Rame, LLC et al v. Popovich et al

Filing 22

OPINION. the Arbitrator's 29 page Award was "based upon a careful analysis of the DRA and DR policy as required by the now growing body of case law on the issue of class action arbitrations." (Award at 11). The Arbitrator did not so st ray from the "interpretation and application of the agreement" sufficient to have dispensed her "own brand of industrial justice" to exceed her powers nor exhibited a manifest disregard for the law. See Stolt-Nielsen, 130 S. Ct. a t 1767. She demonstrated an understanding of, addressed and applied or distinguished where appropriate the relevant case law, including, among others, the Bazzle, Stolt-Nielsen, and Jock line of cases, to the question presented before her. Because th ere exists a more than colorable basis for the Award, the Court finds the Petitioners have failed to meet their considerable burden. Upon the facts and conclusions set forth above, the petition to vacate the Award is denied and the Award is confirmed. It is so ordered. (Signed by Judge Robert W. Sweet on 7/2/2012) (rjm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

---x
RAME, LLC d/b/a CAFE CENTRO, and
PATINA RESTAURANT GROUP, LLC,
Petitioners,
12 Civ. 1684
- against
OPINION
MISHI POPOVICH, SANDRA AGUILERA,
BRENDAN CASEY, JOHAN MESTANZA, DAVID
HEWETSON, SAMUEL CUEVAS, and BONNIE
WICKARD, on
f of themselves and all
Others similarly situated,
Respondents.
- -X

A P PEA RAN C E S:

Att

Petitioners

SHEPPARD MULLIN, RICHTER & HAMPTON, LLP
30 Rocke ller Plaza, 24th
New York, NY 10112
Jonathan Stoler,
Eric
d Raphan,

s

PECHMAN LLP
488 Madison Avenue, 11th Floor
New York, NY 10022
By: Jessica N.
schIer,
s Pechman, Esq.
Nahir Marely Mercado,

1

Sweet, D.J.

Petitioners Rame, LLC d/b/a Ca
Restaurant Group (

Centro and Patina

lectively, the "Petitioners") have filed a

petition to (1) vacate arbitrator Bonnie We
"Arbitrator") Part

's (the

Award on Clause Construction, dated

February 6, 2012 (the "Award"), pursuant to 9 U.S.C.
(2) remand the matter to

Arbitrator, direct

proceed with each re
on an individual basis.
the arbitration agreement

10, and

§

to

s' claims in separate arbitrations
In her Award, the Arbitrator ruled that
(the "Agreement") between

Petitioners and the respondents Mishi Popovich
Aguilera ("Aguilera")

I

ch") ,

("u~>~~,

Brendan Casey ("Casey")

I

Johan

Mestanza ("Mestanza"), David Hewetson ("Hewetson"),
Cuevas ("Cuevas") and Bonnie Wickeraad ("Wickeraad")
ctively, the "Respondents") permits collective
tration.

in
the

Upon the facts

conclusions set forth

ngs
low,

tition to vacate is

I. Prior Proceedings

Respondents filed a compla
et al. v. Rame

against Petitioners

a Cafe Centro

LLC

et ano, 11 Civ.

680 (LBS) on January 31, 2011, which asserted class and
2

action claims for unpaid wages under the Fair Labor

collect

Standards Act ("FLSA U), 29 U.S.C. § 201 et seq., and under the
New York Labor Law ("NYLLU),
Petitioners fil

§

190 et s

On May 20, 2011 1 the

a motion to dismiss and compel arbitration,

alleging that, under the Agreement, the Respondents were
required to arbitrate their cIa

In response to the motion

to compel arbitration, on July I, 2011, the Respondents
volunt

ly dismissed, without prejudice, the complaint and

commenced arbitration.

Pursuant to the parties' joint stipulation, dated
September 23, 2011, the parties agreed to and select
Arbitrator.

the

also agreed to engage in motion practice to

obtain a threshold clause construction award from the Arbitrator
on whether the Respondents' claims
arbitration on a class or collect

d be brought in
action basis. 1

After

several rounds of briefing, on February 6, 2012, the Arbitrator
issued

1

More speci

Award 1 permitting the Respondents to pursue the

, the Agreement states, in pertinent part:

"Construction of the Arbitration Clause
Upon appointment, the arbitrator shall determine as a threshold matter, in a
reasoned, partial final award on the construction of the arbitration clause,
whether the applicable arbitration clause permits the arbitration to proceed
on behalf of or against a class (the "Clause Construction Award"). The
arbitrator shall stay all proceedings following the issuance of the Clause
Construction 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 Clause
Construction Award."

3

claims on a class-wide or collect

action basis.

The

itrator stayed its decision to permit the parties to seek
judic

review and the Petitioners filed an application to

vacate the Award.

The instant mot

was heard and marked fully

submitted on April 11, 2012.

II.

The Facts

The

s are set forth in t

Award, the complaint

and the declarations submitted by the part

s and are not in

spute except as noted below.

Cafe Centro is a restaurant locat
Avenue, New York, New York.
Cafe Centro.

at 200 Park

Patina is a corporate parent

Respondents are individuals who were former

employees at Cafe Centro, who worked as a waiter,
bartender, food runner and busser at
June 2010 in

ous t

from 1995 to

ods ranging from nine months to more than seven

Beginning in November 2007, Cafe Centro's management
stribut

a new Hourly Team Member Handbook (the "Handbook U
4

)

and a copy of a Dispute Resolution Agreement

(the "DRA") to the

restaurant's hourly employees for their review and execution.

In connection with the distribution of the Handbook,
in November 2007, Cafe Centro's management conducted a series of
mandatory staff meetings with its hourly employees.

Each

employee was required to attend at least one of these meetings.

The Handbook contains a Dispute Resolution Policy (the
"DR Policy"), which provides that all claims relating to an
individual hourly employee's employment must be submitted to
final and binding arbitration.

More specifically, the DR Policy

provides, in pertinent part:

By accepting or continuing your employment with the
Company, you will be agreeing that both you and the
Company will resolve by mediation and final and
binding arbitration any claim that would otherwise be
resolved in a court of law.
The claims governed by
this agreement are those that you or the Company may
have relating to your employment with, behavior
during, or termination from the Company. Claims for
workers' compensation or unemployment compensation
benefits are not subject to this agreement.
The
arbitrator will decide all claims according to law,
may award all damages and relief allowed by law, and
will make an award with a written opinion with
findings of facts and conclusions of law.

Similar to the DR Policy, the DRA requires that all
claims relating to an individual's employment be submitted to
5

final and binding arbitration.

Specifically, the DRA provides

in pertinent part that:

. The claims governed by
s agreement are those
that you or the Company may have relating to your
employment with, behavior during or termination from,
t
Company.
aims
workers' compensation or
unemployment compensation benefits are not subject to
this agreement.
By accept
or continuing employment with the
Company, you and the Company both agree to resolve
such claims through final and binding
tration.
This
udes, but is not limit
to, claims of
employment
scrimination because of race, sex,
reI ion, national orig ,color,
,di
iIi
medical condition, marital status, gender identity,
sexual
ference or any sexual harassment and
unlawful retaliation; any claims under contract or
tort law; any claim for wages, compensation or
benefits; and any claim for trade secret violations,
unlawful competition or breach of fiduciary duty.
. You and the Company agree that t
dispute will
resolved by final and binding arbitration
. The
arbitrator may award any remedy or relief as a court
could award on the same claim.

Notably, the DR Policy and the DRA are devoid of any re
to

itration on a class-wide or collective basis.

The Respondents have admitt
Handbook containing t
understood.
Wickeraad

that they received the

DR Policy, which they

and

In addition, Aguilera, Hewetson, Cuevas and
commenced their employment at Cafe Centro after

November 2007 and, thus, signed a DRA when they began their
6

employment at Cafe Centro.
Acknowledgement
provides,

They

so signed an Employment

Agreement (the "Acknowledgmentfl)

pertinent

I acknowledge that I have received a copy of the
Company's Handbook and understand that it cont
important informat
on the Company's general
polic
I acknowledge that I am expected to read,
understand, and adhere to company policies and will
liarize myself with
material in the Handbook.
Team Member understands and acknowl
s that this
Agreement is subject to the terms and conditions of
the Dispute Resolution provis
contained in the
Team Member Handbook and Di
e Resolution Agreement.
Your signature below acknowledges that you have
given suff ient time to read and understand this
document and that you agree to comply with t
standards herein.

Both Hewetson

Popovich

t that, upon receipt of the DR

Policy and DRA, they had a general understanding as to the
purpose of these documents and asked certain questions regarding
policies.

None of the Respondents, however, allege that

they asked whether the DRA and DR

icy permitt

class or

collective proceedings.

III. The Standard For Vacatur Under the FAA

In enacting the Federal Arbitration Act,
et seq.

9 U.S.C.

("FAA"), Congress intended to place arbi tra t ion

7

§

1

agreements on equal footing with other contracts and establish a
strong federal policy
Mobili

LLC v.

179 L. Ed. 2 d 742

favor of arbitration.
ion,

(2011) ;

- U.S.

See AT&T

---, 131 S. Ct. 1740, 1745,

v. Thomas, 482 U.S. 483, 489,

107 S. Ct. 2520, 96 L. Ed. 2d 426 (1987).

Thus, the FAA

requires courts to "rigorously enforce agreements to arbitrate."
------------------------~----------------~--------~------~-----

U.S. 614, 626, 105 S. Ct. 3346, 87 L. Ed. 2d 444

, 473

(1985)

(citation omitted) .

Under Section 9

the FAA,

"a court 'must' confirm an

arbitration award 'unless' it is vacat
'as prescribed'

§§

10 and 11."

Id.

, modified, or corrected
(quoting 9 U.S.C.

§

9).

FAA supplies a "streamlined" mechanism for a party seeking
"a judicial decree confirming an award, an order vacating it, or
an order modifying or correcting it."

Hall St. Assocs., LLC v.

MatteI, Inc., 552 U.S. 576, 582, 128 S. Ct. 1396, 170 L. Ed. 2d
254 (2008).

Section 10 (a) (4) of the FAA, which the Petitioners
invoke in seeking to vacate the Award, provides grounds
vacatur where, among other reasons,

"the

itrators exceed

their powers, or so imperfectly executed them that a mutual,
final, and definite award upon the subject matter was not made."
8

9 U.S.C. § 10 (a) (4).

The Second Circuit has "consistently accorded the
narrowest of readings to [§ 10 (a) (4)],
the purpose underlying arbitration:
effic

ilitate

to provide parties with

dispute resolution, thereby obviating the

protracted litigation."

ReliaStar Li

for

Ins. Co. of N.Y. v. EMC

--~--~~~~~~~~~--~~~

Nat. Life Co., 564 F.3d 81,85 (2d C
"especi

order to

2009).

This is

ly" true when Section 10 (a) (4) is invoked to challenge

an award deciding "a question which all concede to have
properly submitted in the first instance."
Witter

DiRussa v. Dean

ds Inc., 121 F.3d 818, 824 (2d Cir. 1997)

Fahnestock & Co. v. Waltman, 935 F.2d 512, 515

In addition,
issue for

(2d

(quoting

r. 1991)).

"(iJf the parties agreed to submit an

tration, we will uphold a challenged award as long

as the arbitrator of
the outcome reached."

a barely colorable justification for
ReliaStar, 564 F.3d at 86 (internal

quotation marks omitted) .

"In other words,

'as long as the

arbitrator is even arguably construing or applying the contract
and acting within the scope of this authority,' a court's
conviction that the arbitrator has 'committed serious error' in
sputed issue 'does not suffice to overturn his

resolving the
decision.'"

Id.

Int'l Union AFL

(quoting
9

CIa v. Misco, Inc., 484 U.S. 29, 39, 108 S. Ct. 364, 98 L. Ed.
2d 286 (1987)).

Put simply, a party contending that the decision of
the arbitration panel must be vacated bears a heavy burden and
"must clear a high hurdle .

. in order to obtain that reI

Stolt-Nielsen S.A. v. AnimalFeeds Int'l
S. Ct. 1758, 1767, 176 L.

2d 605 (2010)

for petitioners to show that
even a serious error.
from

•

U.S.

I

---I

f."
130

"It is not enough

panel committed an error

or

It is only when [an] arbitrator strays

erpretation and application of the agreement and

effective

'dispense[s] his own brand of indust

that his decision may be unenforceable.

Id.

H

al justice'

(citations

omitted) .

Thus, in considering a Section 10 (b) (4) challenge,
"[t]he principal question for the reviewing court is whether the
arbitrator's award draws its essence" from
arbitrate.

agreement to

ReliaStar, 564 F.3d at 86 (quoting 187 Concourse

Assocs. V.
shman, 399 F.3d 524, 527 (2d Cir. 2005)).
-------------------answer to this question is yes,
review of t

t

award itself is limited.

H

"If t

scope of the court's
Id. at 85-86.

The

court does not consider "whether the arbitrators correctly
decided [the]

issue.

n

Banco
.

de

v. Mut .

~~~-=~-~~~~~~=-~~~~--------

10

Marine Office, Inc., 344 F.3d, 255, 262

Courts

this circuit have

(2d Cir. 2003).

so vacated arbitration

awards that are in "manifest disregard of the law."
~H_a~l~l~~~~~~~~~~~~_r_n~cc. ~"

1998)

148 F.3d 197, 202

See
(2d Cir.

While the future of the "manifest disregard" standard is

unsettled, see Stolt Nielsen, 130 S. Ct. at 1768 n.3

(stating

that the Supreme Court would "not decide whether 'manifest
disregard' survives")

this circuit,

"manifest disregard" has

been reconceptualized as "a judicial gloss" on the FAA's
specific grounds for vacatur, and so interpreted,
valid ground for vacating arbitration awards."
_L_L_C__
v_.____~__L-~~_~_ _~~_L~_r~n_c_.,
2010)

"remains a

T. Co Metals

592 F.3d 329, 340 (2d Cir.

(citation omitted)

" [A] wards are vacated on grounds of manifest disregard
only in those exceedingly rare instances where some egregious
impropriety on

part of the arbitrator is apparent."

339 (citation omitted) .

rd. at

Such impropriety requires "more than

error or misunderstanding with respect to the law, or an
arguable difference regarding the meaning or applicability of
law urged upon an arbitrator."
part showing requires

rd.

(citation omitted).

court to consider, first,

The two

"whether the

governing law alleged to have been ignored by the arbitrator was
11

well defined, explic

,and clearly applicable," and, second,

"whether the arbitrator knew about the existence of a clearly
governing legal principle but
attention to it.ll

ided to ignore it or pay no

Westerbeke

. v. Daihatsu Motor Co.

Ltd.,

----------------~--------------------------~-----

304 F.3d 200, 209 (2d Cir. 2002)

IV.

The Threshold Issue

Applying the above principles to this case, the Court
considers first, whether the

ies had submitted to

trator the question of whether

Agreement permitted class

arbitration and, second, whether the Agreement or the law
categorically prohibited the Arbitrator from resolving the
threshold issue so that the Award should be vacated.
v. St

See Jock

Jewelers Inc., 646 F.3d 113,122 (2d Cir. 2011).

Unable to agree upon the definit

of t

threshold

legal issue, the parties proposed their respective versions to
Arbitrator to determine which was most appropriate.
Stip.

~

follows:

5).

(Jt.

The Petitioners submitted the threshold issue, as

\\May Claimants attempt to pursue a claim or claims in

arbitration on behalf of others on a class-wide and/or
collective bases where, as here, the DRA does not specifically
re

r to the terms'

ass' or 'collect

12

, arbitration and is

otherwise silent on the issue 'class' or 'collective'
arbitration."

The Respondents presented the threshold

(Id.

issue, as follows:

"May the arbitration proceed on a

and/ or class act

basis?"

(Id. )

lective

Arbitrator was to issue

her decision on the threshold question and issue the Award in
accordance wi

the terms of the Agreement and the American

Arbitration Association's ("AAA") Employment Arbitration Rules
and any

ated supplemental rules.

Rule 3

(Resp. Opp. at 3-4).

the Supplemental Rules

the AAA states, in

pertinent part, that:

Upon appointment,
arbitrator shall determine as a
threshold matter, in a reasoned, partial final award
on the construction of the arbitration clause, whether
applicable arbitration clause permits
arbitration to proceed on behalf
or against a
class.

While the parties had minor language differences as to how to
frame the issue presented, both parties generally sought a
ruling as to whether the Agreement permitt

the Respondents to

or class basis.

bring their claims on a collect

Therefore,

the Arbitrator was considering an issue which the parties had
submitt

for her consideration.

13

v.

The Arbitrator Did Not Exceeded Her Authority

A court may properly find that an arbitrator exceeded
her authority if the arbitrator has "consider [ed]

issues beyond

those the parties have submitted for her consideration" or
"reach [ed]

issues clearly prohibited by law or by the terms of

the parties' agreement."

Jock, 646 F.3d at 122.

The Second

Circuit has drawn a distinction between these two situations.
In the first,

"the law or the parties' agreement categorically

prohibits the arbitrator from reaching an issue so that, in
reaching that issue, the arbitrator exceeds her authority."
at 123

(citing Westerbeke, 304 F.3d at 220) .

In the other,

Id.
"the

parties grant the arbitrator the authority to determine an
issue, but the arbitrator makes an error of law in deciding that
issue."

Westerbeke, 304 F.3d at 220.

Here, the Respondents contend that neither situation
applies.

They argue that the Arbitrator did not exceed her

authority, because the issue of whether a collection action
could proceed "was squarely presented to the Arbitrator" and
that the Agreement itself contained language that "the
arbitrator will decide all claims according to law, may award
all damages and relief allowed by law," and that "[t]he
arbitration may award any remedy or relief as a court could
14

award on

same claim."

Arbitrator was granted

(Resp. Opp. at 4 5).

Thus, the

authority to determine the issue and

no error of law was made.

In contrast,
exceeded her authori
(Pet. Memo at 9).

Petitioners
under t

More

that the Arbitrator

parties' DRA and DR Policy.

ifically, they argue that "the Award

fails to adhere to well-settled Supreme Court precedent and
basic New York contract interpretation principles all
clearly provide that nei

which

the DRA nor the DR Policy give the

Arbitrator the authority to preside over class/collective
c

ims."

rd.

Accordingly, the Petitioners urge the Court to

find that the Arbitrator exceeded

proper authority and to

vacate the Award.

The Decisions in Bazzle, Stolt-Nielsen and Jock

An examination of recent Supreme Court and Second
Circuit decisions, however, compels a contrary result.

In

Stolt Nielsen, the Court discussed, but left open, the ambiguity
. v. Bazzle, 539 U.S. 444,

created by Green Tree Financ

123 S. Ct. 2402, 156 L. Ed. 2d 414 (2003), in attempting to
resolve whether a court or an

trator should decide if an

arbitration agreement permits class arbitration when
15

agreement does not contain

s class arbitration language.

Stolt-Nielsen, 130 S. Ct. at 1771.

A four Justice plurality in

question is whether collective

Bazzle determined that where t

arbitration is permissible, it is a procedural matter and thus
for an arbitrator.

Baz

e, 539 U.S. at 452.

Only in certain

limited "gateway matters, such as whether the parties have a
valid arbitration agreement at

1 or whether a concededly

binding arbitration clause appl

to a certain type of

controversy,n maya court make

ision.

While "Stolt-Nielsen point

Id.

out

Bazzle did not

same precedential value as an op

have

Court, it did not indicate that the pI

by a majority of
opinion in

i

Bazzle was incorrect on the issue of who dec
trate a dispute. n

can

793 F. Supp. 2d 611, 616
i

p

a class

Guida v. Home

of Am.

(E.D.N.Y. 2011).

, the Bazzle

's holding remains persuasive and instruct
sen, 130 S. Ct. at 1772

Stolt

Inc.,

----------------------~--------~-----

(stating that"

---------------

to have believed that the judgment in Bazzle

See
ies
res an

arbitrator, not a court, to decide whether a contract
class

ration

decided

here.

n

);

487, 492

quest

In fact,

however, only the p

Cir. 2011)

i

But we need not revisit that question

see also Vilches v. The Travelers Cos., 413
(3

ts

(stating that "[w] here cont
16

IX

silence is implicated
dec

the arbitrator and not a court should

l

whether a contract was silent on the issue of class
(internal quotations omitted); Guida, 793 F.

arbitration.")

Supp. 2d at 617 (concluding

the arbitration panel should

decide whether or not the plaintif
a class basis)

i

in this case can proceed on

z v. Servicemaster

obal HoI

No. 09

5148, 2011 WL 2565574, at *3 (N.D. Cal. June 29, 2011)
that Stolt-Nielsen "cl
but re

fied that the quest

(noting

remains open"

the class arbitration question to the arbitrator)

Smith v. The Cheesecake Fact

Restaurants

Inc., No. 06 829,

2010 WL 4789947 1 at *2 (M.D. Tenn. Nov. 16 1 2010)
that "whether the parties agreed to class arbitrat
resolved by the arbitrator[,]

II

In Stolt-Nielsen,
imposing class arbitrat

(concluding
is to

citing Stolt-Nielsen and Bazzle

Supreme Court addressed "whether
on parties whose arbitration clauses

are 'silent' on that issue is consistent with the [FAA]
Stolt-Nielsen, 130 S. Ct. at 1765.
the class arbitration
Id.

Significantly, t

II

The parties agreed to submit

tion to a panel of three arbitrators.
part

s also stipulated that the

arbitration clause was "silent" with respect to permitting or
prohibiting class arbitration.
AnimalFeeds counsel

i

rd. at 1766.

Respondent

ained "that the term 'silent' did not

simply mean that the clause made no express reference to class
17

arbitration.

Rather,

said' [aJII the parties agree that when

a contract is silent on an issue there's been no agreement that
has been reached on that issue.

In reject

'n

Id.

the arbitration panel's

ision to

arbitrate class as well as individual claims, the Court
expressed concern that the panel "appears to have rested its
decision on [a] public poli
--------

argument.

II

rd. at 1768i see

, 131 S. Ct. at 1750 (noting that in Stolt Nielsen,

"we held that an arbitration panel exceeded its power under

§

10(a) (4) of the FAA by imposing class procedures based on policy
judgments rather than the arbitration agreement itself or some
background principle
interpretat

contract law that would affect its

.").

The Court

so considered that "the dif

rences

between bilateral and class-action arbitration are too great
trators to presume .

. that the part

s' mere silence on

the issue of class-action arbitration constitutes consent to
resolve their disputes in class proceedings."

rd. at 1776.

Thus, the Court held that an agreement to class arbitration
cannot be inferred "solely from the fact of the

ies'

agreement to arbitrate," but that, under the FAA, class
tration is only appropriate where "there is a contractual
18

basis

concluding that

1775 (emphasis in original).
could be implicit.

to do

party
The

Id. at

SO.II

ies' agreement, however,

rd.

In its discussion of Stolt-Nielsen, the Second Circuit
in Jock highlighted the "Court's interpretation of the parties'
'silence'

[as] key."

Jock, 646 F. 3d at 120.

found significant that the part

The Jock maj

s had stipulated that the

agreement was silent, not only in the sense that t
made no reference to class arbitrat

class arbitration.

Ct. at 1768).

II

Id.

contract

, but also that the

silence meant the parties had "not reached
issue

ty

agreement on the

(citing Stolt-Nielsen, 130 S.

Thus, the "parties were in complete agreement

regarding their intent," that "there was no express or implicit
intent to submit to class arbitration."

Id.

In contrast, the dissent in Jock believed that
"silence" in S
lect[ing]
arbitrat

t Nielsen "was inte
fact

[

] each

ed as 'simply
recogni

the

clause neither specifically authorized nor

specifically prohibited class arbitration.
sagreed, stating t
acknowledge that

'II

Id.

The majori

"[t]he dissent, however, fails to

though that is the interpretation that the

Respondents in Stolt-Nielsen wished
19

Court to adopt, that is

not the interpret
in original).

ion that the court did adopt."

rd.

(emphasis

The Jock majority also noted that the Supreme

Court "declined to hold that an arbitration agreement must
expressly state that the parties agree to class arbitration."
Id.

(emphasis in original) .

ke the agreement in stolt-Nielsen, the arbitration
agreement in Jock contained no mention of
was "silent" as to that issue.

ass arbitration and

rd. at 123.

in Stolt-Nielsen, however, the parties

Unlike the parties

Jock did not enter

into a stipulation that their agreement was "silent" as to the
class arbitration issue and submit
arbitrator.

rd.

that question to the

(stating that \\ [t] he plaintiffs' concession

that there was no explicit agreement to permit

ass

arbitration, however, is not the same thing as stipulating that
the parties had reached no agreement on the issue.").

The Court

found that the lack of an express agreement to permit or
prohibit class arbitration did not preclude an
agreement to authorize class-action arbitration.

icit
Id.

(emphasis

added) .

The Second Circuit noted that the language of the
agreement in Jock was broader than the agreement in Stolt
Nielsen.

The arbitration clause in Stolt-Nielsen "merely stat
20

that the arbitration clause would be applicable to '[a]ny
di

e arising from the making, performance or termination of

this Charter Party.
Ct. at 1765).

If'

Id. at 126 (quoting Stolt-Nielsen, 130 S.

In contrast, the clause

Jock explicit

granted the arbitrator the "power to award any types of

or

equitable relief that would be available in a court of competent
juri

ction."

Id.

Court stated that:

[i]t is clear from
terms of the
tration
agreement that St
required its employees to sign
the parties
ended to make available in
tration all
es and rights that would
otherwise be avail
e in court or be
a government
agency.
It was not unreasonable, and clearly not
manifestly wrong,
the arbitrator to construe this
to mean that the parties also intended to include the
to proceed as a class and seek class remedies.

Id. at 127.
class

Thus, there was an implicit

tration.

"whether

to allow for

For the Court, the issue, therefore, was not

arbitrator was

or wrong in her analysis," but

the appropriate level of deference given to her by the court.
Id.

that the arbitrat

(stat

decision,

the parties to

The Petitioners'
Unpersuasive
To

Int=~~~·=tation

"had the authority to make the
arbitration are bound by it.").

of the

icable Precedent is

their position, the Petitioners contend

21

that post-Stolt-Nielsen,

"a

may not be compelled under the

FAA to submit to class arbitration unless there is a contractual
basis for concluding that the party agreed to do so."
Ct. at 1775 (emphasis in original).

130 S.

upon these

principles, which the Petitioners argue are equally applicable
here, they state that the Supreme Court

ected an arbitration

panel's presumption that "the parties' mere silence on the issue
of class-act

arbitrat

constitutes consent to resolve their

class proceedings./I

disputes

rd. at 1776.

The Petitioners contend that "[iJt is undisputed that
neither
to'

DRA nor the DR Policy make any reference whatsoever

ass' or 'collective' actions" and that the Respondents

have admitted to as much.
Petit

I

(Pet. Memo at 11) .

In the

view, the Award "essentially creates a new

requirement that is not supported by

case law; namely, that

employers must include an affirmative class action wavier in
their arbitration agreements

order for employees to be deemed

to have waived their ability to proceed on a class/collective
action basis."

(Pet. Memo at 9).

In addit

contend that in light of Stolt-Nielsen,

, Petit
Arbitrator was

required to abide by, but

led to even consi

on contract interpretation.

(Pet. Reply at 4).

22

, New York law

The

itioners' interpretation, however/

consider the treatment of ?tolt Nielsen by
Jock.

ils to

Second Circuit in

First, the Petitioners adopt an interpretation

"silence," which the Jock dissent advocated for/ but was
explicitly

ected by the maj

ty.

Post Jock,

"silence"

cannot be interpreted to mean that there was no specific
authorization or prohibition of
agreement.

ass arbitration in the

See Stolt-Nielsen, 130 S. Ct. at 1766.

Instead, the

parties must be in agreement regarding their intent and also
stipulate that there was "no explicit or implicit intent to
submit to class arbitration."

Jock, 646 F.3d at 120.

Here, neither party expressly contemplated the issue
of

ass arbitration nor is there a Stolt-Nielsen-like

stipulation on the matter.

Stolt Nielsen "reaffirmed the basic

precept of the FAA, that 'arbitration is a matter of consent,
not coercion'" and that "courts and arbitrators must 'give
effect to the contractual rights and expectations of the
parties. '"
1773-74).

at 127

ting §t:0lt-Nielsen, 130 S. Ct. at

Thus, while the DR Policy and the DRA made no

reference to class

tration, which the Petitioner repeatedly

state in their briefs, more significantly, there was no evidence
of any agreement as to that issue.

Without such an agreement as

to the parties' intent, and "where that agreement contains what
23

is argued to be an implicit agreement to submit to class
arbitration," the Arbitrator was free to "look to state law
principles of contract interpretation in order to divine whether
such intent

sts."

Id. at 126.

As emphasized in the Award, the Arbitrator did not
predicate her decision "upon any alleged silence in the DR
Policy or the DRA regarding class actions."

(Award at 10).

"Rather, it is based on what is stated in the DR Policy, namely,
that an employee can bring "all claims" arising out of his/
employment (except workers' compensation or unemployment claims)
and that the Arbitrator 'will decide all claims according to
law,
/I

[and] may award
(Id.)

allowed by law.

(emphasis added

original).

Thus, like in Jock, the

Arbitrator here examined the terms of the arbitration agreement
and found "the presence of a very broadly worded arbitration
provision./I

(Id.

The Arbitrator found no mutual waiver in the

Agreement and reasoned that "[s]ince class action relief is
clearly allowed under the New York Labor Law and collective
action relief is authori

under the FLSA,

. the DR Policy

and the DRA permit a claim to proceed as a class or collect
action."

Id. at 11).

In addition, to argue against the Award, the
24

Petitioners now rehash several arguments that they previously
presented to the Arbitrator.

Having found that the parties

agreed to submit the class arbitration issue to

Arbitrator,

this Court's

See

ew of these arguments is limi

Reliastar, 564 F.3d at 86.

Under the standard for vacatur under

the FAA, the Award will stand "as long as the arbitrator
a barely colorable justificat
Petitioners' "must

fers

for the outcome reached."

Id.

ear a high hurdle" that shows more than

that "error - or even

ous error" by the Arbitrator, but that

she "dispense[d her] own brand of industrial justice."

Stolt­

Nielsen, 130 S. Ct. at 1767.

Here, the Petitioners contend that

Arbitrator

misinterprets the DRA and DR Policy phrase "any claim" and the
provision that the Arbitrator "may award all damages and relief
allowed by law" to support

Award.

(Pet. Memo at 12-17)

Petitioners argue that the "Arbitrator's reliance on this
language is mi

aced because, when read within the context of

the DRA and the DR

icy, the phrase "any claim" clearly refers

to substantive claims and not matters of procedure."
12) .

In addition, the Petitioners assert that

(Id. at

Arbitrator

"incorrectly reasons that Individual Respondents have a
'statutory right' to seek 'relief' on a class or
basis under

NYLL

lective

FLSA" based on the "all damages and
25

relief" language.

Id. at 15 (citing Award at 13 14, 18 19)).

In the Award, the Arbitrator specifically addressed
both

the Petitioners' arguments.

First, as to the

Petitioners' contention that "any claim" re

rs only to

substant

and found that

claims, the Arbitrator addres

argument to be "disingenuous," stating that "when procedural
matters are inextricably intertwined with

merits of a case,

the artificial distinctions between procedural and substantive
claims must t
parties agreed to

a back seat to the 1

r question whether the

itration these claims."

(Award at 24-25).

In addition, she noted that the arbitration agreement was
suff

iently "broadly worded," a distinction made by the Second

Circuit in Jock, to empower the arbitrator to "award all damages
and relief allowed by law."

Id. at 23) .

In her judgment, the

language of the DRA and the DR Policy "contemplate the
Arbitrator having broad authority to afford the full range
remedies available at law," which in turn "[t]he Arbitrator
construes that to include the right to file claims on behalf of
a class."

(Id. at 20-21) .

The Arbitrator also noted that "the case law in this
jurisdiction ho

that a class or collect

action waiver

should be found only when it is clear that such a waiver was the
26

mutual intent of both parties or, at minimum, the intent of the
drafter."

(Id. at 21).

Having found "no such clear, knowing

waiver present in this case[,]" the Arbitrator declined to
follow, as the Petitioners urged then and now, the holding
_L_a_V_o_l_'c_e v~.__ _S__
___ U_B _ F_i_n_a_n c_i~~S_e~r~v~s~,__I~n~c~., No. 11-2308 (BSJ) (JLC) ,
__
2012 WL 124590 (S.D.N.Y. Jan. 13, 2012).

In LaVoice, the pIa

iff commenced a class and

collective action in the Southern

strict of New York alleging

that the defendant UBS had violated t
*1.

FLSA and NYLL.

Id. at

UBS filed a motion to compel on the grounds that the

plaintiff was a party to an arbitration agreement with UBS
pursuant to which he agreed to individually arbitrate his FLSA
and NYLL claims.

Id.

Like

Respondents here, the plaintiff

countered that the right to proceed on a collective basis under
the FLSA is a federal statutory right that cannot be waived, and
thus the parties' arbitration agreement was unenforceable.
at *6.

Id.

The Court rejected the plaintiff's argument as being

precluded by the Supreme Court's decision in Concepcion.

ision declined to follow this

Notably, the LaVoice
Court's holding

Id.

Raniere v. Cit

Inc., 827 F. Supp. 2d

~~~~~~~~~~L-~~~~

294 (S.D.N.Y. 2011), which held that the right to proceed
collectively under the FLSA cannot be waived.
27

In Raniere, this

Court invalidated an arbitrat

agreement attached to an

employee handbook that requi
employment-re

individual

itration

claims, stating that:

There are good reasons to hold that a wa
r of the
right to proceed collect
under
FLSA is per se
unenforceable and dif
in kind from waivers of
the right to proceed as a class under
e 23.
Collect
actions under
FLSA are a unique animal.
Unlike employment-discrimination class
ts under
Title VII
the Americans with Disabilities Act that
are gove
by Rule 23, Congress created a unique
form of collective actions for minimum-wage and
overtime pay claims brought under the FLSA.

Id. at 311.

Accordingly, this Court cannot find, as the

Petitioners cont

, that the Respondents do not have statutory

to proceed as a class under the FLSA.

In addition, the Arbitrator considered both cases,
disagreed with LaVoice's holding, and found that
dist
di
appri
collect

shable from the instant

s.

case to be

(Award at 21).

The

resolution clauses in LaVoice and Raniere "clearly
the signatories that they

d not bring any class or

claims" through the explicit class act

waiver.2

The Arbitrator noted that, "[olf critical importance, the arbitration
agreement in LaVoice stated, "By agreeing to the terms of this Compensation
Plan . . . you waive any
to commence, be a party to or an actual or
putative class member of any class or collective action aris
out of or
relating to your employment with UBS . . . .
2

/1

(Award at 21).

28

rd.

Absent an explicit class action waiver, the Arbitrator

reasoned that the employees "had no way of knowing that the DR
Policy would be construed by the Respondents to preclude class
or collective actions."

(Id. )

The Arbitrator's reasoning does not, contrary to the
Petitioners' assertion, require "the DRA and DR Policy to have
an express waiver of class/
(Pet. Memo at 17)
re American

lect

claims proceedings."

Instead, the Arbitrator first discussed In

.,

s Merchants'

which the Second

Circuit concluded that a class action waiver was unenforceable
because the plaintiffs had demonstrated that they otherwise
would not be

to vindicate their statutory rights "in either

an individual or collective capacity."
Cir. 2009)

(emphasis in original).

to the great expense

554 F.3d 300, 314

(2d

The Court reasoned that due

pursuing the litigation and the small

individual recovery each plaintiff could expect,
would have the practical effect

waiver

ensuring that no claims would

be brought at all, granting the defendant "de facto immunity
from

. liability."

rd. at 320.

In addition, the binding arbitration clause in Raniere stated, MThe Policy
makes arbitration the required and exclusive forum for the resolution of all
disputes . . . Claims covered under this Policy must be brought on an
individual basis. Neither Citi nor any employee may submit a class,
collective, or representative action for resolution under this Pol
827 F. Supp. 2d at 304.

29

After the Supreme Court vacated the decision and
remanded it for reconsideration in light of Stolt-Nielsen, the
Circuit again found that the arbitration provision was
unenforceable because "the class action waiver

this case

precludes plaintiffs from enforcing their statutory rights" due
to the prohibitive cost of litigating on an individual basis.
American

ss Co. v. It

ors Rest., 634 F.3d 187, 197

------------~--------------------------~------~---

99 (2d.

r. 2 0 11 )

( "AMEX I I ") .

Shortly after the AMEX II

decision, the case was remanded again in light of the Supreme
Court decision in

Circuit held that such

a class action waiver was unenforceable as it effect
deprived "pIa

iffs of the statutory protections of the

antitrust law."
F.3d 204, 217

ly

In re American

~'vnross

Merchants' Lit

., 667

-.-----------------~----------------------~~

(2d Cir. 2012), pet. for reh'g en banc denied

("AMEX III") .

As explained in the Award, the Arbitrator found "the
Second Circuit's reasoning

all three AMEX cases to be

significant to the instant dispute."
the AMEX pIa

(Award at 18).

iffs, who sought to enforce t

Similar to

ir statutory

rights under the antitrust statutes, the Respondents here "seek
to enforce their statutory rights under the FLSA and NYLL."

30

rd. at 19).

Applying this Court's decision in Raniere,3 the

Arbitrator found it "even more compelling to conclude
instant case that a class action waiver
should not be construed

an FLSA

a dispute resolut

the
NYLL case

clause

does not expressly contain such a waiver, nor does the clause
contain language from which such a waiver logically would be
rd. at 20).

inferred."
the DRA

Thus, t

Arbitrator did not require

DR Policy to have an express waiver, but stated that

those Agreements and supporting case law analysis "contemplate
the Arbitrator having broad authority to afford the full range
of remedies available at law.
claims on behalf of a class.

u

includ[ing] the right to file
(Id. at 20-21).

For the reasons stated above,

Arbitrator did not

exceed her powers.

VI. The Arbitrator Did Not Act in Manifest Disregard of the
Law

A court's review under the doct
disregard is "severely limit

II

of mani

st

Gov't of India v. Cargill

The Arbitrator also cited to Sutherlandmy. Ernst & Young LLP, in which the
Court declined to grant reconsideration of its prior order which refused to
compel arbitration where the arbitration agreement contained a class action
waiver.
768 F. Supp. 2d 547 (S.D.N.Y. 2011).
In denying reconsideration,
the Court reaffirmed its decision that an employee with an FLSA claim of
unpaid overtime wages would be denied an opportunity to vindicate her
statutory
if the class action waiver were enforced.
See
v.
Ernst & Young,
F. Supp. 2d
2012 WL 130420 (S.D.N.Y. Jan. 17, 2012).

31

Inc., 867 F.2d 130, 133
deferential to

(2d Cir. 1989).

"It is highly

arbitral award and obtaining judicial

for arbitrators' manifest disregard of the law is rare.

F.3d 383, 389 (2d eir. 2003).

Thus, an arbit

ief

U

award may be

vacated for manifest disregard of the law only where "the
•
arbitrator knew of t
that

s princ

relevant

e cont

[legal] principle, appreciated

led the outcome of the disputed

issue, and nonetheless willfully flouted
refusing to apply it.u

governing law by

Westerbeke, 304 F.2d at 217.

The Petitioners argue that "the Arbitrator ignored a
arguments all of which were

number of well supported I

brought to the Arbitrator's attention prior to the issuance of
Award and mandate that Individual Respondents
proceed on an individual basis.u

(Pet. Memo at 7).

required to
The

Respondents reply that "[t]he law, and each of Petitioners'
legal arguments, most of which have been rehashed in
Petit

rs' motion to vacate, were carefully considered and

addressed by Arbitrator Weinstock. u

(Resp. Opp. at 6).

As discussed above, the Arbitrator did not refuse or
ignore the relevant

princ

les.

In fact,

the record

suggests that the Arbitrator, only "[a]fter reviewing more than
32

eighty pages in legal memoranda, plus supporting documents" as
well as interpreting and distinguishing several cases, issued
the Award explaining why class action was not barred.

(rd.) .

For example, in distinguishing Stolt-Nielsen, the Arbitrator
explained that "those facts are markedly different and fully
distinguishable from the facts

this case," and the Award went

on to analyze the language of the Agreement to provide further
support for the distinction between the cases.
v.

See - - - " ' -et " -LLC
L'
---­

D. Ltd., No. 11-3856(LBS), 2011 WL 4528297, at *3

(S. D. N. Y. Sept. 29, 2011)

(finding no mani

"[aJll evidence indicates that t

st disregard where

arbitrator provided a

carefully reasoned decision explaining why Dastar does not apply
to the facts of this case.").

While the Petitioners may

disagree with the Arbitrator's conclusion, that is an argument
on the merits and does not rise to one of the "exceedingly rare
instances where some egregious impropriety of the arbitrator is
apparent."

Duferco, 333 F.3d at 389.

Moreover, even if the Award "were factually or legally
erroneous, such error would not constitute manifest
for clearly applicable law."

sregard

Possehl, Inc. v. Shanghai Hia Xing

Shipping, No. 00-557(RWS), 2001 WL 214234, at *6 (S.D.N.Y. Mar.
I, 2001)

i

see also

---"'-­

, 2011 WL 4528297, at *3

(quoting

. Carte Blache Int'l.
33

Ltd., 888 F.2d 260, 265 (2d eir. 1989))

(stating that "we are

not at liberty to set aside an arbitrat[or's] award because of
an arguable difference regarding the meaning and applicability
of laws urged upon it.").

Accordingly, the Petitioner fails to demonstrated that
the Award exhibits or that the Arbitrator acted in manifest
disregard for the law.

VII. Conclusion

In sum, the Arbitrator's 29 page Award was "based upon
a careful analysis of the DRA and DR policy as required by the
now growing body of case law on the issue of class action
arbitrations."

(Award at 11).

The Arbitrator did not so stray

from the "interpretation and application of the agreement"
sufficient to have dispensed her "own brand of industrial
justice" to exceed her powers nor exhibited a manifest disregard
for the law.

See Stolt-Nielsen, 130 S. Ct. at 1767.

She

demonstrated an understanding of, addressed and applied or
distinguished where appropriate the relevant case law,
including, among others, the

~azzle,

Stolt-Nielsen, and Jock

line of cases, to the question presented before her.

Because

there exists a more than colorable basis for the Award,
34

Court finds the

titioners have failed to meet their

considerable burden.

Upon the facts and conclusions set forth above, the
petition to vacate the Award is denied and the Award is
irmed.

It is so ordered.

New York, NY
July-y-­ , 201l.

OBERT W. SWEET
U.S.D.J.

35