Zarate v. Midwest Arbor Corporation, an Illinois Corporation

Filing 36

MEMORANDUM Opinion and Order: The plaintiff's motion to vacate and for leave to file a first amended complaint 20 is DENIED. Signed by the Honorable Sharon Johnson Coleman on 11/19/2021. Mailed notice. (ym, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
EDGAR ZARATE, on behalf of himself and all
other plaintiffs similarly situated, known and
unknown,
Plaintiff,
v.
MIDWEST ARBOR CORPORATION,
an Illinois corporation
Defendant.

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Case No. 20-cv-0809
Honorable Sharon Johnson Coleman

MEMORANDUM OPINION AND ORDER
Plaintiff Edgar Zarate brings this putative class action against defendant Midwest Arbor
Corporation, his former employer, alleging that it violated the Fair Labor Standards Act (“FLSA”),
the Portal-to-Portal Act, the Illinois Minimum Wage Law, and the Illinois Wage Payment and
Collection Act (“IWPCA”). On September 4, 2020, plaintiff voluntarily filed a motion to stay
proceedings pending arbitration given the arbitration agreements between the parties. The Court
granted the motion. After further review of the arbitration agreements formed between the parties,
plaintiff now moves to vacate the stay and for leave to file a first amended complaint. For the
following reasons, the Court denies the motion.
I.

Background
Plaintiff was a seasonal landscaper employed by defendant between February 2015 and

December 2019. On February 4, 2020, plaintiff filed his initial complaint alleging that defendant
failed to pay all plaintiffs overtime wages in violation of the FLSA, the Portal-to-Portal Act, and the
Illinois Minimum Wage Law. Plaintiff also claimed that defendant made unauthorized deductions
from his and other plaintiffs’ paychecks in violation of the IWPCA. After filing his complaint,
plaintiff discovered that he signed arbitration agreements in 2018 and 2019 requiring the parties

arbitrate any dispute or claim arising out of the parties’ temporary employment agreements. Plaintiff
then voluntarily filed a motion to stay proceedings pending arbitration, which the Court granted.
After discovering an alleged flaw in the arbitration agreements, plaintiff filed the current motions to
vacate the stay and to amend the complaint. A month after plaintiff filed this motion, defendant
sent him a previously undisclosed arbitration agreement from 2017.
II.

Legal Standards
A motion to vacate pursuant to Federal Rule of Civil Procedure 60(b)(6) permits the court to

vacate an order for “any other reason justifying relief from the operation of the judgment.” Fed. R.
Civ. P. 60(b)(6). It is “an extraordinary remedy and is granted only in exceptional circumstances.”
McCormick v. City of Chicago, 230 F.3d 319, 327 (7th Cir. 2000). To grant relief under Rule 60(b)(6),
the moving party must show that extraordinary circumstances justify the reopening of a final
judgment. Arrieta v. Battaglia, 461 F.3d 861, 865 (7th Cir. 2006). The trial court has broad discretion
in deciding Rule 60(b) motions. Inryco, Inc. v. Metro. Engineering Co., 708 F.2d 1225, 1230 (7th Cir.
1983).
Under Rule 15(a)(2), a party may amend its pleading only with the opposing party's written
consent or the courts' leave, and “the court should freely give leave when justice so requires.”
Nevertheless, district courts are afforded broad discretion to deny leave to amend if there is “undue
delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice to the
defendants, or where the amendment would be futile.” Heng v. Heavner, Beyers & Mihlar, LLC, 849
F.3d 348, 354 (7th Cir. 2017) (citation omitted).
III.

Analysis

Waiver
The parties initially agreed to proceed with arbitration based on the 2018 and 2019
agreements. After minimal progress over approximately six months, plaintiff filed this motion to

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vacate the Court’s order granting his motion to stay proceedings pending arbitration. To prevail on
his motion to vacate, plaintiff must show that extraordinary circumstances justify the reopening of
the Court’s order. Arrieta, 461 F.3d at 865. Plaintiff argues that the stay should be vacated because
(1) defendant impliedly waived its rights under the arbitration agreements by acting in bad faith and
delaying arbitration proceedings and 2) the vagueness and scope of the arbitration agreements
render them unenforceable.
To determine whether a party has impliedly waived its right to arbitrate, the Court must
consider the totality of the circumstances and decide whether the party against whom the waiver is
to be enforced acted inconsistently with the right to arbitrate. Sharif v. Wellness Int'l Network, Ltd.,
376 F.3d 720, 726 (7th Cir. 2004). Factors to consider may include “a party’s diligence, or lack
thereof, in asserting its rights under a contract,” Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50
F.3d 388, 391 (7th Cir. 1995), and “whether the allegedly defaulting party participated in litigation,
substantially delayed its request for arbitration, or participated in discovery.” Kawasaki Heavy Indus. v.
Bombardier Rec. Prods., 660 F.3d 988, 994 (7th Cir. 2011).
Defendant has consistently reflected the desire to arbitrate. Defendant did not issue
discovery requests or even file an appearance in this matter. Further, six months elapsed between
the order to stay and the motion to vacate the stay. While defendant’s responses to plaintiff may
have been slow, the delayed responses have not substantially prejudiced plaintiff as plaintiff has been
on notice since defendant informed plaintiff of the arbitration agreements that defendant wants to
arbitrate. Plaintiff also asserts that because defendant failed to timely provide the signed 2017
arbitration agreement, it waived its right to arbitration under that agreement. But the late disclosure
of the 2017 arbitration agreement did not prejudice plaintiff or substantially impact his legal strategy;
the parties had already agreed to arbitration. Under the totality of the circumstances, defendant has
acted consistently with its right to arbitrate and has not waived that right.

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Enforceability of the Agreements
Plaintiff also contends that his motion to vacate should be granted because the arbitration
agreement terms are vague and, therefore, unenforceable. The Supreme Court has consistently
interpreted the Federal Arbitration Act (“FAA”) to favor arbitration and requires arbitration
provisions to be enforced according to their terms. Henry Schein, Inc. v. Archer & White Sales, Inc., 139
S. Ct. 524, 529 (2019). Section 2 of the FAA makes arbitration agreements “valid, irrevocable, and
enforceable” as written, unless the savings clause applies. AT&T Mobility LLC v. Concepcion, 563
U.S. 333, 344, 131 S. Ct. 1740 (2011). The savings clause in the FAA allows arbitration agreements
to be invalidated only by “generally applicable contract defenses, such as fraud, duress, or
unconscionability,” but not by defenses that apply only to arbitration or that derive their meaning
from the fact that an agreement to arbitrate is at issue. Id.; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612,
1622 (2018).
Plaintiff claims that the agreements are too vague because none of them specify the types of
disputes that should be arbitrated. But each arbitration agreement clearly indicates that any dispute
arising out of “the application or candidacy for employment, the employment, and the cessation of
employment that are based on local, state, or federal regulatory, statutory or common law” are
subject to arbitration. Plaintiff’s Reply, Dkt. 32 at 12. Arbitration provisions such as this that cover
a wide range of disputes are not necessarily vague and vagueness is not a valid contract defense
under the FAA. Additionally, the language in the agreements has not changed since plaintiff
voluntarily agreed to arbitrate. Plaintiff himself chose to arbitrate. Plaintiff cannot now feign
ignorance and argue that the language is vague. Plaintiff also argues that defendant is required to
provide information or documentation to show that the arbitration clauses cover his claims and that
defendant has not produced any. Document production is not a prerequisite for enforcing
arbitration provisions. Given the strong presumption in favor of arbitration and plaintiff’s failure to

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present a valid contract defense under the savings clause, the arbitration agreements are enforceable.
Since defendant has not waived its right to arbitrate and the agreements are enforceable, the Court
cannot grant plaintiff the extraordinary remedy of vacating the stay. Plaintiff’s motion to vacate is
denied.
Because this Court denies the motion to vacate and an amendment to the complaint would
be futile, it must also deny the motion for leave to amend to add the state law claims. The Court
cannot exercise supplemental jurisdiction over the 2015 state law claims because the remaining
federal claims are in arbitration and, therefore, the state law claims would be the only claims before
the Court.
IV.

Conclusion
For the foregoing reasons, the plaintiff’s motion to vacate and for leave to file a first

amended complaint [20] is DENIED.
IT IS SO ORDERED.
Date: 11/19/2021

Entered:_____________________________
SHARON JOHNSON COLEMAN
United States District Judge

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