Judge Denies Wells’ Bid to Quash Brokers’ Overtime Claims
Three former Wells Fargo Advisors brokers who brought a class-action arbitration claim for overtime pay can proceed with their case, a federal judge in the Southern District of New York ruled on Wednesday.
Judge Paul A. Engelmayer denied Wells Fargo’s attempt to vacate a ruling from an American Arbitration Association arbitrator that a class-wide case was permissible under the terms of the brokers’ employment agreements. Although most industry cases are brought in Financial Industry Regulatory Authority arbitration forums, Finra declined to hear the dispute because it cannot preside over class-action cases and the case moved to the alternative forum.
Wells had sought orders that would have compelled arbitration on an individual basis but Judge Engelmayer agreed with earlier court decisions that it was up to an arbitrator to rule on whether the putative class-action could proceed. In June 2018, AAA arbitrator Edith Dineen approved the class initiative.
“Wells Fargo may now rue that the arbitral forum it chose has reached this outcome, and that this Court’s review is limited to determining only whether the Arbitrator exceeded her broad authority,” Engelmayer wrote. “But that was a risk Wells Fargo accepted when it selected arbitration as the forum in which it would litigate employment disputes with the respondent financial advisors.”
The case was originally filed in 2015 by Reagan Tucker, Benjamin Dooley and Marvin Glasgold, entry-level financial advisors who worked at Wells branch offices in either New York or Texas between 2011 and 2013. They argued that Wells violated the Fair Labor Standards Act and New York labor laws by inappropriately misclassifying employees in the “apprentice phase” of its training program as exempt from overtime requirements
Paul W. Mollica, an employment lawyer at Outten & Golden in Chicago who represents Tucker (who is now an advisor in Dallas with TD Ameritrade) and the two other former brokers declined to comment on the decision or the number of class members that could be included in the case.
A Wells spokeswoman declined to comment.
Courts set high bars to vacating arbitration decisions, and Judge Engelmayer denied Wells’ attempt to prove that Dineen exceeded her authority or showed “manifest disregard” for the relevant laws on class actions. She “identified the relevant law, parsed it thoughtfully and endeavored to apply it with considerable care,” Engelmayer ruled.
The class arbitration proceeding will now continue, adding to a series of decisions in brokerage firm overtime cases. In March 2016, Merrill Lynch paid $14 million to settle class claims brought in federal court in New York that it improperly failed to pay around 9,500 former trainees overtime.
Mollica also represents three other former Wells advisors who in July defeated a similar attempt by the bank to vacate an arbitration decision to allow their claims to proceed as class actions. In July 2017, Wells agreed to pay $3.5 million to settle a separate class claim from brokers who were forced to reimburse their training costs because they joined other firms.