New York Securities Lawyer Blog
On Wednesday, September 11, 2013, Judge Harold Baer, of the United States District Court For The Southern District Of New York, denied Merrill Lynch & Co., Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., and Bank Of America Corp.’s (“Defendants”) motion to compel arbitration of overtime compensation claims. According to Judge Baer’s Opinion and Order, Roman Zelster and Anna Tyutyunik (“Plaintiffs”), former Financial Solutions Advisors (“FSAs”), filed a class action complaint on behalf of themselves and all others similarly situated, which alleges that Defendants violated the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”) by refusing to pay FSAs overtime compensation. In response to the filing of the class action complaint, Defendants filed a motion to compel arbitration. The Defendants did not dispute that their employment agreement with Plaintiffs was governed by various FINRA Rules, which prohibit the enforcement of arbitration agreements against members of a proposed putative or collective class action until class certification is denied, and against class actions until members of the class are excluded from the class by the court or opt out of the class. Despite the FINRA rules, Defendants argued that FINRA’s rules were preempted by the Federal Arbitration Act (“FAA”). The Court noted that “[a]lthough recent opinions from the Supreme Court and this Circuit address arbitration in the context of FLSA claims and express a favorable view towards modality, none of these opinions touch on whether arbitration should be compelled for class and collective actions where FINRA rules bind the parties . . . Neither the Supreme Court nor the Second Circuit has held that FINRA is preempted by the FAA in a fact pattern such as the one before me here.” See Opinion and Order, Index. No. 13-cv-1531(HB), Document No. 44, pg. 4. As a result, the Court followed the language of the FINRA Rules and denied Defendants’ motion to compel arbitration at this point in the litigation.
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