Mera v. SA Hospitality Group

Background

Danilo Mera sued SA Hospitality Group, Café Focaccia, other associated restaurant entities, and Dimitri Pauli and Jacopo Giustiniani. He asserted wage-and-hour claims under the Fair Labor Standards Act and New York Labor Law on behalf of himself and proposed groups of workers. He alleged that the defendants improperly claimed a tip credit, failed to pay required minimum and overtime wages, required unpaid work before scheduled shifts, and engaged in other timekeeping and pay practices.

Mera also asserted individual hostile-work-environment claims based on sexual orientation under the New York State Human Rights Law and the New York City Human Rights Law against Café Focaccia. He alleged that coworkers used homophobic slurs, a manager touched him and asked sexual questions, and managers did not adequately respond to his complaints.

Arbitration Agreement and Earlier Order

When Mera was hired, he signed an agreement requiring disputes relating to his employment with Café Focaccia, SA Hospitality Group, or affiliated entities or individuals to be resolved through individual arbitration. The agreement stated that it was governed by the Federal Arbitration Act.

The defendants moved to compel arbitration of all of Mera’s claims. Magistrate Judge Stewart D. Aaron denied the motion as to the New York State and New York City harassment claims but granted it as to the Fair Labor Standards Act and New York Labor Law claims. Judge Aaron also stayed the proceedings while arbitration was pending. Mera appealed the portion of the order requiring arbitration of his wage claims; the defendants did not object to the portion keeping the harassment claims in court.

Legal Issue

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act amends the Federal Arbitration Act. It provides that, at the election of a person alleging sexual harassment, a predispute arbitration agreement is not enforceable with respect to a case filed under federal, tribal, or state law that relates to the sexual-harassment dispute.

The issue was whether that protection applied only to Mera’s harassment claims or to his entire case, including wage claims that did not themselves allege harassment.

Court’s Analysis

Judge Gardephe concluded that the statute’s use of the word “case,” rather than “claim,” covers the legal proceeding as a whole. He noted that Congress used the narrower word “claim” elsewhere in the statute, which supported giving “case” its broader meaning.

The court also concluded that Mera’s wage claims related to the sexual-harassment dispute because both sets of claims arose from his employment and his own experience working for the defendants. The court therefore rejected the argument that the wage claims were unrelated claims that had been improperly joined with the harassment claims.

The defendants relied on legislative-history statements suggesting that the statute should not remove unrelated employment claims from arbitration. The court declined to rely on that history because it found the statutory text clear. It held that, when the Act properly applies, the arbitration agreement is unenforceable as to the plaintiff’s entire case, not merely the claims alleging sexual harassment.

Disposition

The court affirmed in part and reversed in part Judge Aaron’s order. It affirmed the portion denying arbitration of Mera’s New York State and New York City harassment claims. It reversed the portion granting arbitration of Mera’s Fair Labor Standards Act and New York Labor Law claims. The court therefore denied the defendants’ motion to compel arbitration in its entirety and scheduled a case-management conference.