Wells Fargo Advisors, LLC v. Sappington

• Decision Date: 07 March 2018
• Docket Number: Docket No. 16-3833-cv,August Term, 2017, Docket No. 16-3854-cv
• Citation: 884 F.3d 392
• Parties: WELLS FARGO ADVISORS, LLC, Petitioner–Appellant, v. Livia SAPPINGTON, Ewa Kelly, aka Eva Kelly, Patrick Laborde, Respondents–Appellees. Wells Fargo Advisors, LLC, Petitioner–Appellant, v. Reagan Tucker, Benjamin Dooley, Marvin Glasgold, Respondents–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

884 F.3d 392

WELLS FARGO ADVISORS, LLC, Petitioner–Appellant,

v.Livia SAPPINGTON, Ewa Kelly, aka Eva Kelly, Patrick Laborde, Respondents–Appellees.

Wells Fargo Advisors, LLC, Petitioner–Appellant,

v.Reagan Tucker, Benjamin Dooley, Marvin Glasgold, Respondents–Appellees.

Docket No. 16-3833-cv

Docket No. 16-3854-cv

August Term, 2017

United States Court of Appeals, Second Circuit.

Argued: August 17, 2017

Decided: March 7, 2018

Kenneth J. Turnbull, Morgan, Lewis & Bockius LLP, New York, NY, for Petitioner–Appellant.

Paul W. Mollica, Outten & Golden LLP, Chicago, IL (Justin M. Swartz, Olivia J. Quinto–Reyes, Outten & Golden LLP, New York, NY; Paolo C. Meireles, Shavitz Law Group, P.A., Boca Raton, FL, on the brief ), for Respondents–Appellees.

Before: LEVAL, RAGGI, and LOHIER, Circuit Judges.

LOHIER, Circuit Judge:

Reagan Tucker, Benjamin Dooley, Marvin Glasgold, Livia Sappington, Ewa Kelly, and Patrick LaBorde (the "Employees"), all former employees of Wells Fargo Advisors, LLC ("Wells Fargo"), seek unpaid overtime from Wells Fargo under the Fair Labor Standards Act ("FLSA") and State wage and hour laws. The Employees' employment contracts contained broad arbitration clauses governed by Missouri law. When the Employees filed putative class arbitrations, Wells Fargo petitioned the United States District Court for the Southern District of New York (Caproni, J. ) to compel bilateral arbitration. The District Court denied Wells Fargo's petitions, holding that an arbitrator, rather than a court, must decide the availability of class arbitration.

We assume without deciding that the question whether an arbitration clause authorizes class arbitration is a so-called "question of arbitrability" presumptively for a court, rather than an arbitrator, to decide. Applying Missouri's arbitration and contract law, we conclude that the parties overcame this presumption by clearly and unmistakably expressing their intent to let an arbitrator decide whether they agreed to authorize class arbitration. Accordingly, we AFFIRM .

BACKGROUND

The Employees were entry-level financial advisors in various Wells Fargo branch offices in New York, California, and Texas from 2011 to 2014. Each entered into an employment contract with Wells Fargo that included an arbitration clause. The arbitration clause in the contracts of Tucker, Dooley, Glasgold, Kelly, and LaBorde (the "Tucker clause") provides, in relevant part:

You are agreeing to arbitrate any dispute, claim or controversy that may arise between you and Wells Fargo Advisors, or a client, or any other person. This means that you are giving up the right to sue Wells Fargo Advisors, its subsidiaries or employees or any client or any other person in court concerning matters related to or arising from your employment. ... Specifically EXCLUDED from this obligation to arbitrate are any claims for State unemployment insurance .... Also any claims that require you to process them under a different administrative procedure pursuant to the terms of an employee benefit plan shall not be subject to arbitration. ... [Y]ou 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, tortuous [sic] 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 the [Financial Industry Regulatory Authority ("FINRA") ]. If the FINRA does not accept the controversy, dispute or claim, or any portion thereof, then the non-accepted controversy, dispute or claim shall be submitted for arbitration before the American Arbitration Association [ ("AAA") ] pursuant to its Securities Arbitration Rules, effective May 1, 1993.

Tucker App'x 26–27, 34–35, 41–42, 49–50; Sappington App'x 32–33, 40–41. The arbitration clause in Sappington's contract (the "Sappington clause") provides, in relevant part:

You agree that any action instituted as a result of any controversy arising out of this Agreement, your employment or termination of your employment, shall be brought before the arbitration facility of the [FINRA] to the exclusion of all others, unless the rules and/or the codes of the FINRA provide otherwise. Both you and Wells Fargo Advisors agree that arbitration shall be the parties' exclusive remedy and that the results of such arbitration shall be final and binding upon them. ... Any controversy relating to your duty to arbitrate hereunder, or to the validity or enforceability of this arbitration clause, or to any defense to arbitration, shall also be arbitrated before the FINRA.

Sappington App'x 25.

In 2015 Tucker, Dooley, and Glasgold jointly filed nearly identical putative class arbitration actions with FINRA and the AAA, asserting claims for unpaid overtime under the FLSA and State law. Citing its rules forbidding class and collective arbitrations, FINRA rejected their action. With only the class arbitration action before the AAA remaining, Wells Fargo petitioned the District Court to compel bilateral arbitration (the "Tucker action"). Meanwhile, Sappington, Kelly, and LaBorde jointly filed nearly identical putative class arbitration actions with FINRA and the AAA, likewise asserting claims for unpaid overtime under the FLSA and State law. FINRA also rejected their action, leaving only the class arbitration action pending before the AAA. As in the Tucker action, Wells Fargo filed a petition in the District Court seeking to compel bilateral arbitration (the "Sappington action").

The District Court denied Wells Fargo's petition in the Tucker action, holding that whether an arbitration clause authorizes class arbitration is not a gateway question of arbitrability presumptively for a court to decide, but is instead a question that should be answered by an arbitrator in the first instance. Wells Fargo Advisors, L.L.C. v. Tucker, 195 F.Supp.3d 543, 547–51 (S.D.N.Y. 2016). Adopting that same reasoning in a separate judgment, the District Court later denied Wells Fargo's petition in the Sappington action.

These appeals, which we heard in tandem, followed.¹

DISCUSSION

We review de novo the District Court's conclusion that an arbitrator, rather than a court, should determine whether the Tucker and Sappington clauses authorize class arbitration. See Shaw Grp. Inc. v. Triplefine Int'l Corp., 322 F.3d 115, 120 (2d Cir. 2003). In doing so, we are guided by the presumption that questions of arbitrability—certain gateway matters, 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 for a court to decide. BG Grp. PLC v. Republic of Argentina, ––– U.S. ––––, 134 S.Ct. 1198, 1206, 188 L.Ed.2d 220 (2014) (quotation marks omitted). As already noted, we assume without deciding that one of these gateway matters is whether an arbitration clause authorizes class arbitration.

But that assumption marks only the first step in our inquiry, as the presumption that a court should decide a question of arbitrability is overcome when there exists " ‘clear and unmistakable’ evidence from the arbitration agreement, as construed by the relevant state law, that the parties intended that the question of arbitrability shall be decided by [an] arbitrator." PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198–99 (2d Cir. 1996) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ). Here, Missouri supplies the "relevant state law" that governs both arbitration clauses at issue. Applying Missouri's arbitration and contract law to those arbitration clauses, see Bell v. Cendant Corp., 293 F.3d 563, 566–67 (2d Cir. 2002), we conclude, for the reasons below, that there is clear and unmistakable evidence that the parties in both cases before us intended to arbitrate all questions of arbitrability, including whether they agreed to authorize class arbitration.²

1. The Tucker Clause

The Tucker clause demonstrates the parties' clear and unmistakable intent to arbitrate all questions of arbitrability, including the availability of class arbitration, in three ways.

First, the Tucker clause provides that "any controversy or dispute" arising from the employment relationship is subject to arbitration. Tucker App'x 27, 35, 42, 50 (emphasis added); Sappington App'x 33, 41 (emphasis added). Missouri law does not require that "[a]n arbitration agreement ... recite verbatim that the ‘parties agree to arbitrate arbitrability’ in order to manifest ‘clear and unmistakable’ agreement." Dotson v. Dillard's, Inc., 472 S.W.3d 599, 604 (Mo. Ct. App. 2015) (some quotation marks omitted).³

Second, the Tucker clause expressly excludes from arbitration those disputes that relate to unemployment insurance and employee benefits. These exclusions reinforce our view that the parties intended to let an arbitrator decide whether class claims are arbitrable. By expressly foreclosing certain proceedings from arbitration, the parties in these cases strongly implied that every other "controversy or dispute" remains subject to arbitral resolution. See Gen. Am. Life Ins. Co. v. Barrett, 847 S.W.2d 125, 133 (Mo. Ct. App. 1993) (applying the principle of expressio unius est exclusio alterius to contract interpretation); VKK Corp. v. Nat'l Football League, 244 F.3d 114, 130 (2d Cir. 2001) (same).

Third, the Tucker clause incorporates by reference the May 1993 Securities Arbitration Rules of the AAA (the "1993 Rules"). This Court and, more recently, the Missouri Supreme Court have held that when parties "explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties' intent to delegate such issues to an arbitrator." Contec Corp. v. Remote Sol. Co., 398 F.3d 205, 208 (2d Cir. 2005)...