Fuentes et al v. Security Forever LLC et al

Filing 232

ORDER COMPELLING ARBITRATION, STAYING CASE, AND ORDER ADOPTING REPORT AND RECOMMENDATIONS; ORDER STAYING CASE; denying 164 Renewed Motion for Sanctions Under Rule 11; denying 166 Motion to Compel Video Footage to Extent In Defendants' Poss ession, Custody or Control; denying 194 Motion to Compel Discovery and For Sanctions; granting 198 Motion to Preserve Evidence; denying 205 Motion for Sanctions under Section 1927; granting 230 Motion to Strike. Closing Case. Motions t erminated: 163 Renewed MOTION to Dismiss 58 Amended Complaint, filed by Luis Llanes, Daysi Morell, Security Forever LLC, Juan Awais, 197 Defendant's MOTION to Compel Arbitration filed by Luis Llanes, Da ysi Morell, Security Forever LLC, Juan Awais, 198 Plaintiff's MOTION to Preserve Evidence and an Order Requiring Same filed by Humberto David Turro Quintana, Jose Ignacio Hormigot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus P eralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fuentes, Luis Rodriguez Fuentes, Jose A. Rosello, 194 Defendant's MOTION to Compel Discovery and For Sanctions filed by Luis Llanes, Daysi Morell, Security Forever LLC, Juan Awais, 226 REPORT AND RECOMMENDATIONS re 197 Defendant's MOTION to Compel Arbitration filed by Luis Llanes, Daysi Morell, Security Forever LLC, Juan Awais Recomme nding granted., 159 Plaintiff's MOTION to Compel Better Responses to Plaintiffs' Supplemental Discovery andPlaintiff's MOTION for Sanctions filed by Humberto David Turro Quintana, Jose Ignacio Hormigot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus Peralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fuentes, Jose A. Rosello, Luis Rodriguez Fuentes, 168 Plaintiff's MOTION to Compel Inspection of Premises (Renewed) filed by Humberto David Turro Quintana, Jose Ignacio Hormigot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus Peralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fue ntes, Jose A. Rosello, Luis Rodriguez Fuentes, 161 Plaintiff's MOTION to Compel Better Responses to Plaintiffs' Discovery andPlaintiff's MOTION for Sanctions filed by Humberto David Turro Quintana, Jose Igna cio Hormigot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus Peralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fuentes, Jose A. Rosello, Luis Rodriguez Fuentes, 166 Plaintiff's MOTION to C ompel Video Footage to Extent In Defendants' Possession, Custody or ControlPlaintiff's MOTION Injunctive Relief Plaintiff's MOTION for Sanctions filed by Humberto David Turro Quintana, Jose Ignacio Horm igot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus Peralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fuentes, Jose A. Rosello, Luis Rodriguez Fuentes, 205 Plaintiff's MOTION for Sanction s under Section 1927 filed by Humberto David Turro Quintana, Jose Ignacio Hormigot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus Peralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fuentes, J ose A. Rosello, Luis Rodriguez Fuentes, 160 Plaintiff's MOTION to Compel Better Responses to Plaintiffs' Interrogatories andPlaintiff's MOTION for Sanctions filed by Humberto David Turro Quintana, Jose Ignac io Hormigot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus Peralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fuentes, Jose A. Rosello, Luis Rodriguez Fuentes, 167 Plaintiff's MOTION to Ex ceed the Deposition Limit filed by Humberto David Turro Quintana, Jose Ignacio Hormigot, Osmar Gonzalez Rivera, Barbara V Nunez, Jesus Peralta, Juan J Nunez, Alexis Rodriguez Fuentes, Zayda Maibel Gonzalez Rodriguez, Angel Rodriguez Fu entes, Jose A. Rosello, Luis Rodriguez Fuentes, 164 Renewed MOTION for Sanctions Under Rule 11 filed by Luis Llanes, Daysi Morell, Security Forever LLC, Juan Awais, 230 MOTION to Strike 229 Response/Reply (Other), filed by Luis Llanes, Daysi Morell, Security Forever LLC, Juan Awais. Signed by Judge Robert N. Scola, Jr on 7/27/2017. (lrz1) NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014-69.

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United States District Court
for the
Southern District of Florida
Angel Rodriguez Fuentes, and
others, Plaintiffs
v.
Security Forever LLC, Luis Llanes,
Juan Awais, Daysi Morell,
Defendants.

)
)
)
) Civil Action No. 16-20483-Civ-Scola
)
)

Order Compelling Arbitration, Staying Case, and
Adopting Report and Recommendations
Defendants Security Forever LLC, Luis Llanes, Juan Awais, and Daysi
Morell (collectively “Security Forever”) filed a motion to compel arbitration (ECF
No. 197) which the Court referred to United States Magistrate Judge Alicia M.
Otazo-Reyes (ECF No. 206). Thereafter, Judge Otazo-Reyes recused herself
from this case which was reassigned to United States Magistrate Judge Chris
M. McAliley. (Order of Recusal, ECF No. 211.) Judge McAliley issued a report
and recommendations, recommending that the Court grant the motion to
compel. The Plaintiffs, eight former or present Security Forever employees
(collectively the “Employees”), objected to the report (ECF No. 227), to which
Security Forever responded (ECF No. 228). The Employees thereafter filed a
reply (ECF No. 229), which Security Forever has moved to strike (ECF No. 230).
For the reasons that follow, the Court finds Judge McAliley’s report cogent and
persuasive and adopts her recommendation to compel arbitration (ECF No.
226). The Court also grants Security Forever’s motion to strike the Employees’
reply to its objection response (ECF No. 230).
1. Procedural Background
This Fair Labor Standards Act case was initiated in February 2016.
Although over 200 entries appear on the docket, little to no progress has been
made on the actual merits of the case. Despite the passage of time, this case
remains in its infancy. It was not until May 2016 that the operative fourthamended complaint was before the Court. Furthermore, while Security Forever
has filed a motion to dismiss that complaint, no answer has yet been filed. The
case has also been stayed for several months for various reasons. The parties
have spent most of their active time in this case ensnared in hotly contested
discovery disputes and competing sanctions motions. In fact, Judge OtazoReyes heard testimony from nineteen witnesses, over the course of five full
days, between June 2 and July 12, 2016, on the parties’ respective sanctions

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motions. The hearing was continued until August 18, 2016 but then later
canceled due to defense counsel’s medical problems. Thereafter, those same
health concerns prompted the Court to stay the action from early September
until mid-December 2016.
Once the case was reopened, the parties renewed their sanctions
motions. However, before Judge Otazo-Reyes completed the evidentiary
hearings, she recused herself from the case and the matter, including the
pending motion to compel arbitration, was transferred to Judge McAliley. While
the motion to compel arbitration was awaiting Judge McAliley’s resolution, the
Court stayed its consideration of the remaining pending motions in the case.
2. Summary of Report and Recommendations
Security Forever filed its motion to compel arbitration on January 17,
2017, nearly a year after the Employees filed their initial complaint. The
Employees’ opposition to the motion centered not on the arbitration provision’s
enforceability, but, rather, on whether Security Forever had, in its delay,
waived its right to arbitrate. In analyzing the waiver issue, courts must conduct
a two-part inquiry. First, a court must determine “if, ‘under the totality of the
circumstances,’ the party ‘has acted inconsistently with the arbitration right,’
and, second,” a court must then “look to see whether, by doing so, that party
‘has in some way prejudiced the other party.’” Ivax Corp. v. B. Braun of Am.,
Inc., 286 F.3d 1309, 1315–16 (11th Cir. 2002) (quoting S & H Contractors, Inc.
v. A.J. Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir.1990)).
While Judge McAliley readily concluded that Security Forever “acted
inconsistently with arbitration,” she nevertheless found that the Employees
had failed to carry their “heavy burden” of establishing that they had been
“substantially prejudiced” by Security Forever’s litigation-specific conduct.
(Rep. & Rec. at 9, 12, 15.) In finding that the Employees had failed to carry
their burden, Judge McAliley evaluated a number factors. (Id. at 12–15.)
First, while acknowledging that Security Forever’s eight-month delay (not
including the time during which the case was stayed) in seeking arbitration
was indeed considerable, she noted that alone did not establish prejudice. (Id.
at 13.) Second, Judge McAliley pointed out that the lion’s share of the
Employees’ expenses came from contesting Security Forever’s Rule 11 motion
and pressing their own motion for sanctions against Security Forever. (Id.) In
evaluating this factor, Judge McAliley noted, (1) these types of activities and
expenditures are not of the ilk that arbitration is designed to avoid. (Id.) And,
(2) the sanctions hearing was never completed which means that, because of
Judge Otazo-Reyes’s mid-hearing recusal, such proceedings would, in any

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event, need to be restarted from the beginning before Judge McAliley. (Id. at
13–14.)
Next, Judge McAliley observed that, based on the unique procedural
posture of this case at this juncture, both Judge McAliley and this Court’s
familiarity with the merits of this case, or rather their lack thereof, puts both in
essentially the same position as any arbitrator selected to arbitrate this case
would be. (Id. at 14.) Lastly, in considering the Employees’ discovery
expenditures, Judge McAliley found that the Employees had devoted more
resources to seeking discovery than to responding to it. (Id.) And, since they
received discovery they might not have otherwise gotten in arbitration, they
therefore suffered no prejudice in that regard. (Id. (citing Hodgson v. Royal
Caribbean Cruises, Ltd., 706 F. Supp. 2d 1248, 1258 (S.D. Fla. 2009)
(Altonaga, J.) (“It is . . . hard to understand how the discovery [the plaintiff]
received could have prejudiced him.”).) Additionally, Judge McAliley observed,
Security Forever itself had made relatively minimal use of pre-trial discovery
procedures. (Rep. & Rec. at 14–15.)
In conclusion, Judge McAliley noted “by far the majority of Plaintiffs’
efforts either benefitted them, or were not the type that arbitration was
designed to alleviate.” (Id. at 15.) Although recognizing that the Employees have
“no doubt” “been prejudiced to some degree,” Judge McAliley found that, on
balance, the Employees had nonetheless failed to carry their heavy burden of
establishing substantial prejudice. (Id.)
3. Standard of Review
“In order to challenge the findings and recommendations of the
magistrate judge, a party must file written objections which shall specifically
identify the portions of the proposed findings and recommendation to which
objection is made and the specific basis for objection.” Macort v. Prem, Inc., 208
F. App’x 781, 783 (11th Cir. 2006) (quoting Heath v. Jones, 863 F.2d 815, 822
(11th Cir.1989) (alterations omitted). The objections must also present
“supporting legal authority.” Local R. 4(b). Once a district court receives
“objections meeting the specificity requirement set out above,” it must “make a
de novo determination of those portions of the report to which objection is
made and may accept, reject, or modify in whole or in part, the findings or
recommendations made by the magistrate judge.” Macort, 208 F. App’x at 783–
84 (quoting Heath, 863 F.2d at 822) (alterations omitted). To the extent a party
fails to object to parts of the magistrate judge’s report, those portions are
reviewed for clear error. Macort, 208 F. App’x at 784 (quoting Johnson v. Zema
Sys. Corp., 170 F.3d 734, 739 (7th Cir.1999). A court, in its discretion, need

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not consider arguments that were not, in the first instance, presented to the
magistrate judge. Williams v. McNeil, 557 F.3d 1287, 1291 (11th Cir. 2009).
4. Analysis
A. The Employees’ Objections
The rambling nature of the Employees’ objections renders it difficult to
discern the precise contours of their objections to Judge McAliley’s report and
recommendations. To begin with, the Employees quote at length certain
portions of the report but fail to actually specify any objections thereto. These
passages are as follows:
Some courts have found that a party’s participation in discovery
supports a finding of waiver; see e.g., Snelling & Snelling, Inc. v.
Reynolds, 140 F. Supp. 2d 1314, 1322 (M.D. Fla. 2001)
(defendant substantially participated in litigation where, among
other things, he requested document production, served written
discovery and responded to plaintiffs’ written discovery); while
other courts have reached the opposite conclusion; see Hodgson
v. Royal Caribbean Cruises, Ltd., 706 F. Supp. 2d 1248, 1257-58
(S.D. Fla. 2009) (defendant did not actively litigate case even
though it served discovery on plaintiff and answered plaintiffs’
discovery requests). The context of the defendants’ other conduct
is indispensable to answering this question.
and
[T]he Court must determine whether the movant’s participation in
litigation has prejudiced the opposing party. Ivax, 286 F.3d at
1315. Here, courts consider the length of delay in demanding
arbitration, the expense incurred by the opposing party from
participating in litigation, and the use of pre-trial discovery
procedures by the party seeking arbitration. Garcia, 2013 WL
462713 at *4. To defeat arbitration, the opposing party -- here,
Plaintiffs -- must establish both elements of the waiver test. Id. at
*5-*8 (holding plaintiffs failed to demonstrate defendants waived
their right to arbitrate where plaintiffs did not establish requisite
prejudice even though defendants litigated case in a manner
inconsistent with right to arbitrate). “[B]ecause federal policy
strongly favors arbitration, the party who argues waiver bears a
heavy burden.” Id. at *3.
To the extent the Employees intend to lodge objections to the entirety of these
excerpts, the Court overrules those objections. Assuming such objections are
even validly presented, upon a de novo review, the Court finds each point of
law set forth in the excerpts above to be valid and properly stated. The
Employees have not provided any support for their contention that Judge

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McAliley erred by determining that, in the Eleventh Circuit, a waiver of the
right to arbitrate requires a showing of substantial prejudice. The Employees’
“belie[f],” without more, that the “Court should follow the line of case law” that
apparently stands for the proposition that “participation in litigation and
discovery . . . justifies a finding of waiver of arbitration” is unavailing. The
Employees fail to cite to a single case that supports their “belief.” Judge
McAliley’s presentation of the standard, on the other hand, is well supported by
binding Eleventh Circuit case law.
In their attempt to object to the report’s finding that the Employees were
not substantially prejudiced by Security Forever’s delay in seeking arbitration,
the Employees point to a number of factors: (1) the time-consuming evidentiary
proceedings held before Judge Otazo-Reyes which prevented the parties from
focusing on the merits of the lawsuit; (2) hearings related to motions for
protective orders; (3) Security Forever’s motions for extensions of time to
conduct discovery; (4) an arbitrator’s limited authority regarding sanctions; and
(5) the statute of limitations on the Employees’ claims.
Judge McAliley properly acknowledged and took into account the first
three of these factors. She readily appreciated that Security Forever, by its
actions, “plainly” evinced its “intent to litigate rather than resolve the case
through arbitration.” (Rep. & Rec. at 12.) To the extent the Employees have
properly set forth their objection to the report, their summary conclusion that
Security Forever’s participation in litigation alone necessitates a finding of
substantial prejudice is, upon a de novo review, without merit.
Next, the Employees claim prejudice based on their fear that an
arbitrator will not have the authority to enter sanctions. The legal support the
Employees offer on this point does not substantiate their concern. For example,
they cite to the United States Supreme Court’s decision in Int’l Union, United
Mine Workers of Am. v. Bagwell. 512 U.S. 821, 832 (1994). However, this
opinion never even mentions arbitration, never mind an arbitrator’s authority
to enter sanctions. The Employees also rely on Certain Underwriters at Lloyd’s
London v. Argonaut Ins. Co. 264 F. Supp. 2d 926, 943 (N.D. Cal. 2003). But in
that case, although the court found the particular sanctions entered by the
arbitrator to have exceeded his authority, the court also concluded “there is no
categorical ban to an arbitrator’s imposition of sanctions for non-compliance
with his or her orders.” Id. at 943. Similarly, the court in Ruggiero v. Richert,
which Employees also cite, concluded that an arbitrator “may issue sanctions
for failure to comply with an order.” No. 10-23539-CIV, 2011 WL 2910066, at
*3 (S.D. Fla. July 18, 2011) (Cooke, J.). Lastly, and perhaps most puzzling, the
Employees cite to an Eleventh Circuit case for the proposition that an
“arbitrator has discretionary authority to impose additional sanctions

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‘appropriate to the circumstances of the particular case.’” (Pls.’ Objs. at 10
(quoting United Steelworkers of Am., AFL-CIO-CLC v. USX Corp., 966 F.2d 1394,
1396 (11th Cir. 1992)).) In short, the Employees have not, by any stretch,
presented authority that demonstrates an arbitrator would decidely not have
the authority to enter sanctions. However, even if the arbitrator in this case
concludes that he is without authority to resolve the particular sanctions
issues the Employees are concerned about, the Court can, and will, remedy
any deficiencies in that regard by denying those motions without prejudice
pending arbitration.
Lastly, the Employees raise concerns involving the statute of limitations
in this case. This issue was not raised before Judge McAliley nor was it
addressed in her report. Although the Court has discretion to consider this
argument, the Court, in this instance declines to do so. Williams, 557 F.3d at
1291 (finding “the district court did not abuse its discretion in declining to
consider [an] argument that was not presented to the magistrate judge”). The
Court also notes, however, that because this case will be stayed—and not
dismissed—pending arbitration, the Employees’ statute-of-limitations concerns
should be nevertheless alleviated.
In sum, Judge McAliley, in recommending that the Court compel the
parties to arbitration, noted that whether Security Forever waived its right to
arbitrate “presents a close question.” (Rep. at 2.) The Court certainly concurs.
Nonetheless, having reviewed de novo those parts of the report to which the
Employees appear to object and having reviewed the remainder of the report for
clear error, the Court adopts Judge McAliley’s report and recommendations in
total, only adding to it to the extent described below in section B.
As pointed out by Judge McAliley, the Employees’ burden in establishing
substantial prejudice is indeed heavy. Based on its consideration of the report,
the parties’ filings, the entirety of the record, and the relevant legal authority,
the Court acknowledges that the Employees have certainly been prejudiced.
Even so, in light of the unique procedural posture of this case and the
somewhat limited nature of the Employees’ objections to the report, the Court
has lingering doubts about whether the Employees have shouldered their
burden in establishing substantial prejudice in this case. Notably, the
Employees did not lodge any objections to Judge McAliley’s conclusion that “by
far the majority of Plaintiffs’ efforts either benefitted them, or were not the type
that arbitration was designed to alleviate.” (Rep. & Rec. at 15.) Considering this
and the liberal federal policy favoring arbitration agreements which requires
that “any doubts concerning the scope of arbitrable issues . . . be resolved in
favor of arbitration,” the Court finds Security Forever has not waived its right
to arbitrate. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.

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614, 626 (1985) (citations omitted); see also Hodgson, 706 F. Supp. 2d at 1258
(“Doubts concerning the scope of arbitrable issues should be resolved in favor
of arbitration, whether the problem at hand is . . . an allegation of waiver . . .”)
(citations omitted). Security Forever’s motion to compel arbitration should thus
be granted.
B. Stay Pending Arbitration
Judge McAliley did not opine on whether this case should be stayed
pending arbitration or dismissed. In its response to the Employees’ objections,
Security Forever urges the Court to dismiss, rather than stay, the case. The
Employees seem to express reservations about either course of action: if the
case is stayed, the Court’s decision is not a final appealable order; if the case is
dismissed, the Employees may encounter statute-of-limitations problems. The
Court, in its discretion, stays the case pending arbitration. Cf. Bender v. A.G.
Edwards & Sons, Inc., 971 F.2d 698, 699 (11th Cir. 1992) (indicated that even
when a stay is not mandatory, “[u]pon finding that a claim is subject to an
arbitration agreement, the court should order that the action be stayed
pending arbitration.”); see also Lloyd v. HOVENSA, LLC., 369 F.3d 263, 270 (3d
Cir. 2004) (explaining that staying a case pending arbitration “relieves the party
entitled to arbitrate of the burden of continuing to litigate the issue while the
arbitration process is on-going, and it entitles that party to proceed
immediately to arbitration without the delay that would be occasioned by an
appeal of the District Court’s order to arbitrate”). Upon the completion of the
arbitration, any party may file a motion asking that the case be reopened and
request affirmative relief from the Court.
C. Resolution of Pending Motions
The Employees filed a reply to Security Forever’s response to the
Employees’ objections. Security Forever moves to strike the reply. Because
there is no authority that supports the filing of a reply to a response to
objections and the Employees have not explained why the reply is necessary in
this case, the Court grants Security Forever’s motion (ECF No. 230).
Any other pending motions, or portions of pending motions, that relate to
the legal merits of this case are denied as moot. On the other hand, to the
extent the parties’ pending sanctions motions address issues that do not relate
to the legal merits of this case, such motions are denied without prejudice. To
the extent the arbitrator has the authority to resolve such issues, the parties
are ordered to seek redress in that venue.

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5. Conclusion
The Court adopts Judge McAliley’s report and recommendation (ECF
226), which recommends granting Security Forever’s motion to compel
arbitration (ECF No. 198), modifying it only to add that the case is stayed
pending arbitration. The Court additionally grants Security Forever’s motion to
strike (ECF No. 230). The Court directs the Clerk to administratively close
this case during the pendency of the stay. The Clerk is also directed to cancel
any previously set hearings. The Employees’ two motions for sanctions (ECF
Nos. 166 & 205) and Security Forever’s two motions for sanctions (ECF Nos.
164 & 194) are denied without prejudice. All other pending motions are
denied as moot. Upon the completion of the arbitration, any party may file a
motion asking the Court to reopen the case and request affirmative relief from
the Court.
Done and ordered, at Miami, Florida, on July 27, 2017.
________________________________
Robert N. Scola, Jr.
United States District Judge