Judge delivers two plaintiffs to arbitration, despite TQL's slowness in finding, revealing arbitration clauses

By Karen Kidd | Apr 30, 2018

CHICAGO — Two plaintiffs who joined a class action suit against an Ohio-based shipping services provider over accusations of not paying overtime to employees are no longer part of the case and their claims could be heading into arbitration, despite the company's tardiness in presenting the court with the employment agreements containing the arbitration requirements.

A defense motion to dismiss the claims of the two plaintiffs, Ryan Azeem and Richard Smith, who joined the suit after it was filed against Total Quality Logistics (TQL), was granted, according to a memorandum and order handed down in the U.S. District Court for the Northern District of Illinois on April 9 by U.S. District Judge Matthew F. Kennelly. 

Kennelly dismissed the two plaintiffs' claims with prejudice and also ordered the statute of limitations of their claims be tolled from the date they opted into the lawsuit until the day of his order.

"Having considered the totality of the circumstances, the court concludes that TQL has not acted inconsistently with its right to arbitrate the claims of plaintiffs Ryan Azeem and Richard Smith," Kennelly wrote in the order. "The court therefore overrules Azeem and Smith's waiver argument and grants TQL's motion to dismiss their claims."


Kimberly De Arcangelis   Morgan & Morgan

Azeem and Smith joined the collective action suit against TQL, accusing the company of violating the Fair Labor Standards Act by not paying them overtime, according to the background portion of Kennelly's order. 

When the plaintiffs asked for conditional certification of two classes, TQL asked to compel arbitration or dismiss the claims of nine of the original plaintiffs, who had arbitration agreements.

TQL, which is based in Cincinnati, provided the court with varying lists of employees without arbitration agreements, which initially included Azeem and Smith. However, that changed in October when TQL said it had located arbitration agreements in Azeem's and Smith's personnel files. 

"Why did it take so long to find Azeem and Smith's personnel files?" Kennelly wrote in his order. "TQL has not provided much of an explanation. It has submitted an affidavit from Lindsay Elliott, a TQL human resources employee, who says that all personnel files from its seven Florida offices (both Azeem and Smith worked for TQL in Florida) are retained solely in hard copy and are stored at the company's Tampa office. Elliott states, somewhat vaguely, that upon receiving the request for the personnel files of opt-in plaintiffs in April 2017, TQL 'began working methodically' to collect the files. There is no explanation of what this means—for example, was it just one employee working on this? More than that? Where did she have to look? Were the files in storage? Rather, Elliott offers only a general statement that each file had to be located among the files of other employees. She says that '[i]n or around October 2017,' she found Smith and Azeem's files and sent them to TQL's counsel."

When the attorneys for the plaintiffs said they did not want to drop Azeem and Smith for fear that the statute of limitations might bar their claims, TQL offered to toll the statute of limitations for both to make up for the time they have been part of the litigation. Kennelly agreed that that would be the right course of action. 

"To be sure, TQL should have identified Azeem and Smith membership much sooner," he said in the order. "But once TQL became aware they had signed arbitration agreements, it promptly requested arbitration of their claims: It was not 'assessing its options,' and it did not 'drop a bombshell' by insisting upon arbitration. And TQL did not materially benefit from its delay. The discovery requests it served resulted in production of only minimal information by Azeem and Smith, and it likely was the type of information they would have had to turn over even had their claims been sent to arbitration before that."

Plaintiffs are represented in the action by attorneys Ryan F Stephan, of the firm of Stephan Zouras LLP, of Chicago, and Kimberly De Arcangelis, Charles R. Morgan and Matthew R. Gunter, of Morgan & Morgan P.A., of Orlando.

TQL is represented by Matthew A. Bills, of the firm of Barack Ferrazzano Kirschbaum & Nagelberg LLP, of Chicago, and Meaghan K. Fitzgerald, Gregory M. Utter, Bryce J. Yoder and Sophia R. Holley, of Keating Muething & Klekamp PLL, of Cincinnati.

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Barack Ferrazzano Keating Muething & Klekamp Stephan Zouras LLP Total Quality Logistics U.S. District Court for the Northern District of Illinois

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