Rollag v. Cowen Inc.

Background

Kevin Rollag sued Cowen Inc., Cowen and Company, LLC, Gavin O’Reilly, and Scott Lemone. He asserted retaliation and unlawful-discrimination claims under the Family and Medical Leave Act and the New York Human Rights Law. He also filed a complaint with the Occupational Safety and Health Administration alleging whistleblower retaliation under the Sarbanes-Oxley Act of 2002. After receiving no final decision from the agency, Rollag amended his complaint to add Sarbanes-Oxley allegations.

The court previously found that Rollag had agreed to arbitrate all claims except those arising under Sarbanes-Oxley and ordered the parties to arbitrate those claims. Rollag then sought a stay—meaning a pause—of the claims compelled to arbitration while the Sarbanes-Oxley claim proceeded in court. The defendants asked the court to stay the Sarbanes-Oxley claim while the other claims were arbitrated, unless Rollag dismissed the arbitrated claims with prejudice.

The Court’s Analysis

The court declined to stay the claims sent to arbitration. It explained that the Federal Arbitration Act directs courts to order parties to proceed with arbitration when a valid arbitration agreement covers the dispute. Rollag had agreed to arbitrate employment-related claims as a condition of employment and in exchange for additional compensation. The court also noted that Rollag cited no precedent supporting a stay of claims already compelled to arbitration while nonarbitrable claims were resolved in court.

The court also declined to stay the Sarbanes-Oxley claim. It considered whether the arbitration could resolve issues that would prevent or limit litigation of the court claim, including whether the proceedings involved substantial factual overlap and duplicative discovery or issue resolution. Although the court agreed that the Sarbanes-Oxley claims were the primary focus of the dispute, it found that the risk that arbitration would preclude issues in the Sarbanes-Oxley case was not great enough to justify delaying that claim. The court stated that Rollag could choose to dismiss the arbitrated claims if he wanted to focus on the Sarbanes-Oxley claim and avoid a potential preclusion effect.

Disposition

The court declined to issue a stay in the action. It ordered the parties, within two weeks, to submit a letter stating whether Rollag intended to pursue his Family and Medical Leave Act and state-law claims in arbitration. It also ordered them to jointly submit a proposed case-management plan and scheduling order by April 26, 2021, and directed counsel to appear for a telephone status conference on May 3, 2021. Judge Ronnie Abrams signed the order.