United States District Court, N.D. Texas
MEMORANDUM OPINION AND ORDER
A. Varlan CHIEF UNITED STATES DISTRICT JUDGE
civil action is before the Court on multiple motions filed by
the parties. These are: (1) defendant's Motion to Dismiss
or, in the Alternative, Transfer Venue [Doc. 5]; (2)
defendant's Motion for Sanctions Pursuant to 28 U.S.C.
§ 1927 [Doc. 7]; (3) defendant's Motion to Transfer
the Claims of the Opt-In Plaintiffs [Doc. 46]; (4)
defendant's Motion for Rule 16 Conference and for a Stay
of Discovery and Other Pretrial Deadlines [Doc. 55]; (5)
defendant's Supplemental Motion to Transfer the Claims of
the Opt-In Plaintiffs [Doc. 66]; and (6) plaintiff James
Cobble's Expedited Motion to Conditionally Certify
Collective Action and Facilitate Notice to Potential Opt-In
Plaintiffs [Doc. 71].
Court previously referred motions (3), (4), (5) and (6) above
to United States Magistrate Judge Clifton L. Corker for his
consideration [Docs. 58, 76-77]. On November 2, 2017,
Magistrate Judge Corker entered a Report and Recommendation
(the “R&R”), in which he recommends that the
Court grant motions (3) and (5), transfer this action to the
United States District Court for the Northern District of
Texas, and deny motions (4) and (6) as moot. Pursuant to 28
U.S.C. § 636(b)(1)(C), the parties had fourteen days
from service of the R&R in which to file any objections.
Plaintiff timely filed several objections to the R&R on
November 16, 2017 [Doc. 87], to which defendant responded
[Doc. 88]. For the reasons explained below, the Court will
adopt the recommendations of the R&R in whole and
transfer the claims of all plaintiffs to the Northern
District of Texas.
case concerns allegations of unpaid overtime wages under the
federal Fair Labor Standards Act (the “FLSA”), 29
U.S.C. §§ 201-19. Plaintiff seeks to represent all
similarly situated Field Sales Managers (the
“FSMs”) whom defendant employed in the past three
years to service its account with Samsung Electronics
America, Inc., and to whom it allegedly failed to pay
overtime wages [Doc. 1 ¶¶ 1-2]. Plaintiff's
complaint asserts that defendant employed hundreds of FSMs
who worked over forty hours per week but did not receive
sufficient overtime pay [Id. ¶¶ 28-29].
heart of the present dispute is, however, identifying the
proper forum for this action. Defendant submits that, as a
condition of employment, all FSMs signed various employment
agreements (the “Agreements”) [Doc. 6 p. 2]. One
of these was a Mutual Arbitration Agreement (the
“MAA”), which allegedly requires the FSMs to
submit all non-excepted disputes to arbitration
[Id.]. The MAA also contains a waiver of the
FSMs' right to bring a collective action [Id. at
2-3]. Defendant notes that the MAA provides a mechanism for
employees to opt out of the agreement by delivering a
completed opt-out form to the Director of Human Resources
within fifteen days of receipt of the MAA [Id. at 3
(citing Doc. 6-2 ¶ 10)]. Defendant submits that none of
the FSMs involved in this litigation ever completed this
further submits that the Agreements contain a provision
selecting Texas law to govern and fixing venue in Tarrant
County, Texas [Id. at 13]. These choice of law and
forum selection clauses reside in a document distinct from
the MAA (the “Employment Agreement”), but are
expressly made applicable to all of the Agreements [Doc. 6-3
pp. 19- 20]. The sample Employment Agreement provided by
defendant states as follows:
These Agreements shall be governed by the laws of the State
of Texas, notwithstanding the application of any choice of
law principles. The Mutual Arbitration Agreement shall be
governed by the Texas Arbitration Act and the Federal
Arbitration Act. Any litigation or proceeding that may be
brought by either party involving the enforcement of these
Agreements or the rights, duties, or obligations of any party
to these Agreements shall be brought exclusively in Tarrant
County in the state of Texas. [The FSM] hereby consents to
jurisdiction and venue in Tarrant County, Texas as
consideration for these Agreements.
[Doc. 6-3 p. 20]. Defendant asserts that all plaintiffs here
signed identical choice of law and forum selection clauses at
the time they began their employment.
has, however, been able to produce signed Agreements for only
some of the FSMs. Specifically, defendant has produced
Agreements for many of the opt-in plaintiffs, but not for
others and not for plaintiff Cobble [See Id. at 2
n.2; Docs. 47-2-47-16; Docs. 66-1-66-3]. Defendant explains
that many of the original images of the electronic
Agreements-including the MAAs and Employment Agreements-were
lost after defendant's business relationship with its
former onboarding software vendor, Enwisen, ended [Doc. 6 p.
2 n.2]. But defendant asserts that it would have been
impossible for any putative plaintiff to have completed the
hiring process without executing the Agreements, given the
nature of the onboarding software in use at the time
[Id. at 2]. Indeed, according to defendant, a
prospective employee who tried to complete the onboarding
process without signing the Agreements would have received an
error message and could not have moved forward in the process
[Id. (citing Doc. 6-3 ¶ 13)].
has provided the declaration of Director of Human Resources
Chian Burks to substantiate this explanation [Doc. 6-3].
Burks explains that, to apply to work for defendant, an FSM
would have had to submit an application through the Enwisen
portal and provide an email address [Id. ¶ 3].
If defendant decided to hire her, the FSM would then have
received an email with a link to the Enwisen onboarding
portal and a unique username and password [Id.
¶ 4]. Once the FSM logged in, the onboarding software
would have prompted her to complete a series of steps,
including reviewing and acknowledging the Agreements
[Id. ¶ 6]. For the Employment Agreement in
particular, the FSM was required to scroll through the entire
document and sign her name in the empty box next to the words
“Employee Signature” [Id. ¶ 7]. The
FSM could not advance to the next step without doing so
[Id.]. The onboarding software would fill in the
date of execution field, mark the document as “Signed
Electronically, ” and save a copy in PDF format
[Id. ¶ 8]. The FSM was also given an
opportunity to save or print a copy [Id.
¶¶ 7, 10]. Burks further explains that defendant
ended its use of the Enwisen software in late 2015, after
which Enwisen stored electronic copies of past Agreements
“for only a relatively short window of time”
[Id. ¶ 12]. Burks thus avers that, while
defendant no longer has access to plaintiff's original
Agreements, he did complete the onboarding process
[Id. ¶¶ 11, 13].
denies that he ever signed an MAA, noting that defendant has
been unable to produce the original, signed documents [Doc.
16 pp. 5-7]. Defendant has also been unable to produce the
email that defendant allegedly would have sent to him with
links to the onboarding documents [Id. at 6].
Plaintiff asserts that this shows no such email was ever
sent, as defendant admits that several of its human resources
personnel would have been copied on the email [Id.].
Plaintiff has also submitted a sworn declaration in which he
states that he: (1) was never given nor signed an MAA; (2)
has searched his email but has been unable to find an email
from defendant containing an MAA; and (3) was never told that
his employment was governed by an arbitration agreement [Doc.
16-1 ¶¶ 8-10]. This declaration does not, however,
address the Employment Agreement or the choice of law and
forum selection clauses. Furthermore, none of the opt-in
plaintiffs have submitted declarations or other evidence
denying they consented to the Agreements.
to defendant, plaintiff and his counsel have repeatedly
engaged in forum shopping to attempt to evade the
Agreements' arbitration, class action, and forum
selection provisions [Doc. 6 p. 3]. Defendant asserts that
plaintiff's counsel originally filed a class action
complaint on behalf of all FSMs in the Middle District of
Florida, but then dismissed the case after defendant's
counsel brought the MAA to plaintiff's counsel's
attention [Vine v. 20/20 Commc'ns, Inc., No.
2:15-cv-687, Doc. 9 (M.D. Fla. Dec. 7, 2015)].
Plaintiff's counsel then filed a complaint with the
National Labor Relations Board, where the parties stipulated
that all of defendant's employees had to sign an MAA
through the Enwisen onboarding portal before being hired
[Doc. 6 pp. 3-4; Doc. 6-4 ¶¶ 5-6]. Next,
plaintiff's counsel filed eighteen separate, but
substantively identical arbitrations on behalf of various
FSMs, including plaintiff [Doc. 6 p. 4]. According to
defendant, plaintiff's counsel later amended these
submissions to assert collective action claims, contrary to
the MAA [Id.]. Defendant believes this was an
attempt to sidestep the American Arbitration Association
(“AAA”)'s threshold review for collective
action waivers [Id. at 4-5].
then brought suit in the Northern District of Texas, asking
that court to enjoin the FSMs from pursuing class arbitration
[20/20 Commc'ns, Inc. v. Blevins, No.
4:16-cv-810-Y, Doc. 1 (N.D. Tex. Aug. 31, 2016)]. Defendant
asserts that plaintiff here and his co-defendants in that
action specifically admitted to having signed MAAs and to
having instituted arbitration proceedings because the MAAs
required them to do so [No. 4:16-cv-810-Y, Doc. 11 pp. 2-4].
Around the same time, plaintiff's counsel filed a class
action in the Northern District of Illinois, asserting the
same claims as in the pending arbitrations [Richmond v.
20/20 Commc'ns, Inc., No. 1:16-cv-6051, Doc. 1 (N.D.
Ill. June 9, 2016)]. Defendant believes this was an attempt
to take advantage of recent Seventh Circuit case law on the
enforceability of class action waivers [Doc. 6 p. 5].
Defendant then moved for the Northern District of Illinois to
transfer the case to the Northern District of Texas, relying
on the Agreements' forum selection clause [No.
1:16-cv-6051, Doc. 46]. The court granted this motion,
finding that the forum selection clause was enforceable and
applied to the plaintiffs' FLSA claims [No. 1:16-cv-6051,
transfer, the plaintiffs in the Richmond case
voluntarily dismissed the action [Richmond v. 20/20
Commc'ns, Inc., No. 4:16-cv-994-Y, Doc. 90 (N.D.
Tex. Dec. 9, 2016)]. Plaintiff Cobble's arbitration had
remained pending before the AAA during this time period, with
little progress made [Doc. 6 p. 6]. Finally, after more than a
year of arbitration proceedings, plaintiff unilaterally
withdrew his arbitration submission and filed a complaint in
this Court, seeking identical relief [Doc. 1].
casts this procedural history in a different light. Plaintiff
submits that he only sought arbitration in the first place
because defendant's counsel told his counsel that he had
signed an MAA [Doc. 16 p. 5]. Plaintiff notes that, in a
cover letter to his arbitration submission, he requested that
the AAA reject the filing for lack of jurisdiction if
defendant did not produce a signed arbitration agreement
within twenty days [Id.]. Plaintiff submits that the
AAA did not ask defendant to produce an arbitration agreement
for five months, at which time defendant's counsel
admitted it could not locate plaintiff's Agreements
[Id. at 5-6]. Plaintiff further asserts that, after
he amended his arbitration submission to add collective
action claims, defendant failed to ever respond to the
amended submission [Id. at 7]. Instead, defendant
responded by seeking declaratory and injunctive relief in the
Northern District of Texas [See No. 4:16-cv-810-Y,
Doc. 1]. Defendant later filed motions for a preliminary
injunction and temporary restraining order in that case,
which plaintiff opposed [No. 4:16-cv-810-Y, Docs. 5, 27, 33,
39]. The Northern District of Texas denied both motions,
defendant filed an interlocutory appeal, and the parties are
currently litigating that appeal before the Fifth Circuit
[No. 4:16-cv-810-Y, Docs. 35, 52-53]. Plaintiff submits that
the arbitration proceedings were “essentially held in
abeyance” during these federal court proceedings, until
plaintiff withdrew his arbitration submission and filed this
action [Doc. 16 pp. 9-10].
responded to plaintiff's complaint in this action by
moving the Court to dismiss and compel arbitration or, in the
alternative, to transfer the case to the Northern District of
Texas [Doc. 5]. Defendant has also filed a motion for
sanctions under 28 U.S.C. § 1927, based on the alleged
litigation conduct described above [Doc. 7]. On July 3, 2017,
defendant moved to transfer the claims of all opt-in
plaintiffs to the Northern District of Texas based on the
forum selection clause [Doc. 46]. Defendant later filed a
supplemental motion seeking the same relief with regard to
additional opt-in plaintiffs who had joined the suit in the
interim [Doc. 66]. Defendant also moved for a stay of
discovery pending a ruling on its motions to dismiss or
transfer venue [Doc. 55].
on August 18, plaintiff moved the Court to conditionally
certify this matter as a collective action and to order that
notice be sent to potential opt-in plaintiffs, pursuant to 29
U.S.C. § 216(b) [Doc. 71]. The Court referred several of
these motions [Docs. 46, 55, 66, 71] to Magistrate Judge
Corker for his consideration [Docs. 58, 76-77]. Next, on
August 31, defendant moved to stay briefing of
plaintiff's conditional certification motion until the
Court rules on defendant's dispositive motions [Doc. 78].
On October 11, this Court entered an order granting
defendant's motion to stay, finding that principles of
judicial economy favored resolution of the arbitration and
venue-transfer issues before resolution of the conditional
certification issue [Doc. 85].
Judge Corker then entered his R&R on November 2 [Doc.
86]. The R&R recommends that the Court grant
defendant's motion to transfer the opt-in plaintiffs'
claims, transfer this entire action to the Northern District
of Texas, and deny the remaining referred motions as moot
[Id. at 11]. Magistrate Judge Corker relies on the
“unrebutted sworn testimony” of Chian Burks to
find that all plaintiffs-both those for whom defendant can
produce signed Agreements and those for whom it
cannot-executed a forum selection clause [Id. at 5].
Magistrate Judge Corker also finds that this clause is
enforceable in light of recent Supreme Court and Sixth
Circuit case law [Id. at 5-7 (citing Atl. Marine
Constr. Co. v. U.S. Dist. Court for the W. Dist. of
Tex., 134 S.Ct. 568 (2013); Wong v. PartyGaming
Ltd., 589 F.3d 821 (6th Cir. 2009))]. Finally,
Magistrate Judge Court rejects plaintiff's arguments that
the Agreements are procedurally and substantively
unconscionable under state or federal law, that transfer
would be inefficient and inequitable, and that the forum
selection clause does not apply to this action [Id.
at 7-11]. Plaintiff timely filed multiple objections to the
R&R [Doc. 87], to which defendant replied [Doc. 88].
Court held a hearing on January 11, 2018, to address
defendant's motions to transfer, the recommendations of
the R&R, and plaintiff's objections to the R&R
[Doc. 89]. The Court had previously informed the parties
that, at this hearing, they should be prepared to: (1)
discuss the proper scope of the Court's review in
deciding whether to transfer the claims of some or all
plaintiffs; and (2) present any additional evidence or
argument they wish for the Court to consider in making this
decision. At this hearing, only defendant offered additional
evidence for the Court to consider. Specifically, defendant
sought to admit live witness testimony from Chian Burks, as
well as copies of several email communications between
defendant's human resources personnel and plaintiff
Cobble. These emails tend to show that plaintiff did, in
fact, receive an email with links to the Enwisen portal and
that he eventually completed the onboarding process.
objected that, under Sixth Circuit precedent, the Court must
consider only the existing record in deciding whether to
transfer this action. Plaintiff also objected to the emails
on the ground that defendant had not produced-or even
suggested the existence of-these documents until one hour
before the hearing. Defendant's counsel explained that,
speaking with Burks that morning, she had learned of the
possible existence of these documents. Burks then contacted
her fellow human resources personnel, who located and sent
these documents to Burks within a few hours. The Court
permitted defendant to offer these documents into evidence,
but reserved decision on plaintiff's scope of review,
prejudice, authenticity, and hearsay objections.
Standard of Review
district court must conduct a de novo review of
those portions of a magistrate judge's report and
recommendation to which a party objects, unless the
objections are frivolous, conclusory, or general.
See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P.
72(b)(3); Smith v. Detroit Fed'n of Teachers, Local
231, 829 F.2d 1370, 1373 (6th Cir. 1987); Mira v.
Marshall, 806 F.2d 636, 637 (6th Cir. 1986).
“[A]bsent compelling reasons, ” parties may not
“raise at the district court stage new arguments or
issues that were not presented to the magistrate.”
Murr v. United States, 200 F.3d 895, 902 n.1 (6th
Cir. 2000); see also Marshall v. Chater, 75 F.3d
1421, 1426-27 (10th Cir. 1996) (“[I]ssues raised for
the first time in objections to the magistrate judge's
recommendation are deemed waived.”). After conducting
the necessary review, the district court “may accept,
reject, or modify, in whole or in part, the [magistrate
judge's] findings or recommendations.” §
the merits of defendant's motions to transfer venue, 28
U.S.C. § 1404(a) provides that, “[f]or the
convenience of parties and witnesses, in the interest of
justice, a district court may transfer any civil action to
any other district or division where it might have been
brought.” A district court has broad discretion in
considering a § 1404(a) motion to transfer. Stewart
Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988);
accord Kerobo v. Sw. Clean Fuels, Corp., 285 F.3d
531, 537 (6th Cir. 2002). Transfer of venue under §
1404(a) requires a two-step analysis. The court must first
decide whether the claim at issue could be properly brought
in the transferee district, on both venue and jurisdictional
grounds. See § 1404(a). The court must next
balance all of the relevant public and private factors to
decide whether the litigation in question would proceed more
conveniently and whether the interests of justice would be
better served through transfer to a different forum.
Stewart Org., 487 U.S. at 29. The movant bears the
burden of proving both the existence of a proper alternative
venue and that the “convenience of the parties and
witnesses, and the interest of justice[, ] warrant
transfer.” McKee Foods Kingman v. Kellogg Co.,
474 F.Supp.2d 934, 936 (E.D. Tenn. 2006); see also United
States v. Cinemark USA, Inc., 66 F.Supp.2d 881, 887
(N.D. Ohio 1999) (noting that the relevant considerations
under § 1404(a) “include the plaintiff's
choice of forum, location of documents, convenience of
witnesses, possibility of prejudice in either forum, and the
practical problems associated with trying the case
expeditiously and inexpensively”).
this analysis changes when a valid forum selection clause is
present. In Atlantic Marine Construction Co. v. United
States District Court for the Western District of Texas,
the Supreme Court made clear that “[w]hen the parties
have agreed to a valid forum selection clause, a district
court should ordinarily transfer the case to the forum
specified in that clause.” 134 S.Ct. at 581.
“Only under extraordinary circumstances unrelated to
the convenience of the parties should a § 1404(a) motion
be denied” when such a clause is present. Id.
The reason for this is that that the overriding consideration