Ahn v. MB Rye Metro Nail, Inc.

Background

Kyong Ho Ahn brought claims against MB Rye Metro Nail, Inc. and its owner, Sun Young Kim, under the Fair Labor Standards Act and New York Labor Law. The parties proceeded to arbitration after the court referred the dispute to arbitration and left the question of individual versus class arbitration to the arbitrator.

On July 11, 2022, Arbitrator Andrew J. Peck issued an award. He found that Ahn was entitled to $1,921.25 in overtime and $1,921.25 in liquidated damages. He also awarded $5,000 for the defendants’ failure to provide statutory notice when Ahn was hired and another $5,000 for failing to provide required information with her weekly wage statements. The arbitrator awarded Ahn’s counsel $11,250 in attorneys’ fees, substantially reducing the amount requested.

The parties’ motions

Ahn moved to confirm the arbitration award, which would make the award a judgment of the court. The defendants cross-moved to modify the award. They argued that the arbitrator improperly awarded damages for the New York Labor Law notice violations and that the attorneys’ fee award should be reduced if those damages were removed. The defendants also argued that the arbitrator had disregarded changes in the law concerning whether plaintiffs could recover for statutory notice and wage-statement violations.

Why the court rejected modification

The court held that the defendants’ request was not a proper motion to modify under Section 11 of the Federal Arbitration Act. That provision permits correction of an evident material mistake in describing a person, thing, or property, or correction of an imperfection in the award’s form that does not affect the merits. It does not permit a court to resolve substantive disagreements at the heart of the arbitration. The changes sought by the defendants would have reduced Ahn’s award from $13,842 to $3,842 and reduced the attorneys’ fee award from $11,250 to $3,200.

The court also considered whether the award could be vacated, meaning set aside, because the arbitrator manifestly disregarded the law or exceeded his authority. The court found no manifest disregard of the law. Arbitrator Peck knew the defendants’ position and the cases they relied on, considered the issue, and disagreed with them. The court also concluded that the legal question was not governed by a clearly applicable rule that the arbitrator had ignored. In addition, the court noted that the parties had submitted the statutory wage-and-hour issues to the arbitrator and that their arbitration agreement covered employment-related claims, including wage claims and claims based on statutes or regulations.

Ruling

Judge Karas granted Ahn’s motion to confirm the arbitral award and denied the defendants’ cross-motion to modify it. The court denied vacatur on the defendants’ asserted grounds and separately denied their request to reduce the attorneys’ fee award because that request depended on vacating the award. The court directed the Clerk to enter judgment for Ahn, terminate the pending motions, and close the case.