Wells Fargo Advisors, L.L.C. v. Tucker

• Decision Date: 01 July 2016
• Docket Number: 15-CV-7722 VEC
• Citation: 195 F.Supp.3d 543
• Parties: WELLS FARGO ADVISORS, L.L.C., Petitioner, v. Reagan TUCKER, Benjamin Dooley, Marvin Glasgold, Respondents.
• Court: U.S. District Court — Southern District of New York

195 F.Supp.3d 543

WELLS FARGO ADVISORS, L.L.C., Petitioner,

v.Reagan TUCKER, Benjamin Dooley, Marvin Glasgold, Respondents.

15-CV-7722 VEC

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

Signed July 1, 2016

Ashley Jean Hale, Morgan Lewis & Bockius, LLP, Princeton, NJ, Kenneth Joseph Turnbull, Morgan, Lewis & Bockius LLP, New York, NY, for Petitioner.

Gregg I. Shavitz, Paolo Chagas Meireles, Shavitz Law Group, P.A, Boca Raton, FL, Justin Mitchell Swartz, Olivia J. Quinto, Outten & Golden, LLP, New York, NY, Paul W. Mollica, Outten & Golden LLP, Chicago, IL, for Respondents.

OPINION & ORDER

VALERIE CAPRONI, United States District Judge:

Respondents Reagan Tucker ("Tucker"), Benjamin Dooley ("Dooley") and Marvin Glasgold ("Glasgold") (collectively the "Respondents") commenced an arbitration proceeding before the American Arbitration Association ("AAA") against their former employer, Wells Fargo Advisors, L.L.C. ("Wells Fargo"), raising class-wide and collective claims for unpaid overtime. In response, pursuant to the Federal Arbitration Act, 9 U.S.C.A. § 1 et seq. ("FAA"), Wells Fargo filed a Petition to Dismiss or in the Alternative Stay the Pending Arbitration and Compel Individual Arbitration in Accordance With the Binding Arbitration Agreements ("Petition"). For the following reasons, Wells Fargo's Petition is DENIED.

BACKGROUND

I. Respondents' Arbitration Action

Respondents are former Wells Fargo financial advisors who were employed at Wells Fargo branch offices in New York and Texas between July 2011 and August 2013. Petition ¶¶ 10-12. In connection with their employment, each Respondent signed a "New Financial Advisor Training Agreement" (the "Agreement"), pursuant to which each agreed to arbitrate "any controversy or dispute" with Wells Fargo. See Declaration of Kenneth J. Turnbull in Support of Petition ("Turnbull Decl."), Exs. A-C.

Paragraph 14 of the Agreement provides in pertinent part:

you agree that any controversy or dispute, including but not limited to, claims of wrongful termination, breach of contract, discrimination, harassment, retaliation, infliction of emotional distress, tortious interference with business or contract, federal, state or local statute or ordinance and/or other theory, arising between you and Wells Fargo Advisors, shall be submitted for arbitration before FINRA. If the FINRA does not accept the controversy, dispute or claim, or any portion thereof, then the nonaccepted controversy, dispute or claim shall be submitted for arbitration before the American Arbitration Association pursuant to its Securities Arbitration Rules, effective May 1, 1993.

On July 23, 2015, Respondents initiated identical putative class actions with the Financial Industry Regulatory Authority ("FINRA") and the AAA, asserting, inter alia , claims for unpaid overtime under the Fair Labor Standards Act ("FLSA") and the New York Labor Law ("NYLL"). SeeTurnbull Decl., Exs. D, E. In their statement of claim before the AAA, Respondents allege that Wells Fargo misclassified them as exempt employees under the FLSA and NYLL and failed to pay them overtime for hours worked in excess of 40 hours per week. Trumbull Decl., Ex. E ¶¶ 3-4. Respondents seek to arbitrate their claims on a class-wide basis representing, first, a class of similarly-situated financial adviser "Trainees," id . ¶ 1-2, and second, a class of similarly-situated "Apprentice Phase" financial advisers, id.

Because Rule 13204 of the FINRA Code of Arbitration Procedure for Industry Disputes prohibits class action claims from being arbitrated by FINRA, see Memorandum in Support of the Petition to Dismiss or in the Alternative Stay the Pending Arbitration and Compel Individual Arbitration in Accordance With the Binding Arbitration Agreements ("Mem.") at 4; see also Cohen v. UBS Fin. Servs., Inc. , 799 F.3d 174, 178 (2d Cir.2015), Respondents' claims are now pending arbitration before the AAA.

DISCUSSION

I. Legal Standard

The Federal Arbitration Act "is an expression of a ‘strong federal policy favoring arbitration as an alternative means of dispute resolution.’ " Ross v. Am. Express Co. , 547 F.3d 137, 142 (2d Cir.2008) (quoting Hartford Accident & Indem. Co. v. Swiss Reinsurance Am. Corp. , 246 F.3d 219, 226 (2d Cir.2001) ). As a result "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration," Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), and courts should "construe arbitration clauses as broadly as possible," David L. Threlkeld & Co. v. Metallgesellschaft Ltd. , 923 F.2d 245, 250 (2d Cir.), cert. dismissed , 501 U.S. 1267, 112 S.Ct. 17, 115 L.Ed.2d 1094 (1991) (citation omitted). "Of course, notwithstanding the policy favoring arbitration, ‘arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.’ " Klein v. ATP Flight Sch., LLP , No. 14–CV–1522(JFB)(GRB), 2014 WL 3013294, at *4 (E.D.N.Y. July 3, 2014) (quoting AT & T Techs., Inc. v. Commc'ns Workers of Am. , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ); see also Cap Gemini Ernst & Young, U.S., L.L.C. v. Nackel , 346 F.3d 360, 364 (2d Cir.2003) (Congress enacted the FAA "to make arbitration agreements as enforceable as other contracts, but not more so ." (quoting Opals on Ice Lingerie v. Body l ines Inc. , 320 F.3d 362, 369 (2d Cir.2003) (emphasis in original)).

"[D]isputes about ‘arbitrability’.... such as ‘whether the parties are bound by a given arbitration clause,’ or ‘whether an arbitration clause in a concededly binding contract applies to a particular type of controversy’ " are presumptively "gateway" issues for the court to decide. BG Grp., PLC v. Republic of Argentina , ––– U.S. ––––, 134 S.Ct. 1198, 1206, 188 L.Ed.2d 220 (2014) (quoting Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) ). The Supreme Court has clarified, however, that such "gateway" questions arise only in:

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.

Howsam , 537 U.S. at 83–84, 123 S.Ct. 588. Furthermore, the "presumption [that gateway questions will be decided by courts] may be overcome if the parties have ‘clearly and unmistakably’ delegated to an arbitrat[or] the authority to resolve issues of arbitrability." Klein , 2014 WL 3013294, at *4 (quoting Howsam , 537 U.S. at 83, 123 S.Ct. 588 ).

As to the scope of an arbitration agreement, the court's determination generally "depends on whether the agreement is a broad agreement or a narrow one." Edwards v. Macy's Inc. , No. 14CV–8616(CM)(JLC), 2015 WL 4104718, at *10 (S.D.N.Y. June 30, 2015) (citing Mehler v. Terminix Int'l Co. , 205 F.3d 44, 49 (2d Cir.2000) ). "If the agreement is broad—that is, if it calls for arbitration of ‘any and all disputes'—there arises a presumption of arbitrability; and if the claim ‘implicates issues of contract construction or the parties' rights and obligations under it,’ the issue of contract construction is perforce arbitrable." Edwards , 2015 WL 4104718, at *10 (quoting Collins & Aikman Prods. Co. v. Bldg. Sys., Inc. , 58 F.3d 16, 23 (2d Cir.1995) ).

Here, the parties do not dispute that the arbitration clause included in Respondents' Agreements is valid and binding. Nor do the parties dispute that Respondents' underlying FLSA and NYLL claims fall squarely within the scope of the arbitration clause. The parties' dispute focuses instead upon: (1) whether, under the terms of the applicable arbitration clause, Respondents are entitled to (or precluded from) arbitrating on a collective or class-wide basis, and, (2) who, as between the Court and the arbitrator, must make that determination in the first instance.

I. The Arbitrator Should Determine Whether Respondents May Proceed on a Collective or Class-wide Basis

While the Supreme Court and Second Circuit have yet to issue binding precedent, the weight of authority among district courts in this Circuit is that the arbitrator, rather than the Court, should decide questions regarding the availability of class arbitration. See, e.g. , Rossi v. SCI Funeral Servs. of New York, Inc. , No. 15CV473(ERK)(VMS), 2016 WL 524253, at *8 (E.D.N.Y. Jan. 28, 2016) ("District courts in this circuit presented with this question have generally found that the issue of classwide arbitration is for an arbitrator to decide." (citing cases)); see also Guida v. Home Sav. of Am., Inc. , 793 F.Supp.2d 611, 615 (E.D.N.Y.2011). Although at least one court in this District has taken the opposite position, see Anwar v. Fairfield Greenwich, Ltd., 950 F.Supp.2d 633, 639 (S.D.N.Y.2013), the Court finds that, based on its review of the relevant precedent and for the reasons articulated by the majority of sister courts to have addressed the issue in this Circuit, the arbitrator must decide the availability of class-wide arbitration in this case.

In Green Tree Financial Corp. v. Bazzle , 539 U.S. 444, 452–53, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003), the Supreme Court concluded, in a four-Justice plurality opinion, that it was for the arbitrator to decide, in the first instance, whether a broad arbitration clause encompassing "[a]ll disputes" contemplated class arbitration when the clause was silent with respect to the availability of class procedures. In distinguishing the availability of class arbitration from "gateway" issues that must be decided by district courts, the plurality noted that, with respect to class arbitrability:

[T]he relevant question here is what kind of arbitration proceeding the parties agreed to. ... Arbitrators are well situated to answer that

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