Opinion
CIVIL 3:15-CV-2076
11-15-2023
ABDUL A. JALUDI, Plaintiff, v. CITIGROUP, et. al, Defendant.
Mannion, Judge
REPORT AND RECOMMENDATION
Martin C. Carlson, United States Magistrate Judge
I. Factual Background
Like a phoenix rising from the ashes, this case has resurfaced in this Court, after nearly eight years of litigation, for us to consider the plaintiff's request to reopen proceedings on his RICO claims, which were previously dismissed and ordered resolved through binding arbitration. The plaintiff, Abdul Jaludi, a Citigroup employee for 26 years, originally filed this lawsuit against his former employer in 2015 alleging they violated the Sarbanes-Oxley Act of 2002 (SOX) and the civil enforcement provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO) by terminating him in retaliation for making ethical violation complaints against them to its officers and regulatory agencies. (Doc. 1). The Court found that the defendant's Employment Arbitration Policies required the plaintiff to resolve his SOX and RICO claims through binding arbitration and dismissed the case. (Docs. 40, 41). The court of appeals later reversed and remanded only with regard to the SOX claim, finding it was not subject to the arbitration agreement, (Doc. 46-1), however the SOX claim was later dismissed for failure to state a claim upon which relief could be granted. (Doc. 71). After the court of appeals affirmed the dismissal of the plaintiff's SOX claim, (Doc. 75), it appeared the only path forward for the plaintiff was to proceed to arbitration on his RICO claims against the defendant. However, the plaintiff never initiated such arbitration proceedings and instead, more than four years after the court of appeals affirmed this Court's order to arbitrate his RICO claims, the plaintiff has returned to the district court asking that these same claims be reopened because the defendants have waived their right to arbitration.
This motion is fully briefed and is ripe for disposition. (Docs. 77-1, 81). For the reasons set forth below, we recommend the plaintiff's motion to reopen this case be denied.
II. Discussion
A. Jaludi's Motion to Reopen is Untimely under FRCP 60.
Rule 60 of the Federal Rules of Civil Procedure applies to motions to re-open prior federal court judgments and provides, in part, as follows:
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons;
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
(c) Timing and Effect of the Motion.
(1) Timing. A motion under Rule 60(b) must be made within a reasonable time-and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding.Fed.R.Civ.P., Rule 60(b) and (c).
As the text of this rule implies, decisions regarding whether to re-open cases under Rule 60, rest “within the discretion of the trial court [although] [i]t is the trial judge's duty to construe the rule liberally in order to work substantial justice between the parties.” Home Box Office, Inc. v. Spectrum Electronics, Inc., 100 F.R.D. 379, 382 (E.D.Pa. 1983). In exercising this discretion, however, “the court must balance the ends of justice on the one hand, ..., and the public interest in the finality of judgments on the other.” Aetna Cas. & Sur. Co. v. Home Ins. Co., 882 F.Supp. 1355, 1356 (S.D.N.Y.1995).
Because one of the cardinal considerations in assessing a Rule 60 motion is the public interest in the finality of judgments, Rule 60 motions must be made in a timely fashion. As the Rule itself states: “A motion under Rule 60(b) must be made within a reasonable time-and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding.” Fed.R.Civ.P., Rule 60(c).
Here, it is entirely unclear what the legal basis of Jaludi's Rule 60(b) motion may be although, liberally construed, it seems that Jaludi seeks to re-open this case under the catch-all provision of Rule 60(b), which permits relief on “any other reason that justifies relief.” Unlike other Rule 60(b) motions, motions brought pursuant to Rule 60(b)(6) are not subject to a strict 1-year limitations period. However, “[a] motion under the ‘catchall' provision contained in Rule 60(b)(6) also must be made ‘within a reasonable time.' Relief under Rule 60(b)(6) requires a showing of ‘extraordinary circumstances justifying the reopening of a final judgment' ” Arrieta v. Battaglia, 461 F.3d 861, 865 (7th Cir.2006) (citations omitted). Further:
What constitutes a “reasonable time” depends on the circumstances of each case. Delzona Corp. v. Sacks, 265 F.2d 157, 159 (3d Cir.1959). A court considers many factors,
including finality, the reason for delay, the practical ability for the litigant to learn of the grounds relied upon earlier, and potential prejudice to other parties. Kagan v. Caterpillar Tractor Co., 795 F.2d 601, 610 (7th Cir.1986); Ashford v. Steuart, 657 F.2d 1053, 1055 (9th Cir.1981). What constitutes a “reasonable time” also depends on which Rule 60(b) clause a claimant is trying to avail. We have noted that relief under Rule 60(b)(6) is extraordinary because it can be given for “any other reason justifying relief” and is not subject to an explicit time limit. Coltec Indus. Inc. v. Hobgood, 280 F.3d 262, 273 (3d Cir.2002). Therefore, a claimant must establish exceptional circumstances justifying the delay for filing under Rule 60(b)(6).In re Diet Drugs (Phentermine/Fenfluramine/Dexfenfluramine) Prod. Liab. Litig., 383 Fed.Appx. 242, 246 (3d Cir. 2010).
One aspect of this showing of “exceptional circumstances justifying the delay for filing under Rule 60(b)(6),” is that a movant under Rule 60(b)(6) must show that he “has exercised due diligence to ascertain whether the judgment has been entered or has given sufficient reason for the lack of such diligence.” Spika v. Vill. of Lombard, Ill., 763 F.2d 282, 285 (7th Cir. 1985). Here we cannot find that Jaludi has acted with due diligence. Jaludi's motion seeks to reopen the proceedings on his RICO claim that was dismissed by this Court over seven years ago on September 8th, 2016. In fact, Jaludi had an alternative avenue to pursue relief on his RICO claims through arbitration, as ordered by the Court. Instead, Jaludi continued to litigate his claims in federal court, and never availed himself of the arbitration process to which he was bound and ordered to pursue. Now more than seven years after his RICO claim was dismissed, having exhausted his appeals, Jaludi returns to federal court for another bite at the same apple without any justification for why he should be entitled to such extraordinary relief. In fact, it appears Jaludi's motion is couched upon his failure to understand the orders of this Court and the terms of the contract that required him to litigate his complaint through arbitration. Jaludi persists in claiming this confusion notwithstanding the repeated efforts of this court and the court of appeals to provide him with clarity and finality. This is not an exceptional circumstance that would provide grounds for extraordinary relief under Rule 60(b) and thus his motion should be denied.
B. Jaludi's Motion to Reopen is Meritless.
Further, setting aside the untimeliness of Jaludi's motion to reopen, it should also be denied on the merits. The plaintiff argues that, because the defendants failed to initiate arbitration in this case, they have waived the arbitration requirement in their contract. Essentially, he argues that he was waiting to move to reopen this case until a sufficient time had passed to demonstrate the defendant's waiver of arbitration. But the reality is that the plaintiff, as the party seeking relief in this case, was obligated to pursue his claims through arbitration, as ordered by the court, and his failure to litigate his claims in this manner does not entitle him to now again attempt to pursue relief in this forum.
The plaintiff argues that by failing to initiate arbitration within thirty days of an arbitration request, the defendant has waived its right to arbitrate his claims under Morgan v. Sundance, Inc. 596 U.S. 411 (2022). In Sundance, the Supreme Court analyzed waiver of the right to arbitrate using the contractual standard of waiver, the relinquishment of a known right, and held that an employer, by litigating too long, waived its right to stay litigation or compel arbitration under the FAA. (Id.) But here, the defendant-employer, Citigroup, cannot be said to have relinquished a known right after it moved to compel arbitration in this case in January of 2016, (Doc. 15), and the parties were ordered to arbitrate by this court and the court of appeals. (Docs. 33, 41, 47).
Thus, it appears there is some confusion on the part of the plaintiff as to the parties' post-dismissal obligations in initiating the court-ordered arbitration and exactly how it is initiated. The plaintiff's motion explains that he thought Citigroup was waiting for the appeal on the SOX claim to be resolved before commencing arbitration. He references the arbitration agreement that states Citigroup has thirty days from receipt of a written demand for arbitration to file it with the appropriate office of the AAA, and explains that he, “gave Citigroup six additional months beyond the 30-day time limit they both agreed to in the arbitration agreement.” (Doc. 77-1, at 13). However, Jaludi never sent a written demand for arbitration to the Director of Employee Relations for Citigroup. Thus, it appears either Jaludi erroneously believed the thirty-day deadline commenced automatically with the conclusion of his second appeal upholding the dismissal of his SOX claim, or that Citigroup had an affirmative obligation to commence arbitration on its own, without his demand.
But the arbitration process set forth in the agreement is straightforward and states:
To initiate arbitration you must send a written demand for arbitration to the Director of Employee Relations for Citi.... Within 30 calendar days of receiving such demand, or as soon as possible thereafter, Citi shall file the demand with the appropriate office of the AAA or FINRA.(Doc. 81-2, at 66-67). The defendant avers that the plaintiff has never sent a written demand for arbitration to the Director of Employee Relations for Citigroup, (Doc. 81, at 16), and the plaintiff has not demonstrated that he made such written demand. Further, nothing in the contract or arbitration rules indicates that arbitration is somehow automatically initiated at the conclusion of litigation.
To the extent that the plaintiff asserts that Citigroup was obligated to initiate arbitration on its own, nothing in the parties' contract, nor the rules governing arbitration, nor the court's order indicate that the defendant had an obligation to do so. Citigroup's employee handbook instructs that, “[a]rbitration shall be conducted . . . under the auspices of . . . the American Arbitration Association (“AAA”).” (Doc. 81-2, at 65). The AAA Employment Arbitration Rules and Mediation Procedures lay out that arbitration shall be initiated either by a joint request by the parties, or by the “initiating party” or “claimant” filing a written notice of its intention to arbitrate at any office of the AAA. (Id. at 105). Thus, a liberal reading of both the parties' contract and the rules governing arbitration shows that the complaining party, here, Jaludi, should initiate arbitration. This fits with a common sense understanding of how disputes are resolved both in and out of court; it is the obligation of the complainant to affirmatively notify the mediator of their grievance and seek a resolution.
Moreover, other courts have held similarly that, where the plain language of the arbitration agreement indicates that either party may initiate arbitration, there is no obligation on the defendants to initiate the arbitration process and, in fact, the AAA Rules tend to indicate it is the party initiating the claim that bears the burden of initiating arbitration and paying the administrative fees. See e.g. Nation v. Lydmar Revocable Tr., 251 So.3d 784, 789 (Ala. 2017) (“Nothing in the arbitration provisions requires the defendants to initiate the arbitration process.... [t]herefore, under the plain language of the arbitration provisions, we cannot conclude that [they] require the defendants to initiate the arbitration process.”); see also Integrserv LLC v. EQT Prod. Co., 2021 WL 1816941, at *5 (W.D. Pa. May 05, 2021) (holding the AAA Rules place the burden of paying filing fees to initiate arbitration on the party or parties making a claim or counterclaim); Briggs v. Nationstar Mortg., LLC, No. 3:15-CV-24, 2016 WL 2644902, at *2 (N.D. W.Va. May 9, 2016) (holding same).
Jaludi was ordered to pursue his RICO claims against Citigroup using the arbitration process that was laid out in his employment contract. Yet, over eight years since he was ordered to do so, Jaludi has still failed to follow the prescribed process for litigating this complaint. This does not entitle him to now return to federal court to seek relief. Therefore, his motion to reopen proceedings should be denied.
III. Recommendation
Accordingly, for the foregoing reasons, IT IS RECOMMENDED that the plaintiff's Motion to Return RICO Claims to District Court, (Doc. 77), be DENIED.
The Parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses, or recommit the matter to the magistrate judge with instructions.