Wells Fargo Advisors, L.L.C. v. Tucker
195 F. Supp. 3d 543
S.D.N.Y.2016Background
- Three former Wells Fargo financial advisors (Tucker, Dooley, Glasgold) signed broad arbitration agreements requiring submission of “any controversy or dispute” to FINRA or, if FINRA did not accept it, to the AAA.
- Respondents filed arbitration claims with FINRA and the AAA asserting putative class/collective FLSA and NYLL unpaid-overtime claims on behalf of Trainee and Apprentice-phase classes.
- FINRA prohibits class claims, so the matters proceeded before the AAA.
- Wells Fargo petitioned the SDNY under the FAA to dismiss or stay the AAA proceedings and to compel individual arbitration (i.e., to preclude class/collective arbitration).
- The principal contested questions were (1) who decides whether class/collective arbitration is available (court or arbitrator), and (2) whether this case should be dismissed or stayed as duplicative of a previously filed Williams action.
- The Court denied Wells Fargo’s petition, ruling the arbitrator should decide availability of class/collective arbitration and that the first-filed rule did not compel dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides availability of class/collective arbitration | Arbitrator should decide under broad arbitration clause and AAA rules | Court should decide as a gateway question of arbitrability | Held for Respondents: arbitrator must decide availability of class/collective arbitration in the first instance |
| Whether agreement allows class/collective arbitration | Agreement’s broad language and AAA incorporation permit an arbitrator to find class/collective arbitration authorized | Agreement is effectively silent or contemplates individual arbitration; Stolt‑Nielsen forbids imposing class arbitration without contractual basis | Reserved to arbitrator; Court did not compel individual arbitration now |
| First‑filed rule vs. Williams action | Respondents: Williams does not substantially overlap with claims here (different classes/claims) | Wells Fargo: Williams was earlier and should get priority | Court: first‑filed rule inapplicable because claims, classes, facts and relief are substantially different |
| Dismissal vs. stay pending arbitration | Respondents sought dismissal of court case; alternatively requested stay | Wells Fargo sought dismissal/compel individual arbitration | Court denied petition; instructed parties to notify court by a date if they seek a stay; absent request, case will be dismissed |
Key Cases Cited
- Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (Sup. Ct.) (plurality: arbitrator is well suited to decide whether parties agreed to class arbitration when clause is broad)
- Stolt‑Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (Sup. Ct.) (a party cannot be compelled to class arbitration absent contractual basis)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (Sup. Ct.) (FAA preempts state-law rules that invalidate arbitration provisions; class arbitration raises unique concerns)
- Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (Sup. Ct.) (parties may assign threshold questions about class arbitration to arbitrators; Court reserved whether class arbitration is a question of arbitrability)
- Collins & Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16 (2d Cir.) (broad arbitration clauses give rise to a presumption of arbitrability and make contract‑construction questions arbitrable)
- Cohen v. UBS Fin. Servs., Inc., 799 F.3d 174 (2d Cir.) (FINRA Rule prohibiting class arbitration does not preclude parties from choosing alternative forums)
- Katz v. Cellco P’ship, 794 F.3d 341 (2d Cir.) (district courts should stay proceedings after claims are referred to arbitration when a stay is requested)