A New York federal judge on Tuesday rejected Wells Fargo Advisors LLC’s challenge to an arbitrator’s decision letting workers pursue class arbitration of their unpaid overtime claims, calling the company out for trying to escape the same binding proceedings it imposes on its employees.
U.S. District Judge Valerie Caproni refused to vacate an arbitrator’s findings that language in two workers’ contracts with Wells Fargo lets them bring their claims on behalf of a class, saying the decision doesn’t fit into the narrow range of circumstances that open arbitration rulings up to court review.
“Wells Fargo Advisors LLC … like many other employers, has elected to require its employees to arbitrate their employment disputes,” Judge Caproni said. “Having opted to require its employees to arbitrate their disputes, Wells Fargo now has to live with the arbitrator’s decision.”
Wells Fargo is challenging an arbitrator’s ruling letting former employees Ewa Kelly and Patrick LaBorde pursue claims for unpaid wages on behalf of nationwide classes of similar workers. Their suit accuses the company of blocking trainee financial advisers from recording overtime while routinely making them work more than 40 hours a week. It also says Wells Fargo misclassifies apprentice advisers, who are a step above trainees, as exempt from overtime.
Wells Fargo argued the arbitrator exceeded his authority and disregarded the controlling law when he ruled the arbitration provisions in the workers’ contracts did not bar class proceedings.
The company challenged the arbitrator’s reliance on a past court order in the case leaving it up to him to decide whether the contracts allow class arbitration. It argued that he violated a requirement that decisions on “issues of arbitrability” be based in the disputed contract by pointing to the court’s ruling. But “that the arbitrator adopted this court’s reasoning rather than conducting his own searching analysis does not mean that the arbitrator acted outside the scope of his powers,” Judge Caproni said.
Wells Fargo said the arbitrator exceeded his authority by factoring into his decision evidence other than the contract language, such as the legal environment the deals were brokered in. It argues the contract is controlled by Missouri law, which it says limits interpretation of unambiguous pacts to their contents, and that the arbitrator conceded the contract is “unambiguous.”
But Judge Caproni noted the arbitrator elsewhere suggested the contract was open to interpretation. And even if there was no room for opposing views on the deal’s meaning, the arbitrator found Missouri law lets him apply extrinsic evidence to an unambiguous contract, she said.
“The court finds that the arbitrator’s reading of Missouri law on this issue to be colorable,” Judge Caproni said. “Moreover, even if Wells Fargo were correct that the arbitrator misapplied Missouri law relative to interpretation of an unambiguous contract, that does not provide a basis to vacate the arbitrator’s decision.”
Wells Fargo also argues the arbitrator misread a pair of court decisions it says stand for the idea that “where arbitration agreements are ‘silent’ as to class arbitration, then classwide procedures are impermissible.”
Judge Caproni rejected this argument as well, saying “the arbitrator reviewed and explored the relevant case law, albeit interpreting it differently than Wells Fargo does.”
Outten & Golden LLP’s Paul Mollica, who represents the workers, said he and his clients are “thankful to have the opportunity to proceed as a possible class or collective action.”
“Employers now routinely require their employees to enter into arbitration contracts or agreements, and part of that commitment is that you have to live by how the arbitrator interprets the contract and the law,” he said. “Sometimes that works out for the employer, and sometimes it doesn’t.”
An attorney for Wells Fargo did not immediately respond Tuesday to a request for comment.
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The case is Wells Fargo Advisors LLC v. Sappington et al., case number 1:16-cv-08956, in the U.S. District Court for the Southern District of New York.