Velez v. Perrin Holden & Davenport Capital Corp.
769 F. Supp. 2d 445
S.D.N.Y.2011Background
- Velez sues on behalf of himself and others similarly situated for FLSA and New York Labor Law violations against Perrin Holden & Davenport Capital Corp. (PHD Capital).
- Defendants are officers/owners of PHD Capital; plaintiff alleges failure to pay overtime, commissions, and timely wages.
- Plaintiff seeks to certify an FLSA collective action and a Rule 23 class action for state-law claims.
- Defendants move to dismiss or, alternatively, compel arbitration under the FAA based on an employment agreement requiring FINRA arbitration.
- FINRA Rule 13204 prohibits arbitration of class action claims; issue is whether FLSA collective actions fall within that rule’s scope.
- Court concludes FLSA collective actions are arbitrable under the parties’ FINRA-based arbitration agreement; class action claims remain non-arbitrable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FINRA Rule 13204 bar arbitration of FLSA collective actions? | Velez urges collective actions fall within class-action ban. | PHD Capital argues collective actions are distinct from class actions and thus arbitrable. | No; FLSA collective actions are arbitrable. |
| Do the parties' FINRA arbitration provisions cover FLSA claims? | Agreement governs disputes under the employment contract, including FLSA. | Arbitration clause is broad enough to cover FLSA claims. | Yes; FLSA claims fall within the scope of arbitration. |
| Is there any congressional intent precluding arbitration of FLSA claims under the FAA? | Federal policy favors arbitration for statutory claims. | No specific preclusion identified by Congress. | No congressional preclusion; arbitration is permissible. |
Key Cases Cited
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Supreme Court 1983) (strong federal policy favoring arbitration where agreement exists)
- Guyden v. Aetna, Inc., 544 F.3d 376 (2d Cir. 2008) (factors for staying action pending arbitration under FAA)
- Coheleach v. Bear, Stearns & Co., 440 F. Supp. 2d 338 (S.D.N.Y. 2006) (arbitration of statutory claims under FINRA rules)