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Marzano v. Proficio Mortg. Ventures, LLC

United States District Court, N.D. Illinois

April 25, 2013

JAMES MARZANO and JOHN MAJOREK, on behalf of themselves and others similarly situated, Plaintiffs,
v.
PROFICIO MORTGAGE VENTURES, LLC, PROFICIO BANK, and FIRST LIBERTY FINANCIAL GROUP, LLC, Defendants

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For James Marzano, John Majorek, On behalf of themselves and all others similarly situated, Plaintiffs: Rowdy Meeks Meeks, LEAD ATTORNEY, Rowdy Meeks Legal Group LLC, Kansas City, MO; Kenneth C. Apicella, Apicella Law Firm, LLC, Palatine, IL.

For Proficio Mortgage Ventures, LLC, Proficio Bank, Defendants: Christina M. Kennedy, PRO HAC VICE, John S. Lord, Jr., PRO HAC VICE, Foley & Lardner LLP, Orlando, FL; John Louis Litchfield, Foley & Lardner Llp, Chicago, IL; Jonathan William Garlough, Foley & Lardner, Chicago, IL.

For First Liberty Financial Group, LLC, Defendant: Timothy L Bertschy, LEAD ATTORNEY, Heyl, Royster, Voelker & Allen, Peoria, IL; Jana L Brady, Heyl, Royster, Voelker & Allen, Rockford, IL; Stephen Richard Ayres, Heyl, Royster, Voelker & Allen, Chicago, IL.

OPINION

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MEMORANDUM OPINION AND ORDER

Ruben Castillo, United States District Judge.

James Marzano and John Majorek (" Plaintiffs" ) bring this collective and class action against Proficio Mortgage Ventures, LLC, Proficio Bank, and First Liberty Financial Group, LLC (collectively, " Defendants" ) alleging violations of the Fair Labor Standards Act (" FLSA" ), 29 U.S.C. § 201 et seq. ; the Illinois Minimum Wage Law (" Illinois Wage Law" ), 820 Ill. Comp. Stat. 105/1 et seq. ; the Illinois Wage Payment and Collection Act (" Illinois Payment Act" ), 820 Ill. Comp. Stat. 115/1 et seq. ; the Ohio Minimum Fair Wage Standards Act (" Ohio Wage Act" ), Ohio Rev. Code Ann. § § 4111.01, 4111.03, 4111.08, and 4111.10; the Ohio Constitution, Article II § 34a (" Ohio Constitution" ); the Ohio Prompt Pay Act, Ohio Rev. Code Ann. § 4113.15; and Ohio contract law. (R. 1, Compl.)

Presently before the Court are Defendants' motions to dismiss or stay these proceedings pending arbitration. (R. 23, First Liberty's Mot.; R. 27, Proficio's Mot.) For the reasons set forth below, the Court grants Defendants' motions.

RELEVANT FACTS

First Liberty Financial Group, LLC (" First Liberty" ) is a regional mortgage bank licensed in 17 states. (R. 1, Compl. ¶ 27.) Proficio Mortgage Ventures, LLC is a nationwide mortgage lender and a wholly owned subsidiary of Proficio Bank (collectively, " Proficio" ), which began as a Utah state-chartered commercial bank and is now a " non-member bank of the FDIC." ( Id. ¶ ¶ 22, 24.) Proficio acquired the First Liberty branch office in Independence, Ohio in December 2011. ( Id. ¶ ¶ 14.)

At all relevant times, Defendants employed Plaintiffs and putative class members as " loan officers," " senior loan officers," " senior mortgage bankers," and in other similar mortgage origination positions (collectively, " Loan Officers" ). ( Id. ¶ ¶ 3, 28.) During the month of February 2012, Marzano, an Illinois resident, was employed bye Proficio as a Loan Officer in Schaumburg, Illinois. ( Id. ¶ 13.) In this suit, he represents the putative " Illinois Class," which is made up of all persons employed by Defendants as Loan Officers in Illinois within five years of the filing of

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the present complaint. ( Id. ¶ 7.) Majorek, an Ohio resident, was employed by First Liberty and, after the acquisition, by Proficio as a Loan Officer in Independence, Ohio from May 2011 until the end of February 2012. ( Id. ¶ 14.) Majorek represents the putative " Ohio Class," which is made up of all persons employed by Defendants as Loan Officers within Ohio who failed to receive overtime pay, or were subject to the Loan Officer compensation agreement that Proficio allegedly breached, within three years of the filing of the present complaint. ( Id. ¶ 8.) All Loan Officers shared common job duties and descriptions and were classified by Defendants as exempt employees, meaning that they were ineligible for overtime compensation. ( Id. ¶ ¶ 35, 38.)

Plaintiffs allege that Defendants violated the FLSA and Illinois and Ohio State laws by failing to: (1) keep accurate records of the hours Plaintiffs and other Loan Officers worked; and (2) compensate Plaintiffs and other Loan Officers for the overtime hours they worked during the weekends and evenings. ( Id. ¶ ¶ 31, 39-40.) Specifically, Plaintiffs allege that Defendants paid them and putative class members " on a draw against commission and/or hourly basis without any payment for overtime premiums." ( Id. ¶ 30.) Plaintiffs allege that Defendants " uniformly applied these payment structures to all Loan Officers in an effort to avoid the overtime [wage] requirements under the FLSA, and Illinois and Ohio state laws." ( Id. ) Plaintiffs also allege that Proficio paid its Loan Officers on an hourly basis but forbade them from recording more than 40 hours per week or altered the timesheets to remove any time worked in excess of 40 hours per week. ( Id. ¶ 34.) Plaintiffs allege that Defendants treated the Loan Officers as exempt employees even though they were non-exempt and were entitled to overtime pay. ( Id. ¶ ¶ 35, 36.)

PROCEDURAL HISTORY

On September 26, 2012, Plaintiffs filed their seven-count complaint with this Court in their individual capacities and on behalf of others similarly situated. (R. 1, Compl.) In Count I, Plaintiffs allege that Defendants willfully violated the FLSA by failing to maintain accurate records and pay the required overtime premiums. ( Id. ¶ ¶ 70-76.) In Counts II and III, Marzano alleges that Proficio violated the Illinois Wage Law and Illinois Payment Act by failing to properly compensate him and the putative Illinois Class at the rate of one and one-half times the regular hourly wage for overtime hours worked. ( Id. ¶ ¶ 81-91.) In Counts IV through VI, Majorek alleges that Defendants willfully and recklessly violated the Ohio Wage Act and the Ohio Constitution by failing to properly compensate him and the putative Ohio Class at the rate of one and one-half times the regular hourly wage for overtime hours worked and failing to maintain accurate records of their hours. ( Id. ¶ ¶ 95-112.) In Count VII, Majorek alleges that Proficio violated Ohio common law of contract formation and breach when it failed to pay Majorek and the putative Ohio Class an hourly wage as specified in the Loan Officer compensation agreements. ( Id. ¶ ¶ 115-119.)

On November 1, 2012, First Liberty moved to stay these proceedings or, in the alternative, to dismiss or, in the alternative, to sever and transfer the claims against it to the Northern District of Ohio. (R. 23, First Liberty's Mot.) According to First Liberty, all of its employees, including Majorek, entered into an employment agreement that provides that " any dispute, controversy, claim, or difference between Employer and Employee which directly or indirectly relates to or arises out of this Agreement, or its breach" is subject to arbitration. ( Id. ¶ ¶ 7, 13.) First Liberty

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argues that Plaintiffs' claims against it are subject to binding arbitration under the arbitration clause and should therefore be stayed or dismissed pursuant to Rule 12(b)(1) or Rule 12(b)(6). ( Id. ¶ 7.) First Liberty further asserts that Plaintiffs' claims against it should be dismissed because Plaintiffs failed to file consent forms with respect to the FLSA collective action against First Liberty as they are required to do by 29 U.S.C. § 216(b). ( Id. ¶ 16.) In the alternative, First Liberty argues that Plaintiffs' claims against First Liberty do not arise out of the same transaction or occurrence as their claims against Proficio, nor does a common question of law or fact exist between the claims, and they should therefore be dismissed, or severed and transferred to the Northern District of Ohio, due to improper joinder. ( Id. ¶ ¶ 21-27.) Finally, First Liberty argues that the claims against it should be dismissed, or severed and transferred to the Northern District of Ohio, pursuant to Rule 12(b)(3) because Ohio is the only venue with any connection to those claims. ( Id. ¶ 30.)

On November 2, 2012, Proficio moved to dismiss Plaintiffs' claims against it or, in the alternative, to stay these proceedings pending arbitration. (R. 27, Proficio's Mot.) Proficio asserts that Plaintiffs and every other Loan Officer it employed entered into an employment agreement that includes an arbitration provision requiring binding arbitration and the waiver of " litigation and trial by jury in any action or proceeding to which they may be parties, arising out of, or in any way pertaining or relating to, this agreement." (R. 28, Proficio's Mem. at 3.) Proficio argues that Plaintiffs' claims against it must be dismissed pursuant to Rule 12(b)(3) because the only proper venue for their claims is binding arbitration in Salt Lake City, Utah. ( Id. at 12.) In the alternative, Proficio argues that the claims against it should be dismissed pursuant to Rule 12(b)(1) because the arbitration agreement eliminates the Court's subject matter jurisdiction. ( Id. at 13.) Finally, Proficio argues that if the claims are not dismissed, they should be stayed pursuant to Section 3 of the Federal Arbitration Act (" FAA), 9 U.S.C. § 1 et seq., pending resolution of binding arbitration. ( Id. at 14.)

The thrust of Defendants' arguments is that this Court is not the appropriate venue for the adjudication of Plaintiffs' claims. Because the Court finds these arguments compelling and dismisses Plaintiffs' complaint for improper venue, the Court does not address the myriad of other reasons Defendants provide for the dismissal of Plaintiffs' complaint.

LEGAL STANDARD

Rule 12(b)(3) allows a party to move for dismissal of an action when it is not filed in the proper venue. Fed.R.Civ.P. 12(b)(3). The plaintiff bears the burden of establishing that venue is proper. Int'l Travelers Cheque Co. v. BankAmerica Corp., 660 F.2d 215, 222 (7th Cir. 1981) (citing Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir. 1970)). When ruling upon a Rule 12(b)(3) motion to dismiss for improper venue, the Court takes all the allegations in the complaint as true, unless contradicted by an affidavit. Nagel v. ADM Investor Servs., Inc., 995 F.Supp. 837, 843 (N.D. Ill. 1998). The Court may, however, consider facts outside the complaint. Cont'l Cas. Co. v. Am. Nat'l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005). The Court must resolve all factual disputes and draw all reasonable inferences in the plaintiffs' favor. Nagel, 995 F.Supp. at 843. ...


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