Garcia v. Acosta Tractors, Inc. et al
Filing
43
ORDER granting 31 Defendants' Motion to Dismiss, Compel Arbitration, Stay Proceedings. Signed by Magistrate Judge Andrea M. Simonton on 2/7/2013. (par)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 12-21111-CIV-SIMONTON
CONSENT CASE
MARTIN OMAR GARCIA,
et al.,
Plaintiffs,
v.
ACOSTA TRACTORS, INC., and
FELIX F. ACOSTA,
Defendants.
/
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS,
COMPEL ARBITRATION, STAY PROCEEDINGS
Presently pending before the Court is Defendants Acosta Tractors, Inc., Felix F.
Acosta and Frank P. Acosta’s Motion to Dismiss and/or Compel Arbitration, Stay
Proceedings (DE # 31).1 The Plaintiffs have filed a Response in Opposition to the Motion
(DE # 34). The Defendants have not replied and the time for doing so has elapsed.
Pursuant to the consent of the Parties, this action has been transferred by the Honorable
Patricia A. Seitz to the undersigned for all proceedings, including trial (DE # 27). For the
following reasons, the Defendants’ Motion is Granted, and this action is stayed pending
the arbitration of the Plaintiffs’ claims raised in this action.
I.
BACKGROUND
Since the determination of whether to compel arbitration is based upon the
1
On the same date that the Defendants filed the instant Motion, the Defendants
filed another Motion to Dismiss And/Or Compel Arbitration, Stay Proceedings (DE # 30).
That Motion is seemingly identical to the instant Motion (DE # 31) except that the
“Assigned Employee Acknowledgements” appended to the instant Motion as Exhibit 1,
are missing from that Motion. Therefore, the undersigned assumes that the Motion at
bar (DE # 31) was intended to be substituted for the first filed Motion (DE # 30), and thus
denies that Motion as Moot.
litigation activities undertaken prior to the filing of a motion to compel arbitration, the
litigation history is set forth in detail below.
This matter was initiated on March 20, 2012, when Plaintiff Martin Omar Garcia, on
behalf of himself and all other similarly situated individuals under 29 U.S.C. 216 (b), filed
a two-count Complaint alleging violations of the Fair Labor Standards Act Overtime
Wage provisions (“FLSA”) (Count I), and violations of §22.3 Code of Miami Dade County
for Under-Payment of Wages (Count II), against Defendants Acosta Tractors, Inc., Felix F.
Acosta and Frank P. Acosta (DE # 1). In the Complaint, Plaintiff Omar Garcia alleged that
he worked for Defendants as a Construction Laborer from about February 15, 1994 until
on or about March 9, 2012. During that time, the Defendants allegedly failed to pay the
Plaintiff for five overtime hours per week throughout the duration of his employment. In
addition, the Plaintiff alleged that he was not paid the “Responsible Wage” rate owed to
him as a Journeyman Laborer as required by the Miami-Dade County Responsible Wage
Ordinance, and that this constituted wage theft under the Miami-Dade County Wage
Theft Ordinance. The Complaint requested that the Plaintiff be awarded his unpaid
wages, double damages, reasonable attorney’s fees, back wages, and liquidated and
treble damages.
On March 30, 2012, the Plaintiff filed an Amended Complaint wherein, among
other things, Lorenzo Amado Salinas was named as an additional Plaintiff (DE # 5).
On April 4, 2012, the Court issued its Notice of Court Practice in Fair Labor
Standards Act Cases and Referral to Magistrate Judge for Settlement Conference (DE #
8). That Order directed, among other things, for the Plaintiff to file a Statement of Claim
and the Defendant to file a Response to Plaintiff’s Statement of Claim.
On April 11, 2012, the Defendants filed a nine-page Answer and Affirmative
2
Defenses to the Amended Complaint wherein the Defendants asserted, inter alia, that the
Plaintiffs’ claims were barred by various provisions of the Portal-to Portal Act, 29 U.S.C.
§§ 254, 255, 260 (DE # 9). In addition, the Defendants cited several sections of the Code
of Federal Regulations (“CFR’s”) as providing a basis for the denial of the Plaintiffs’
claims. The Answer and Affirmative Defenses did not refer to any arbitration agreement
between the Parties.
On April 24, 2012, Plaintiffs Garcia and Salinas filed their combined Statement of
Claim (DE # 10). On May 15, 2012, the Defendants filed a response to the Plaintiffs’
Statement of Claim wherein the Defendants denied liability to either Plaintiff and
specifically asserted that the Plaintiffs received compensation for all of their pay for
overtime hours that they legitimately worked (DE # 12). (DE # 12).
On May 30, 2012, the Defendants filed a Certificate of Compliance certifying that
they had served all documents supporting their defenses upon the Plaintiffs (DE # 14),
A settlement conference held before the undersigned on June 14, 2012, resulted
in an impasse (DE ## 16,17). Thereafter, the Parties filed their Corrected Joint
Scheduling Report wherein the Parties, among other things, included a July 27, 2012,
deadline for joining other parties and amending the pleadings (DE # 19). Based upon the
Corrected Joint Scheduling Report, the Court issued an Order Setting Trial Date and
Pretrial Deadlines which, inter alia, set the discovery deadline for October 26, 2012 and a
trial date for May 6, 2013 (DE # 20).
On August 3, 2012, the Defendants filed a Stipulation for Substitution of Counsel
(DE # 23). On August 7, 2012, the parties consented to the exercise of jurisdiction over
this matter by the undersigned Magistrate Judge (DE # 24), and an order transferring the
case based on this consent was entered on August 21, 2012 (DE # 27). On August 20,
3
2012, the Plaintiffs filed an Unopposed Motion for Leave to File a Second Amended
Complaint wherein the Plaintiffs requested leave to amend their Complaint to add opt-in
Plaintiff Jatniel Casanas Corrent, and to withdraw Plaintiffs’ claims brought pursuant to
the Miami Dade County Ordinance. In addition, the Plaintiffs sought to add an FLSA
retaliation claim pursuant to 29 U.S.C. § 215(a) (DE # 26). The Unopposed Motion was
granted on August 21, 2012; and the Second Amended Complaint was filed on
September 13, 2012. On September 17, 2012, the Defendants filed the instant Motions to
Dismiss (DE ## 30, 31) asserting that the matter should be either dismissed or stayed
until the Parties arbitrated the dispute.
II.
THE POSITIONS OF THE PARTIES
In the instant Motion, the Defendants contend that the Plaintiffs’ Second Amended
Complaint should be dismissed, or, in the alternative, the proceedings should be stayed,
so that the Parties may arbitrate this matter pursuant to an agreement entered into by
each of the Plaintiffs at the commencement of their employment with the Defendants.2 In
support of this contention, the Defendants assert that the Plaintiffs, as employees of
Defendant Acosta, were given an Employee Handbook that included an arbitration clause
in its “Assigned Employee Acknowledgements” section which was signed and executed
by each Plaintiff. According to the Defendants, the arbitration clause required that any
claims arising from the Plaintiffs’ employment, including claims related to wages, be
submitted to binding arbitration. The Defendants further contend that the instant claims
2
The Defendants have appended to the Motion three separate “Assigned
Employee Acknowledgements” signed by each of the Plaintiffs. Those
Acknowledgments generally provide that the employee agrees that any legal dispute
between the employer and that employee will be resolved exclusively through binding
arbitration and that the agreement to arbitrate is enforceable as a contract under the
Federal Arbitration Act. (DE # 31-1).
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fall within the scope of that clause and thus should be arbitrated.
In addition, the Defendants argue that, although the Defendants did not
immediately request that the dispute be submitted to arbitration, in light of the federal
public policy supporting the enforcement of arbitration agreements, the five-month delay
in seeking arbitration alone, is insufficient to constitute a waiver of the Defendants’
rights under the arbitration clause. The Defendants thus argue that absent a showing of
prejudice to the Plaintiffs caused by the Defendants’ delay, the action should still be
submitted to binding arbitration. In this regard, the Defendants note that relatively few
resources have been expended by the Parties on this action and that virtually little or no
discovery–other than serving initial requests for documents and interrogatories–has
been completed.
Finally, the Defendants contend that to the extent that the Defendants’
participation in litigation in this action may be construed as a waiver of their right to
arbitrate, that right was revived when the Plaintiffs filed their Second Amended
Complaint which added a new Plaintiff to the action and alleged an FLSA retaliation
claim.
In opposition to the Motion, the Plaintiffs contend that the Defendants waived
their right to arbitrate this matter by delaying their request to arbitrate until six months
after the action was filed and after a settlement conference was held before the
undersigned (DE # 34). The Plaintiffs further note that the Defendants did not object to
the Plaintiffs’ Motion seeking leave to file a Second Amended Complaint to include a
claim for FLSA retaliation based upon an incident that occurred during the settlement
conference (DE # 26). In addition, the Plaintiffs contend that because of the Defendants’
delay in seeking to compel this matter to arbitration, the Plaintiffs have expended fees
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and costs. For the following reasons, the undersigned concludes that the instant matter
should be stayed while the Parties arbitrate their disputes.
III.
LEGAL FRAMEWORK
The Federal Arbitration Act (“FAA”) embodies a “liberal federal policy favoring
arbitration agreements,” and federal courts are required to “rigorously enforce”
agreements to arbitrate. Hemispherx Biopharma, Inc. v. Johannesburg Consol. Invs., 553
F.3d 1351, 1366 (11th Cir. 2008) (citations omitted). Questions of arbitrability should be
resolved in favor of arbitration. Picard v. Credit Solutions, Inc., 564 F. 3d 1249, 1253 (11th
Cir. 2009). Further, the FAA provides that when “any suit or proceeding [is] brought in [a
district court] upon any issue referable to arbitration under an agreement,” the Court
shall “stay the trial of the action until such arbitration has been had in accordance with
the terms of the agreement.” 9 U.S.C. § 3; see also Dean Witter Reynolds, Inc. v. Byrd, 470
U.S. 213, 218 (1985).
Courts will not compel arbitration when the party who seeks to arbitrate has
waived its right to do so. Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194, 1200 (11th Cir.
2011). Rather, an agreement to arbitrate, “just like any other contract ..., may be waived.”
Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1316 (11th Cir. 2002) citing Burton-Dixie
Corp. v. Timothy McCarthy Const. Co., 436 F.2d 405, 407 (5th Cir. 1971). Nonetheless,
because federal policy strongly favors arbitration, the party who argues waiver bears a
heavy burden of proof. Id. at n.17 citing Stone v. E.F. Hutton & Co., 898 F.2d 1542, 1543
(11th Cir. 1990). As set forth in Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1316
(11th Cir. 2002), to determine whether a party has waived its right to arbitrate, Courts in
this circuit apply a two-part test: 1) whether under the totality of the circumstances, the
party has acted inconsistently with the arbitration right; and, 2) whether, by doing so, that
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party has prejudiced the other party. Accord S & H Contractors, Inc. v. A.J. Taft Coal Co.,
906 F.2d 1507, 1514 (11th Cir. 1990 (same); Morewitz v. W. of England Ship Owners Mut.
Prot. & Indem. Ass'n, 62 F.3d 1356, 1366 (11th Cir. 1995) (“. . .the doctrine of waiver is not
an empty shell. Waiver occurs when a party seeking arbitration substantially participates
in litigation to a point inconsistent with an intent to arbitrate and this participation results
in prejudice to the opposing party.”)
The first prong of the waiver test may be satisfied “when a party seeking
arbitration substantially participates in litigation to a point inconsistent with an intent to
arbitrate.” Morewitz v. W. of Eng. Ship Owners Mut. Prot. & Indem. Ass'n,, 62 F.3d 1356,
1366 (11th Cir. 1995); see also S & H Contractors, 906 F.2d at 1514 (“[A] party that
substantially invokes the litigation machinery prior to demanding arbitration may waive
its right to arbitrate.” (alterations and internal quotation marks omitted)). In other words,
a party has acted inconsistently with its right to arbitrate where its conduct–including
participation in litigation–manifests an intent to avoid or to waive arbitration. See Ivax
Corp., 286 F.3d at 1319 & n. 21, 1320. See also Citibank, N.A. v. Stok & Assocs., P.A., 387
F. App'x 921, 924 (11th Cir.2010) (“participating in litigation can satisfy the first prong of
the waiver test ‘when a party seeking arbitration substantially participates in litigation to
a point inconsistent with an intent to arbitrate’ ”).
As to the second prong, in determining whether the party opposing arbitration was
prejudiced by the delay, the Eleventh Circuit has considered the length of delay in
demanding arbitration and the expense incurred by the party alleging prejudice from
participating in the litigation process. Citibank, N.A. v. Stok & Associates, P.A., 387 F.
App’x 921 (11th Cir. 2010), citing S & H Contractors, 906 F.2d at 1514. In addition, the
Eleventh Circuit has considered the extent of “[t]he use of pre-trial discovery procedures
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by a party seeking arbitration,” to determine if the inconsistent conduct “sufficiently
prejudice[d] the legal position of an opposing party so as to constitute a waiver of the
party's right to arbitration.” Citibank, N.A. v. Stok & Associates, P.A., 387 F. App’x 921
(11th Cir. 2010), citing Stone v. E.F. Hutton & Co., 898 F.2d 1542, 1543 (11th Cir. 1990).
IV.
APPLICATION OF LAW TO THE CASE AT BAR
A.
The Plaintiffs Entered Into a Valid Agreement to Arbitrate Disputes
Including Those Arising under the FLSA
At the outset, in the case at bar, the Court notes that the Plaintiffs do not dispute
that each of the Plaintiffs entered into a valid agreement with their employer to arbitrate
legal disputes. Nor do the Plaintiffs contend that the dispute at issue falls outside of the
scope of that agreement. Rather, the Plaintiffs only contend that the Defendants waived
their right to compel arbitration in this matter by waiting more than six months, and after
the matter had been mediated by the undersigned, to seek to compel arbitration. Thus,
the undersigned does not address the validity or scope of the arbitration clause at issue
but instead only analyzes whether the Defendants waived their rights under that
agreement by litigating this matter.
B.
Whether the Defendants Waived their Right to Arbitrate
1.
Participation in Litigation to a Point Inconsistent with Intent to
Arbitrate
In this case, prior to the Defendants filing the instant Motions to Dismiss, the
Defendants litigated this matter in a manner which is inconsistent with an intent to
arbitrate. First, the Defendants did not raise their right to arbitrate this dispute in their
Answer and Affirmative Defenses (DE # 9). This omission is particularly curious given
that the Defendants raised sixteen affirmative defenses in that pleading, many of which
were specific to this action and not simply “boiler-plate” averments. Similarly, even after
8
the Parties had reached an impasse at the settlement conference, which was held nearly
three months after the case was filed, the Defendants still did not seek to compel
arbitration in this matter until another three months passed. Instead, in the Corrected
Joint Scheduling Report that was filed approximately two weeks after the unsuccessful
settlement conference, the Defendants made no reference to the arbitration agreement
and, significantly, stated, “Plaintiffs requested a jury trial in their Amended Complaint.
The parties estimate that the trial of this matter should take up to three days, inclusive of
jury selection” (DE # 19 at 4). This statement seems particularly inconsistent with the
Defendants’ claim that they did not waive their right to arbitrate where the arbitration
agreements signed by the Plaintiffs specifically state “I and [the employer] further
mutually waive any right to a jury trial.” (DE # 31-1 at 2-4). Further, in their current
Motion, the Defendants admit that the Parties have served their initial requests for
documents and interrogatories (DE # 30 at 10). Thus, for approximately six months, the
Defendants herein not only did not request that the action be submitted to arbitration,
despite their right to do so under the clear language of the arbitration clauses signed by
the Plaintiffs, the Defendants also proceeded in a manner which seemingly manifested an
intent to not proceed to arbitration, including failing to refer to arbitration in their Answer,
attending a settlement conference before the undersigned, submitting a scheduling
report which was silent as to arbitration and referenced the Plaintiffs’ right to a jury trial,
and serving their initial requests for documents and interrogatories. The Court further
notes that the Defendants have not offered any explanation for failing to seek to compel
arbitration of this matter earlier.3
3
The Defendants assert that the matter was only pending for five months prior to
the instant Motion was filed (DE # 30 at 10). However, this action was filed on March 20,
2012 (DE # 1) and the instant Motion was filed on September 17, 2012, and thus the
9
In this regard, the case at bar is not dissimilar from Lewis v. The Keiser School,
Inc., Case No. 11-62176-Civ, 2012 WL 193366 *1 (S.D. Fla. Sept. 18, 2012), wherein the
Court opined that the defendants in that case had acted inconsistently with their
arbitration right where they waited more than seven months before moving to arbitrate
under an agreement that the defendants required their plaintiff employees to sign. In
reaching that conclusion, the Court stated,
In the seven months of litigation preceding the motion to
compel arbitration, the record reveals that Defendants never
once raised to the Plaintiff or the Court that this dispute might
potentially be subject to arbitration. If Defendants were certain
that Plaintiff had signed such an agreement, but simply could
not immediately find it, Defendants could reasonably be
expected to mention the issue at an early point in the case.
They did not. Instead, Defendants affirmatively indicated in a
joint status report that there were no “other issues that the
Court should be aware of that may affect the resolution of this
matter or the schedule as currently set”—a strange statement
from a party wishing to preserve a potential right to arbitrate.
Id. See also Dockeray v. Carnival Corp., 724 F. Supp. 2d 1216,
1222 (S.D.Fla. 2010) (Altonaga, J.) (“‘not pleading arbitration in
the answer can be used as evidence towards finding of
waiver.’ An early arbitration demand notifies a party that
arbitration may be forthcoming, and therefore the party may
prepare accordingly. It is for this reason that ‘[o]nce the
defendant, by answer, has given notice of insisting on
arbitration[,] the burden is heavy on the party seeking to
prove waiver’”) (citations omitted).
Id. at *3. The Court further concluded that the record revealed that the defendants
actively litigated the case by participating in discovery, successfully obtaining an
extension of the discovery period and trial date, and engaging in discovery motions
practice. The court additionally noted that in the joint status report, the Defendants
represented to the Court that they were participating in discovery, and did not mention
matter was pending for approximately six months prior to the Defendants seeking to
compel arbitration.
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the possibility of arbitration. Id. Accord Stanley v. Kahn & Assocs., LLC, 2009 WL
1532724, at *1 (M.D. Fla. June 2, 2009) (Lazzara, J.) (finding waiver after eight months of
litigation, where defendant “fail[ed] to raise the issue of arbitration at the earliest
possible stages of the proceedings,” and “announc[ed] its intention to engage in the full
panoply of discovery authorized by the Federal Rules of Civil Procedure” in case
management report).
In the case at bar, as stated above, the undersigned has concluded that the
Defendants have litigated this action in a manner inconsistent with their right to arbitrate.
However, the Defendants’ Motion is nonetheless due to be granted because, as
discussed below, the Plaintiffs have failed to demonstrate sufficient prejudice caused by
the Defendants’ delay in seeking to have this matter arbitrated.4
4
The Court is aware that the Defendants contend that even if they waived their
right to arbitrate, their right was revived when the Plaintiffs filed their Second Amended
Complaint which raised, for the first time, an FLSA retaliation claim (DE # 31 at 8-9. The
undersigned does not reach this issue because, as discussed infra., the Plaintiffs have
failed to satisfy the prejudice prong of the Ivax test, and thus the Defendants have not
waived their right to arbitrate this action. The undersigned does note, however, that
when a plaintiff files an amended complaint that “unexpectedly changes the scope or
theory of the plaintiff's claims,” fairness dictates that a defendant's prior waiver of
arbitration be nullified and the right to compel arbitration revived. See Krinsk v.
SunTrust Banks, Inc., 654 F.3d 1194, 1202 (11th Cir. 2011). However, where an amended
complaint only makes minor changes to the factual allegations or legal claims previously
asserted, a defendant's right to arbitrate, if waived, will not be rejuvenated by the filing
of the pleading. Id. Further, recently, in Plaintiffs’ Shareholders Corp. v. Southern Farm
Bureau Life Ins. Co., 486 Fed. Appx. 786 (11th Cir. 2012), the Eleventh Circuit, in an
unpublished decision, examined whether a defendant’s right to compel arbitration was
revived by the plaintiffs’ filing of a second amended complaint. The Court decided that
because the plaintiff’s second amended complaint added a breach of contract claim
which unexpectedly altered the scope and theory of the case, the defendant could seek
to compel arbitration of the newly-plead breach of contract claim. However, the Court
also held that because the defendant had waived its right to compel arbitration of the
plaintiff’s original fraud claim, that the newly added breach of contract claim did not
revive that right. Id. at *5. The Court noted that although there were several similarities
between the breach-of-contract claim and the previously asserted fraud claims,
including the fact that all of the claims relied upon the same alleged misrepresentations
and omissions, there were significant differences between the two claims including the
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2.
Prejudice to Plaintiffs Based upon Defendants’ Delay in
Seeking to Compel Arbitration
Although the Court concludes that the Defendants participated in this litigation to
a point inconsistent with an intent to arbitrate, the Plaintiffs have failed to demonstrate
how they were prejudiced by the Defendants’ delay in seeking to enforce the arbitration
clause, and thus fail to satisfy the second prong set forth in Ivax. In Citibank, N.A. v. Stok
& Associates, P.A., 387 F. App’x 921 (11th Cir. 2010), for example, the Eleventh Circuit,
after assuming without deciding that the plaintiff’s participation in state court
proceedings was inconsistent with the plaintiff’s right to arbitrate the federal action,
reversed a trial court’s determination that the plaintiff had waived its right to arbitrate in
that case. Specifically, in Citibank, the reviewing court concluded that the defendant had
not demonstrated the requisite prejudice to satisfy the two-prong waiver test under Ivax.
In reaching that conclusion, the Court stated, “When the inconsistent conduct prong is
satisfied by substantial participation in litigation, we evaluate the prejudice prong by
“consider[ing] the length of delay in demanding arbitration and the expense incurred by
damages available under each claim and different elements of proof. Thus, given that in
this case, the Defendants argue that the Plaintiff’s newly pled retaliation claim requires
different elements of proof and allows for different damages, it is unlikely, given the
holding in Plaintiffs’ Shareholders Corp., that the Plaintiffs’ Second Amended Complaint
would revive the Defendants’ right to arbitrate the Plaintiffs’ original FLSA overtime
claims, rather than just the newly-pled FLSA retaliation claim.
As to the viability of the newly-pled retaliation claim, again, although the
undersigned need not reach any determinations regarding that claim, it is worth noting
that even under the lowered standard for retaliation claims as enunciated in Burlington
N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 68 (2006), it is questionable whether the
Plaintiffs’ retaliation claim would meet the “material, significant and not trivial”
threshold, for purposes of submitting that claim to a jury. See Crawford v. Carroll, 529 F.
3d 961, 973 n.13 (11th Cir. 2008) (noting that the Supreme Court in Burlington suggested
that it is for the jury to decide whether anything more than the most petty and trivial
actions against an employee should be considered “materially adverse” to him and thus
constitute an adverse employment action for purposes of establishing a retaliation
claim).
12
[the] party [alleging prejudice] from participating in the litigation process.” Id. at 924.
The Court then stated,
[Plaintiff] takes issue with the district court's conclusion that
it induced [Defendant], a small firm, to dedicate “significant
human resources” to research and discovery tasks particular
to litigation. [Defendant] is deserving of sympathy for its
misfortune. However, when considered in light of our waiver
jurisprudence, the record does not support the district court's
finding.
[Plaintiff] concedes that [Defendant] may have suffered some
prejudice when it expended time and resources preparing and
filing an offer of judgment, reply, and notice of readiness for
trial in state court. However, courts have declined to find
waiver in cases with similar or more extensive litigation
activity. See, e.g., Hill v. Ricoh Ams. Corp., 603 F.3d 766,
772-76 (10th Cir. 2010); Patten Grading & Paving, Inc. v.
Skanska USA Building, Inc., 380 F.3d 200, 206-07 (4th Cir.
2004); Walker v. Bradford, 938 F.2d 575, 576-78 (5th Cir. 1991).
Moreover, [Defendant] has done little to demonstrate the
amount of expenses incurred as a result of [Plaintiff's]
conduct. In fact, when asked directly at oral argument,
[Defendant] could not point to any portion of the record that
reveals either the amount of money it spent or the number of
hours it dedicated to conducting litigation-specific discovery
and preparing litigation-specific documents.
Id. at 925. The reviewing Court then distinguished its prior holdings in Stone v. E.F.
Hutton & Co., 898 F.2d 1542 (11th Cir. 1990), and S & H Contractors, Inc. v. A.J. Taft Coal
Co., 906 F.2d 1507 (11th Cir. 1990), wherein the Court found prejudice where the parties
had engaged in relatively extensive discovery. Id. at *3, n.3. In particular, the Court noted
that in Stone, the parties engaged in discovery typical for trial preparation and further,
that the defendant, who sought arbitration, “had twice deposed the plaintiff; it had
responded to the plaintiff's request for production; the plaintiff had submitted
interrogatories and additional requests for production; each side had scheduled
depositions; and the trial court had scheduled a discovery completion date, a conference
date, and potential trial dates.” Id. citing Stone at 1544. The Court similarly observed that
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in S&H Contractors, during the eight months before the plaintiff demanded arbitration in
that action, the plaintiff had deposed five of the defendant’s employees and the
defendant, who opposed the arbitration, had filed a motion to dismiss and an opposition
to the plaintiff’s motion for discovery. Id.
Finally, while the Court in Citibank noted that the period of delay in seeking to
arbitrate the matter in that case was relatively brief, as stated previously, the Court
preliminarily assumed without deciding that the actions of the party seeking arbitration
demonstrated that the party did not intend to pursue arbitration. Thus, the Court’s
emphasis in deciding whether prejudice had been established focused primarily on
whether the party opposing arbitration had demonstrated that it had, in fact, been
prejudiced by that delay. In finding that the prejudice was lacking, the Court specifically
rejected the trial court’s conclusion that the expenditure of time and expenses in
undertaking discovery tasks and preparing state court filings was sufficient to satisfy the
prejudice requirement. Id. at *3. Accord G.R. Harvill, Inc., v. Patel, Case No. 11-311-N, 2011
WL 3607020 *3 (S.D. Ala. Aug. 16, 2011) (finding that although defendant’s actions,
including failing to raise arbitration as a defense in its answer and waiting a little more
than two-months before demanding arbitration, demonstrated that the defendant
intended to litigate rather than arbitrate, that the plaintiff failed to establish the requisite
prejudice to demonstrate waiver).
Similarly, in this matter, in response to the Defendants’ Motion, the Plaintiffs have
only stated the following with regard to any prejudice that they have suffered, “Now after
this case has moved forward for (6) months through litigation, and fees and costs have
been expended, the defense now wishes to pull out the arbitration card without ever
pursuing same previously.” (DE # 34 at 3). This allegation falls far short from the
14
assertions made in those cases where courts have found that prejudice has been
established when a party delays its right to seek arbitration. Rather, much like the
prejudice allegations in Citibank, the Plaintiffs’ prejudice contentions herein fail to state
the amount of money spent or the number of hours dedicated to conducting litigationspecific discovery and preparing litigation-specific documents. In addition, discovery in
this matter has been extended until February 28, 2013, based in part, upon the Parties’
representation that discovery has not been completed in this matter (DE ## 39, 41).5
Thus, there is no evidence that the Plaintiffs have undergone the types of litigation
expenses that arbitration was designed to alleviate. cf Garcia v. Wachovia Corp., 699 F.
3d 1273, 1278 (11th Cir. 2012) (finding prejudice by delayed request for arbitration where
plaintiffs expended substantial sums of money in conducting litigation). Accordingly, the
Plaintiffs have failed to demonstrate the requisite prejudice necessary to satisfy the
second prong of the Ivax test, and thus have failed to demonstrate that the Defendants
have waived their right to arbitrate this matter.
V.
CONCLUSION
Accordingly, based on the foregoing, it is
ORDERED AND ADJUDGED that Defendants Acosta Tractors, Inc., Felix F.
Acosta and Frank P. Acosta’s Motion to Dismiss and/or Compel Arbitration, Stay
Proceedings is GRANTED (DE # 31). It is further
5
Moreover, at the Scheduling Conference held on October 25, 2012, before the
undersigned Magistrate Judge, the Defendants explained that their Motion to Compel
Arbitration was pending, that the Parties had not yet engage in significant discovery
procedures and that by agreeing to the Scheduling Order and not opposing discovery
they did no intend to waive their rights to compel arbitration. The Plaintiffs did not seek
to stay discovery pending the resolution of this Motion; and therefore cannot claim
prejudice based on the expenses of discovery during the pendency of this motion.
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ORDERED AND ADJUDGED that pursuant to Title 9 U.S.C. § 3, this matter is
STAYED and administratively CLOSED until the Parties have arbitrated this matter
pursuant to the arbitration clause set forth in the “Assigned Employee
Acknowledgements” signed by each of the Plaintiffs. It is further
ORDERED AND ADJUDGED that the Plaintiffs shall file a Notice of Arbitration
within twenty (20) days of the completion of arbitration to advise the Court as to whether
the matter was resolved through arbitration; and either Party may file a Motion to Re-open
this case if further judicial action is requested at that time.
DONE AND ORDERED at Miami, Florida, on February 7, 2013.
ANDREA M. SIMONTON
UNITED STATES MAGISTRATE JUDGE
Copies furnished to:
All counsel of record
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