Abernathy v. Becon Construction Company, Inc

Filing 65

MEMORANDUM ORDER overruling objections and adopting 56 Report and Recommendation. Pltfs' 38 Motion to Stay Action and Compel Arbitration is granted in part. The motion is granted as to 492 of the pltfs' claims as designated in the R &R. The motion is denied as to the 22 pltfs who have failed to prove that they actually worked for Becon. Pltfs are granted leave to supplement the record within 30 days to submit evidence that the remaining 22 pltfs were in fact employed by Becon. Signed by Judge Ron Clark on 8/18/16. (tkd, )

UNITED STATES DISTRICT OURT
EASTERN DISTRICT OF TEXAS
BEAUMONT DIVISION
MARY ANNETTE ABERNATHY, et al.,

Plaintiffs,
v.
BECON CONSTRUCTION CO., INC.,

Defendants.

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§ Civil Action No. 1:14-CV-466
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MEMORANDUM ADOPTING REPORT AND
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Pursuant to General Order 14-10 and 28 U.S.C. § 636, this matter was directly assigned
to United States Magistrate Judge Keith F. Giblin for pretrial matters. On June 22, 2016, Judge
Giblin entered his report and recommendation (Doc. No. 56) recommending that the District
Court compel arbitration of 492 of the plaintiffs’ claims in this matter and stay the action
pending arbitration of those claims. The magistrate judge also recommended that the claims of
22 remaining plaintiffs not be compelled to arbitration until those plaintiffs submitted evidence
showing that they did in fact work for the defendant on the Motiva Crude Expansion Project
(CEP). Upon entry of the report and recommendation, this case was assigned to this Court as the
presiding judge.
All parties objected to the report and recommendation, and then responded to the
opposing parties’ objections. See Objections (Doc. No. 58, Doc. No. 60) and Responses to
Objections (Doc. No. 61 and Doc. No. 64). Plaintiffs specifically object to Judge Giblin’s
findings concerning the language of the Employee Dispute Resolution (“EDR”) Plan at issue in
this case. Plaintiffs agree, however, with the Court’s recommendation that their request to
compel arbitration be granted.
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Defendant in turn objects by arguing that Judge Giblin erred in compelling the arbitration
of the claims of 492 plaintiffs and in recommending denial of the defendant’s motion for
summary judgment on its counterclaim. Defendant goes on to contend that the magistrate judge
should not have even considered the plaintiffs’ motion to compel arbitration as it was untimely.
The Court has considered the parties’ objections and finds they should be overruled. A
thorough review of Judge Giblin’s analysis shows that he properly considered the EDR and
engaged in the appropriate analysis before determining that the defendant’s promise to arbitrate
under the EDR was illusory. He also fully considered the factors in determining whether the
defendant should be judicially estopped from arguing that the EDR is invalid. This Court’s own
review of the evidence and complicated background of this case supports a finding that the
defendant’s current position regarding the validity and enforceability of the EDR is clearly
inconsistent with its prior position on the issue. The Court also agrees with Judge Giblin’s
application of judicial estoppel in the interest of consistency and equity. See Report, at p. 11.
Plaintiffs’ objections do not alter the Court’s agreement with Judge Giblin’s finding that
the defendant’s promise to arbitrate under the EDR was illusory and thus invalid. Plaintiffs’
objections re-assert many of the same arguments already presented to Judge Giblin when he
issued his report. In adopting Judge Giblin’s findings on the issue, this Court overrules those
arguments. The additional cases that plaintiffs seek to add to the record as purported evidence
relating to Becon’s prior representations regarding the validity of the EDR are redundant of prior
evidence submitted and would not alter this Court’s final decision even if they were considered.
Turning to the defendant’s objections, Becon’s argument that Judge Giblin failed to
address the issue of Becon’s termination of the EDR in November 2013 is misplaced. In fact,
Judge Giblin discussed the defendant’s notice to the plaintiffs regarding the termination of the

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EDR program. See Report, at p. 11. The Court also disagrees with Becon’s characterization of
the magistrate judge’s analysis when it argues that Judge Giblin “confused the distinction
between (1) Becon’s right to terminate the EDR, and (2) the effect of Becon’s exercise of that
right.” See Defendant’s Objections, at p. 3.
First, Becon seems to be the one that is confused as to the basic nature of its argument.
The only way that the notice affects this case is if it applies retroactively to defeat Plaintiffs’
right to arbitrate their already accrued FLSA claims. If the notice applies retroactively, then
Defendant’s promise to arbitrate was illusory. If Defendant’s promise was illusory, then there
was no consideration and the EDR was never a valid contract. If the EDR was never a valid
contract, then the notice sent by Becon is just a useless piece of paper, terminating something
that does not exist. Defendant’s argument that Judge Giblin confused its right to terminate the
EDR and the effect of its exercising that right is a distinction without a difference. Judge Giblin
properly concluded that the notice is an immaterial factual change. The truth is that Becon duped
this Court into validating an invalid arbitration contract and is now coming back to this same
court arguing that the facts have changed because it sent out a notice that only matters if this
Court was wrong in initially validating the arbitration contract.
Second, as Judge Giblin noted in his Report, the notice sent to Plaintiffs does not state
that it applies retroactively to terminate any right to arbitration for Plaintiffs’ already-accrued
FLSA claims. Report, at p. 11 n.5. Assuming Defendant had such a right, the notice states only
that the EDR was terminated and does not say anything about retroactive application. The notice
also specifically states that the EDR was in force while Plaintiffs worked on the Motiva
Expansion Project. It is difficult to see how a notice, which does not say it applies retroactively
to Plaintiffs’ right to compel arbitration of its already-accrued claims, changes the facts in such a

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way that judicial estoppel is not applicable. Upon de novo review by this Court, it becomes clear
that the lack of retroactive effect of the notice completely defeats any argument that the facts
have changed.
It is questionable whether the facts have actually changed such that judicial estoppel is
defeated. Even if assuming, arguendo, that Becon’s position on this issue is correct, the Court’s
own independent analysis yields the conclusion that Judge Giblin’s recommended outcome
would still be proper given the applicable law and all factors to be considered. The record
evidence supports Judge Giblin’s ultimate conclusion on the judicial estoppel issues, and the
remainder of Becon’s objections on these findings are also overruled.
Finally, as for Becon’s objection to Judge Giblin allowance of plaintiffs’ motion to
compel past the motion cut-off deadline, the Court will not disturb this determination. In
support, the Court notes the broad discretion afforded to the Court in managing its own docket
and enforcing deadlines. See Cranford v. Morgan Southern, Inc., 421 F. App’x 354, 357 (5th Cir.
April 5, 2011) (citing United States v. Colomb, 419 F.3d 292, 299 (5th Cir. 2005)). The
magistrate judge found good cause in allowing the late-filed motion in noting the importance of
the arbitration issues in this case, considering that a finding against Becon on its counter-claim
means that Plaintiffs’ claims are subject to a valid arbitration clause. See Report, at p. 11, n. 1. A
district court is entitled to broad discretion in modifying scheduling matters for good cause. See
Geiserman v. MacDonald, 893 F.2d 787, 790 (5th Cir. 1990)(citing FED. R. CIV. P. 16(a)). At
the time he permitted the filing of the late motion to compel arbitration, this case was directly
assigned to Judge Giblin. The Court concludes that he did not abuse his discretion in allowing
the late motion and will not disturb this decision given the broad discretion afforded to the court
on case management matters. The defendant’s objection is therefore overruled in this regard.

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The Court has considered each of the parties’ objections and responsive briefs and the
magistrate judge’s report. Having conducted a de novo review, the Court is of the opinion that
the findings and conclusions of the magistrate judge are correct. It is therefore ORDERED that
the Report and Recommendation on Motion to Stay Action and Compel Arbitration (Doc. No.
56) is ADOPTED. The parties’ objections (Doc. No. 58, Doc. No. 60) are OVERRRULED.
This Court therefore ORDERS that the Plaintiffs’ Motion to Stay Action and Compel Arbitration
(Doc. No. 38) is GRANTED IN PART. The motion is granted as to 492 of the plaintiffs’
claims as designated in the Report and Recommendation. The motion is denied as to the 22
plaintiffs who have failed to prove that they actually worked for Becon, as discussed in the
report.
The plaintiffs are granted leave to supplement the record by submitting evidence to the
Court within thirty (30) days of this order as proof that the remaining 22 plaintiffs were in fact
employed by Becon. The Court will consider this evidence regarding those plaintiffs’ request
that their claims be submitted to arbitration. Failure to submit sufficient evidence will result in
dismissal of those plaintiffs’ claims without prejudice.

After receipt of the plaintiffs’

submissions and entry of any necessary dismissal order, the Court will enter a stay while
the parties submit the active plaintiffs’ claims to arbitration.
So ORDERED and SIGNED this 18 day of August, 2016.

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Ron Clark, United States District Judge

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