Patterson v. Raymours Furniture Co.
96 F. Supp. 3d 71
S.D.N.Y.2015Background
- Plaintiff worked as a Sales Associate for Raymour & Flanigan from 2005 until her termination in 2014 and sued for FLSA and NYLL overtime violations, alleging misclassification of Sales Associates as exempt.
- Employer distributed successive versions of an Associate Handbook; plaintiff signed acknowledgments and electronically confirmed review of the 2012 and 2013 revisions.
- The 2012 Handbook introduced an Employment Arbitration Program (EAP); the 2013 Handbook reiterated the EAP and stated that continued employment constituted acceptance of handbook policies.
- The EAP required arbitration of "employment-related or compensation-related" claims (including FLSA/ state wage claims) and contained a class/collective-action waiver.
- Defendant moved to compel arbitration under the FAA; the court considered whether a binding arbitration agreement existed, whether the claims fell within its scope, and whether the class-waiver was enforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of agreement to arbitrate | No binding arbitration agreement because handbook disclaimers negate contractual obligations | Employee acknowledged and continued employment after notice of EAP; acknowledgments create a binding agreement | Court: Agreement exists—employee review and continued work bound her to EAP despite handbook disclaimers |
| Scope—are FLSA/NYLL claims covered | N/A (disputes existence/coverage) | EAP covers any employment- or compensation-related claims, expressly including FLSA and state wage laws | Court: Claims fall within EAP scope and are arbitrable |
| Whether FAA preempts or allows arbitration of statutory collective remedies | NLRA and FLSA rights preserve collective action; plaintiff invokes NLRA-protected concerted activity | FAA and Supreme Court/Second Circuit precedent require enforcement of arbitration terms, including class waivers | Court: FAA governs; Congress did not make FLSA nonarbitrable here; arbitration enforceable |
| Enforceability of class/collective-action waiver (conflict with NLRA) | Class waiver invalid because NLRA protects concerted activity and NLRB decisions (D.R. Horton/Murphy Oil) prohibit such waivers as a condition of employment | Class waiver is contractual term enforceable under FAA; Second Circuit precedent rejects NLRB's D.R. Horton approach | Court: Class/collective-action waiver is enforceable; NLRA does not invalidate the EAP waiver |
Key Cases Cited
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (ensures judicial enforcement of arbitration agreements)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (federal policy favoring arbitration)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (state contract law governs whether parties agreed to arbitrate)
- Sutherland v. Ernst & Young LLP, 726 F.3d 290 (2d Cir.) (FLSA collective-action provision does not bar enforcement of arbitration class waivers)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (Supreme Court) (FAA requires enforcement of arbitration agreements according to their terms, undermining rules that prohibit class waivers)
- CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (Supreme Court) (courts must enforce arbitration agreements according to their terms)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (procedural questions about arbitration generally for arbitrator unless contract reserves them for court)