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Thomas v. Downriver Staffing Group, LLC

United States District Court, E.D. Michigan, Southern Division

June 18, 2018




         Plaintiffs filed this putative class action lawsuit against Defendants asserting violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219. Defendants thereafter moved to compel arbitration based on an arbitration clause in an agreement signed by Plaintiffs. In a decision issued July 6, 2015, this Court granted in part and denied in part Defendants' motion. (ECF No. 27.) Finding the arbitration agreement effective as of December 16, 2013, the Court held that Plaintiffs could be compelled to arbitrate only their FLSA claims arising after that date. (Id. at Pg ID 13.) The Court stayed Plaintiffs' FLSA claims arising before that date until arbitration was concluded. (Id. at 30.) The matter is presently before the Court on Defendants' motion to vacate the arbitration award, filed March 19, 2018. (ECF No. 32.) The motion has been fully briefed. (ECF Nos. 33, 34.) Finding the facts and legal arguments sufficiently presented by the parties, the Court is dispensing with oral argument with respect to Defendants' motion pursuant to Eastern District of Michigan Local Rule 7.1(f).


         Sometime after the Court issued its July 6, 2015 decision compelling arbitration, Plaintiff Vincent Thomas (“Thomas”) and Defendants proceeded to arbitration through the American Arbitration Association (“AAA”).[1] The parties subsequently agreed to consolidate the arbitration case for hearing with another case in which the Honorable Judith E. Levy had ordered arbitration of FLSA claims brought by Gary Conner, Jr. (“Conner”) against Right Choice Staffing Group, LLC (“Right Choice”) and Adept Services Group, Inc. (“Adept”): Gary Conner, Jr. v. Right Choice Staffing Grp., LLC, et al., Civil No. 14-12887 (E.D. Mich. filed July 23, 2014). The parties subsequently selected Michael R. Blum as the arbitrator.

         On October 27, 2016, Arbitrator Blum submitted a General Arbitrator Oath Form to AAA, answering “yes” in response to the question: “Have you had any professional or social relationship with counsel for any party in this proceeding or the firms for which they work.” (Defs.' Mot., Ex 10, ECF No. 32-11 at Pg ID 478.) Arbitrator Blum explained that he is a member of the Macomb County Bar Association (“MCBA”) Labor and Employment Committee and that Conner's counsel, Heidi Sharp, also is a committee member and served at the time as its Chairperson. (Id.) Arbitrator Blum submitted a supplemental disclosure on October 31, 2016, adding that he had not been particularly active in the MCBA Labor and Employment Committee in the past few years and had not attended committee meetings for the past year. (Id., Ex. 11, ECF No. 32-12.) Arbitrator Blum included that he did not believe his relationship with Sharp would affect his ability to act fairly and impartially. (Id.) He then submitted a second supplemental disclosure on May 1, 2017, stating that he appeared opposite another lawyer in Sharp's firm, Joseph Golden of Burgess Sharp & Golden, in an ongoing matter and that they attended an EEOC conciliation in the matter on that date. (Id., Ex. 16, ECF No. 32-17.)

         The consolidated arbitration hearing regarding Thomas' and Conner's claims was held on August 9 or September 8, 2017.[2] On October 6, 2017, Arbitrator Blum issued a Decision and Interim Award. (Defs.' Mot., Ex. 20, ECF No. 32-21.) Arbitrator Blum first found that Thomas and Conner were employees, not independent contractors, and thus entitled to overtime pay under the FLSA. (Id. at 5, Pg ID 595.) Arbitrator Blum next found that Conner suffered damages in the form of unpaid overtime totaling $6, 170.63, and that Thomas' damages totaled $5, 409.63 (which included a credit of $661.00 previously paid pursuant to a Department of Labor investigation). (Id. at 5-6, Pg ID 595-96.) In the “Award” section of the decision, however, Arbitrator Blum listed Conner's damages as $9, 459.00. (Id. at 7, ECF No. 597.)

         Arbitrator Blum additionally awarded Conner and Thomas liquidated damages under the FLSA in the same amounts as their actual damages and concluded that they were entitled to an award of attorneys' fees and costs. (Id. at 6, 7, Pg ID 596-97.) Finding insufficient documentation to determine the appropriate award of attorneys' fees or costs, Arbitrator Blum retained jurisdiction and instructed the parties to file submissions regarding the issue. (Id.) Lastly, Arbitrator Blum dismissed Thomas' and Conner's claims against Adept and Downriver Staffing Group, LLC, finding that they never worked for these companies, and concluded that there was no basis to hold Tracy Shaffer personally liable. (Id. at 7, Pg ID 597.) He found Right Choice, Autoline, and Timothy Schultz jointly liable for the arbitration award. (Id.)

         Right Choice and Schultz subsequently filed a motion for modification, noting the discrepancy in the amounts awarded to Conner in the interim award and arguing that Conner was entitled to a much lower award, $1, 532.07 or less. See Resp. to Mot., Ex. 1, Conner v. Right Choice Staffing Grp., LLC, et al., No. 14-12887 (E.D. Mich. Apr. 2, 2018), ECF No. 30-2. On December 20, 2017, Arbitrator Blum issued a Final Award of Arbitration, awarding Thomas $9, 459.00 in damages, the same amount in liquidated damages, and attorneys' fees totaling $25, 650.00 against Right Choice, Autoline, and Schultz.[3] (Defs.' Mot., Ex. 21, ECF No. 32-22.) Arbitrator Blum awarded Conner $6, 170.63, the same amount in liquidated damages, and attorneys' fees and costs totaling $24, 271.00. (Id.)

         On March 19, 2018, Defendants filed the pending motion to vacate the arbitration award in favor of Thomas.[4] Defendants indicate in their motion that “[f]ollowing the arbitration hearing, [they] discovered that the arbitrator had not disclosed pertinent information regarding his relationship to Conner's attorney and other partners in her firm.” (Defs.' Mot. at 4, ECF No. 32 at Pg ID 346.) Specifically, Defendants identify that Arbitrator Blum failed to previously disclose the following:

(1) [H]e was apparently a founding member of the Macomb County ADR Committee, together with Joseph Golden, a partner at Burgess, Sharp, and Golden and, at that time, a director of the Macomb County Bar Association. (Exhibit 13, at 12-14);
(2) Sharp was also a member of the Macomb County ADR Committee at the same time as Arbitrator Blum (Exhibit 14, at 20)[;]
(3) [H]e organized a presentation on November 4, 2013 on ADR techniques with Golden, which featured Sharp as one of the event's speakers. (Exhibit 15, at 2; Ex. 13, at 13-14[.]) At the time, the ADR Committee consisted of just 26 members. (Ex. 13, at 14)[;]
(4) Sharp, Blum, and Golden were all members of the ADR Committee as of at least February 2015, after [Judge Levy] entered an Order compelling arbitration of Conner's claims on January 16, 2015. (Ex. 14, at 20)

         (Defs.' Mot. at 8-9, ECF No. 32 at Pg ID 351-52, footnotes omitted.) Defendants contend that Arbitrator Blum's relationship with Golden and Sharp caused him to be biased in favor of Sharp's client, Conner, as demonstrated by his award to Conner of nearly twice the maximum damages he sought, an award against Schultz and Autoline where Conner never named ...

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