The opinion of the court was delivered by: Cedarbaum, J.
Plaintiff, a registered securities broker, filed an action under the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq., claiming that defendant brokerage firm improperly exempted him from the wage provisions of that act by failing to pay him for the hours he worked in excess of 40 hours each week. Although plaintiff describes the claim as a collective action, no other plaintiffs have elected to join. The complaint also asserts two pendent claims for class actions under New York State and City laws. Relying on two arbitration agreements signed by plaintiff, defendant moves to dismiss all the claims or alternatively to compel arbitration of the FLSA claim and stay the class action claims. Because no other plaintiff has sought to join plaintiff's FLSA claim, that claim is asserted only in behalf of the one named plaintiff. Accordingly, defendant's motion to compel arbitration of the FLSA claim is granted. Defendant's motion to dismiss the class action claims is denied.
According to the complaint, plaintiff was employed by Bear, Stearns & Co. as a stockbroker for approximately three years. The complaint alleges that throughout his employment plaintiff was regularly required to work more than 40 hours per week. Plaintiff asserts that he did not receive overtime pay, and that defendant improperly deducted money from his wages. Although defendant classified plaintiff as an exempt employee under 29 U.S.C. § 207, plaintiff argues that he and his fellow brokers were non-exempt employees entitled to the wage and hour protections of the FLSA.
Plaintiff is a party to two separate arbitration agreements. One was included in a letter offering him employment (the "Employment Agreement"), and it provides:
You and the Firm both specifically and knowingly and voluntarily agree to a pre-dispute arbitration clause so that should any controversy or dispute arise in connection with your employment, the cessation of your employment or the interpretation of this offer letter, you and the Firm agree to arbitrate any and all such claims before a neutral panel of the National Association of Securities Dealers, Inc. (pursuant to its rules, including those related to discovery) at an NASD situs closest to the last Firm office in which you were employed.
The other agreement was included in the Uniform Application for Securities Industry Registration or Transfer (the "U-4") which all brokers working with Self-Regulatory Organizations must sign, and it reads:
I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the [National Association of Securities Dealers, Inc.] as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of competent jurisdiction.
Defendant maintains that both arbitration agreements require plaintiff to arbitrate his claims according to the rules of the National Association of Securities Dealers, Inc. (the "NASD"), and that Rule 10101 of the NASD Code of Arbitration Procedure (the "NASD Rules") requires that any dispute "arising out of employment or termination of employment" of "a person associated with a member against a member" shall be arbitrated.
The parties do not dispute that class actions are ineligible for NASD arbitration. Plaintiff argues that FLSA collective actions are essentially class actions, and that the arbitration agreements do not require claims encompassed within a class action to be arbitrated. Defendant responds with three arguments: 1. Plaintiff's FLSA claim is not part of a collective action because no other plaintiff has joined; 2. Only the NASD may decide whether a collective action is ineligible for arbitration under Rule 10301; 3. The arbitration agreements require plaintiff to arbitrate all of his claims in non-class arbitration.
Plaintiff's FLSA Claim is Subject to Arbitration
Collective actions under the FLSA and class actions under Rule 23 of the Federal Rules of Civil Procedure both facilitate the pursuit of joint relief for similarly situated plaintiffs. Class actions, however, bind all class members who do not affirmatively "opt out" of the action. In contrast, collective actions bind only similarly situated plaintiffs who file written consents to "opt in" to the action. NASD Rule 10301(d)(1) provides that "a class action shall not be eligible for [NASD] arbitration." Because plaintiff believes that the NASD would interpret this rule to cover putative collective actions as well as class actions, plaintiff argues that none of his claims is eligible for arbitration.
Although plaintiff describes his FLSA claim as a collective action under 29 U.S.C. § 216, the action should more accurately be called a putative collective action since no other plaintiff has given "consent in writing to become...a ...