From Law360:
Law360, New York (October 20, 2011, 7:03 PM ET) -- A New York appeals court on Thursday denied a request by JetBlue Airways Corp. to compel a potential class of its pilots to arbitrate individually over claims that the airline failed to award the pilots a contractually assured salary increase.
Judge Eileen Bransten remanded the dispute to the American Arbitration Association, stating that arbitrators, and not the court, should decide whether the arbitration over the pilots' claims should be collective or individual.
“Here, there is only one straightforward question that needs to be answered by the arbitration panel, and its disposition will equally affect each and every pilot,” Judge Bransten said in her decision.
The plaintiff class, a group of 746 past and current JetBlue pilots, had entered into standardized employment agreements in which the contested provisions were identical, according to the order. The pilots had claimed that JetBlue was contractually bound to increase their base salary by the same percentage by which the base salary offered to new hires increases.
The pilots filed a single demand for arbitration with the AAA, arguing that their employment contracts, which said any dispute should be submitted to an arbitrator, did not expressly bar collective arbitration, the order said.
JetBlue filed a motion in June 2010 to compel individual arbitration according to Federal Arbitration Act rules, arguing that each pilot had signed a unique employment contract, which restricts arbitration to only one pilot at a time and before an arbitrator in the city of the pilot’s base of operation.
The pilots disagreed, saying FAA rules did not apply to them, since their job description fell under an exemption for “workers engaged in foreign or interstate commerce,” and that it was “wasteful” to demand hundreds of individual proceedings.
Judge Bransten found that FAA rules did apply to the dispute, because the pilots primarily move passengers and the exemption applies only to workers who primarily transport goods.
But she said the issue of whether collective or individual arbitration should apply should be decided by arbitrators, saying it was a “procedural” matter over the manner in which the arbitration should take place, and not a question about whether the parties had decided to arbitrate in the first place.
Attorneys for JetBlue and the plaintiffs could not be immediately reached for comment Thursday.
JetBlue is represented by Marisa A. Marinelli of Holland & Knight LLP.
The plaintiffs are represented by Robert M. Stephenson of Locke Lord Bissell & Liddell LLP.
The case is JetBlue Airways Corp. v. Robert M. Stephenson et al., case number 650691/10, in the Supreme Court of the State of New York, County of New York.
--Editing by Jocelyn Allison and John Williams.
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