Fed. Nat'l Mortg. Ass'n v. Prowant

• Decision Date: 21 September 2016
• Docket Number: CIVIL ACTION NO. 1:14-CV-3799-AT
• Parties: FEDERAL NATIONAL MORTGAGE ASSOCIATION, a/k/a Fannie Mae, Plaintiff, v. Teri PROWANT and Tamara Mitchell-Johnson, Defendants.
• Court: U.S. District Court — Northern District of Georgia

209 F.Supp.3d 1295

FEDERAL NATIONAL MORTGAGE ASSOCIATION, a/k/a Fannie Mae, Plaintiff,

v.Teri PROWANT and Tamara Mitchell-Johnson, Defendants.

CIVIL ACTION NO. 1:14-CV-3799-AT

United States District Court, N.D. Georgia, Atlanta Division, ATLANTA DIVISION.

Signed September 21, 2016

Teresa Lynn Reuter, Sidley Austin LLP, Chicago, IL, Wendy Lazerson, Sidley Austin LLP, Palo Alto, CA, Scott Gilbert Blews, Taylor English Duma LLP, Atlanta, GA, for Plaintiff and Counter Defendant.

Benjamin Andrew Stark, Barrett & Farahany, LLP, Atlanta, GA, C. Andrew Head, Jerilyn Elaine Gardner, Head Law Firm, LLC, Victor Severin Roberts, Barrett & Farahany, LLP, Atlanta, GA, for Defendant.

Benjamin Andrew Stark, Barrett & Farahany, LLP, Jerilyn Elaine Gardner, Head Law Firm, LLC, Atlanta, GA, for Counter Claimant.

ORDER

Amy Totenberg, United States District Judge

This declaratory judgment action is before the Court on the Parties' respective Motions for Summary Judgment. Plaintiff Federal National Mortgage Association's ("Fannie Mae") initially filed its Complaint, (Doc. 1), seeking a declaration from the Court that its dispute resolution policy ("DRP") did not permit Defendants, prior employees of Fannie Mae, to arbitrate their claims as a class. Fannie Mae also sought a declaration that only the Court (and not an arbitrator) could decide whether the DRP permitted class arbitration, as well as an injunction preventing Defendants from arbitrating their underlying claims as a class.

The underlying claims were brought by Defendants under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. ("FLSA"), in an arbitral forum. Fannie Mae, the respondent in arbitration, abruptly filed this declaratory judgment action and became the Plaintiff in federal court—while the arbitrator was deciding the very clause construction issue Fannie Mae asked the Court to decide. Fannie Mae then obtained a stipulation from the individual Defendants that this Court could decide all issues of arbitrability, and specifically the availability of class claims ("class availability")¹ , but that stipulation also reserved Defendants' right to object to and challenge Plaintiff's resort to the Court for this purpose instead of proceeding with the arbitration hearing. (Doc. 11-5 at 3.)² Plaintiff's Motion for Summary Judgment [Doc. 11] currently before the Court seeks only a declaration that the DRP does not permit class claims and an injunction preventing Defendants from asserting any.

After Plaintiff moved for summary judgment, Defendants filed three counterclaims, two of which claim that Plaintiff's court filing rendered the DRP unenforceable.³ Each of those two counterclaims also raised issues that were substantially similar to issues raised by Defendants in their response to Plaintiff's Motion for Summary Judgment. As any order on Plaintiff's Motion for Summary Judgment would likely address those issues, the Court directed Defendants to file their own Motion for Summary Judgment [Doc. 37] on the two counterclaims (1 and 2).⁴ For the following reasons, Plaintiff's Motion for Summary Judgment [Doc. 11] is DENIED and Defendants' Motion for Summary Judgment [Doc. 37] is GRANTED .

I. LEGAL STANDARD

The Court may grant summary judgment only if the record shows "that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A factual dispute is genuine if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is material if resolving the factual issue might change the suit's outcome under the governing law. Id. The motion should be granted only if no rational fact finder could return a verdict in favor of the non-moving party. Id. at 249, 106 S.Ct. 2505.

When ruling on the motion, the Court must view all the evidence in the record in the light most favorable to the non-moving party and resolve all factual disputes in the non-moving party's favor. See Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). As this matter is before the Court on cross-motions for summary judgment, the Court clarifies the standard to be used in each case. Where the moving party does not bear the burden of proof at trial, the "moving party is not required to support its motion with affidavits or other similar material negating the opponent's claim [but] simply may ... point[ ] out to the district court [ ] that there is an absence of evidence to support the non-moving party's case." Fitzpatrick v. City of Atlanta , 2 F.3d 1112, 1115 (11th Cir.1993). Alternatively, if the moving party that does not bear the burden of proof at trial "put[s] on evidence affirmatively negating the material fact" required for the non-movant to prove its case, "then the non-movant must respond with evidence sufficient to withstand a directed verdict motion at trial on the material fact sought to be negated." Id. at 1116. However, where the movant does bear the burden of proof at trial, "it must support its motion with credible evidence ... that would entitle it to a directed verdict if not controverted at trial." Fitzpatrick , 2 F.3d at 1115 (quoting United States v. Four Parcels of Real Prop. in Greene & Tuscaloosa Ctys. in State of Ala. , 941 F.2d 1428, 1438 (11th Cir.1991) ).

If the moving party meets its initial burden, whatever that burden is, in order to survive summary judgment, the non-moving party must then present competent evidence beyond the pleadings to show that there is a genuine issue for trial. Celotex Corp. v. Catrett , 477 U.S. 317, 324–26, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The essential question is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson , 477 U.S. at 251–52, 106 S.Ct. 2505.

II. BACKGROUND FACTS

No material facts are in dispute. Defendant Prowant was employed by Fannie Mae in its Atlanta, Georgia office from July 2011 through May 2012. (Declaration of Leslie Arrington ¶ 3, Doc. 11-2.) Defendant Mitchell-Johnson was employed in the same office from May 2011 through September 2012. (Id. )

A. Underlying arbitration

On or about May 19, 2014, Defendants filed a demand for arbitration with JAMS, Inc. ("JAMS") on behalf of themselves and similarly situated individuals alleging that Fannie Mae violated the FLSA's overtime provisions. (Declaration of C. Andrew Head ("1st Head Decl.") ¶ 3, Doc. 15-2.) Defendants filed that demand pursuant to Fannie Mae's Dispute Resolution Policy ("DRP") (Arrington Decl. Ex. A, Doc. 11-3), which both Defendants signed. The DRP reads, in pertinent part:

1. Arbitration as Prerequisite to Lawsuit.

If an employee⁵ has a claim that is covered under Section 2 of this Policy, he or she must arbitrate the claim under this Policy before bringing suit on it in court.

2. Claims Covered by the Policy.

This Policy applies to all claims that an employee might make against Fannie Mae ... involving a legally-protected right, that directly or indirectly relate to his or her employment or the termination of that employment [ ].

[ ]

5. Rules and procedures.

Arbitration will be conducted under the rules and procedures contained in the Policy, supplemented by J·A·M·S's Arbitration Rules and Procedures for Employment Disputes ("J·A·M·S's rules"). In the event of a conflict between J· A·M·S's rules and those contained in the Policy, the Policy will prevail.

[ ]

14. Rejection/Acceptance of the Award.

The employee may, within 30 calendar days of the date of Issuance of the Award, reject it, in its entirety, by sending a completed "Rejection of Arbitration Award" form to J·A·M·S and C & E. If the employee rejects the Award, it will not become binding on the employee or the Company, and the employee may bring suit on the claim at his or her own expense. [ ]

[ ]

16. Interpretation and Governing Law.

The arbitrator will resolve all disputes over the interpretation and applicability of the Policy, and over the arbitrability of all matters presented under it. This Policy is an agreement to arbitrate pursuant to the [Federal Arbitration Act ("FAA") ]. The Policy will, in all respects, be interpreted, enforced, and governed under the FAA.

(Id. (emphasis added).) The DRP does not use the words "class," "collective action," or "representative action." (Plaintiffs Statement of Undisputed Material Facts ¶ 3, Doc. 11-1; DRP, Doc. 11-3). As such, the DRP does not expressly provide for class claims.

Defendant Claimants filed the demand for arbitration on May 19, 2014, the arbitration proceeded. On May 23, 2014, JAMS issued its Notice of Intent to Initiate Arbitration, with both Claimants included in a case styled "Mitchell-Johnson, Tamara, et al v. Federal National Mortgage Association ." (Second Declaration of C. Andrew Head ("2d Head Decl.") ¶ 4, Doc. 31-1.) On August 19, 2014, outside the 14-day timeframe for filing an Answer under JAMS Employment Rules 9(c) and 9(f), Fannie Mae filed its Answer. (Id. ¶ 6.) In its Answer, Fannie Mae did not challenge the arbitrator's jurisdiction to decide any or all issues of arbitrability or the specific question of class availability. (Id. )

On August 28, 2014, the arbitrator "held a preliminary conference with counsel. During that hearing, in discussing the scheduling of various matters including a motion for class certification [under both JAMS class procedures and 29 U.S.C. § 216(b) ], counsel for [Fannie Mae] stated that [Fannie Mae] would want to take depositions of Claimants in connection with such motion." (JAMS Preliminary Order No. 2 at 2, Doc. 38-4.) The parties then briefed whether Fannie Mae should be permitted to take pre-certification depositions, and a hearing was held on the issue. (Id. at 3.) The arbitrator found a "legitimate need for limited...