By Marjorie Johnson, J.D.
A federal district court in New York held that it lacked jurisdiction to review an arbitrator’s order conditionally certifying a collective action against Sterling Jewelers under the Equal Pay Act (EPA) and tolling the statute of limitations for the claims. Finding that the arbitrator’s challenged rulings were not “final,” the court distinguished the preliminary nature of the conditional certification of a collective action from a Rule 23 class certification, which is a “more or less” final determination that all of the Rule’s requirements have been satisfied (Jock v. Sterling Jewelers Inc., May 22, 2016, Rakoff, J.). For the past eight years, the parties have engaged in arbitration over the plaintiffs’ claims of gender bias under both Title VII and the EPA. During that time, extensive proceedings had occurred before the arbitrator, the district court, and the Second Circuit. At issue now was Sterling’s motion to vacate the arbitrator’s recent order conditionally certifying a collective action under the EPA and tolling the statute of limitations for EPA claims. Class certification rulings. The arbitrator previously addressed plaintiffs’ motion to have opt-out classes certified for both the Title VII and EPA claims. She certified a class for the Title VII disparate impact claims with respect to declaratory and injunctive relief, but not for monetary damages or disparate treatment claims. She also refused to certify an opt-out class for the EPA claims, but left the door open for plaintiffs to seek certification of an opt-in collective action of those claims. The district court confirmed that award, except to the extent it permitted opt-outs for classwide injunctive and declaratory relief, and Sterling’s appeal was currently pending. Conditional certification. At issue now was the arbitrator’s order granting the plaintiffs’ subsequent motion to conditionally certify a collective action on the EPA claims, thereby allowing notices to be sent. The arbitrator also tolled the statute of limitations for the EPA claims so that individuals could opt in to the EPA collective action if their claims arose on or after October 16, 2003. The plaintiffs contended that the court lacked jurisdiction to review the challenged rulings since they were not “final,” and the court agreed. Rulings not “final.” The preliminary certification of “collective actions” under the FLSA (and thus the EPA) materially differs from the procedure for certification of class actions under Rule 23 since “certification” in the collective action context refers only to “the district court's exercise of the discretionary power to facilitate the sending of notice to potential class members.” Therefore, such certification is a “first step,” preliminary determination that requires only a modest showing, while Rule 23 class certification indicates a final determination that all the requirements have been satisfied. Moreover, under the Federal Arbitration Act (FAA), a court lacks authority to confirm an award that is interim and not final. To be final, it must resolve all the issues submitted to arbitration, definitively enough so that the rights and obligations of the parties do not stand in need of further adjudication. Here, it was obvious that the arbitrator's conditional certification award and tolling order were not “final” arbitration awards. Indeed, the Second Circuit concluded in a non-arbitration context that it lacked appellate jurisdiction over a district court decision denying conditional certification of a FLSA collective action. As the arbitrator in the instant case expressly recognized, only at the “second stage” of an EPA collective action (after notice is sent out and potential EPA claimants opt in) will a decision be made as to whether a collective action may go forward. Following conditional certification, then, issues such as the basic makeup of the collective action and the fundamental viability of the collective action mechanism remain in need of further adjudication. An arbitration award that conditionally certifies a class of plaintiffs and outlines the procedures to be followed in notifying and defining the class is thus not final. AAA rules. The court rejected Sterling’s assertion that the court had jurisdiction to review the arbitrator’s order pursuant to the AAA Supplementary rules, which allow review of rulings on class action certification. In the related context of appellate review of district court rulings, the Second Circuit (and other courts of appeals) distinguished between having jurisdiction over district courts’ rulings on class certification and lacking jurisdiction over rulings on conditional certification of FLSA collective actions. The court was unpersuaded by Sterling’s contention that the AAA Supplementary Rules should apply to any class-like determination, including determinations regarding collective actions, finding that the same established distinction between certification of an opt-out class and a conditional certification of a collective action applied here. Moreover, the AAA Supplementary Rules governing class arbitrations make no mention of conditional certification of a collective action, but rather focus on “Class Certification” and “Class Arbitration,” and largely track the requirements Rule 23. Indeed, there was no parallel provision in the Rules for conditional certification of collective actions under the FLSA (or the EPA). Finally, if the arbitrator's intentions as to the finality of the conditional certification award and tolling order were ever in doubt, the fact that she labelled these rulings “non-final” in her order denying a stay during the pendency of the instant motion would put these doubts “convincingly” to rest. Thus, the court held that it lacked jurisdiction to review the arbitrator's conditional certification award and tolling order.
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