Fernandez v. Pinnacle Group NY LLC

Background

Edgar Fernandez and six opt-in plaintiffs—Julio Concepcion, Franklin Lara, Igor Turcios, Juan Mena, Fernando Mercado, and Tony Fernandez—brought a collective action under the Fair Labor Standards Act (FLSA). They alleged that Pinnacle Group NY LLC and Joel Wiener failed to pay them for hours worked over 40 in a week. Fernandez alleged that he generally worked 50-hour weeks, and sometimes 54- or 58-hour weeks, but was paid his $22 hourly rate only for the first 40 hours. He also alleged that he had to remain available and respond quickly to tenant calls outside scheduled hours.

Fernandez, Concepcion, Lara, Turcios, and Mena were represented by Service Employees International Union, Local 32BJ. Mercado was represented by Local 670, Stationary Engineers, Firemen, Maintenance and Building Service Union. Tony Fernandez was not a union member. Pinnacle had collective bargaining agreements with both unions. Those agreements addressed employment terms, including overtime, and contained grievance and arbitration procedures.

Defendants’ Motion to Dismiss

The defendants moved to dismiss under Rules 12(b)(1) and 12(b)(6), arguing that the FLSA overtime claims were preempted by section 301 of the Labor Management Relations Act and that the plaintiffs had not alleged that they exhausted the grievance procedures in their collective bargaining agreements. Preemption means that federal labor-contract law would displace or control a claim because resolving it substantially depends on interpreting a collective bargaining agreement.

The court held that the FLSA claims were not preempted. The plaintiffs limited their claims to overtime for hours worked over 40 in a week and expressly gave up claims based only on working more than eight hours in a day. Resolving the claims therefore did not require interpreting the collective bargaining agreements, although the agreements could be consulted for information such as the pay rate.

The court also held that the plaintiffs were not required to exhaust the agreements’ grievance procedures before bringing their FLSA claims. The agreements did not specifically mention the FLSA or statutory claims generally. Their broad references to disputes and grievances therefore did not clearly and unmistakably waive the plaintiffs’ right to bring statutory overtime claims in federal court.

Motion to Compel Arbitration

The defendants alternatively asked the court to compel arbitration. They argued both that the agreements delegated the initial question of arbitrability to an arbitrator and that the FLSA claims fell within the agreements’ arbitration provisions. Arbitrability is the question whether a particular dispute must be arbitrated.

The court rejected both arguments. The agreements did not clearly and unmistakably waive the plaintiffs’ right to bring their FLSA claims in federal court, and they did not clearly assign the question of arbitrability to an arbitrator. Because the agreements were silent on that issue and did not broadly require arbitration of all aspects of all disputes, the court retained authority to decide the issue and would not compel arbitration.

Disposition

The court denied the defendants’ motion to dismiss and denied their alternative motion to compel arbitration. The Clerk of Court was directed to correct the spelling of Joel Wiener’s name in the caption and terminate the motions at ECF Nos. 35 and 50.