793 F. Supp. 2d 611
E.D.N.Y2011Background
- Plaintiffs Guida, Esposito, McGorman, and Ramirez filed a putative class action under the FLSA and New York wage laws against Home Savings of America, Inc., David Cirocco, and Gregory Caputo.
- All plaintiffs signed an Alternative Dispute Resolution Agreement and a Compensation Agreement with Home Savings, which referenced AAA rules and arbitration for unresolved employment disputes.
- The ADRA lacks an explicit clause on class arbitration, though the AAA rules cited by the agreements include class arbitration procedures.
- Defendant moved to compel arbitration and dismiss; plaintiffs agreed to arbitrate but argued the arbitrator should decide whether arbitration could proceed on a class basis.
- The court held arbitration must proceed and that the question of class-arbitration eligibility is an issue for the arbitrator in the first instance, with the court staying the case pending arbitration.
- The court discussed relevant authorities (Bazzle, Stolt-Nielsen, Concepcion) to determine who decides class arbitration when the agreement is silent or ambiguous.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides class arbitration eligibility | Guida argues arbitrator decides class issue | Home Savings argues court decides arbitrability | Arbitrator decides class-arbitration eligibility |
| Stay or dismiss pending arbitration | Stay appropriate to permit arbitration | Stay or dismissal permissible; dismissal discouraged to avoid delay | Stay the action pending arbitration |
Key Cases Cited
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (gateway arbitrability questions for courts unless contract clearly assigns to arbitrator)
- Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (U.S. 2003) (class arbitration question is procedural; arbitrator can decide under contract interpretation)
- Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 130 S. Ct. 1758 (S. Ct. 2010) (no majority decision on who decides class arbitration; addressed contract silence and arbitrator role)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (S. Ct. 2011) (class arbitration not favored; concerns procedural safeguards in arbitration)
- Vilches v. The Travelers Companies, Inc., 413 F. App'x 487 (3d Cir. 2011) (contractual silence on class arbitration; arbitrator decides whether contract was silent)