Taylor v. Western Southern Financial Group

Filing 17

REPORT AND RECOMMENDATIONS re 12 MOTION for Leave to File memorandum instanter filed by Shannon Taylor, 1 MOTION to Vacate filed by Shannon Taylor - IT IS THEREFORE RECOMMENDED THAT: 1. Plaintiff Shannon Taylors Motion for Leave t o File Memorandum Instanter (Doc. #12) be DENIED; 2. Plaintiffs Motion to Accept Brief Instanter (Doc. #15) be GRANTED; 3. Plaintiffs Motion to Vacate Arbitrators Award (Doc. #1) be DENIED; 4. This case be DISMISSED for lack of subject matter jurisdiction; and, 5. This case be terminated on the docket of this Court. Objections to R&R due by 7/8/2013. Signed by Magistrate Judge Sharon L Ovington on 06/19/13. (pb1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
SHANNON TAYLOR,

:

Plaintiff,

:
Case No. 3:12mc00020

vs.

:

WESTERN SOUTHERN
FINANCIAL GROUP,

:

District Judge Timothy S. Black
Chief Magistrate Judge Sharon L. Ovington

:
Defendant.
:

REPORT AND RECOMMENDATIONS1

I.

Introduction
Shannon Taylor previously sought relief in arbitration claiming that his former

employer, Western Southern Financial Group (Western Southern), violated his rights
under federal and state anti-discrimination laws. He was unsuccessful. He brings the
present case challenging the dismissal of his arbitration at the summary judgment stage.
This case is presently before the Court upon Taylor’s Motion or Complaint to Vacate
Arbitrator’s Award (Doc. #1); Western Southern’s Memorandum in Opposition (Doc.
#2); Taylor’s Motion for Leave to File Memorandum Instanter (Doc. #12); Taylor’s
Response to Order to Show Cause (Doc. #14) and Motion to Accept Brief Instanter (Doc.

1

Attached hereto is a NOTICE to the parties regarding objections to this Report and
Recommendations.

#15); Western Southern’s Reply to Response to Order to Show Cause (Doc. #16); and the
record as a whole.
II.

Background
In August 2011, Taylor filed a Complaint in the Cincinnati Division of this Court

claiming that Western Southern violated his rights under the Americans with Disabilities
Act, the Family and Medical Leave Act, and many other federal and state statutes. See
Shannon Taylor v. Western Southern Financial Group, Case No. 1:11cv00605. On
September 16, 2011, Taylor filed a Notice voluntarily dismissing his case without
prejudice to refiling within one year.
The matter then proceeded to arbitration before the American Arbitration
Association, Employment Arbitration Tribunal. In a decision issued on April 20, 2012,
an arbitrator explained that Taylor had not responded to Western Southern’s Motion for
Summary Judgment. Noting that Taylor’s omission by itself was not sufficient reason to
grant Western Southern’s Motion for Summary Judgment, the arbitrator analyzed the
Motion (and supporting exhibits) and concluded, “it is apparent that there is no genuine
issue of material fact in dispute and that the Respondent [Western Southern] is entitled to
an award as a matter of law.” (Doc. #1-2 at 9). The arbitrator therefore granted Western
Southern’s Motion for Summary Judgment.
Through counsel, Taylor explains in the present case that on or about the same
date the arbitrator issued his decision (April 20, 2012), he contacted the arbitrator and left
a message checking on the status of his case. Shortly thereafter he received the
2

arbitrator’s award in favor of Western Southern. But, according to Taylor, he had not
received a copy of Western Southern’s Motion for Summary Judgment and “a notice of
filing was not mailed. Defendant asserted he [sic] sent his motion by email but never
confirmed receipt or otherwise informed Plaintiff of the filing.” (Doc. #1 at 2).
Taylor notified the arbitrator of the error and filed a motion to stay the arbitration
award. Western Southern opposed a stay, arguing that Taylor needed to prove he never
received the emailed Motion for Summary Judgment.
Taylor explains the next events as follows:
The Arbitrator agreed to review and on June 6, 2012 the arbitrator
allowed Plaintiff to respond (see Exhibit 4). No one objected to the
authority of the arbitrator to decide the issue of staying the award and
allowing a response on the merits.
Plaintiff’s memorandum was filed on or before June 13, 2012, still
not having the defendants[’] Motion for Summary Judgment.
(Doc. #1 at 2).
In his decision on the Motion to Stay, the arbitrator considered whether Taylor had
provided evidence showing there “was a genuine issue of material fact in dispute.” (Doc.
#1-2 at 5). The arbitrator reported that Taylor had submitted a “thumb drive” that
contains “many hours of conversations he [Taylor] had recorded with his superiors and
his co-workers.” Id. The arbitrator then wrote:
Upon review of the recordings, they do not establish discrimination
or other illegal conduct on the part of [Western Southern]. However, that is
not the test. If the recordings had been submitted in opposition to the
motion for summary judgment, I believe that, on balance, I would have
found that a hearing would have been appropriate to resolve issues of the
3

nuances of the conversations and what the parties meant to convey through
their choices of words. [Taylor] also raised an issue of accommodation ...
that was not apparent in the motion and that could have benefitted from
evidence as to how readily achievable the accommodation would have
been.
Finally, I must consider the issue of my jurisdiction to grant
[Taylor’s] motion. The general rule is that, once an arbitrator issues the
award and closes the case, the arbitrator loses jurisdiction.... See, for
example, Miller v. Gunckle, (2002), 96 Ohio St.3d 359.
(Doc. #1-2 at 6). Next, the arbitrator identified a limited exception appearing in Rule 40
of the American Arbitration Association’s Rules, which allows a party to request, within
20 days after an award, the arbitrator to correct clerical, typographical, technical or
computational errors in the award. Rule 40 further states, “The arbitrator is not
empowered to redetermine the merits of any claim already decided.” Id. The arbitrator
then wrote:
Based on this rule I cannot find that I have jurisdiction to reopen the
case or to vacate my previous final award. That would be redetermining the
merits of the motion, which has already been decided. I understand that this
may create additional confusion for the parties, but unless they agree to a
modification of the appointment and a specific grant of renewed powers to
me, I do not believe that reopening my previous award would be valid.
That action would, in all likelihood, create even more confusion and
potential extraneous controversy. I therefore must deny the motion to stay
the Award.
(Doc. #1-2 at 6).
On October 10, 2012, Taylor filed a “Motion or Complaint to Vacate Arbitrator’s
Award,” in which he requests the Court provide an Order (1) vacating the arbitrator’s
denial of his Motion to Stay the proceedings and (2) requiring a rehearing in arbitration.

4

(Doc. #1 at 3). Taylor based this request on Title 9 U.S.C. §10, although he provided no
analysis of which specific language in §10 applies in this case. Id. at 2-3. He also did not
cite any case supporting his requests for federal judicial relief. He argued, in conclusion,
“The District Court also has jurisdiction where the arbitrators have awarded upon a matter
not submitted to them, unless it is a matter not affecting the merits of the decision upon
the matter submitted.” (Doc. #1 at 3).
Western Southern responded that Taylor’s motion is time-barred because he did
not file it in this Court within the Federal Arbitration Act’s three-month statute of
limitations.
Prior to evaluating the merits of Taylor’s motion, however, the Court first
considered whether federal question jurisdiction exists to hear this case. Due to the fact
that the Federal Arbitration Act does not independently provide the Court with subject
matter jurisdiction, the Court ordered Plaintiff to show cause on or before April 26, 2013,
why the Court has subject matter jurisdiction in this case. (Doc. #13 at 2).
Taylor filed his untimely response to the Order on April 27, 2013. (Doc. #14). In
his response, he argues that despite the fact that the FAA does not provide an independent
basis for subject matter jurisdiction to hear this case, “this case none the less [sic]
survives the jurisdictional issue.” (Id. at 1). In support of this position, Taylor argues that
subject matter jurisdiction exists to hear this case because the matter “involves
constitutional issues: substantive and procedural due process.” (Id. at 2). He contends
that “[t]he central issue in this appeal is whether Appellant was afforded due process
5

where the arbitrator renders a decision on a respondent’s motion and the motion was not
in compliance with the rules on service and was not served on opposing party.” (Id. at 23). He alleges his constitutional rights were violated because the arbitrator ignored
certain rules set forth by the American Arbitration Association. (Id. at 3-6).
On May 9, 2013, Western Southern filed a Memorandum in Opposition (Doc.
#16). Western Southern argues that “[d]ue process protections do not extend to private
conduct abridging individual rights as in arbtiration” and therefore, “there is no state
action to support Plaintiff’s due process claim.” (Doc. #16 at 2-3). Taylor has not filed a
timely Reply.
III.

Discussion
The Court may consider the issue of subject matter jurisdiction sua sponte. See

Ford v. Hamilton Investments, Inc., 29 F.3d 255, 257 (6th Cir. 1994) (“The existence of
subject matter jurisdiction, moreover, is an issue that ‘may be raised at any time, by any
party or even sua sponte by the court itself.’”) (citing Franzel v. Kerr Mfg. Co., 959 F.2d
628, 630 (6th Cir. 1992)).
Pursuant to 28 U.S.C. § 1331, district courts have federal question jurisdiction over
“all civil actions arising under the Constitution, laws, or treaties of the United States.” In
order for a cause of action to arise under federal law, a plaintiff’s well-pleaded complaint
must raise such issues. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 95 L. Ed.
2d 55, 107 S. Ct. 1542 (1987). Citation to federal law, however, is not alone sufficient to
confer jurisdiction. Ford v. Hamilton Inv., Inc., 29 F. 3d 255, 258 (6th Cir. 1994)
6

(“Merely referring to a federal statute . . . does not establish federal jurisdiction if the
dispute does not involve ‘a substantial question of federal law.’”) (citing Franchise Tax
Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 28, 77 L. Ed. 2d 420, 103 S. Ct.
2841 (1983)).
It is well settled that the Federal Arbitration Act does not create any independent
federal question jurisdiction. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 25 n.32, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1982) (The FAA establishes “a body of
federal substantive law establishing and regulating the duty to honor an agreement to
arbitrate, yet it does not create any independent federal-question jurisdiction under 28
U.S.C. § 1331 . . . or otherwise.”).
Moreover, the United States Court of Appeals for the Sixth Circuit has held that
the federal nature of the underlying claims submitted to arbitration does not confer federal
question jurisdiction. City of Detroit Pension Fund v. Prudential Securities, Inc., 91 F.3d
26, 29 (6th Cir. 1996) (“[t]he federal nature of the claims submitted to arbitration would
not appear to be a sufficient basis for jurisdiction under 28 U.S.C. § 1331, since the rights
asserted here are actually based on the contract to arbitrate rather than on the underlying
substantive claims.”); see also Ford, 29 F.3d 255, 257 (6th Cir. 1994) (“One can
understand why Mr. Ford’s counsel might have assumed, as he evidently did in drafting
his complaint, that [section 10 of the Federal Arbitration Act] would suffice to confer
federal jurisdiction over an action to vacate an arbitral award. It is well established,
however, that § 10 of the Arbitration Act does not constitute a grant of subject matter
7

jurisdiction.”).
Taylor appears to believe federal question jurisdiction exists under the FAA or
because of the federal nature of the employment discrimination claims underlying the
arbitration; however, the Sixth Circuit has specifically rejected this reasoning.
In Collins v. Blue Cross Blue Shield of Michigan, 103 F.3d 35 (6th Cir. 1996), the
Sixth Circuit vacated the decision of the district court confirming an arbitration award in
favor of the plaintiff, Irma Collins. Collins claimed Defendant Blue Cross Blue Shield of
Michigan (“BCBSM”) terminated her employment in violation of the Americans with
Disabilities Act, as well as other state anti-discrimination laws. Collins arbitrated her
claims and received an award in her favor. After filing her complaint to confirm the
arbitration award in state court, Defendant BCBSM removed the case to the district court
asserting the existence of federal question subject matter jurisdiction due to the fact that
the arbitrator’s decision referenced, and was based upon, the ADA. Collins, 103 F.3d at
37. The district court thereafter confirmed the arbitration award. Id. at 35.
On appeal, the Sixth Circuit concluded the district court lacked subject matter
jurisdiction, and explained as follows:
In this case, one of the issues in the underlying arbitration was Collins’
statutory claim against BCBSM under the ADA, clearly a federal question.
However, the issue in Collins’ state court complaint was the confirmation of the
arbitrated award, a right that was provided in the parties’ arbitration agreement
and, thus, clearly a state law matter. As noted, neither the FAA nor the underlying
arbitrated claim provide an independent basis of federal jurisdiction in an action to
confirm or vacate an arbitration award. Therefore, this Court lacks jurisdiction of
this matter.

8

Id. at 38. In this case, Taylor filed an action in August 2011 against Western Southern
alleging violation of his rights under the ADA, FMLA, and other federal and state
statutes. See Shannon Taylor v. Western Southern Financial Group, Case No. 1:11cv
00605. Pursuant to the terms of his employment contract, Taylor proceeded to
arbitration, but lost at the summary judgment stage. He now brings this action seeking to
vacate the arbitration award.
As discussed in Collins, however, no federal question exists for which this Court
may exercise subject matter jurisdiction over this case. Again, “neither the FAA nor the
federal nature of an underlying arbitrated dispute provide federal question subject matter
jurisdiction.” Collins, 103 F.3d at 37; see also Corner v. Greef, 99 Fed. Appx. 577, 580
(6th Cir. 2004)(affirming district court’s judgment dismissing, sua sponte, plaintiff’s
complaint filed pursuant to 9 U.S.C. § 10 (the Federal Arbitration Act), 42 U.S.C. §§
1981, 1983, 1985, and 1986, and state law claims, for lack of subject matter jurisdiction).
Taylor now also appears to argue that the Court has subject matter jurisdiction to
hear this case because the arbitrator with the American Arbitration Association allegedly
violated his due process rights by failing to ensure he was provided with a copy of the
motion for summary judgment prior to rendering a decision. Taylor cites to multiple
cases discussing due process, yet as Western Southern notes, he fails entirely to address
how a private arbitrator’s actions are attributable to the state or those acting under the
color if its authority. (Doc. #16 at 2). This is problematic for Taylor because, “[i]n order
to raise a due process claim, a party must have a property or liberty interest of which it is
9

deprived by state action, as the Fourteenth Amendment ‘erects no shield against merely
private conduct, however discriminatory or wrongful.’” Lucre, Inc. v. Michigan Bell Tel.
Co., 238 Fed. Appx. 18, 22 (6th Cir. 2007) (quoting Blum v. Yaretsky, 457 U.S. 991, 1002,
102 S. Ct. 2777, 73 L. Ed.2d 534 (1982)); see also Thomas v. Better Bus. Bureau, 79 Fed.
Appx. 748 (6th Cir. 2003) (citing Lansing v. City of Memphis, 202 F.3d 821, 828 (6th Cir.
2000)) (“Private individuals and companies do not act under color of state law.”).
The actions of the private arbitrator in this case simply do not constitute state
action sufficient to support a constitutional due process claim.2 See, e.g., Elmore v.
Chicago I.M.R. Co., 782 F.2d 94, 96 (7th Cir. 1986) (“Private arbitration, however, really
is private; and since constitutional rights are in general rights against government officials
and agencies rather than against private individuals and organizations, the fact that a
private arbitrator denies the procedural safeguards that are encompassed by the term ‘due
process of law’ cannot give rise to a constitutional complaint.”); Federal Deposit Ins.
Corp. v. Air Florida Sys., Inc., 822 F.2d 833, 842 n. 9 (9th Cir. 1987), cert. denied, 485
U.S. 987, 108 S. Ct. 1289, 99 L. Ed. 2d 500 (1988) (“The arbitration involved here was
private, not state, action; it was conducted pursuant to contract by a private arbitrator. . . .
we do not find in private arbitration proceedings the state action requisite for a
constitutional due process claim.”); Davis v. Prudential Sec., 59 F.3d 1186, 1191 (11th
Cir. 1995) (“In the present case, the arbitration was a private proceeding arranged by a

2

Nowhere in his “Motion or Complaint to Vacate Arbitrator’s Award” (Doc. #1) does he mention
due process or attempt to raise a claim pursuant to 42 U.S.C. § 1983. Nor does he include the arbitrator or
AAA as a party in this case.

10

voluntary contractual agreement of the parties. Accordingly, the arbitration proceeding
itself did not constitute state action.”).
If the parties are of diverse citizenship and the requisite minimum amount in
controversy is met pursuant to 28 U.S.C. § 1332, the Court can, of course, also exercise
jurisdiction. However, Taylor did not set forth in his complaint that jurisdiction based on
diversity of citizenship exists in this case, nor does the record appear to support such a
conclusion. As such, Taylor has failed to establish that this Court has jurisdiction over
his claims pursuant to § 1332. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994) (“Federal courts are courts of limited
jurisdiction. They possess only that power authorized by Constitution and statute . . . It
is to be presumed that a cause lies outside this limited jurisdiction, and the burden of
establishing the contrary rests upon the party asserting jurisdiction.”) (internal citations
omitted).
As the Court finds it lacks subject matter jurisdiction over this matter, it should be
dismissed.
Taylor’s Motion for Leave to File Memorandum Instanter (Doc. #12) is also not
well taken. Plaintiff’s counsel was provided four extensions of time to file a reply
(originally due on or before December 19, 2012). Upon granting the third request for an
extension of time on January 11, 2013, the Court cautioned Plaintiff’s counsel that “No
further extensions of time will be granted, absent extraordinary circumstances.” (Doc.
#10 at 2). He was provided an additional 31 days – until February 11, 2013 – to file a
11

reply. On February 11, 2013, Plaintiff’s counsel yet again requested another extension of
time. The Court concluded counsel’s fourth motion for extension of time lacked merit,
yet (preferring to decide the case on the merits) ultimately allowed Plaintiff’s counsel
until midnight on February 18, 2013, to file a reply. (Doc. #10 at 3). Plaintiff’s counsel
failed to meet this deadline. Plaintiff’s Motion for Leave to File Memorandum Instanter
(Doc. #12) fails to set forth any reason sufficient to justify or otherwise excuse this delay
and should therefore be denied.
Plaintiff also failed to meet the deadline set forth in this Court’s Order to Show
Cause (Doc. #13). Plaintiff was provided until April 26, 2013, to file his response, but
filed his response on April 27, 2013. (Doc. #27). Plaintiff subsequently filed a Motion to
Accept Brief Instanter (Doc. #15), in which he requests the Court provide him leave to
file the untimely response. Plaintiff provides the following explanation:
Plaintiff’s Counsel asked one of his staff members to help in the writing of this
response, when Counsel received the document he had to make several revisions to
it. Counsel was able to get the revisions changed and attempted to file the
response with this Court. Counsel and staff do immensely send our apologies to
this Honorable Court for any un-conveniences [sic] this may have or will cause.
(Doc. #15). Despite the inadequate reason provided by Plaintiff’s counsel for such a
delay, the Court will nevertheless permit the filing of his Response to the Order to Show
Cause (Doc. #14) only to avoid further delay in the administration of this case.

12

IT IS THEREFORE RECOMMENDED THAT:
1.

Plaintiff Shannon Taylor’s Motion for Leave to File Memorandum Instanter
(Doc. #12) be DENIED;

2.

Plaintiff’s Motion to Accept Brief Instanter (Doc. #15) be GRANTED;

3.

Plaintiff’s Motion to Vacate Arbitrator’s Award (Doc. #1) be DENIED;

4.

This case be DISMISSED for lack of subject matter jurisdiction; and,

5.

This case be terminated on the docket of this Court.

June 19, 2013
s/Sharon L. Ovington
Sharon L. Ovington
Chief United States Magistrate Judge

13

NOTICE REGARDING OBJECTIONS
Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written
objections to the proposed findings and recommendations within fourteen days after
being served with this Report and Recommendations. Pursuant to Fed. R. Civ. P. 6(d),
this period is extended to seventeen days because this Report is being served by one of
the methods of service listed in Fed. R. Civ. P. 5(b)(2)(c), (D), (E), or (F). Such
objections shall specify the portions of the Report objected to and shall be accompanied
by a memorandum of law in support of the objections. If the Report and
Recommendations are based in whole or in part upon matters occurring of record at an
oral hearing, the objecting party shall promptly arrange for the transcription of the record,
or such portions of it as all parties may agree upon or the Magistrate Judge deems
sufficient, unless the assigned District Judge otherwise directs. A party may respond to
another party’s objections within fourteen days after being served with a copy thereof.
Failure to make objections in accordance with this procedure may forfeit rights on
appeal. See United States v. Walters, 638 F.2d 947 (6th Cir. 1981); Thomas v. Arn, 474
U.S. 140 (1985).

14