Jock et al v. Sterling Jewelers, Inc
Filing
151
OPINION AND ORDER: re: 146 MOTION to Vacate both the Equal Pay Act Collective Action Conditional Certification Award and Order Re Claimants Motion For Tolling Of EPA Limitations Period entered on February 29, 2016 in the matter pending b efore the American Arbitration Asso filed by Sterling Jewelers, Inc. For all these reasons, the Court holds that it lacks jurisdiction to review the Arbitrator's Conditional Certification Award and Tolling Order. The Clerk of Court is directed to close docket entry 146. SO ORDERED. (Signed by Judge Jed S. Rakoff on 5/22/2016) (ama)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------x
LARYSSA JOCK, et al.,
Plaintiffs,
08 Civ. 2875
-v-
STERLING JEWELERS INC.,
For the past eight years, defendant Sterling Jewelers Inc.
("Sterling") and plaintiffs Laryssa Jock et al. have been engaged in
arbitration over plaintiffs' claims that Sterling discriminated
against them in violation of both Title VII of the Civil Rights Act
and the Equal Pay Act
(EPA). Most recently, on March 23, 2016,
defendant Sterling filed a motion seeking to vacate certain rulings
issued by the Arbitrator, specifically, orders conditionally
certifying a collective action under the EPA and tolling the statute
of limitations for EPA claims. For the reasons stated below, the
Court determines that it has no jurisdiction at this time to review
Sterling's motion to vacate these rulings, since the rulings of the
Arbitrator that Sterling challenges are not "final" rulings.
By way of background, on March 18, 2008, plaintiffs filed suit
in this Court on behalf of themselves and all persons similarly
situated, alleging sex discrimination in Sterling's promotion and
compensation policies and practices in violation of both Title VII
of the Civil Rights Act and the EPA, 29 U.S.C.
1
§
206. See Complaint,
Dkt.
1. On June 18, 2008, this Court granted plaintiffs' motion to
refer the matter to arbitration. See Order,
Dkt.
52. There followed
extensive proceedings before the Arbitrator, this Court, and the
Second Circuit Court of Appeals,
familiarity with which will here be
presumed.
Of some incidental relevance to the present dispute,
on
February 2, 2015, the Arbitrator, operating under the auspices of
the American Arbitration Association
(AAA),
issued a Class
Determination Award addressing plaintiffs' motion to have opt-out
classes certified for both the Title VII and the EPA claims. See
Class Determination Award,
Dkt. 137-1, at 1. In this ruling, the
Arbitrator certified a class for plaintiffs' Title VII disparate
impact claims with respect to declaratory and injunctive relief, but
not for monetary damages. The Arbitrator also denied class
certification for plaintiffs' Title VII disparate treatment claims.
See id.,
Dkt. 137-3, at 118. Finally, and of relevance here, the
Arbitrator's Class Determination Award denied plaintiffs' motion to
certify an opt-out class for their EPA claims, but stated that this
was without prejudice to plaintiffs'
seeking certification of an
opt-in collective action under the EPA. See id. at 115. On November
15, 2015, this Court confirmed the Class Determination Award, except
the part of that award permitting opt-outs for classwide injunctive
and declaratory relief. See Opinion and Order dated November 15,
2015,
Dkt. 144. Defendant appealed the Court's partial confirmation
2
of the Class Determination Award, and that appeal is currently
pending before the Second Circuit.
1
Meanwhile, of more direct relevance here, the Arbitrator moved
forward with respect to plaintiffs' EPA claims. The EPA incorporates
the enforcement provisions of the Fair Labor Standards Act
See 29 U.S.C.
§
(FLSA)
.2
216(b). The FLSA, in turn, states that employees may
bring an action against their employers "for and in behalf of .
themselves and other employees similarly situated" and that "[n]o
employee shall be a party plaintiff to any such action unless he
gives his consent in writing to become such a party and such consent
is filed in the court in which such action is brought." Id. Courts
have interpreted these provisions to create a scheme for the
preliminary certification of "collective actions" under the FLSA
(and, accordingly, under the EPA) that materially differs from the
procedure for certification of class actions under Fed. R. Civ. P.
23. See Myers v. Hertz Corp.,
624 F.3d 537, 542
Young v. Cooper Cameron Corp., 229 F.R.D. 50, 54
(2d Cir. 2010);
(S.D.N.Y. 2005)
Indeed, "certification" under the FLSA and EPA has a different
meaning than "certification" of a class action under Rule 23,
since
"certification" in the FLSA collective action context refers only to
"the district court's exercise of the discretionary power .
to
Neither side at any time questioned the Court's jurisdiction to review the Class
Determination Award, and, indeed, for the reasons described infra, the Court's
jurisdiction to review that determination is clear.
1
Since the FLSA provides a mechanism for the enforcement of EPA claims, cases
regarding collective certification under the FLSA are equally applicable to EPA
claims. See Myers v. Hertz Corp., 624 F.3d 537, 554 n.9 (2d Cir. 2010).
2
3
facilitate the sending of notice to potential class members." Myers,
624 F.3d at 555 n.10; see also Hoffmann-La Roche Inc. v. Sperling,
493 U.S. 165 (1989). In every material respect, therefore,
certification of a collective action is a preliminary determination
that requires only a modest showing. Certification under Rule 23 is
a more or less final determination that all the mandatory
requirements of Rule 23(a)
- numerosity, commonality, typicality,
and adequacy - as well as at least one of the additional
requirements of Rule 23(b) have been satisfied.
Put differently, "certification" of a collective action means
only that an initial "first step" has been taken that, unlike class
certification of a Rule 23 kind, involves only the most preliminary
kind of determination. As the Second Circuit states:
The first
step involves the court making an initial
determination to send notice to potential opt-in plaintiffs
who may be similarly situated to the named plaintiffs with
respect to whether a FLSA violation has occurred. The court
may send this notice after plaintiffs make a modest factual
showing that they and potential opt-in plaintiffs together
were victims of a common policy or plan that violated the
law.
The modest factual showing cannot be satisfied
simply by unsupported assertions, but it should remain a low
standard of proof because the purpose of this first stage
is merely to determine whether similarly situated plaintiffs
do in fact exist
At the second stage, the district
court will, on a fuller record, determine whether a socalled "collective action" may go forward by determining
whether the plaintiffs who have opted in are in fact
similarly situated to the named plaintiffs. The action may
be de-certified if the record reveals that they are not, and
the opt-in plaintiffs' claims may be dismissed without
prejudice.
Myers,
624 F.3d at 555
(internal citations and quotation marks
omitted) .
4
Reflective of the difference between the full and largely final
showings needed for certification of a class under Rule 233 and the
very modest and highly preliminary showing needed for
"certification" of a collective action under the EPA, the Arbitrator
in the instant case, while denying in her Class Determination Award,
plaintiffs' motion to certify, for their EPA claims, an opt-out
class pursuant to Fed. R. Civ. P. 23 and the AAA Supplementary Rules
for Class Actions,
4
expressly left open the possibility that
plaintiffs could seek opt-in certification of a collective action
for their EPA claims. See Class Determination Award at 114-15.
Consequently, plaintiffs, on March 6, 2015, filed before the
Arbitrator a motion for conditional certification of an opt-in EPA
collective action
(~,
the "first step" of the FLSA enforcement
procedure described supra). See Claimants' Motion for Conditional
Certification of Claimants' Equal Pay Act Claims and Authorization
of Notice, Dkt. 148-3.
In response, on February 29, 2016, the Arbitrator issued the
rulings that Sterling challenges in the instant motion. First, the
Arbitrator conditionally certified an opt-in collective action for
plaintiffs' EPA claims, thereby allowing notice to be sent. See
Equal Pay Act Collective Action Conditional Certification Award
While certification of a class under Rule 23 is theoretically subject to
reconsideration later in the case, it is so clearly final in most situations that
Rule 23 allows immediate appeal from the class certification. See Fed. R. Civ. P.
23 ( f) .
3
4 As discussed infra,
the standards for certification of a class action under the
AAA Supplementary Rules largely mirror those of Fed. R. Civ. P. 23.
5
("Conditional Certification Award"), Dkt. 148-1. Second, in
determining to whom notice should be sent, the Arbitrator tolled the
statute of limitations for the EPA claims and issued a separate
Order explaining why. See Order re Claimants' Motion for Tolling of
EPA Limitations Period ("Tolling Order"), Dkt. 148-2. Specifically,
the Arbitrator tolled the statute of limitations on plaintiffs' EPA
claims so that individuals could opt in to the EPA collective action
if their claims arose on or after October 16, 2003. See Conditional
Certification Award at 4; Tolling Order at 3-6.
On March 23, 2016, defendant Sterling moved in this Court to
vacate the Arbitrator's Conditional Certification Award and Order on
Tolling insofar as these rulings tolled the statute of limitations
for plaintiffs' EPA claims. See Notice of Defendant's Motion to
Vacate the Arbitrator's Equal Pay Act Collective Action Conditional
Certification Award and Order re Claimants' Motion for Tolling of
EPA Limitations Period, Dkt. 146. On April 11, 2016, plaintiffs
filed opposition papers. See Opposition to Defendant's Motion to
Vacate the Arbitrator's Equal Pay Act Collective Action Conditional
Certification Award and Order re Claimants' Motion for Tolling of
EPA Limitations Period ("Pl. Opp. Br."), Dkt. 149. In addition to
challenging defendant's arguments on the merits, plaintiffs
contended that this Court lacked jurisdiction to review the
challenged rulings because these rulings were not "final." See Pl.
Opp. Br. at 4-8. Defendant replied on April 20, 2016, see
Defendant's Reply in Support of Its Motion to Vacate the
6
Arbitrator's Equal Pay Act Collective Action Conditional
Certification Award and Order re Claimants' Motion for Tolling of
EPA Limitations Period ("Def. Reply Br."), Dkt. 150, and the Court
heard oral argument on May 11, 2016. Having considered the parties'
submissions and arguments, the Court finds that it has no
jurisdiction to review the Arbitrator's Conditional Certification
Award and Tolling Order at this juncture in the proceedings, because
these rulings are not "final." The Court therefore expresses no view
on the merits of defendant's motion to vacate these rulings.s
The Federal Arbitration Act
(FAA) provides that "at any time
within one year after the [arbitration] award is made any party to
the arbitration may apply to the court
for an order confirming
the award, and thereupon the court must grant such an order unless
the award is vacated, modified, or corrected." 9 U.S.C.
§
9. The
Second Circuit has held that "[t]he language of the [Federal
Arbitration] Act is unambiguous: it is only after an award has been
made by the arbitrators that a party can seek to attack any of the
arbitrators' determinations in court, by moving either to vacate the
award .
or to modify or correct it." Michaels v. Mariforum
Shipping, S.A.,
624 F.2d 411, 414
(2d Cir. 1980). Therefore, a court
"lacks authority to confirm an award that is interim, not final."
s On April 4, 2016, the Arbitrator denied Sterling's motion to stay proceedings
pending this Court's resolution of the instant motion. See Order re Sterling's
Renewed Motion to Stay, Dkt. 149-3. In doing so, the Arbitrator characterized her
Conditional Certification Award and Tolling Order as "non-final." Id.
7
Daum Global Holdings Corp. v. Ybrant Digital Ltd., No. 13-cv-3135,
2014 WL 8 9 6 7 16, at * 2 ( S . D. N . Y.
Feb . 2 0, 2O14 ) .
Further, "an arbitration award, to be final, must resolve all
the issues submitted to arbitration, and .
it must resolve them
definitively enough so that the rights and obligations of the two
parties, with respect to the issues submitted, do not stand in need
of further adjudication." Rocket Jewelry Box,
Packaging,
Inc.,
Inc. v. Noble Gift
157 F.3d 174, 176 (2d Cir. 1998)
.6
The Second
Circuit has explained the logic behind the finality doctrine as
follows:
Policy considerations, no less than the language of the Act
and precedent construing it, indicate that district courts
should not be called upon to review preliminary rulings of
arbitrators. Most of the advantages inherent in arbitration
are dissipated by interlocutory appeals to a district court.
[A] district court should not hold itself open as an
appellate tribunal during an ongoing arbitration proceeding,
since applications for interlocutory relief result only in
a waste of time,
the interruption of the arbitration
proceeding, and .
. delaying tactics in a proceeding that
is supposed to produce a speedy decision.
Michaels,
624 F.2d at 414
(internal quotation marks omitted). Or, as
the Seventh Circuit put it, "the courts are naturally reluctant to
invite a judicial proceeding every time the arbitrator sneezes."
Smart v.
Int'l Bhd. of Elec. Workers, Local 702,
315 F.3d 721, 725
(7th Cir. 2002).
6 The Second Circuit has also stated that "an award which finally and definitely
disposes of a separate independent claim may be confirmed although it does not
dispose of all the claims that were submitted to arbitration." Metallgesellschaft
A.G. v. M/V Capitan Constante, 790 F.2d 280, 283 (2d Cir. 1986). But in this case,
the Arbitrator's Conditional Certification Award and Tolling Order have not
"finally and definitely" disposed of any of plaintiffs' EPA claims.
8
In this case, it is obvious that the Arbitrator's Conditional
Certification Award and Tolling Order are not "final" arbitration
awards.
7
Indeed, the Second Circuit, in Myers, addressed, albeit in a
non-arbitration context, almost the same question as presented here,
and concluded that it lacked appellate jurisdiction over a district
court decision denying conditional certification of a FLSA
collective action. As the Second Circuit noted, the first step of a
FLSA collective action requires plaintiffs only to make a "modest
factual showing that potential plaintiffs existed who were similarly
situated to themselves" - a considerably "lower standard" than is
required for certification of a class action under Fed. R. Civ. P.
23. Myers,
624 F.3d at 555-56 (internal quotation marks omitted)
Consequently, as the Arbitrator in the instant case expressly
recognized, only at the "second stage" of an EPA collective action
(~,
after notice is sent out and potential EPA claimants opt in)
will a decision be made as to "whether .
a
'collective action'
may go forward." Conditional Certification Award at 2-3; see Myers,
624 F.3d at 555. Following conditional certification, then, issues
such as the basic makeup of the collective action and the
fundamental viability of the collective action mechanism remain "in
need of further adjudication." Rocket Jewelry Box, 157 F.3d at 176.
7 While the analysis below (and in the case law)
focuses on the finality of the
Arbitrator's ruling conditionally certifying a collective action, the Court sees
no reason to apply a separate analysis to the Tolling Order (and neither, it
seems, do the parties). The Conditional Certification Award itself tolls the
statute of limitations and notes that this decision is explained in the Tolling
Order issued on the same day, so that the two are inextricably intertwined. See
Conditional Certification Award at 4.
9
An arbitration award that "conditionally certifies a class of
plaintiffs and outlines the procedures to be followed in notifying
and defining the class" is hence not final, and this Court has no
jurisdiction to review it. Int'l Bancshares Corp. v. Lopez, 15-cv1 7 3 , 2 0 15 WL 6 7 9 9 7 8 3 , at * 3 ( S . D. Tex . Nov . 5 , 2 0 15 )
The fact that courts sometimes exercise jurisdiction over a
limited group of other kinds of interlocutory arbitral rulings is
not to the contrary. For instance, courts
(including this Court)
have reviewed arbitrators' "clause construction awards," where,
~,
they are threshold rulings determining whether the parties'
arbitration agreement even permits class arbitration. See, e.g.,
Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp.,
Jock v. Sterling Jewelers,
Inc.,
559 U.S.
677 F. Supp. 2d 661,
662
665
(2010) ;s
(S.D.N.Y.
2009). But judicial review of clause construction awards constitutes
a "limited exception" to the general rule that non-final arbitration
awards are not subject to review.
Int'l Bancshares Corp., 2015 WL
6799783, at *2. This exception "does not give courts blanket
jurisdiction over all arbitral orders concerning collective action.
8
Defendant Sterling notes that in Stolt-Nielsen, the Supreme Court's decision to
review the clause construction award did not depend on finding that the clause
construction award was final; rather, the Supreme Court found that the Clause
Construction award was ripe for review. See Def. Reply Br. at 3-4; see also StoltNielsen, 559 U.S. at 670 n.2. But the Supreme Court would not have reached the
ripeness issue if it lacked jurisdiction. Similarly, this Court also previously
examined ripeness in determining that it could review the Arbitrator's Clause
Construction Award in the instant case. See Jock, 677 F. Supp. 2d at 664. However,
these findings that clause construction awards were ripe for review do not
remotely suggest that finality is no longer relevant when a court faces the
question of whether to review determinations by an arbitrator made after the
clause construction ruling is rendered - in this case, the Arbitrator's
Conditional Certification Award and Tolling Order.
10
Rather,
it gives courts limited jurisdiction to consider an
arbitrator's ruling on a particular threshold issue," namely,
whether class arbitration is permissible under the parties'
arbitration agreement.
Id. The fact that courts may review clause
construction awards does not remotely suggest that courts may also
review arbitral rulings that, as in the case of rulings on the first
step of an EPA collective action, are expressly "conditional" and
require only a "low standard of proof."
Likewise, numerous courts have reviewed arbitrators'
rulings on
class action certification under the AAA Supplementary Rules
as noted,
largely mirror Rule 23 in this respect)
(which,
and/or have
approved of such review. See, e.g., Southern Commc'ns Servs.,
v. Thomas,
720 F.3d 1352, 1354, 1360
Silver's Restaurants,
Inc. v. Cole,
Dealer Computer Servs.,
2009 WL 277557, at *5
No.
Inc.
(11th Cir. 2013); Long John
514 F.3d 345
Inc. v. Randall Ford,
(4th Cir. 2008);
Inc., No.
08-cv-2033,
(S.D. Tex. Feb. 4, 2009); Haro v. NCR Corp.,
04-cv-328, 2008 WL 5156461
Oxford Health Plans, LLC, No.
(D.N.J. Oct. 31, 2005), aff'd,
(S.D. Ohio Dec. 8, 2008); Sutter v.
05-cv-2198, 2005 WL 6795061, at *3-4
227 F. App'x 135
(3d Cir. 2007).
Indeed, as noted, on November 15, 2015, this Court in the instant
case confirmed in part the Arbitrator's Class Determination Award
certifying some of plaintiffs' Title VII claims for class action
treatment. Jock,
2015 WL 7076011. But this is largely because AAA
Supplementary Rule 5(d)
expressly provides for such an appeal,
similarly to Fed. R. Civ. P. 23(f) and for the same reasons.
11
Indeed,
in the related context of appellate review of district court
rulings, the Second Circuit, as previously noted, has distinguished
between its having jurisdiction over district courts' rulings on
class certification and its lacking jurisdiction over district
courts' rulings on conditional certification of FLSA collective
actions. Similarly, other Courts of Appeals have found that they
lacked appellate jurisdiction over district court rulings on
conditional certification of collective actions pursuant to the FLSA
on the basis that these rulings were not final.
U.S. Bank Nat. Ass'n,
495 F.3d 1136, 1138
See McElmurry v.
(9th Cir. 2007) ; 9 Comer v.
Wal-Mart Stores, Inc., 454 F.3d 544, 549 (6th Cir. 2006); Baldridge
v. SBC Commc'ns,
Inc.,
404 F.3d 930,
931-32
(5th Cir. 2005).
Defendant nonetheless argues that the AAA Supplementary Rules
should apply to any class-like determination, including
determinations regarding collective actions. But defendant's
argument is unpersuasive. The same established distinction between
certification of an opt-out class and a conditional certification of
a collective action applies here. The AAA Supplementary Rules
governing class arbitrations make no mention of conditional
certification of a collective action. Rather, AAA Supplementary Rule
4, titled "Class Certification," identifies criteria for the
9 The Ninth Circuit case McElmurry did not discuss "conditional certification"
explicitly; rather, the appellate court considered whether it had jurisdiction
over the district court's decision not to issue notice of a collective action
under the FLSA. McElmurry, 495 F.3d at 1138. However, the Second Circuit has noted
that "certification" pursuant to the FLSA refers simply to the district court's
decision to send notice to potential opt-ins. Myers, 624 F.3d at 555 n.10.
12
maintenance of a "Class Arbitration" that largely track the
requirements of Fed. R. Civ.
P. 23. Likewise, AAA Supplementary Rule
5, titled "Class Determination Award," states that "(a) The
arbitrator's determination concerning whether an arbitration should
proceed as a class arbitration shall be set forth in a reasoned,
partial final award (the
'Class Determination Award'), which shall
address each of the matters set forth in [AAA Supplementary] Rule
4." Rule 5 then indicates that "[t]he arbitrator shall stay all
proceedings following the issuance of the Class Determination Award
for a period of at least 30 days to permit any party to move a court
of competent jurisdiction to confirm or to vacate the Class
Determination Award." AAA Supplementary Rule S(d).
The AAA Supplementary Rules,
therefore, expressly designate as
"partial final awards" arbitrators'
"class determination awards" and
provide a mechanism for parties to move in court for confirmation or
vacatur of class determination awards. These features of the AAA
Supplementary Rules, which mimic the approach of Rule 23(f)
of the
Federal Rules of Civil Procedure, may not definitively settle the
question of federal courts'
determination awards
jurisdiction to review class
(a question this Court need not definitively
reach here in any event). But while these features strongly suggest
a basis for treating an arbitrator's class determination awards as
subject to judicial review,
there exists no parallel provision in
the AAA Supplementary Rules for conditional certification of
collective actions under the FLSA (or the EPA).
13
Defendant Sterling points out that the Arbitrator noted in her
Tolling Order that "under Supplementary Rule 4 all class
arbitrations are treated like Rule 23 opt-out class actions." Def.
Reply Br. at 2; Tolling Order at 4. According to defendant, the
Arbitrator thereby signaled that she was treating the Conditional
Certification Award,
just as she treated her Class Determination
Award, as a "partial final award" subject to judicial review. Def.
Reply Br. at 3. But this reads far too much into the Arbitrator's
actual,
limited words. Indeed, if the Arbitrator's intentions as to
the finality of the Conditional Certification Award and Tolling
Order were ever in doubt, the fact that the Arbitrator labelled
these rulings "non-final" in her order denying a stay during the
pendency of the instant motion would put these doubts convincingly
to rest. See Order re Sterling's Renewed Motion to Stay. In any
event, an individual Arbitrator has no power to create federal court
jurisdiction where it does not otherwise exist.
For all these reasons, the Court holds that it lacks
jurisdiction to review the Arbitrator's Conditional Certification
Award and Tolling Order. The Clerk of Court is directed to close
docket entry 146.
SO ORDERED.
Dated: New York, NY
May J_'&-, 2016
14
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