Guida v. Home Sav. of Am. Inc.

• Decision Date: 28 June 2011
• Docket Number: No. 11–CV–00009 JFB ARL.,11–CV–00009 JFB ARL.
• Citation: 793 F.Supp.2d 611
• Court: U.S. District Court — Eastern District of New York
• Parties: Joseph GUIDA, Plaintiff,v.HOME SAVINGS OF AMERICA, INC., David Cirocco, & Gregory Caputo, Defendants.

793 F.Supp.2d 611

Joseph GUIDA, Plaintiff,

v.HOME SAVINGS OF AMERICA, INC., David Cirocco, & Gregory Caputo, Defendants.

No. 11–CV–00009 JFB ARL.

United States District Court, E.D. New York.

June 28, 2011.

Erik Harald Langeland, Esq., Erik H. Langeland, P.C., New York, NY, for Plaintiffs.Linda T. Prestegaard, Phillips Lytle LLP, Rochester, NY, Defendant Home Savings.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Plaintiffs Joseph Guida (“Guida”), Michael Esposito (“Esposito”), Daniel McGorman (“McGorman”), and Jahn Ramirez (“Ramirez”) (collectively “plaintiffs”), bring this putative class action on behalf of themselves, and on behalf of individuals similarly situated, against Home Savings of America, Inc. (“Home Savings” or “defendant”), David Cirocco, and Gregory Caputo (collectively “defendants”), asserting claims under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., and related New York state wage and labor laws.¹

Home Savings now moves to dismiss plaintiffs' complaint, and compel arbitration on an individual basis pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq. Plaintiffs agree to arbitrate the dispute, but argue that the arbitrator should decide whether the arbitration can proceed on a class basis. For the reasons set forth below, the Court grants in part and denies in part defendant's motion to compel arbitration. Specifically, the Court concludes that the parties must arbitrate this dispute, but that the determination of whether or not the arbitration should proceed on a class basis is for the arbitrator to make in the first instance. As a result, the Court stays this action pending the resolution of the arbitration proceeding.

I. Background

A. The Underlying Facts

The following facts are taken from the Complaint (“Compl.”), the Declaration of Greg Reniere (“Reniere Decl.”) filed in support of defendant's motion, and the exhibits attached thereto.²

Plaintiffs are former employees of Home Savings, a provider of mortgage banking services. (Compl. ¶¶ 4–6; Reniere Decl. ¶¶ 2–9.) All of the plaintiffs signed an Alternative Dispute Resolution Agreement as well as a Compensation Agreement. (Reniere Decl. ¶¶ 2–9.) The terms of the Alternative Dispute Resolution Agreement are identical for all of the plaintiffs. The following are relevant portions from the Alternative Dispute Resolution Agreements:

I understand that Home Savings of America makes available arbitration for resolution of employment disputes that are not otherwise resolved by internal policies or procedures.

I agree that if I am unable to resolve any dispute through the internal policies and procedures of Home Savings ... I will arbitrate ... any legal claim that I might have against Home Savings ... or its employees, in connection with my employment or termination of employment ... whether arising out of issues or matters occurring before the date of this Agreement or after such date.

I agree to abide by and accept the final decisions of the arbitration panel as ultimate resolution of any disputes or issues for any and all events that arise out of employment or termination of employment.

I agree that the Employee Dispute Resolution Rules of the American Arbitration Association will apply to any resolution of any such matters. In exchange for the benefits of arbitration, I agree that the arbitrator will only have the power to grant those remedies available in court, under applicable law.

(Reniere Decl. Ex. A (signed by Guida), Ex. C (signed by Esposito), Ex. E. (signed by McGorman), Ex. G (signed by Ramirez).)

It is undisputed by the parties that the Alternative Dispute Resolution Agreements do not explicitly mention class arbitration. Defendant does not contest that the Employee Dispute Resolution Rules of the American Arbitration Association include rules relating to class arbitration.

B. Procedural History

Plaintiffs filed the complaint on January 3, 2011. Defendant Home Savings filed a motion to compel arbitration and dismiss the complaint on March 15, 2011. On March 29, 2011, the Court set a pre-motion telephone conference to address defendant's filing of the motion. The conference was held on April 13, 2011. Plaintiffs filed their response to defendant's motion on May 17, 2011. Defendant filed its reply on May 27, 2011. Oral argument took place on June 16, 2011. Defendant submitted a letter to the Court dated June 22, 2011, to address issues raised at oral argument. On June 23, 2011, the Court received plaintiffs' letter in response. The Court has fully considered the submissions and arguments of the parties.

II. Standard of Review

The Court must evaluate a motion to compel arbitration, pursuant to the FAA, under a standard similar to the standard for a summary judgment motion. See Bensadoun v. Jobe–Riat, 316 F.3d 171, 175 (2d Cir.2003) (citing Par–Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n. 9 (3d Cir.1980)); Doctor's Assocs. v. Distajo, 944 F.Supp. 1010, 1014 (D.Conn.1996), aff'd, 107 F.3d 126 (2d Cir.1997); see also Mazza Consulting Grp., Inc. v. Canam Steel Corp., No. 08–CV–38 (NGG), 2008 WL 1809313, at *1, 2008 U.S. Dist. LEXIS 32670, at *3 (E.D.N.Y. Apr. 21, 2008). “When such a motion is opposed on the ground that no agreement to arbitrate has been made between the parties, a district court should give the opposing party the benefit of all reasonable doubts and inferences that may arise.” Mazza Consulting Grp., Inc., 2008 WL 1809313, at *1, 2008 U.S. Dist. LEXIS 32670, at *3. “If there is an issue of fact as to the making of the agreement for arbitration, then a trial is necessary.” Bensadoun, 316 F.3d at 175 (citing 9 U.S.C. § 4).

III. Discussion

The plaintiffs and Home Savings agree that there is a valid agreement to arbitrate and that it applies to plaintiffs' FLSA and state law claims. Thus, the parties agree that this Court should compel arbitration in this case. The gravamen of the dispute is whether or not the arbitration can proceed on a class basis and whether it is for this Court or the arbitrator to decide the issue. As set forth below, the Court concludes that this dispute should be arbitrated, but that it is for the arbitrator to decide in the first instance whether or not the arbitration can proceed on a class basis. Furthermore, the Court stays this action pending the resolution of the arbitration.

A. Arbitration on Class Basis

For the reasons set forth below, the Court concludes that where, as here, there is disagreement over whether the agreement to arbitrate permits class arbitration and the agreement does not explicitly address this issue, the ability to proceed on a class basis is a procedural question involving contract interpretation and is therefore for the arbitrator to decide in the first instance.

1. Legal Standard

“The question whether the parties have submitted a particular dispute to arbitration, i.e., the question of arbitrability, is an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (quotation marks omitted). What is deemed a question of arbitrability has been limited to

the kind of narrow circumstance where contracting parties would likely have expected a court to have decided the gateway matter, where they are not likely to have thought that they had agreed that an arbitrator would do so, and, consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate.

Id. at 83–84, 123 S.Ct. 588. Disputes about whether the parties are bound by the arbitration agreement, or if a particular controversy falls under the scope of an arbitration agreement, are both the type of gateway issues that go to arbitrability and which are for courts to decide. Id. at 84, 123 S.Ct. 588. On the other hand, “procedural questions which grow out of the dispute and bear on its final disposition are presumptively not for the judge, but for an arbitrator, to decide.” Id. (emphasis in original) (quotation marks omitted). Issues of waiver, delay, “or a like defense” are the types of procedural questions that are left for the arbitrator. Id.

2. Analysis

Essentially, the parties dispute whether the ability to proceed on a class basis is more akin to a procedural question or, instead, to an issue of arbitrability. Plaintiffs assert that it is a procedural issue, relying on the Supreme Court's plurality opinion in Green Tree Financial Corporation v. Bazzle, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003). Home Savings, on the other hand, argues that Bazzle has been undermined by the Supreme Court's more recent decision in Stolt–Nielsen S.A. v. AnimalFeeds International Corporation, ––– U.S. ––––, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010), which allegedly suggests that whether or not an arbitration can proceed on a class basis is an arbitrability issue that should be decided by the courts. This Court agrees with plaintiffs. Although Bazzle is solely a plurality opinion, it is nevertheless instructive. Furthermore, many courts have continued to conclude subsequent to the Supreme Court's decision in Stolt–Nielsen, as does this Court, that the ability to proceed as a class in an arbitration proceeding is a procedural question for the arbitrator to decide.

As an initial matter, Stolt–Nielsen is consistent with Bazzle. In Bazzle, the parties “agreed to submit to the arbitrator all disputes, claims, or controversies arising from or relating to this contract or the relationships which result from this contract[,]” but disputed whether class arbitration was permitted under the agreement, which did not explicitly address the issue. 539 U.S. at 447–48, 451–52, 123 S.Ct. 2402 (emphasis in original) (quotation marks omitted). The Supreme Court concluded that “the dispute about what the arbitration contract in each case means...