291 F. Supp. 3d 294
E.D.N.Y.2018Background
- Plaintiffs are former Raymours employees who signed an Employee Arbitration Program (EAP) covering FLSA and state wage/hour claims.
- The EAP required individual arbitration, contained a class/collective-action waiver, and set a contractual limitations period of 180 days (270 days in some circumstances) to file a claim with the Administrator.
- Plaintiffs brought a putative FLSA collective/class action in federal court; Raymours moved to compel individual arbitration, strike class allegations, and dismiss.
- Plaintiffs concede they agreed to arbitrate but contend the EAP’s 180-day limitations provision is unenforceable as to FLSA claims and should be severed.
- Raymours argued the arbitrator should decide enforceability and that the shortened limitations period is valid; the EAP expressly reserved questions of validity/enforceability for courts.
- The court compelled individual arbitration, severed the 180-day limitations clause as unenforceable against FLSA claims, struck class allegations, and stayed the action pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides enforceability of the EAP’s limitations clause | Court should decide; clause unenforceable | Arbitrator should decide procedural arbitrability | Court decides; EAP itself reserves enforceability questions for courts, so court decides |
| Enforceability of 180-day limitations period for FLSA claims | 180-day clause shortens statutory remedies and is unenforceable | Clause is enforceable (and arbitrator should decide) | Unenforceable as contrary to FLSA remedial scheme and effective-vindication doctrine; severed from EAP |
| Class/collective-action waiver | (Plaintiffs did not contest waiver) | Enforce waiver to require individual arbitration | Enforceable under Second Circuit precedent; class allegations struck |
| Remedy and case posture after severance | Proceed in court or arbitration? | Dismiss or compel arbitration | Case stayed pending individual arbitration after severing the limitations clause |
Key Cases Cited
- Howsam v. Dean Witter Reynolds, 537 U.S. 79 (2002) (procedural arbitrability issues are for arbitrators)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (2010) (courts decide formation/enforceability unless agreement commits such issues to arbitrator)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (court must decide challenges to the validity of the arbitration agreement itself)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (Federal Arbitration Act principles governing arbitration agreements)
- Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (2013) (effective-vindication exception applies to prospective waivers of statutory rights)
- Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728 (1981) (FLSA rights to minimum wage and overtime are nonwaivable)
- Sutherland v. Ernst & Young, 726 F.3d 290 (2d Cir. 2013) (FLSA does not preclude waiver of collective action claims in arbitration)
- Boaz v. FedEx Customer Servs., Inc., 725 F.3d 603 (6th Cir. 2013) (contractual short limitations period invalid as waiver of FLSA claim)