Lesser v. TIAA Bank, FSB

Background

Current and former TIAA Bank employees sued under the Federal Labor Standards Act and similar New York and New Jersey statutes. They alleged that TIAA Bank misclassified them as outside sales employees, which allegedly excluded them from protections requiring payment of wages and overtime. The plaintiffs sought to represent a nationwide group of residential loan officers, and additional employees opted into the case.

The employees’ compensation terms appeared in periodically revised Performance Guides. The 2013 and 2014 Guides contained arbitration clauses requiring disputes relating to or arising under the Guides to be submitted to mandatory arbitration in Duval County, Florida. The 2016 and 2018 Guides did not contain arbitration clauses.

TIAA Bank moved to compel arbitration of Richard Lesser and David Gutfeld’s claims arising before December 1, 2016. It did not seek arbitration of their later claims or of the claims asserted by Richard Martin and Lediana Llerena. TIAA Bank also asked the court to pause the entire case while the arbitration proceeded.

Arbitration ruling

The court applied the Federal Arbitration Act and state contract-law principles. It determined that Lesser and Gutfeld agreed to arbitrate their pre-December 1, 2016 claims through the 2013 and 2014 Guides. Those claims concerned compensation governed by those Guides and therefore fell within the clauses’ language covering disputes relating to or arising under the Guides.

The plaintiffs argued that the 2016 and 2018 Guides replaced the earlier agreements and removed the arbitration requirement. The court treated this as an argument that the later Guides created a new agreement that extinguished the earlier one. It concluded that the undisputed facts showed no intent to extinguish the earlier agreements. In particular, the later Guides became effective for existing participants on dates in 2016 and 2018, rather than retroactively replacing compensation regimes that had already governed earlier work.

The court also rejected the plaintiffs’ reliance on a prior arbitration stipulation involving TIAA Bank and three other former employees. Lesser and Gutfeld were not parties to that stipulation. The court concluded that the stipulation defined the scope of that particular arbitration and did not eliminate TIAA Bank’s contractual right to seek arbitration from Lesser and Gutfeld in this case.

Finally, the court rejected the plaintiffs’ judicial-estoppel argument. Judicial estoppel is a doctrine that can prevent a party from taking inconsistent positions in separate proceedings. The court found no clear inconsistency between TIAA Bank’s position in the earlier arbitration and its position regarding Lesser and Gutfeld’s claims here.

Stay ruling and disposition

The court concluded that Lesser and Gutfeld must arbitrate claims arising before December 1, 2016. Their later claims, and the claims of Martin and Llerena, remained before the court. The court granted TIAA Bank’s motion to compel arbitration.

The court denied TIAA Bank’s request to stay the entire case. Although the arbitration and court case involved common questions about the employees’ classification and entitlement to wages and overtime, a stay would delay the court’s handling of the many claims that were not being sent to arbitration, including later claims, other plaintiffs’ claims, and claims by employees who had opted into or might later opt into the case. Judge Alison J. Nathan also denied a request for oral argument and stated that an initial conference would be scheduled separately.