Bello Herrera v. Manna 2nd Avenue LLC

Background

Alfredo Bello Herrera and Angelo Bello Silva sued the defendant restaurant companies and individuals, alleging violations of the Fair Labor Standards Act and New York Labor Law. Their claims included alleged failures to pay minimum wage and overtime and to provide wage statements. The plaintiffs sought to proceed on behalf of themselves and others similarly situated.

The defendants later located arbitration agreements signed by both plaintiffs and moved to compel arbitration and stay the case. The agreements had been prepared in English and Spanish in January 2019. The plaintiffs acknowledged signing them but said they were told to sign immediately, received only the first and last pages, and did not fully understand what they were signing. Silva also said that some Spanish words were difficult for him to understand.

Arbitration agreements

The court applied New York contract law. Under that law, a person generally must read a document before signing it and cannot avoid the document merely because the person did not read or understand it. The court also explained that a signer’s obligation is not eliminated by receiving only a signature page or by having language difficulties.

The court found that both plaintiffs signed agreements that clearly referred to arbitration. The first and last pages also showed that the documents concerned arbitration, and the signature pages began with paragraph 17, indicating that earlier paragraphs existed. The court therefore concluded that the plaintiffs agreed to arbitrate their employment claims. The plaintiffs did not dispute that their Fair Labor Standards Act and New York Labor Law claims fell within the agreements if the agreements were enforceable.

Waiver

The court also considered whether the defendants waived, meaning gave up, their right to compel arbitration by participating in the lawsuit. The court discussed the Supreme Court’s decision in Morgan v. Sundance, which rejected a special requirement that a party resisting arbitration prove prejudice before waiver can be found. The court noted uncertainty about how the Second Circuit would apply that decision but concluded that the result was the same under either possible approach.

Under ordinary contract-waiver principles, the plaintiffs had not shown a clear intent by the defendants to give up arbitration. Under the Second Circuit’s earlier arbitration-waiver framework without its prejudice requirement, the delay weighed somewhat toward waiver, but the limited litigation weighed strongly against it. Although the defendants had answered the complaint, participated in mediation, and opposed conditional class certification, the parties had not briefed the merits of the wage claims, filed dispositive motions, or completed meaningful discovery. The court therefore found no waiver.

Ruling

The court granted the defendants’ motion to compel arbitration. It stayed the case pending the arbitration proceedings and ordered the parties to submit a joint status update by the deadline stated in the order. The ruling addressed whether the claims had to be arbitrated, not whether the plaintiffs ultimately prevailed on their wage-law claims.