Fordham v. Fannie Mae , 49 F. Supp. 3d 77 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
EDNA D. FORDHAM, )
)
Plaintiff, )
)
v. ) Civil Action No. 11-1894 (ABJ)
)
FANNIE MAE, )
)
Defendant. )
____________________________________)
MEMORANDUM OPINION
On October 27, 2011, plaintiff brought an action against her employer, defendant Fannie
Mae, alleging that the defendant retaliated against her for complaining about race discrimination
in violation of 42 U.S.C. § 2000e-3(a). Compl. [Dkt. # 1]. On January 6, 2012, defendant
moved to compel arbitration in accordance with the terms of plaintiff’s employment application
and Fannie Mae’s offer letter, both of which referenced the Fannie Mae Dispute Resolution
Policy. Def.’s Mot. to Compel Arbitration [Dkt. # 5, 5-3, 5-4] (“Mot. to Compel”). Plaintiff
informed the Court that she did not oppose defendant’s motion, Pl.’s Resp. to Mot. to Compel at
1 [Dkt. # 6], and the motion was granted. Plaintiff requested that the action be stayed pending
the arbitration, Pl.’s Mot. to Stay [Dkt. # 7], and that motion was granted on January 18, 2012.
The arbitrator found for Fannie Mae on September 20, 2013, and entered a Final Award
for defendant. Consent Status Report of Sept. 30, 2013 [Dkt. # 12]. The terms of the Dispute
Resolution Policy provided that if plaintiff did not reject the Final Award within thirty days of its
issuance, the Final Award would become binding on plaintiff. Id. ¶ 6. Plaintiff failed to reject
the Final Award within that thirty-day period. Defendant then moved to dismiss this case under
Rule 12(b)(6) or, in the alternative, under Rule 56, asserting that the Final Award was binding
upon plaintiff. Def.’s Mot. to Dismiss at 1 [Dkt. # 17]; see also Consent Status Report of Dec. 2,
2013 ¶ 7 [Dkt. # 13]. Plaintiff argued that it was not binding because her lawsuit was still
pending in this Court. Consent Status Report of Dec. 2, 2013 ¶ 8.
Because binding arbitration decisions are final decisions with preclusive effect for
purposes of res judicata, Camp v. Kollen, 567 F. Supp. 2d 170, 173 n.6 (D.D.C. 2008), the Court
finds that plaintiff has failed to state a claim upon which relief can be granted and will dismiss
this case.
FACTUAL BACKGROUND
When the Court ordered this matter stayed pending the outcome of the arbitration
proceedings, the parties were also ordered to file periodic joint reports updating the Court on the
status of the arbitration. See Minute Orders of Jan. 18, 2012; Apr. 18, 2012; Sept. 26, 2012; Oct.
1, 2012; Feb. 26, 2013; Mar. 4, 2013; June 4, 2013. On September 30, 2013, the parties jointly
informed the Court of the outcome of the arbitration. Consent Status Report of Sept. 30, 2013.
They filed what they entitled a “Consent Status Report on Arbitration,” which stated the
following:
5. On September 20, 2013, the Arbitrator entered a Final Award in
favor of the Respondent, Fannie Mae. The Final Award was served on the
Parties on September 23, 2013.
6. The Final Award is binding on Fannie Mae. However, pursuant to
Rule 14 of the Dispute Resolution Policy, Plaintiff has thirty (30) days
from the issuance of the Final Award to reject it and to pursue her claims
in this Court.
7. The Parties request that the instant matter be stayed for a period of
60 days within such time, Plaintiff will advise the Court whether she will
pursue her claims in this action.
Id. at 1–2.
2
On October 2, 2013, the Court entered a Minute Order stating: “In light of the parties’
joint status report, the Court orders the parties to submit a further status report by December 2,
2013, at which time the plaintiff must advise the Court whether she intends to pursue her claims
in this action.” Since the matter was already stayed, there was no need to enter another order
staying the case.
On December 2, 2013, the parties filed the status report that had been ordered on October
2. See Consent Status Report of Dec. 2, 2013. They reiterated that under the Dispute Resolution
Policy, plaintiff had thirty days from the issuance of the Final Award to reject it and to elect to
pursue her claims in Court, and they jointly informed the Court that plaintiff “did not complete
and submit a Rejection notice to JAMS and has thus, failed to reject the Final Award within the
30 days of its issuance.” Id. ¶¶ 6–7.
Based upon that set of circumstances, defendant Fannie Mae asserted that the Final
Award had become binding upon plaintiff. Id. ¶ 7. But plaintiff took the position “that the 30
days to contest the arbitration award does not apply where there is already a pending case in U.S.
District Court, which was then stayed and referred to arbitration, and where the Court then gave
the parties until December 2, 2013 to notify the court if plaintiff was proceeding.” Id. ¶ 8.
Plaintiff cited no authority in support of this proposition. 1
1 The December 2, 2013 Consent Status Report was signed only by counsel for defendant
Fannie Mae, who stated that “the undersigned counsel for Fannie Mae has conferred with
Plaintiff’s arbitration counsel . . . which has not to date entered an appearance in this case, and
has been authorized to represent that Plaintiff agrees to the matters described in this report.”
Consent Status Report of Dec. 2, 2013 ¶ 9. But the docket entry for June 6, 2013 reflects that
“[i]f after the filing of the next status report on 9/27/2013 this case continues in litigation then
attorneys Thad Guyer and Stephani Ayers will either become members of the bar and enter an
appearance or they will move for Pro Hac Vice admission.”
3
In the wake of that status report, on December 3, 2013, the Court ordered plaintiff to
show cause why the arbitration award was not binding and why the case should not be dismissed,
and it provided defendant with an opportunity to respond to plaintiff’s submission. Minute
Order of Dec. 3, 2013. Plaintiff filed her response to the order on December 20, 2013, Pl.’s
Resp. to Order to Show Cause [Dkt. # 14] (“Pl.’s Resp.”), and defendant submitted a reply on
January 6, 2014, [Dkt. # 15]. Based on its consideration of those submissions and the entire
record of the case, the Court concluded that “plaintiff ha[d] failed to supply any grounds for why
the arbitration award [was] not binding” upon her, but noted that there was no motion to dismiss
pending on which the Court could rule. Order of January 9, 2014 [Dkt. # 16]. The Court then
ordered defendant to file a motion upon which it could rule, id., which defendant did on January
17, 2014. 2 On January 21, 2014, the Court ordered defendant to supplement its motion “with the
authority that establishes that either dismissal under Rule 12(b)(6) or summary judgment under
Rule 56” would be appropriate in this case. Minute Order of Jan. 21, 2014. Defendant
responded on January 31, 2014. Def.’s Supplemental Mem. in Supp. of Mot. to Dismiss [Dkt.
# 18] (“Def.’s Supp. Mem.”). Plaintiff responded to defendant’s motion to dismiss on February
10, 2014, Pl.’s Opp. to Defs.’ Mot to Dismiss [Dkt. # 19] (“Pl.’s Opp.”), and defendant filed a
reply on February 19, 2014, [Dkt. # 20].
DISCUSSION
I. Plaintiff’s Response to the Court’s Order to Show Cause
In her response to the order to show cause, plaintiff recites most of the chronology above.
Pl.’s Resp. at 1–2. She cites the provision in the Dispute Resolution Policy that granted her
2 The Court also informed plaintiff that if she wished to file an opposition to defendant’s
motion to dismiss with the assistance of counsel, she had to be represented by counsel authorized
to practice law in this Court. Order of Jan. 9, 2014 at 5–6. To date, no attorney has entered an
appearance or moved for admission pro hac vice on behalf of plaintiff.
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thirty days to reject the award and argues that therefore, the arbitration was non-binding. Id. at 3.
But she does not address the fact that the rules also clearly call for the award to become binding
if it is not rejected within the specified timeframe.
It is clear from the record before the Court – in particular, the Consent Status Report
dated September 30, 2013 – that plaintiff and her counsel knew that she had thirty days to reject
the decision before it became final. The time period was contractual, and plaintiff cites no
authority that would indicate that the Court had any power to alter or extend it. More important,
in the Consent Status Report, plaintiff did not ask the Court to extend it, and in its ruling, the
Court did not purport to do so. It simply stated that “in light of the parties’ joint status report” –
which clearly informed the Court of the deadline – the parties should report back in sixty days as
to what had transpired. Minute Order of Oct. 2, 2013.
Furthermore, the representations in the Consent Status Report comport with the express
terms of the Dispute Resolution Policy. See Ex. 1 to Consent Status Report of Dec. 2, 2013 ¶ 14
[Dkt. # 13-1] (“Dispute Resolution Policy”) (“The employee may, within 30 calendar days of the
date of issuance of the Award, reject it, in its entirety, by sending a completed ‘Rejection of
Arbitration Award’ form to JAMS and [Compliance and Ethics at Fannie Mae] . . . . If the
employee does not reject the Award during the 30-day period, the Award becomes binding on
both the Company and the employee, and the employee may not bring suit against Fannie
Mae . . . .”) (emphasis in original); see also Attach. C to Pl.’s Resp. (“Rejection of Arbitration
Award Form”) [Dkt. # 14-4] (“To reject an arbitration decision (‘Award’) under Fannie Mae’s
Dispute Resolution Policy, you (or your attorney or representative, if any) must complete and
send this form, within 30 calendar days after the Award is issued, to [JAMS/ENDISPUTE and
Compliance and Ethics, Fannie Mae]”).
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In the face of this clear language, which plaintiff acknowledges constitutes an
enforceable contract, see Pl.’s Resp. at 5, plaintiff argues that she did in fact put Fannie Mae on
notice of her intention to reject the award even if she did not submit the formal rejection form to
JAMS as required. Id. at 3–5. Therefore, she states, she substantially performed her contractual
obligations. Id. at 7–8. But even if plaintiff correctly describes the doctrine of substantial
performance, she has not provided the Court with the evidence from which it could find that she
performed her obligations under the contract with only trivial or minor omissions. The fact is,
plaintiff did not reject the award in any manner within thirty calendar days of the decision, and
the emails attached to plaintiff’s submission do nothing of the sort. See Attach. A to Pl.’s Resp.
[Dkt. # 14-2]; Attach. B to Pl.’s Resp. [Dkt. # 14-3].
Attachment A to plaintiff’s Response to the Order to Show Cause reflects that on
Monday, September 23, 2013, arbitration counsel for plaintiff congratulated counsel for
defendant for prevailing in the arbitration and stated: “My calendar shows that the federal court
status report is due on September 27th. If you are willing to once again file it, I suggest that we
request 30 days for each side to file a brief as to effect of the arbitration award the pending Title
VII claim. Let me know if you agree.” Attach. A to Pl.’s Resp. at 1. No further communication
from that day has been provided, but ultimately, that was not what the parties requested in their
September 30 status report: they simply advised the Court of the thirty-day rejection period and
asked for another sixty days. Consent Status Report of Sept. 30, 2013 ¶¶ 6–7.
The next set of emails with which the Court has been provided is from the date the next
status report was due: December 2, 2013. Attach. B to Pl.’s Resp. at 1–3. At that point, plaintiff
appears to have surprised defense counsel by taking the position that she still had the option to
pursue her case in court. See id. at 1–2. So there is no evidence that plaintiff “substantially”
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performed her contractual obligation to reject the award within thirty days, and this doctrine
appears to have no applicability to the facts.
Since plaintiff has failed to supply any grounds for why the arbitration award is not
binding under the terms of the Fannie Mae Dispute Resolution Policy to which plaintiff agreed to
be bound, the Court concludes that the award is binding on the plaintiff.
II. Defendant’s Motion to Dismiss
Defendant urges the Court to dismiss this case under Rule 12(b)(6), Rule 56, or the
provision of the Federal Arbitration Act governing final awards, 9 U.S.C. § 9. Def.’s Mot. to
Dismiss at 1; Def.’s Supp. Mem. at 3. The Court specifically directed the defendant to provide it
with the authority that permits it to enter judgment on any of these grounds, see Minute Order of
Jan. 21, 2014, and defendant has not been very helpful in that regard. But plaintiff has not
provided any authority for her contention that her claim should not be dismissed. Rather, she
appears to argue – again without legal authority – that she should be excused from her failure to
timely object to the Final Award because that failure was the fault of her arbitration counsel. See
Pl.’s Opp. ¶¶ 13–24; see also Ex. 1 to Pl.’s Opp. at 1 (email dated September 23, 2013, reflecting
plaintiff’s statement to arbitration counsel that she wished to “proceed to Federal Court”); id. at 3
(chain of emails dated October 2, 2013, reflecting plaintiff’s inquiry to arbitration counsel as to
whether she needed to file the rejection notice herself, and attorney Stephani Ayers’s response
that she “believe[d]” attorney Thad Guyer would “handle” it); id. at 5 (email dated December 20,
2013, reflecting this statement by attorney Guyer: “Now I wish we would have filed that little
rejection form within the 30 days to avoid all this work.”).
Regardless of who bears the responsibility for the failure to act, the fact is that the
plaintiff and her counsel were clearly aware of and bound by the terms of the Dispute Resolution
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Policy, and neither plaintiff nor her counsel took the steps necessary to reject the award within
the appropriate time. Thus, the Court finds that plaintiff is bound by the express terms of the
Dispute Resolution Policy and that the principle of res judicata requires dismissal of this case
under Rule 12(b)(6).
A. Plaintiff is bound by the Dispute Resolution Policy.
The Fannie Mae Dispute Resolution Policy states: “This Policy is an agreement to
arbitrate pursuant to the [Federal Arbitration Act (“FAA”)]. The Policy will, in all respects, be
interpreted, enforced, and governed under the FAA.” Ex. 2 to Def.’s Mot. to Dismiss at 6 [Dkt.
# 17-2]. “The ‘central purpose’ of the FAA is ‘to ensure that private agreements to arbitrate are
enforced according to their terms.’” Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 458 (2003),
quoting Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 53–54 (1995). To that end,
the FAA provides that
[a] written provision in any . . . contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of such
contract . . . shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2.
A “written provision” of the Dispute Resolution Policy provided that plaintiff could,
“within 30 calendar days of the date of issuance of the [Final] Award, reject [the Award], in its
entirety, by sending a completed ‘Rejection of Arbitration Award’ form to JAMS and the [Office
of Corporate Justice].” Ex. 2 to Def.’s Mot. to Dismiss at 5 (emphasis in original). Plaintiff
failed to reject the Award within the thirty-day window. Although plaintiff’s failure may turn
out to be attributable to her arbitration counsel’s error, that does not constitute a ground “at law
or in equity for the revocation of any contract” – the problem lies not with the agreement itself,
but rather with one of the parties. And as plaintiff identifies no other basis that would justify the
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revocation of the arbitration agreement, the Court must “enforce[] [it] according to [its] terms.”
See Bazzle, 539 U.S. at 458. Therefore, plaintiff cannot be excused from her failure to object to
the Final Award before the contractual deadline.
B. Res judicata bars the Court from further considering this case.
It is a “settled principle that ‘[t]he decisions of binding arbitration proceedings are final
decisions on the merits for purposes of res judicata.’” Camp v. Kollen, 567 F. Supp. 2d 170, 173
n.6 (D.D.C. 2008), quoting Century Int'l Arms, Ltd. v. Fed. State Unitary Enter. State Corp.
'Rosvoorouzheinie', 172 F. Supp. 2d 79, 95 (D.D.C. 2001). Defendants have not raised this
argument themselves, but “[b]ecause 'res judicata belongs to courts as well as to litigants,' a court
may invoke res judicata sua sponte.” Amore ex rel. Amore v. Accor, S.A., 484 F. Supp. 2d 124,
129 (D.D.C. 2007), quoting Stanton v. D.C. Court of Appeals, 127 F.3d 72, 77 (D.C. Cir. 1997).
It is appropriate to dismiss a case barred by res judicata under Rule 12(b)(6). See, e.g., Nader v.
Democratic Nat’l Comm., 590 F. Supp. 2d 164, 169 (D.D.C. 2008), citing Stanton, 126 F.3d at
76–77; Hemphill v. Kimberly-Clark Corp., 530 F. Supp. 2d 108, 111 (D.D.C. 2008).
Because the Final Award of the arbitrator in this case is binding on plaintiff, res judicata
applies, and the Court will dismiss this case under Rule 12(b)(6).
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