Hudgins et al v. Total Quality Logistics, LLC
MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 4/9/2018: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court grants defendant's motion to dismiss the claims of plaintiffs Ryan Azeem and Richard Smith [dkt. no. 140] and orders that the statute of limitations on their claims is tolled from the date they opted into this lawsuit through April 9, 2018. Their claims are dismissed without prejudice. (mk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
BRIAN HUDGINS, on his own
behalf and on behalf of those
TOTAL QUALITY LOGISTICS, LLC,
Case No. 16 C 7331
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
Ryan Azeem and Richard Smith are among the employees of Total Quality
Logistics LLC (TQL) who joined the collective action complaint filed by Brian Hudgins
and Jonathan Romero, alleging that TQL failed to pay them overtime in violation of the
Fair Labor Standards Act. Earlier in the litigation, the plaintiffs moved for conditional
certification of two classes. In response, TQL moved to compel arbitration of the claims
brought by nine of the original plaintiffs who had arbitration agreements, or alternatively
to dismiss the claims of those nine plaintiffs.
The Court granted conditional certification of a collective action consisting of
current and former TQL logistic account executives and logistic account executive
trainees, except for those who worked in TQL's Ohio offices and those who made more
than $100,000 in any given year. The Court directed TQL to turn over contact
information for all putative class members and ordered the sending of notice of the
pendency of the case to the affected employees. Hudgins v. Total Quality Logistics,
LLC, No. 16 C 7331, 2016 WL 7426135 (N.D. Ill. Dec. 23, 2016). In a subsequent
order, the Court dismissed the claims of the nine plaintiffs who had signed arbitration
agreements. Hudgins v. Total Quality Logistics, LLC, No. 16 C 7331, 2017 WL 514191
(N.D. Ill. Feb. 8, 2017). The Court also modified its prior notice ruling "by (1) limiting
notice to those potential [class] members who have not signed arbitration agreements;
and (2) directing the parties to promptly develop a list of the potential class members
who have not signed arbitration agreements." Id. at *4.
TQL’s list of employees without arbitration agreements has gone through several
iterations. Before the dismissal of the claims of the nine plaintiffs, TQL's counsel had
told the Court that about 3,000 of the approximately 6,000 potential class members had
signed arbitration agreements—apparently leaving about 3,000 who had not and thus
presumably would remain part of the lawsuit. But a few days later, on January 9, 2017,
TQL provided plaintiffs' counsel with a list of employees who had not signed arbitration
agreements that included only 661 names, including Azeem and Smith. About seven
weeks later, on February 24, 2017, TQL provided a revised list that included 368 more
employees without arbitration agreements, for a total of 1,029, citing "human error" and
the misapplication of its own database programs. But Azeem and Smith were still on
For next eight months, TQL continued to litigate against Azeem, Smith, and all
others whom it had identified as not having arbitration agreements. The two sides
exchanged written discovery requests and responses. Discovery requests were served
on Azeem and Smith in April 2017. They each answered eight interrogatories
concerning their salary, earned commissions, typical work schedule, and supervisors.
Azeem had no documents to produce; Smith produced an employment welcome letter
Also in early April 2017, plaintiffs' counsel asked TQL to produce the personnel
files of all of the plaintiffs in the lawsuit, including Azeem and Smith. TQL says that in
October 2017, after saying that Azeem and Smith did not have arbitration agreements, it
located their personnel files and discovered that each did, in fact, have such
Why did it take so long to find Azeem and Smith's personnel files? TQL has not
provided much of an explanation. It has submitted an affidavit from Lindsay Elliott, a
TQL human resources employee, who says that all personnel files from its seven
Florida offices (both Azeem and Smith worked for TQL in Florida) are retained solely in
hard copy and are stored at the company's Tampa office. Def.'s Mem., Ex. 3 ¶¶ 3-6.
Elliott states, somewhat vaguely, that upon receiving the request for the personnel files
of opt-in plaintiffs in April 2017, TQL "began working methodically" to collect the files.
Id. ¶ 2. There is no explanation of what this means—for example, was it just one
employee working on this? more than that? where did she have to look? were the files
in storage? Rather, Elliott offers only a general statement that each file had to be
located among the files of other employees. She says that "[i]n or around October
2017," she found Smith and Azeem's files and sent them to TQL's counsel.
One of TQL's attorneys says that on October 12, 2017, she located an arbitration
agreement in Azeem's personnel file, sent it to plaintiffs' counsel, and requested
Azeem's withdrawal from the lawsuit. Def.'s Mem., Ex. 1 ¶ 10. She reviewed Smith's
personnel file on October 19, found an arbitration agreement, and made a similar
request. Id. ¶ 13. In both instances, plaintiffs' counsel declined to withdraw Azeem and
Smith from the lawsuit, stating that the statute of limitations might bar their claims if they
dropped out of the case. Id. ¶¶ 11, 13. TQL offered to toll the statute of limitations for
both Azeem and Smith for the period during which they were opted into the litigation.
Id. ¶¶ 12, 13.
Smith's employment agreement was executed on February 29, 2016; Azeem's is
dated June 8, 2015. Def.'s Mem., Ex. 2. Both documents include an agreement to
arbitrate employment-related disputes, which unquestionably covers the claims Azeem
and Smith have asserted in this case. Plaintiffs contend, however, that TQL has waived
the right to insist on arbitration.
The Federal Arbitration Act embodies a policy favoring enforcement of arbitration
agreements, but a contractual right to arbitration can be waived. St. Mary’s Med. Ctr. of
Evansville, Inc. v. Disco Aluminum Prods. Co., 969 F.2d 585, 587 (7th Cir. 1992).
Waiver may be inferred from a party's actions. Id. The question is whether,
"considering the totality of the circumstances, a party acted inconsistently with the right
to arbitrate." Kawasaki Heavy Indus., Ltd. v. Bombardier Recreational Prods., Inc., 660
F.3d 988, 994 (7th Cir. 2011). The "diligence or lack thereof" of the party seeking
arbitration "should weigh heavily in the decision." Id. Other factors to be considered
are "whether the allegedly defaulting party participated in litigation, substantially delayed
its request for arbitration, or participated in discovery." Id. A showing that the other
party was prejudiced by reliance on the waiving party's participation in litigation is not
required, but if such prejudice exists, it is a relevant factor. Id.
TQL was diligent in asserting its right to arbitrate generally; it filed a motion to
compel arbitration at the outset of the suit. But it was not particularly diligent in
asserting its right to arbitrate the claims of Azeem or Smith. As indicated earlier, TQL's
somewhat vague explanation for the delay does not reflect much in the way of diligence.
TQL also participated in litigation against Azeem and Smith; it served discovery
requests on them and responded to their discovery requests. But as participation in
litigation goes, this was relatively light. The reason for considering a party's
participation in litigation as part of the waiver analysis is to "prevent[ ] parties from
waiting to see how they fare in a judicial forum before choosing arbitration, prevent[ ] the
duplicative adjudication of disputes, and prevent[ ] the undue prejudice that results from
a party spending time and money on litigation that will not ultimately resolve a case." Id.
at 994-95. TQL did not take a wait-and-see approach; there is no indication that, when
it served its discovery requests, TQL had any actual awareness that either Azeem or
Smith had signed arbitration agreements. This is not, for example, a case like
Cabinetree of Wisconsin, Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388 (7th Cir. 1995),
in which the defendant first removed the case from Wisconsin state court to federal
court and then litigated in court for six months before "dropp[ing] a bombshell into the
proceedings" by filing a motion to stay the action pending arbitration. Id. at 389.
Unlike the defendant in Cabinetree, there is no basis to believe that TQL was
"weigh[ing] its options" as between litigation and arbitration. Id. at 391. And as in
Kawasaki Heavy Industries, TQL's assertion of its right to arbitration "was not out of the
blue." Kawasaki Heavy Indus., 660 F.3d at 996. As the Court has discussed, TQL
promptly sought arbitration, and it made clear once the Court ruled on that motion that it
intended to pursue arbitration for any employee who had signed an arbitration
agreement. To be sure, TQL should have identified Azeem and Smith membership
much sooner. But once TQL became aware they had signed arbitration agreements, it
promptly requested arbitration of their claims: it was not “assessing its options,” and it
did not “drop a bombshell” by insisting upon arbitration. And TQL did not materially
benefit from its delay. The discovery requests it served resulted in production of only
minimal information by Azeem and Smith, and it likely was the type of information they
would have had to turn over even had their claims been sent to arbitration before that.
Having considered the totality of the circumstances, the Court concludes that
TQL has not acted inconsistently with its right to arbitrate the claims of plaintiffs Ryan
Azeem and Richard Smith. The Court therefore overrules Azeem and Smith's waiver
argument and grants TQL's motion to dismiss their claims [dkt. no. 140]. The statute of
limitations on their claims is tolled from the date Azeem and Smith opted into this
lawsuit through April 9, 2018. Their claims are dismissed without prejudice.
Date: April 9, 2018
MATTHEW F. KENNELLY
United States District Judge
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