Update. I dropped my bike off at the dealer about two hours ago where I demonstrated the issues. Within an hour, they called back where after troubleshooting, they got in touch with Shimano who was aware of the problem. They said it was an issue with or in the master cylinder (I can't remember which one he said) and it can not be serviced so they are sending out a new brake lever. Should be here next week. The mechanic bled some air out of the rear brake and now the lever doesn't travel all the way to the tape anymore. Glad this showed up under warranty and I appreciate all of your insight.