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Cramer v. Bank of America, N.A.

United States District Court, Seventh Circuit

May 30, 2013

THOMAS CRAMER, CHRISTA SPENCER, MATTHEW MERRILL, PAUL LORENZ, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
BANK OF AMERICA, N.A., and BANK OF AMERICA CORPORATION, Defendants.

MEMORANDUM OPINION AND ORDER

JAMES B. ZAGEL, District Judge.

Thomas Cramer and Christa Spencer ("Plaintiffs") brought this class action against Bank of America, N.A., and Bank of America Corporation ("Defendants") alleging violations of the Fair Labor Standards Act ("FLSA"), the Illinois Minimum Wage Law ("IMWL"), and the Illinois Wage Payment and Collection Act ("IWPCA"). Presently before the Court is Defendant's motion to dismiss Plaintiffs' claim and petition to compel individual arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. Also before the Court is Plaintiffs' motion for leave to file a First Amended Complaint. For the reasons set forth herein, Defendants' motion is denied, and Plaintiffs' motion is granted.

BACKGROUND

Defendants provide financial and mortgage services throughout the nation, including Illinois. In July 2008, Countrywide Financial Corporation and its subsidiaries became a wholly-owned subsidiary of Bank of America Corporation. After this merger, Plaintiffs became employees of Defendants, while continuing to work as mortgage origination employees. Plaintiffs allege Defendants misclassified their positions as exempt from the FLSA minimum wage and overtime requirement. Plaintiffs and putative class members had similar job descriptions, responsibilities, and compensation designations. Plaintiffs allege that Defendant violated the FLSA, the IMWL, and the IWPCA by failing to: (1) accurately record the hours worked by Plaintiffs; and (2) provide accurate compensation and wage statements to Plaintiffs. Further, Plaintiffs assert that Defendants' actions constitute a "willful" violation of the FLSA. See 29 U.S.C. § 255(a) (expanding the statute of limitations period for a cause of action arising out of a willful violation).

Plaintiffs and Defendants entered into a "Mutual Agreement to Arbitrate Claims" (the "Agreement") in 2006. Pursuant to the Agreement, the parties must submit to binding arbitration to resolve "every possible claim arising out of or relating in any way to [Plaintiffs'] employment" with Defendant. According to the terms of the Agreement, arbitration hearings are to be conducted by the National Arbitration Forum ("NAF"), the American Arbitration Association (the "AAA"), or JAMS, The Resolution Experts ("JAMS"). The Agreement instructs that the "arbitrator has exclusive authority to resolve any disputes relating to the applicability or enforceability of this Agreement."

On October 30, 2012, Plaintiffs filed a three-count complaint with the Court on their own behalf and on behalf of similarly situated individuals. Plaintiffs request a judgment against Defendants for willfully violating the FLSA, the IMWL, and the IWPCA.

On December 7, 2012, Defendant moved to dismiss this action and filed a petition to compel individual arbitration. Defendant asserts that the Agreement requires Plaintiffs to submit to binding arbitration and eliminates the Court's subject matter jurisdiction. On March 3, 2013 Plaintiffs filed a motion for leave to file a First Amended Complaint to add Mathew Merrill and Paul Lorenz as named Plaintiffs without arbitration agreements. Plaintiffs also simultaneously filed a response to Defendants' motion to dismiss conceding that Cramer and Spencer "will file demands for arbitration." Defendant filed a consolidated reply on March 29, 2013, arguing that Plaintiffs Cramer's and Spencer's claims ought to be dismissed by this Court pursuant to Rule 12(b)(1). Defendants further requested the Court to compel individual arbitration, arguing that because the Agreement is silent as to class arbitration, class arbitration is prohibited. On April 10, 2013, Plaintiff filed a sur-reply requesting that the Court stay proceedings subject to arbitration pending the outcome of such arbitration. Plaintiffs' sur-reply also declared Plaintiffs Spencer's and Cramer's intention to pursue collective action certification in arbitration.

Spencer and Cramer filed their Demand for arbitration on behalf of themselves and all others similarly situated with the AAA on March 25, 2013. Defendants continue to refuse to consent to arbitrate on a collective basis, and have withheld their portion of the filing fee.

DISCUSSION

A. Legal Standards

1. Legal standard for a motion to compel arbitration

Congress enacted the FAA to "reverse the longstanding judicial hostility to arbitration agreements... and to place arbitration agreements on the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). Although the FAA requires federal courts to enforce arbitration agreements in accordance with their terms, see 9 U.S.C. § 4 (2000); see also Volt Info. Sci.'s, Inc. v. Bd. of Tr.'s of Leland Stanford Junior Univ., 489 U.S. 468, 474-75 (1989), the United States Supreme Court has held that an arbitrator - not the court - should resolve class arbitrability disputes where the arbitration agreement is silent on the issue. See Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003) (plurality opinion). More recently, the Supreme Court narrowed its Bazzle holding by declaring "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1775 (2010) (emphasis in original). The court is "obliged to enforce the type of arbitration to which [the] parties agreed." Livingston v. Assocs. Fin., Inc., 339 F.3d 553, 558 (7th Cir. 2003).

If the Court is satisfied that the parties agreed to arbitrate, it must promptly compel arbitration. 9 U.S.C. § 4. A court may not deny a party's request to arbitrate an issue "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Gore v. Alltel ...


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