DISCUSSION

A motion for reconsideration is an “extraordinary remedy to be used sparingly in the interests of finality and conservation of judicial resources.” Kona Enters v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). Thus, “a motion for reconsideration should not be granted, absent highly unusual circumstances, unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law.” 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999). Under Civil Local Rule 7-9(b), a party seeking reconsideration of an interlocutory order must show one of the following: (1) “a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought”; (2) “[t]he emergence of new material facts or a change of law occurring after the time of such order; or (3) [a] manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court before such interlocutory order.” N.D. Cal. Civ. L.R. 7-9(b).^[2] In addition, a district court retains jurisdiction to “reconsider its prior rulings so long as it retains jurisdiction over the case.” United States v. Smith, 389 F.3d 944, 948 (9th Cir. 2004) (citing City of Los Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 888 (9th Cir. 2001)).

Wells Fargo moves for reconsideration of the portion of the Court's FLSA conditional certification order which deferred ruling on whether employees who had signed arbitration agreements with Wells Fargo should be excluded from the conditional certification order. (Dkt. No. 42 at 8.) In doing so, the Court concluded that the question of enforceability of arbitration agreements is better reserved for step two FLSA certification and noted that this was consistent with the approach of other courts in this District. (Id. at 8 (citing Herrera v. EOS IT Mgmt. Sols., Inc., No. 20-CV-01093-LHK, 2020 WL 7342709, at *9 (N.D. Cal. Dec. 14, 2020) (collecting cases))).

Wells Fargo argues that the Court erred in doing so because here-unlike in Herrera and the other cases-the Court has already ruled on the enforceability of the at-issue arbitration agreement. Wells Fargo insists that its records show that of the 34, 000 current and former employees who fall within the scope of the Court's Conditional Certification Order, 27, 000 have signed binding arbitration agreements. Wells Fargo offers a declaration from Alesha Lusk-Herron who attests that since December 11, 2015, Wells Fargo has required employees to sign arbitration agreements as a condition of employment and that the arbitration agreements have remained substantially the same.^[3] (Dkt. No. 47-2 at ¶¶ 3-5.) Under these circumstances, Wells Fargo argues that sending notice to these 27, 000 individuals would result in (1) confusion and frustration among those who receive the notice, (2) administrative burdens on the Court to add thousands of individuals who claims must then be stayed; and (3) “manifest injustice” to Wells Fargo by stirring up litigation. (Dkt. No. 47 at 8.)

Plaintiffs counter that this evidence is not new and that Wells Fargo could have presented it with its opposition to the certification motion. Plaintiffs also suggest that the Court lacks the ability to reconsider its prior ruling. (Dkt. No. 48 at 13.) As to the latter point, not so. The Court retains inherent authority to modify the FLSA conditional certification order and reconsider its prior rulings. Campbell v. City of Los Angeles, 903 F.3d 1090, 1110 (9th Cir. 2018) (“[T]he proper means of managing a collective action ... is largely a question of ‘case management,' and thus a subject of substantial judicial discretion.”) (internal citations omitted); see also City of Los Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 888 (9th Cir. 2001) (holding that the “district court[ ha]s power to reconsider its own interlocutory order provided that the district court has not been divested of jurisdiction over the order”).

The Court thus turns to the merits of Wells Fargo's arguments. While the Ninth Circuit has not had the opportunity to consider whether FLSA notice should be provided to individuals who signed arbitration agreements, the Seventh and the Fifth Circuits have considered this issue and both have concluded that it is not appropriate to send notice to employees with valid arbitration agreements. See Bigger v. Facebook, Inc., 947 F.3d 1043, 1050 (7th Cir. 2020) (“we conclude that a court may not authorize notice to individuals whom the court has been shown entered mutual arbitration agreements waiving their right to join the action.”); In re JPMorgan Chase & Co., 916 F.3d 494, 501 (5th Cir. 2019) (“we hold that district courts may not send notice to an employee with a valid arbitration agreement unless the record shows that nothing in the agreement would prohibit that employee from participating in the collective action”). In both Bigger and JPMorgan, the courts held that the employer must be provided the opportunity to show that the employees entered into a valid arbitration agreement. Bigger, 947 F.3d at 1050 (“if a plaintiff contests [the arbitration agreement], then-before authorizing notice to the alleged ‘arbitration employees'-the court must permit the parties to submit additional evidence on the agreements' existence and validity. The employer seeking to exclude employees from receiving notice has the burden to show, by a preponderance of the evidence, the existence of a valid arbitration agreement for each employee it seeks to exclude from receiving notice.”); JP Morgan, 916 F.3d at 503 (“The court should permit submission of additional evidence, carefully limited to the disputed facts, at the conditional-certification stage. Where a preponderance of the evidence shows that the employee has entered into a valid arbitration agreement, it is error for a district court to order notice to be sent to that employee as part of any sort of certification.”).

A similar pragmatic approach is warranted here. First, in opposing Wells Fargo's motion to compel arbitration Plaintiffs' arguments-which the Court rejected-related entirely to the alleged procedural and substantive unconscionability of the arbitration agreement; that is, Plaintiffs did not argue that there was something beyond the agreement itself or unique to Plaintiffs which precluded enforcement of the agreements. (Dkt. No. 30.) Nor...