Mantooth et al v. Bavaria Inn Restaurant Inc. et al

Filing 145

Omnibus ORDER on Pending Motions. The Court DIRECTS the Clerk of Court to reopen the case for good cause. Defendants' Motion for Reconsideration is GRANTED IN PART (ECF No. 125 ) to clarify the scope of the Court's prior Order (ECF No. 1 24) with respect to the feeand cost-shifting clauses. Plaintiffs' Motion for Relief (ECF No. 127 ) is GRANTED IN PART to clarify the severance of the fee- and cost-splitting clauses. Defendants' Motion to Strike (ECF No. 142 ) is GRANTED IN PART, and the attachments to Plaintiffs reply in support of their Relief Motion are stricken, and the remainder of Defendants Motion is DENIED. The claims of the named Plaintiffs, as well as of opt-in plaintiffs Darr and Lopez, REMAIN STAYED. C ounsel are directed to contact the Chambers of U.S. Magistrate Judge Michael E. Hegarty to set a status conference in this matter on the claims of opt-in plaintiffs Bonham, Cline, Hattlestad, and Howard. ORDERED by Judge William J. Martinez on 1/28/2019. (angar, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 17-cv-1150-WJM-MEH
CHADA MANTOOTH,
GALE RAFFAELE,
ALEXIS NAGLE, and
NICOLE BUJOK, individually and on behalf of all others similarly situated,
Plaintiffs,
v.
BAVARIA INN RESTAURANT, INC., d/b/a Shotgun Willie’s, and
DEBRA MATTHEWS,
Defendants.

OMNIBUS ORDER ON PENDING MOTIONS

The underlying claims in this lawsuit concern whether a local landmark
establishment, Defendant Bavaria Inn Restaurant Inc. d/b/a/ Shotgun Willie’s (“Shotgun
Willie’s”), and its owner Defendant Debra Matthews (jointly, “Defendants”) improperly
classified named Plaintiffs Chada Mantooth, Gale Raffaele, Alexis Nagle, Nicole Bujok
(“named Plaintiffs”), in addition to opt-in plaintiffs (jointly, “Plaintiffs”) as independent
contractors and underpaid Plaintiffs in violation of the Fair Labor Standards Act, 29
U.S.C. §§ 201 et seq. (“FLSA”), the Colorado Wage Claim Act, Colo. Rev. Stat. §§ 8-4101 et seq. (“CWCA”), and Colorado common law. (ECF No. 1.)
Defendants moved to compel arbitration. The Court previously granted in part
Defendants’ motion to compel arbitration (the “Order”). (ECF No. 124.) The Court
compelled arbitration but struck certain fee-shifting and arbitrator selection clauses in

the parties’ arbitration agreements, as well as the cost-shifting clause of the
agreements for Bujok, Nagle, Raffaele, and opt-in plaintiff Alexandra Darr. (Id. at
23–24.)
The parties were not wholly satisfied with the Court’s resolution of Defendants’
motion to compel. Defendants filed a “Motion for Partial Reconsideration”
(“Reconsideration Motion”) asking the Court to revisit its decision to sever provisions
under the effective vindication doctrine based on the Supreme Court’s decision in Epic
Systems Corporation v. Lewis, 138 S. Ct. 1612, 1619 (2018). (ECF No. 125.) Plaintif fs
filed a version of a motion for reconsideration titled “Motion for Partial Relief from Order
Granting In Part Defendants’ Motion to Compel Arbitration” (“Relief Motion”) asking the
Court to strike the cost-shifting provisions in the arbitration contracts of Mantooth and
the remaining opt-in plaintiffs. (ECF No. 127.) Defendants then filed a motion to strike
certain exhibits attached to Plaintiffs’ reply in support of the Relief Motion or, in the
alternative, to allow a sur-reply (“Motion to Strike”). (ECF No. 142.)
For the reasons explained below, the Court grants in part Defendants’
Reconsideration Motion; grants in part Defendants’ Motion to Strike; and grants in part
Plaintiffs’ Relief Motion in the interest of justice.
I. BACKGROUND & PROCEDURAL HISTORY
The underlying factual basis for these motions is discussed in the Order.
Familiarity with that factual background is presumed.
In relevant summary, named Plaintiffs and opt-in plaintiffs Darr and Jessica
Lopez signed “Entertainment License Agreements” to work at Shotgun Willie’s. These

2

agreements contained an arbitration provision.1 (ECF No. 57-2 ¶ 22.) That provision
delegated exclusive authority to resolve disputes over the validity or enforceability of the
agreement to the arbitrator; allowed Defendants to insist on an arbitrator “experienced
in the adult entertainment industry”; and contained four provisions concerning
arbitration fees and costs:
•

“The costs of the arbitration shall be borne equally by the entertainer and
the club unless the arbitrator concludes that a dif ferent allocation is
required by law.” (Id. ¶ 22.A.)

•

“In the event that any party challenges, or is required to initiate
proceedings to enforce, the arbitration requirements of this paragraph 22,
the prevailing party to such challenges and/or enforcement proceedings
shall be entitled to an award of all costs, including actual and reasonable
attorney fees, incurred in litigation such issues.” (Id. ¶ 22.D.)

•

“Any ruling arising out of a claim between the parties shall, to the extent
not precluded by applicable law, award costs incurred for the proceedings
and reasonable attorney fees to the prevailing party.” (Id. ¶ 22.E.)

•

The arbitrator “shall be permitted to award, subject only to the restrictions
contained in this paragraph 22, any relief available in a court.” (Id.
¶ 22.A.)

1

The arbitration provisions in the operative versions of each agreement signed by the
named Plaintiffs are identical. (ECF Nos. 57-2, 57-4, 57-8 & 57-10.) Defendants also imply
that Darr and Lopez had identical arbitration agreements, although those agreements are not
before the Court. (ECF No. 57 at 2 n.2.) Plaintiffs do not appear to dispute that implicit claim.
(See generally ECF No. 82.) Thus, for purposes of analysis, the Court will assume that the
arbitration clauses in the contracts of the named Plaintiffs, Darr, and Lopez are identical.

3

On October 16, 2017, Defendants moved to compel “Plaintiffs”—defined as
“named Plaintiffs, Alexandra Darr and Jessica Lopez”—to arbitrate their claims.2 (ECF
No. 57 at 2 n.2.) In response, “Plaintiffs”—defined as “Named and Opt-in Plaintiffs, and
putative class/collective action members”—objected to the motion to compel in part
because the fee- and cost-shifting provisions of their arbitration agreements prevented
“Plaintiffs” from effectively vindicating their claims. (ECF No. 86 at 1 n.1, 11.) In
support, these Plaintiffs submitted evidence from Bujok, Darr, Nagle, and Raffaele
about their ability to share arbitration costs, as well as the financial hardship the costsharing provision would impose. (ECF Nos. 86-5, 86-6, 86-8 & 86-9.)
In its Order, the Court granted in part the motion to compel. (ECF No. 124.) The
Court also found that, for Bujok, Darr, Nagle, and Raffaele, arbitration costs would be
thousands to tens of thousands of dollars; “the cost-sharing provisions of the arbitration
clause would prevent effective vindication of their claims”; and thus the Court severed
the cost-sharing provisions for those individuals. (Id. at 16–17.) The Court did not,
however, sever the cost-sharing provisions for Mantooth or Lopez because they did not
submit evidence of financial hardship. The Court also severed certain fee-shifting
provisions and the arbitrator selection clause—a provision that would have allowed
Defendants to demand an arbitrator “experienced in the adult entertainment
industry”—for named Plaintiffs, Darr, and Lopez because in the Court’s view such
clauses would have prevented effective vindication of Plaintiffs’ rights. (Id. at 14,
19–20.)

2

The named Plaintiffs in this action are Mantooth, Bujok, Nagle, and Raffaele.

4

Five days after the Court’s Order, the Supreme Court issued its opinion in Epic
Systems Corporation v. Lewis, resolving the question of whether “employees and
employers [should] be allowed to agree that any disputes between them will be
resolved through one-on-one arbitration.” 138 S. Ct. 1612, 16 19 (2018). The Supreme
Court held that the National Labor Relations Act, which “secures to employees rights to
organize unions and bargain collectively,” did not “manifest[ ] a clear intention to
displace the Arbitration Act.” Id. at 1619, 1632. Thus, the arbitration contracts at issue
in Epic—which required employees to arbitrate individually rather than collectively—
were to be enforced as written.
Based on Epic, Defendants filed their Reconsideration Motion arguing that Epic
eviscerated the effective vindication doctrine. (ECF No. 125.) Defendants asked that
the Court revisit its decision to strike the fee- and cost-shifting provisions under the
effective vindication doctrine. 3 (Id. at 2.)
Plaintiffs filed their Relief Motion asking the Court to invalidate the cost-sharing
requirement for “the remaining Plaintiffs (named Plaintiff Chada Mantooth and opt-in
Plaintiffs Ariel Cline, Samantha Hattlestad, Ashley Howard, Jessica Lopez, and Allison
Bonham)” as “‘similarly situated employees’ to the Plaintiffs who previously submitted
declarations.” (ECF No. 127 at 2.) Plaintiffs attached affidavits from Mantooth, Cline,
Hattlestad, Howard, Lopez, and Bonham about their inability to pay arbitration costs.
(ECF Nos. 127-1, 127-2, 127-3, 127-4, 127-5 & 127-6.)

3

It should be noted that Defendants do not seek reconsideration of the portion of the
Court’s Order severing the arbitrator selection clause, even though it was severed under the
same effective vindication rationale as the fee- and cost-shifting provisions.

5

Plaintiffs attached two exhibits to their reply in support of their Relief Motion
about the expense of arbitration. (ECF Nos. 140-1 & 140-2.) Defendants then filed the
Motion to Strike those exhibits and asked that the Court disregard any new arguments
that relied on the newly-included information. (ECF No. 142.)
II. LEGAL STANDARD
While the Federal Rules of Civil Procedure do not directly provide for a motion to
reconsider an interlocutory ruling, district courts have broad discretion to reconsider
their interlocutory rulings before the entry of judgment. See Rimbert v. Eli Lilly & Co.,
647 F.3d 1247, 1251 (10th Cir. 2011) (“[D]istrict courts generally remain free to
reconsider their earlier interlocutory orders.”); Fed. R. Civ. P. 54(b) (“[A]ny order . . . that
adjudicates fewer than all the claim or the rights and liabilities of fewer than all the
parties . . . may be revised at any time before the entry of a judgment.”). Thus, a court
can alter its interlocutory orders even where the more stringent requirements applicable
to a motion to alter or amend a final judgment under Rule 59(e) or a motion for relief
from judgment brought pursuant to Rule 60(b) are not satisfied. Spring Creek Expl. &
Prod. Co., LLC v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1024 (10th Cir. 2018).
“Notwithstanding the district court’s broad discretion to alter its interlocutory
orders, the motion to reconsider ‘is not at the disposal of parties who want to rehash old
arguments.’” Nat’l Bus. Brokers, Ltd. v. Jim Williamson Prods., Inc., 115 F. Supp. 2d
1250, 1256 (D. Colo. 2000) (quoting Young v. Murphy, 161 F.R.D. 61, 62 (N.D. Ill.
1995)). “Rather, as a practical matter, to succeed in a motion to reconsider, a party
must set forth facts or law of a strongly convincing nature to induce the court to reverse

6

its prior decision.” Id. (internal quotation marks omitted and alterations incorporated).
Even under this lower standard, “[a] motion to reconsider should be denied unless it
clearly demonstrates manifest error of law or fact or presents newly discovered
evidence.” Id. (alterations incorporated); see Sanchez v. Hartley, 2014 WL 4852251, at
*2 (D. Colo. Sept. 30, 2014) (refusing to reconsider an interlocutory order where the
defendants did not show “an intervening change in the law, newly discovered evidence,
or the need to correct clear error or manifest injustice”). The Court may be guided by
Rules 59 and 60 standards in deciding whether to alter or vacate an interlocutory order.
Perkins v. Fed. Fruit & Produce Co. Inc., 945 F. Supp. 2d 1225, 1232 (D. Colo. 2013).
III. ANALYSIS
Before analyzing the parties’ motions, the Court addresses two preliminary
matters. First, the subject Order directed the Clerk of Court to administratively close
this case, subject to reopening for good cause shown after the conclusion of the
individual arbitration proceedings. The parties have not specifically requested
reopening of the case in their motions currently pending before the Court. Nonetheless,
the Court finds that good cause exists for reopening this matter and sua sponte orders
that the case be reopened.
Second, the Court clarifies the scope of the initial Order compelling arbitration.
On October 16, 2017, Defendants sought to compel “Plaintiffs”—defined as Mantooth,
Bujok, Darr, Lopez, Nagle, and Raffaele—to arbitrate their claims.4 (ECF No. 57.) At

4

Defendants’ motion to compel was, in fact, a renewed motion to compel. Defendants
initially moved to compel arbitration on June 26, 2017. On July 19, 2017, the Court denied
Defendants’ initial motion without prejudice subject to later refiling after limited, expedited
discovery. (ECF No. 38.) The renewed motion to compel was not a replica of the prior motion.

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that time, Bonham, Cline, Hattlestad, and Howard had also opted into the litigation by
filing notices of consent to join. 5 (ECF Nos. 12, 15, 16 & 17.) Because Defendants
moved for arbitration only as to Mantooth, Bujok, Darr, Lopez, Nagle, and Raffaele, the
Court’s corresponding Order therefore applies only to those individuals, and does not
apply to Bonham, Cline, Hattlestad, and Howard.
A.

Defendants’ Motion to Reconsider
Defendants ask the Court to reconsider its Order severing the fee- and cost-

shifting provisions in light of Epic, issued a mere five days after the May 16, 2018
Order. See Nat’l Bus. Brokers, 115 F. Supp. 2d at 1256 (“A motion to reconsider
should be denied unless it clearly demonstrates manifest error of law or fact or presents
newly discovered evidence.” (alteration incorporated)). “An ‘intervening change in the
controlling law’ is . . . [an] appropriate ground upon which to seek reconsideration.”
Gomez v. Kroll Factual Data, Inc., 2014 WL 5395099, at *3 (D. Colo. Oct. 22, 2014)
(citing Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000)).
Defendants argue that the Epic decision held that
unless a provision in an arbitration agreement directly
conflicts with the express language of a statute, it must be
enforced as written. Hence, the Supreme Court has now
implicitly, if not directly, rejected the imposition of policybased reasons for invalidating provisions in arbitration

Defendants added to their definition of “Plaintiffs” both Darr and Lopez, who filed notices of
consent to join on July 12, 2017, and September 5, 2017, respectively, after Defendants’ initial
motion to compel. (ECF Nos. 32 & 42.)
5

Bonham filed a notice of consent to join on May 18, 2017. (ECF No. 16.) Cline filed a
notice of consent to join on May 17, 2017. (ECF No. 15.) Hattlestad filed a notice of consent to
join on June 5, 2017. (ECF No. 17.) Howard filed a notice of consent to join on May 15, 2017.
(ECF No. 12.)

8

agreements such as the “effective vindication of rights”
doctrine.
(ECF No. 125 at 2.) According to Defendants, the fee- and cost-shifting provisions do
not directly conflict with the FLSA and thus, Defendants argue, the Court should allow
an arbitrator to determine if such provisions are enforceable. (Id. at 2, 6.) Defendants
misapprehend the scope of Epic and its impact on the effective vindication doctrine.
1.

The Effective Vindication Doctrine

The Supreme Court has “developed a mechanism—called the effectivevindication rule—to prevent arbitration clauses from choking off a plaintiff’s ability to
enforce congressionally created rights” and bars applying such clauses only when they
operate “to confer immunity from potentially meritorious federal claims.” Am. Ex. Co. v.
Italian Colors Rest., 570 U.S. 228, 241 (2013) (Kagan, J., dissenting). This judiciallycreated exception to the Federal Arbitration Act (“FAA”) allows courts to harmonize the
FAA’s policy favoring arbitration with other federal statutory rights. Id. at 235–36 (maj.
op.). The doctrine exists to “prevent ‘prospective waiver of a party’s right to pursue
statutory remedies.’” Id. at 236 (quoting Mitsubishi Motors v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 637 n.19 (1985)). Thus, federal courts generally compel arbitration
unless an arbitral forum prevents a prospective litigant from effectively vindicating its
statutory cause of action, and as a consequence effectively prevents the federal statute
from serving its remedial and deterrent function. Id.; see Bechtold v. Santander
Consumer USA, Inc., 2015 WL 5455617, at *1 (D. Colo. July 30, 2015) (“The
presumption in favor or arbitration does not control, however, where the terms of an
arbitration agreement prevent an individual from effectively vindicating his or her
9

statutory rights.” (internal quotation marks omitted)). Likewise, the Tenth Circuit
recognizes the FAA’s presumption in favor of enforcing arbitration agreements, but
“concluded that this presumption falters ‘if the terms of an arbitration agreement
actually prevent an individual from effectively vindicating his or her statutory rights.’”
Nesbitt v. FCNH, Inc., 811 F.3d 371, 377 (10th Cir. 2016) (quoting Shankle v. B-G
Maint. Mgmt. of Colo., Inc., 163 F.3d 1230, 1234 (10th Cir. 1999)).
Inability to access a neutral tribunal—whether a court or arbitral panel—
prospectively waives that party’s right to pursue its statutory remedies. See Italian
Colors, 570 U.S. at 236. As the Court observed in Italian Colors, the effective
vindication doctrine “would certainly cover a provision in an arbitration agreement
forbidding the assertion of certain statutory rights.” Id. The Court suggested that the
doctrine would also “cover filing and administrative fees attached to arbitration that are
so high as to make access to the forum impracticable.” Id.; see Green Tree Fin. Corp.Ala. v. Randolph, 531 U.S. 79, 60 (2000). Such a result is consistent with the FAA’s
saving clause, which allows a court to refuse to enforce an arbitration agreement “upon
such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. §
2. See also McMullen v. Meijer, Inc., 355 F.3d 485, 491 (6th Cir. 2004) (holding that
the language of the savings clause “sufficiently encompasses the ‘effective vindication’
analysis prescribed by the United States Supreme Court”).
2.

Supreme Court’s Decision in Epic

In Epic, employees sought to litigate FLSA and state law claims through class or
collective actions in federal court, notwithstanding contracts that mandated
individualized arbitration of their claims. 138 S. Ct. at 1616. The employees generally
10

argued that the saving clause removes the obligation to enforce arbitration agreements
as written when the arbitration agreement violates some other federal law. Id. The
employees thus argued that the individualized arbitration provision violated the National
Labor Relations Act (“NLRA”), which guarantees workers the right to organize and
bargain collectively.
The Court held that the savings clause applies to “defenses that apply to ‘any’
contract,” and “by attacking (only) the individualized nature of the arbitration
proceedings, the employees’ argument seeks to interfere with one of arbitration’s
fundamental attributes,” namely the “traditionally individualized and informal nature of
arbitration.” Id. at 1622–23. More importantly, the Court found that “[n]othing in our
cases indicates that the NLRA guarantees class and collective action procedures, let
alone for claims arising under different statutes [here, the FLSA] and despite the
express . . . teachings of the Arbitration Act.” Id. at 1628. Because NLRA did not
provide a right to collective adjudication of FLSA claims, the NLRA did not override the
FAA’s general mandate to enforce arbitration agreements as written. The Court held
that, under these circumstances, the “arbitration agreements like those before use must
be enforced as written” and concluded that the employees could not bring collective
FLSA claims in arbitration. Id. at 1632.
The Court recognized, however, that the employees may agree to bilaterally
arbitrate disposition of their FLSA claims. Id. at 1632. The decision in Epic merely
limited the manner in which such a claim may be brought, not the employees’ right to
bring substantive FLSA claims in individualized arbitration. See id. at 1626; Werner v.
Waterstone Mortg. Corp., 2018 WL 6567081, at *3 (W.D. Wis. Dec. 13, 2018) (“[T]he
11

question in [Epic Systems v.] Lewis was limited to whether the class action waiver in the
arbitration agreement was enforceable.”).
3.

Impact of Epic on the Effective Vindication Doctrine

While Epic broadly favors enforcing arbitration agreements as written,6 it has not
been—nor should it be—construed so expansively that it eliminates the long-standing
effective vindication doctrine. See 138 S. Ct. at 1621 (citing Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). On its face, and contrary to
Defendants’ suggestion, Epic does not directly reject the effective vindication doctrine.
138 S. Ct. 1612. Indeed, it never so much as mentions effective vindication. Id.
Nor did Epic undermine the rationale for the effective vindication doctrine, a
policy-based exception to the FAA’s general approach to favoring arbitration. Rather, in
striving to harmonize two federal statutes, namely the NLRA and the FAA, the Court
found that the NLRA did “not express approval or disapproval of arbitration” nor
“mention class or collective action procedures.” Id. at 1625. Thus, the Court merely
concluded that the NLRA did not mandate that FLSA claims be decided collectively, the
employees could waive their right to pursue claims collectively in arbitration, and the
employees could still pursue their statutory rights granted by the FLSA in individual
arbitration. Id. at 1632. In other words, the individual arbitration provision at issue did
not “choke off” the employees “ability to enforce congressionally created rights.” Id.;

6

At least one court post-Epic has questioned the underlying premise that arbitration
provides real benefits in the employment contexts: “scholars have continued to test those
assumptions and have seemingly unsettled the notion that arbitration is superior or even
sufficiently comparable to litigation. There is certainly some data suggesting that the arbitral
forum’s downsides may outweigh its benefits, as least for vulnerable workers.” Styczynski v.
MarketSource, Inc., 340 F. Supp. 3d 534, 548 (E.D. Pa. 2018).

12

see Italian Colors, 570 U.S. at 241.
Moreover, from this Court’s review of all cases citing Epic, as well as cases
referencing the effective vindication doctrine post-Epic, no court to date has read Epic
to abrogate the effective vindication doctrine. Nor have Defendants filed any
supplemental authority calling this conclusion into question. Significantly, since the
Epic decision, district courts across the country have continued to analyze whether
certain provisions of an arbitration agreement would prevent effective vindication of a
party’s substantive rights. See, e.g., Grigsby v. Income Prop. USA, LLC, 2018 WL
4621766, at *7 (D. Utah Sept. 26, 2018) (ref using to compel arbitration where feeshifting clause would prevent the plaintiffs from effectively vindicating their RICO claim),
appeal filed, No. 18-4143 (10th Cir. Oct. 3, 2018); Clough v. W.-Shamrock Corp., 2018
WL 4183223, at *1 (W.D. Okla. Aug. 31, 2018) (finding that fee-shifting provisions
would prevent plaintiff from effectively vindicating her rights).7 See also Am. Family Life
7

See also Castillo v. CleanNet USA, Inc., 2018 WL 6619986, at *17–18, 21–22 (N.D.
Cal. Dec. 18, 2018) (finding that the plaintiff met its burden to show that prohibitive costs would
likely be imposed and concluding that a cost-shifting provision prevented effective vindication of
substantive rights afforded by a federal statute); Mohammad v. T-Mobile USA, Inc., 2018 WL
6249910, at *1 (E.D. Cal. Nov. 29, 2018) (effective vindication argument mooted by the
defendants’ offer to pay arbitration costs); Elliot v. NTAN, LLC, 2018 WL 6181351, at *7 (M.D.
Tenn. Nov. 27, 2018) (finding that a plaintiff failed to demonstrate that fees and costs would
prevent effective vindication of claims in arbitration); Garcia v. MaineGeneral Health, 2018 WL
6071998, at *4 (D. Me. Nov. 20, 2018) (“The parties’ relative resources, standing alone, do not
impact whether the prospective litigant effectively may vindicate his or her statutory cause of
action in the arbitral forum.” (internal quotation marks omitted and alterations incorporated));
Curtis v. Contractor Mgmt. Servs., LLC, 2018 WL 6071999, at *7 (D. Me. Nov. 20, 2018)
(analyzing whether a cost-sharing provision prevented effective vindication of FLSA claims);
Greene v. OneMain Fin. Grp., LLC, 2018 WL 5831681, at *1 (M.D.N.C. Nov. 7, 2018) (finding
that “only conclusory, unsubstantiated[ ] statements . . . [were] not sufficient to satisfy” the
plaintiff’s burden to show that she could not effectively vindicate her rights); Smiley v.
Forcepoint Fed., LLC, 2018 WL 5787468, at *1 (E.D. Va. Nov. 5, 2018) (finding that a plaintiff
failed to demonstrate that an arbitration agreement prevented him from effectively vindicating
his claims in arbitration); Titus v. ZestFinance, Inc., 2018 WL 5084844, at *3 (W.D. Wash. Oct.
18, 2018) (analyzing “whether the exception to the general policy favoring arbitration—the

13

Assurance Co. of Columbus, 2019 WL 115102, at *6 (11th Cir. Jan. 7, 2019) (assum ing
that “an arbitration agreement could be substantively unconscionable if it imposed such
great arbitration costs that it effectively denied a party an opportunity to vindicate her
rights in the arbitral forum”); Beltran v. AuPairCare, Inc., 907 F.3d 1240, 1260 (10th Cir.
2018) (confirming the district court’s analysis that, under California law, a fee-shifting
clause may be unconscionable if it involves “unwaivable statutory rights”).
Other courts have referenced the effective vindication doctrine and assumed its
continued existence and viability post-Epic. See Santich v. VCG Holding Corp., 2018
WL 3968879, at *4 (D. Colo. Aug. 20, 2018) (noting that no party objected to the U.S.
Magistrate Judge’s determination that fee- and cost-shifting provisions precluded the
plaintiffs from effectively vindicating their FLSA claims); Keyes v. The Ayco Company,
L.P., 2018 WL 6674292, at *6 (N.D.N.Y. Dec. 19, 2018) (the doctrine allows courts to

effective vindication exceptions—applies”), appeals docketed, Nos. 18-35940 & 18-35943 (9th
Cir. Nov. 1, 2018 & Nov. 2, 2018); Burnley v. Conifer Health Sols., 2018 WL 4323935, at *2
(W.D. Ky. Sept. 10, 2018) (recognizing that the Sixth Circuit interprets § 2 of the FAA to require
that the arbitral forum permit the effective vindication of rights); In re Zetia (Ezetimibe) Antitrust
Litig., 2018 WL 4677830, at *7–9 (E.D. Va. Sept. 6, 2018) (finding that arbitration provisions
limiting damages and attorneys’ fees available on antitrust claims prevented effective
vindication of plaintiffs’ claims in arbitration); Wells Fargo Bank, Nat’l Ass’n v. Cabell, 2018 WL
4659255, at *1 (E.D. Tex. Sept. 6, 2018) (defendants failed to offer any evidence that arbitration
would deprive them of substantive rights), report and recommendation adopted, 2018 WL
4655718 (E.D. Tex. Sept. 26, 2018); Williams v. Dearborn Motors 1, LLC, 2018 WL 3870068, at
*5 (E.D. Mich. Aug. 15, 2018) (acknowledging the existence of the effective vindication doctrine
and the Supreme Court’s Epic decision, and determining that the contractual terms did not
prevent plaintiffs’ rights to pursue their statutory remedies under certain civil rights statutes);
The Shipman Agency, Inc. v. TheBlaze Inc., 315 F. Supp. 3d 967, 970 (S.D. Tex. 2018)
(holding that arbitration clauses are valid provided that they allow an employee to effectively
vindicate his statutory rights); Robertson v. Fiesta Rest. Grp., Inc., No. 3:17-CV-00384, 2018
WL 3130677, at *1 (S.D. Tex. June 8, 2018), report and recommendation adopted, 2018 WL
3121877 (S.D. Tex. June 26, 2018) (finding that where an employer is obligated to pay “virtually
all arbitration-related expenses,” arbitration did not prevent employee from vindicating his rights
in arbitration); Williams v. FCA US LLC, 2018 WL 2364068, at *8 (E.D. Mich. May 24, 2018)
(concluding that an individual arbitration requirement did not prevent effective vindication of the
plaintiffs’ Title VII rights).

14

invalidate agreements that prevent effective vindication of federal statutory rights, but
not state-law claims); Trout v. Organizacion Mundial de Boxeo, Inc., 2018 WL 4719104
(D.P.R. Sept. 30, 2018) (plaintiff could effectively vindicate his statutory cause of action
in an arbitral forum); Covington v. Kanan Enters., Inc., 2018 WL 4411652, at *1 (N.D.
Ohio Sept. 17, 2018) (FLSA claims may be effectively vindicated in an arbitral setting);
McLellan v. Fitbit, Inc., 2018 WL 3549042, at *5 (N.D. Cal. July 24, 2018) (recognizing
that “effective vindication is a judge-made exception to the FAA” (internal quotation
marks omitted)); Buchanan v. Tata Consultancy Servs., Ltd., 2018 WL 3537083, at *8
(N.D. Cal. July 23, 2018); In re Homaidan, 587 B.R. 428, 431 (Bankr. E.D.N.Y. 2018)
(analyzing Epic and whether to compel arbitration in a bankruptcy case).
In conclusion, both the text of the Epic decision, as well as the overwhelming
weight of subsequent lower-court authority, fail to support Defendants’ position on this
issue in its Reconsideration Motion. The effective vindication doctrine remains viable
after Epic. As discussed in the Order and further discussed below, Plaintiffs have made
sufficient financial showings that the burden of fees and costs will effectively and
prospectively prevent them from bringing their claims in arbitration. Thus, the Court will
not revisit its conclusion that those provisions, as applied to Plaintiffs, prospectively
prevent Plaintiffs from effectively vindicating their statutory FLSA rights in arbitration
and that severance of those provisions is appropriate in this case.
2.

Clarifying Scope of the Order

Defendants raise a question about the scope of the Court’s prior Order. The
Court ordered that “the fee-shifting provision in the arbitration clause are unenforceable
and will be severed” (ECF No. 124 at 14), but later stated that “[a]ny portion of any
15

Agreement that any Plaintiff may have with Defendants is SEVERED to the extent it (a)
establishes a fee-shifting obligation different from those established [under the FLSA]”
(id. at 23).8 Defendants argue that none of the severed provisions directly conflict with
the FLSA, and thus the Court improperly severed the provisions. To the extent these
rulings have created any ambiguity on this point, the Court will clarify its prior Order.
The Court previously found that the fee-shifting provisions, which allowed
Defendants to recover fees and costs for arbitrating Plaintiffs’ FLSA claims, erected a
barrier to the effective vindication of Plaintiffs’ FLSA claims. It was the Court’s intent to
sever all fee- and cost-shifting obligations because they prevented effective vindication
of Plaintiffs’ FLSA claims, but to nonetheless allow Plaintiffs to recover attorneys’ fees
and costs in the event they are prevailing parties, consistent with the private attorney
general enforcement scheme of the FLSA. In other words, the arbitrator will be free to
award any manner of relief otherwise available in the federal court litigation of FLSA
claims.
Finally, to the extent that Defendants ask the Court to reconsider its prior Order
based on arguments other than the Epic decision, Defendants have failed to provide
any new facts, law, or circumstances, or argued mistake of law or fact, or otherwise
plausibly argued why such relief is appropriate and necessary to effect the interest of
justice. See Servants of the Paraclete, 204 F.3d at 1012. Therefore, the remainder of

8

The FLSA provides that a court “shall . . . allow a reasonable attorney’s fee to be paid
by the defendant, and costs of the action” to a prevailing plaintiff. 29 U.S.C. § 216(b). The
Tenth Circuit has interpreted this language to entitle a prevailing defendant to attorney’s fees
“only where the district court finds that the plaintiff litigated in bad faith.” Sanchez v. Nitro-Lift
Techs., L.L.C., 762 F.3d 1139, 1148 (10th Cir. 2014) (quoting Turlington v. Atlanta Gas Light
Co., 135 F.3d 1428, 1437 (11th Cir. 1998)).

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Defendants’ Reconsideration Motion is denied.
B.

Plaintiffs’ Relief Motion
Plaintiffs ask the Court to sever and strike the cost-shifting provisions of the

arbitration clauses for Mantooth and Lopez under same effective vindication analysis
that it applied to Bujok, Darr, Nagle, and Raffaele.9 Plaintiffs analogize to the Rule
60(b) standards for relieving a party from a final judgment or order, and ask the Court to
grant relief on three alternate grounds: (1) in the interest of justice; (2) mistake of fact;
and (3) excusable neglect. (ECF No. 127 at 3–5.) See Fed. R. Civ. P. 60(b).10
Federal Rule of Civil Procedure 60(b) permits the court to relieve a party from a
final judgment, order or other proceeding on the grounds of “mistake, inadvertence,
surprise, or excusable neglect,” or “any other reason that justifies relief.” The Court is
“mindful that Rule 60(b) ‘relief is extraordinary and may only be granted in exceptional
circumstances.’” Beugler v. Burlington Northern & Santa Fe Ry. Co., 490 F.3d 1224,
1229 (10th Cir. 2007) (citing Amoco Oil Co. v. EPA, 231 F.3d 694, 697 (10th Cir.
2000)). A motion for relief under Rule 60(b) is addressed to the sound discretion of the
trial court and generally will not be disturbed except for a manifest abuse of discretion.

9

Plaintiffs also seek to strike the cost-shifting clauses for Bonham, Cline, Hattlestad,
and Howard. However, as discussed above, Defendants’ motion to compel, and the Court’s
Order granting in part that motion, did not apply to these opt-in plaintiffs. The Court will not
decide matters not properly before the Court, and declines to express any opinion on whether
the cost-shifting provisions should be struck for those four individuals.
10

Defendants contend that Rule 60(b) is inapplicable to Plaintiffs’ Relief Motion. As a
technical matter, Defendants are correct, but not in a way that favors them. On a motion for
reconsideration of an interlocutory order, the Court has broad discretion to alter its prior orders
and, while not bound by the strictures of Rules 59 and 60, may look to them for guidance. See
Spring Creek, 887 F.3d at 1024; Perkins, 945 F. Supp. 2d at 1232. In the broad discretion
reserved to courts for reconsideration of their interlocutory orders, the Court looks to Rule 60 for
guidance.

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Zimmerman v. Quinn, 744 F.2d 81, 82 (10th Cir. 1984).
The Court need only analyze Plaintiffs’ interest of justice arguments. Rule
60(b)(6) permits a court to grant relief for “any other reason justifying relief.” “Rule
60(b)(6) has been described as a ‘grand reservoir of equitable power to do justice in a
particular case.’” Cashner, 98 F.3d at 579 (quoting Pierce v. Cook & Co., 518 F.2d 720,
722 (10th Cir. 1975) (en banc)).
The Court finds that it is in the interest of justice, and consistent with the
remedial purpose of the FLSA, to resolve FLSA claims on their merits, rather than
potentially prevent resolution of those claims because of a plaintiff’s inability to pay
arbitration costs. The FLSA is a “comprehensive remedial scheme requiring a minimum
wage and limiting the maximum number of hours works, absent payment of an overtime
wage for all hours worked in excess of the specified maximum number.” Lamon v. City
of Shawnee, Kan., 972 F.2d 1145, 1149 (10th Cir. 1992). “T he prime purpose in
enacting the FLSA was to aid the unprotected, unorganized and lowest paid employees
who lack sufficient bargaining power to secure for themselves a minimum subsistence
wage.” Teague v. Acxiom Corp., 2018 WL 3772865, at *2 (D. Colo. Aug. 9, 2018)
(internal quotation marks omitted and alterations incorporated). Similar to a number of
anti-discrimination and civil rights statutes, the FLSA gives plaintiffs a private right of
action to remedy injuries to important personal rights. Turner v. Chipotle Mexican Grill,
Inc., 123 F. Supp. 3d 1300, 1305 (D. Colo. 2015); see Trainor v. Apollo Metal
Specialties, Inc., 318 F.3d 976, 983 (10th Cir. 2002) (“[W ]e must be mindful of
[antidiscrimination laws’] remedial purposes, and liberally interpret their provisions to
that end.”). Thus, in the FLSA context, employees can pursue a claim against an
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employer for unpaid wages and overtime compensation as well as liquidated damages.
29 U.S.C. § 216.
The affidavits submitted by Mantooth and Lopez establish that paying half of the
arbitration costs would pose a significant financial burden, such that they would be
unable to pursue their claims against Defendants in arbitration. 11 (ECF No. 127 at 1–2
(Mantooth: “I’m not even able to make ends meet right now, so I’m not sure how I would
find the money to pay for arbitration, which I understand could cost thousands of
dollars.”); ECF No. 127-4 at 1 (Lopez: “I receive welfare benefits, include TANF and
SNAP, due to my low income . . . I have no idea how I would pay for arbitration,
especially if it’s going to cost thousands of dollars.”).) Plaintiffs previously established,
and the Court credited, that the cost of arbitration was likely to be at least thousands of
dollars. (ECF No. 124 at 15.) The Court concludes, therefore, that the cost-shifting
provision of the arbitration agreements would prevent Mantooth and Lopez from
effectively vindicating their rights under the FLSA. In the interest of justice and toward
the end of promoting resolution of remedial claims under the FLSA on their merits, the

11

In their reply in support of the Relief Motion, Plaintiffs submit two exhibits regarding
the cost of arbitration, which are the subject of Defendants’ Motion to Strike. (ECF Nos. 140-1,
140-2 & 142.) Defendants alternatively move to file a sur-reply. (ECF No. 142.) The Court has
already credited Plaintiffs’ evidence and found that arbitration costs range from “thousands to
tens of thousands of dollars, to ‘fifty times the basic costs of litigating in a judicial, rather than
arbitral forum.’” (ECF No. 124 at 15 (citing ECF No. 86 at 12) (emphasis in original).) The Court
sees no reason to revisit that finding, even though Defendants question its premise in their
response to the Relief Motion. Thus, the Court need not rely on the exhibits because it has
already found the cost of arbitration to be much greater than the cost of litigating before this
Court. In addition, because the exhibits were attached to Plaintiffs’ reply brief, Defendants have
not had an opportunity to respond to the arguments that depend on these exhibits, and thus
seek to exclude them from the Court’s consideration. Because of the belated inclusion of these
exhibits and because the Court’s decision today does not rely on them, the Court grants
Defendants’ Motion to Strike (ECF No. 142). Because the Court grants the primary relief
Defendants request, the Court denies the alternative relief requested.

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Court grants Plaintiffs’ Relief Motion as to Mantooth and Lopez ,and severs the costshifting provisions of their arbitration contracts.
Because the Court grants the Relief Motion in the interest of justice, it does not
address, nor express any opinion on, the merits of Plaintiffs’ alternative excusable
neglect and mistake of fact or law arguments.
IV. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.

The Court DIRECTS the Clerk of Court to reopen the case for good cause
shown;

2.

Defendants’ Motion for Reconsideration is GRANTED IN PART (ECF No. 125) to
clarify the scope of the Court’s prior Order (ECF No. 124) with respect to the feeand cost-shifting clauses as follows:
a.

Any portion of any Agreement allowing fee- and cost-shifting is
SEVERED, except that the arbitrator may award attorneys’ fees and costs
as authorized by federal law;

b.

Any portion of any Agreement that Plaintiffs Bujok, Darr, Nagle, and
Rafaele may have with the Defendants is SEVERED to the extent that it
establishes an obligation to split the costs of arbitration equally between
Plaintiffs and Defendants; and

c.
3.

The remainder of Defendants’ Motion is DENIED;

Plaintiffs’ Motion for Relief (ECF No. 127) is GRANTED IN PART to clarify the
severance of the fee- and cost-splitting clauses as follows:
a.

Any portion of any Agreement that Plaintiffs Mantooth or Lopez may have
20

with Defendants is SEVERED to the extent that it establishes an
obligation to split the costs of arbitration equally between Plaintiffs and
Defendants; and
b.
4.

The remainder of Plaintiffs’ Motion is DENIED;

Defendants’ Motion to Strike (ECF No. 142) is GRANTED IN PART, and the
attachments to Plaintiffs’ reply in support of their Relief Motion are stricken, and
the remainder of Defendants’ Motion is DENIED;

5.

The claims of the named Plaintiffs, as well as of opt-in plaintiffs Darr and Lopez,
REMAIN STAYED pending the conclusion of their individual arbitration
proceedings. The claims of opt-in plaintiffs Bonham, Cline, Hattlestad, and
Howard remain pending before this Court; and

6.

Counsel are directed to contact the Chambers of U.S. Magistrate Judge Michael
E. Hegarty to set a status conference in this matter on the claims of opt-in
plaintiffs Bonham, Cline, Hattlestad, and Howard.
Dated this 28th day of January, 2019.
BY THE COURT:

William J. Martínez
United States District Judge

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