Orlando, Jr v. Liberty Ashes, Inc.

Background

Carl Orlando, Jr., Leonard Menna, Jr., Luis Acevedo, Quamaine Powell, and Ramdeo Persad brought a collective action against their former employers, Liberty Ashes, Inc. and its principals. They alleged violations of federal and New York wage laws, including unpaid overtime, minimum-wage violations, retaliation, missing wage notices, and unpaid wages owed to Orlando for the last three days of his employment.

A union represented employees in the plaintiffs’ job categories. Liberty Ashes and the union entered a collective bargaining agreement effective from January 1, 2012, through December 31, 2015. The agreement applied to present and future employees covered by it during that period. The court held that all five plaintiffs worked for Liberty Ashes during that period and were bound by the 2012 agreement.

After all five plaintiffs had left Liberty Ashes, the company and the union entered agreements concerning a successor collective bargaining agreement. A memorandum adopted in December 2016 added an arbitration clause covering wage-and-hour claims under federal, state, and local laws. The clause required individual arbitration and stated that there would be no class-wide arbitration. In exchange, Liberty Ashes agreed to provide benefits including a bonus, a raise, a boot allowance, uniform-cleaning changes, and a locker room.

Defendants’ Motion

The defendants moved to compel arbitration and dismiss the complaint. They argued that the 2016 arbitration clause covered the plaintiffs because it applied to claims brought by “Employees.” The plaintiffs argued that they were former employees when the 2016 agreement was adopted and therefore were not bound by it.

The court had previously denied an earlier motion to compel arbitration without prejudice to renewal because factual disagreements required limited discovery. The defendants later renewed the motion, which resulted in the January 15, 2020 order summarized here.

Court’s Analysis

The court first decided that it, rather than an arbitrator, had to determine whether the plaintiffs were bound by the 2016 agreement. Whether the plaintiffs agreed to arbitrate at all was a threshold contract question. The agreement did not clearly and unmistakably assign that question to an arbitrator, and the defendants did not identify contract language doing so.

The court then compared the agreements. It concluded that the 2012 collective bargaining agreement applied to the plaintiffs because they worked for Liberty Ashes during its term. But by the time the 2012 agreement was modified through the later agreements, all five plaintiffs were former employees. The court therefore concluded that the 2016 agreement, which required present and future employees to arbitrate, did not apply to them because none had worked for Liberty Ashes during the term of the 2016 collective bargaining agreement.

The court rejected the defendants’ argument that “Employees” in the 2016 memorandum included all past, present, and future union employees. It found no clear language or other evidence that the arbitration clause applied retroactively to former employees. The benefits exchanged for the arbitration clause were directed to present employees and, to some extent, future employees, and the parties agreed that the plaintiffs had received none of them.

Ruling and Effect

The court held that the agreements did not bind the plaintiffs to arbitrate their wage-and-hour claims. Judge Richard J. Sullivan denied the defendants’ motion to compel arbitration and to dismiss the case. The court also ordered the parties to file a proposed revised case-management plan within two weeks and directed the clerk to terminate the pending motion.

This order addressed whether the plaintiffs were bound by the arbitration agreement; it did not decide whether the alleged wage-law violations occurred.