Sehler et al v. Prospect Mortgage, LLC
MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 11/21/13. (gwalk, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
THOMAS SEHLER, et al.,
PROSPECT MORTGAGE, LLC,
M E M O R A N D U M
O P I N I O N
This matter is before the Court on Defendant Prospect
Mortgage, LLC’s (“Defendant” or “Prospect Mortgage”) Motion for
Leave to File Motion to Sever, [Dkt. 49], and corresponding
Motion to Sever, [Dkt. 49, Ex. A], (collectively “Motions”).
For the following reasons the court will grant Defendant’s
Motion for Leave and grant Defendant’s Motion to Sever.
Prospect Mortgage is a California corporation that
offers consumer lending products such as mortgages and equity
(Second Am. Compl. [Dkt. 12] ¶ 9.)
Sadiqui, Lora Hartman, Monica Harmison, Allison Cougill, Alice
Dixon, Ronald Hantz, and Annette Post (collectively
“Plainitffs”) are former loan officers with Prospect Mortgage.
(Second Am. Compl. ¶¶ 1-8.)
On April 18, 2013, Plaintiffs filed this action
alleging violations of the Fair Labor Standards Act, 29 U.S.C. §
201 et seq. (“FLSA”).
Plaintiffs aver that Defendant
wrongfully classified them as exempt employees under the FLSA,
resulting in lost benefits.
(Second Am. Compl. ¶ 24.)
Plaintiffs were paid on a commission-only basis; they therefore
allege that Defendant wrongfully failed to pay them (1) the
minimum wage, and (2) overtime compensation.
(Second Am. Compl.
The Court entered a discovery order in this case on
August 27, 2013.
This order provides that all
motions, except summary judgment and consent orders, shall be
noticed for a hearing on the earliest possible Friday before the
pre-trial conference set for November 21, 2013.
Order ¶ 2.)
In other words, outside of summary judgment, all
motions must be docketed on or before November 15, 2013.
Defendant filed its answer in this case on September
The heart of Defendant’s position appears
to be that Plaintiffs were exempt from the overtime and minimum
wage requirements under the “outside sales” exemption set forth
in 29 U.S.C. § 213(a)(1). 1
(Answer at 8.)
Pursuant to 29 U.S.C. § 213(a)(1), “any employee employed . . . in the
capacity of outside salesman” is exempt from the minimum wage and maximum
hour requirements of the FLSA. The term “outside salesman” means any
employee: (1) “whose primary duty is . . . making sales . . . or obtaining
orders or contracts for services or for the use of facilities for which a
alleges that several claims are barred by the applicable statute
On November 15, 2013, Defendant filed a Motion to
Sever and simultaneously docketed a hearing for November 22,
(Def.’s Mot. to Sever at 1.)
Acknowledging that this
motion is untimely under the scheduling order, Defendant also
requests leave to permit the belated filing.
Leave at 1.)
(Def.’s Mot. for
Defendant maintains that its delay is the result
of a late discovery schedule.
for Leave [Dkt. 50] at 1-3.)
(Def.’s Mem. in Support of Mot.
Thus, according to Defendant, it
“did not have record evidence upon which it could base a motion
to sever” until after the deadline.
(Id. at 2.)
Defendant’s Motion to Sever, in turn, asks the Court
to separate Plaintiffs’ claims because they do not arise “out of
the same transaction, occurrence, or series of occurrences” as
required for permissive joinder under Federal Rule of Civil
(Def.’s Mem. in Support of Mot. to Sever at 1-
According to Defendant, “whether each Plaintiff is exempt
from overtime under the outside sales exception turns on the
amount of time each Plaintiff spent on outside sales
activities,” and this inquiry is highly fact specific and
“dependent on the individual circumstances of each Plaintiff.”
consideration will be paid by the client or customer”; and (2) “who is
customarily and regularly engaged away from the employer's place or places of
business in performing such primary duty.” 29 C.F.R. § 541.500.
(Id. at 1, 11.)
In sum, “the amount of time Plaintiffs spent on
outside sales activities varied considerably based on a number
of individualized factors,” the proof for which “will be unique
for each Plaintiff.”
(Id. at 11.)
Furthermore, Defendant plans
to assert several affirmative defenses against some, but not
all, of the Plaintiffs.
Thus, concludes Defendant, the
individualized evidence for each Plaintiff along with the
varying affirmative defenses “would breed confusion for jurors.”
(Id. at 12-13.)
For relief, Defendant asks to the Court to
either dismiss the severed claims without prejudice or order
separate trials under Federal Rule of Civil Procedure 42.
Plaintiffs filed their response on November 20, 2013.
(Pls.’ Response [Dkt. 52] at 1.)
Despite their prior
disagreement on this issue, Plaintiffs now concur that severance
The only issue they dispute is the
According to Plaintiffs, ordering
separate trials is more suitable under the circumstances because
“severing and dismissing [their] claims would be incredibly
inefficient” at this stage of the litigation.
(Id. at 2.)
Having reviewed the case law on this subject, and in
light of the parties’ agreement that severance is appropriate,
the Court will grant Defendant’s Motion for Leave and grant
Defendant’s Motion to Sever.
Accordingly, the only issue
remaining before the Court is the appropriate relief.
Rule 20 of the Federal Rules of Civil Procedure states
that defendants may be joined in one action if “(a) any right to
relief is asserted against them jointly, severally, or in the
alternative with respect to or arising out of the same
transaction, occurrence, or series of transactions or
occurrences, and (b) any question of law or fact common to all
defendants will arise in the action.”
Fed. R. Civ. P. 20.
the event of improper joinder, Rule 21 the Federal Rules of
Civil Procedure provides district courts with discretion to add
or drop a party or to sever any claim against a party for just
See Fed. R. Civ. P. 21.
“The proper remedy in case of
misjoinder is to grant severance or dismissal to the improper
party if it will not prejudice any substantial right.”
v. Budzanoski, 457 F.2d 1245, 1249 (3d Cir. 1972).
formulating a remedy for a misjoinder the judge is required to
avoid gratuitous harm to the parties, including the misjoined
Rule 21 not only requires that orders adding or dropping
parties be made ‘on such terms as are just,’ but also expressly
allows the judge to sever the misjoined party's claim rather
than dismiss it.”
Elmore v. Henderson, 227 F.3d 1009, 1012 (7th
Cir. 2000) (citation omitted).
Considering these principles, the Court finds it
proper to allow Plaintiffs’ claims to proceed as separate
The Court is persuaded by Plaintiffs’ argument that
dismissing the severed claims without prejudice, as suggested by
Defendant, promotes inefficiency.
This would require both
parties to unnecessarily repeat the pre-trial steps they have
spent the last seven months completing.
This would also
necessitate needless expenditures on duplicitous discovery.
sum, the Court sees no benefit to having the parties return to
See, e.g., Ballentine v. Town of Coats, No. 5:11–
CV–524–FL, 2012 WL 4471605, at *5 (E.D.N.C. Sept. 26, 2012)
(granting motion to sever and directing the plaintiffs’ claims
to proceed separately under new case numbers).
Order will issue.
November 21, 2013
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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