Faroque v. Park West Executive Services et al
ORDER ADOPTING REPORT AND RECOMMENDATIONS --- For the reasons set forth in the ATTACHED MEMORANDUM AND ORDER, the objections to the detailed, thorough, and well reasoned Report and Recommendation ("R & R") issued by the Hon. Cheryl L. Polla k, U.S.M.J., on September 7, 2016, are overruled, and the R & R is adopted in its entirety. Accordingly, Defendants' motion to compel arbitration as to Faroque and Ikbal, dismiss the individual defendants, and stay any remaining claims pending arbitration is denied in its entirety. This matter is referred to the magistrate judge for further pretrial proceedings. SO ORDERED by Chief Judge Dora Lizette Irizarry on 3/31/2017. (Irizarry, Dora)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
MOHAMMAD O. FAROQUE, KHALED KHAN, :
MD IMRANUL HAQUE, KHANDKER HAQUE, :
MOHAMMED S. ALAM, ASAD IKBAL, and
MOHAMMED E. KARIM on behalf of themselves :
and on behalf of all other similarly situated persons, :
MEMORANDUM AND ORDER
ADOPTING REPORT AND
PARK WEST EXECUTIVE SERVICES, d/b/a
15-CV-6868 (DLI) (CLP)
TOWN CAR INTERNATIONAL; TOWN CAR
INTERNATIONAL HOLDINGS, LLC; ZACHARY :
BERMAN, in his individual and professional
capacities; JOHN M. AHREN, in his individual and :
DORA L. IRIZARRY, Chief United States District Judge:
On December 2, 2015, Plaintiff Mohammad O. Faroque (“Faroque”) initiated this
proceeding individually and on behalf of all current and former similarly situated drivers who,
since December 2, 2009, had provided services to Defendants Park West Executive Services, d/b/a
Town Car International (“TCI”), Town Car International Holdings, LLC, Zachary Berman
(“Berman”), and John M. Ahren (“Ahren”) (collectively, “Defendants”), alleging various
violations of the Fair Labor Standards Act (“FLSA”), the New York Labor Law (“NYLL”), and
the New York Code of Rules and Regulations (“NYCRR”). See Complaint (“Compl.”), Dkt. Entry
No. 1. The proposed classes were described as the “FLSA Collective” and the “NYLL Class.” Id.
at ¶¶ 2-6.
On January 26, 2016, Defendants filed a motion to compel arbitration and dismiss the
complaint, claiming that a clause in Faroque’s operative agreement with TCI (“2015 Agreement”) 1
bound him to arbitrate his claims on an individual basis (“Arbitration Clause”). See Mem. of Law
in Supp. of Def.’s Mot. to Compel Arb. & Dism. the Compl., Dkt. Entry No. 43-1. Instead of
opposing the motion, on February 16, 2016, Faroque filed an Amended Complaint naming six
additional plaintiffs: Khaled Khan (“Khan”), MD Imranul Haque (“M. Haque”), Khandker Haque
(“K. Haque”), Mohammad S. Alam (“Alam”), Asad Ikbal (“Ikbal”), and Mohammad E. Karim
(“Karim”) (collectively with Faroque, the “Plaintiffs”). See Amended Complaint (“Am. Compl.”),
Dkt, Entry No. 54. Two new claims were added for minimum wage violations under the FLSA,
NYLL, and NYCRR. Id. at ¶¶ 143-48, 161-66.
In the Amended Complaint, Plaintiffs proposed two general classes and two subclasses.
The two proposed general classes, the “FLSA Collective” and the “NYLL Class,” would consist
of “Khan, M. Haque, K. Haque, Alam, Karim[,] and all” others similarly situated who never signed
agreements requiring arbitration. Id. at ¶ 3. The two proposed subclasses, the “FLSA Subclass”
and “NYLL Subclass,” would consist of Faroque, Ikbal, and “all such other similarly-situated
persons” who entered into agreements requiring arbitration (i.e., the 2015 Agreement), but only
sought relief for claims predating those contracts. Id. at ¶ 4.
On March 4, 2016, Defendants filed a motion requesting that this Court compel arbitration
for Faroque and Ikbal, dismiss the individual defendants, and stay any remaining claims pending
arbitration (the “Motion”). See Mem. of Law in Supp. of Defs.’ Mot. to Compel Arb., Dism. the
Ind. Defs., & Stay Any Remaining Claims (“Def. Mot.”), Dkt. Entry No. 55-1. Plaintiffs opposed
The “2015 Agreement” is a form contract that was signed by both Faroque and Ikbal. Copies of their
executed contracts have been provided by Defendants. See Def. Mot. at Exs. A, B. The terms of the documents are
identical. Accordingly, the Court will simply refer to the 2015 Agreement in the singular.
the Motion. See Pls.’ Mem. of Law in Opp. to Mot. to Compel Arb., Dism. the Ind. Defs., & Stay
All Remaining Claims (“Pl. Opp.”), Dkt. Entry No. 56. Defendants filed their reply papers on
March 31, 2016. See Reply Mem. of Law in Supp. of Defs.’ Mot. to Compel Arb., Dism. the Ind.
Defs., & Stay Any Remaining Claims (“Def. Reply”), Dkt. Entry No. 57.
On June 16, 2016, this Court referred the Motion to United States Magistrate Judge Cheryl
L. Pollak for a Report and Recommendation (“R & R”). The magistrate judge issued a thorough
and well reasoned R & R on September 7, 2016, and recommended that the Court deny all relief
requested by Defendants. See R & R, Dkt. Entry No. 61. In sum, the magistrate judge determined
that the Motion should be denied, in toto, because: (1) the language of the 2015 Agreement did not
apply to claims accruing under previous contracts; (2) Plaintiffs stated claims against Berman and
Ahern; and (3) there was no reason to stay the proceeding. See R & R at 10-26. On September 26,
2016, Defendants timely filed objections to the R & R. See Defs.’ Objs. to Sept. 7, 2016 R & R
(“Objs.”), Dkt. Entry No. 64. Plaintiffs opposed. See Pls.’ Mem. of Law in Opp. to Defs.’ Objs. to
Sept. 7, 2016 R & R (“Objs. Opp.”), Dkt. Entry No. 65.
For the reasons set forth below, Defendants’ objections are overruled and the R & R is
adopted in its entirety.
When a party objects to an R&R, a district judge must make a de novo determination as to
those portions of the R & R to which a party objects. See FED. R. CIV. P. 72(b)(3); United States
v. Male Juvenile, 121 F.3d 34, 38 (2d Cir. 1997). Pursuant to the standard often articulated by the
district courts of this Circuit, “[i]f a party simply relitigates his original arguments, the Court
reviews the Report and Recommendation only for clear error.” Antrobus v. New York City Dep’t
The Court assumes familiarity with the facts as outlined in the R & R. See R & R at 3-10.
of Sanitation, No. 11-CV-5434 (CBA) (LB), 2016 WL 5390120, at * 1 (E.D.N.Y. Sept. 26, 2016)
(internal citations and quotation marks omitted); see also Rolle v. Educ. Bus Transp., Inc., No. 13CV-1729 (SJF) (AKT), 2014 WL 4662267, at *1 (E.D.N.Y. Sept. 17, 2014) (“[A] rehashing of the
same arguments set forth in the original papers . . . would reduce the magistrate’s work to
something akin to a meaningless dress rehearsal.”) (internal citations and quotation marks
omitted). On the other hand, the Second Circuit Court of Appeals has suggested that a clear error
review may not be appropriate “where arguably ‘the only way for [a party] to raise . . . arguments
[is] to reiterate them.’” Moss v. Colvin, 845 F.3d 516, 520 n.2 (2d Cir. 2017) (quoting Watson v.
Geithner, No. 11-CV-9527 (AJN), 2013 WL 5441748, at *2 (S.D.N.Y. Sept. 27, 2013)).
Nonetheless, a court will not “ordinarily . . . consider arguments, case law and/or evidentiary
material which could have been, but [were] not, presented to the magistrate judge in the first
instance.” Santiago v. City of New York, No. 15-CV-517 (NGG) (RER), 2016 WL 5395837, at *1
(E.D.N.Y. Sept. 26, 2016) (internal citation and quotation marks omitted). After its review, the
district court may then “accept, reject, or modify the recommended disposition; receive further
evidence; or return the matter to the magistrate judge with instructions.” FED. R. CIV. P. 72(b)(3);
see also 28 U.S.C. § 636(b)(1).
Defendants present three objections: (1) the magistrate judge erred in applying the
presumption of arbitrability and failed to identify a “positive assurance” that the subject arbitration
clause did not apply retroactively; (2) the magistrate judge misconstrued the Second Circuit’s
holding in Holick v. Cellular Sales of New York, 802 F.3d 391 (2d Cir. 2015); and (3) the Court
should stay the other Plaintiffs’ claims pending resolution of the arbitration. See Objs. 6-18. They
do not challenge that part of the R & R recommending that the Court deny Defendants’ motion to
dismiss the individual defendants, Berman and Ahren. See generally, Id.
The Court has reviewed the R & R de novo with respect to these objections and accepts the
reasoning and recommendations of the magistrate judge in their entirety.
THE MAGISTRATE JUDGE PROPERLY DETERMINED THAT THE CLAIMS PREDATING THE
FEBRUARY 2015 CONTRACT WERE NOT SUBJECT TO THE ARBITRATION CLAUSE
The first two objections are simply two different ways of challenging the magistrate judge’s
finding that the Arbitration Clause did not apply retroactively. Having reviewed the magistrate
judge’s findings and determinations in detail, the Court finds that Defendants’ objections are
meritless and adopts the reasoning and recommendations of the magistrate judge. While the parties
argued about the retroactivity of the Arbitration Clause before the magistrate, as the dispute
seemingly centers on the significance of Holick and interpretation of controlling precedent, the
Court will review this objection de novo. See Def. Mot. at 12-13; Pl. Opp. at 8-12; Def. Reply at
1-6; R & R 11-20; see also Objs. at 10-16.
The Second Circuit has explained that, in order to determine if a dispute “is arbitrable, [the
Court] must answer two questions: (1) whether the parties agreed to arbitrate, and, if so, (2)
whether the scope of that agreement encompasses the claims at issue.” Holick, 802 F.3d at 394
(internal citations and quotation marks omitted). As to the second prong, if an arbitration clause
“has no explicit temporal limitation,” the Court must determine whether the subject matter of a
dispute is included in that clause. Id. (internal citations omitted); see also Smith/Enron
Cogeneration Ltd. P’ship v. Smith Cogeneration Int’l, 198 F.3d 88, 99 (2d Cir. 1999). Despite the
general policy in favor of arbitration, it “is a matter of contract, and therefore a party cannot be
required to submit” a dispute to arbitration if it has not contracted to do so. Id. at 395 (quoting JLM
Indus. v. Stolt-Nielsen SA, 387 F.3d 163, 171 (2d Cir. 2004)) (internal quotation marks omitted).
There is no dispute that the parties agreed to arbitrate claims under the 2015 Agreement. R
& R at 13. The sole question before the Court is whether the scope of the Arbitration Clause
includes Faroque’s and Ikbal’s claims that predate the 2015 Agreement. The Court finds that it
In the R & R, the magistrate judge acknowledged the federal policy in favor of arbitration
and a “presumption of arbitrability which may only be overcome by ‘a positive assurance that the
arbitration clause is not susceptible of an interpretation [i.e., ambiguity] that covers the asserted
dispute.’” R & R at 11 (quoting Holick, 802 F.3d at 395). Applying the presumption of arbitrability
alongside principles of contract law, the magistrate judge found positive assurances 3 in the
language of the Arbitration Clause and the parties’ past practices that limited the Arbitration
Clause to disputes arising after the parties signed the contract. Id. at 17-20.
In pertinent part, the Arbitration Clause, Section 11(a), reads as follows:
All claims and disputes arising under or relating to this Agreement .
. . are to be settled by individual binding arbitration in the [S]tate of
New York, County of Queens. The arbitration shall be conducted on
a confidential basis pursuant to the Commercial Arbitration Rules
of the American Arbitration Association.
Def. Mot., Ex. A at 12-13; Def. Mot., Ex. B, at 12-13. 4 Here, the language of the 2015 Agreement
speaks only to “this Agreement.” Def. Mot., Ex. A at 12; Def. Mot., Ex. B, at 12. Looking to the
jurisprudence from courts of concurrent jurisdiction, as a matter of contract interpretation, when
successive contracts use the phrase “this Agreement,” “[t]he subject matter of [the] clause is
restricted by the phrase ‘this Agreement.” TAPCO Underwriters, Inc. v. Catalina London Ltd.,
No. 14-CV-8434 (JSR), 2014 WL 7228711, at *4 (S.D.N.Y. Dec. 8, 2014); see also Sempra
Energy Trading Corp. v. Algoma Steel, Inc., No. 00-CV-9227 (GEL), 2001 WL 282684, at *7
A “positive assurance” as to the applicability of an arbitration clause can be found by looking to the
“contract’s language, the timing of its execution, and the conduct of the parties.” Holick, 802 F.3d at 398 (internal
citations and quotation marks omitted).
This pagination refers to the numbers generated electronically at the top of the page by ECF for ease of
(S.D.N.Y. Mar. 22, 2001), aff’d by 300 F.3d 242 (2d Cir. 2002) (explaining that “forum selection
clauses cannot operate to hijack any dispute that may exist . . . related or unrelated, and turn a
dispute about some other contract . . . that would otherwise be litigated elsewhere into a dispute
‘relating to’ the agreement . . . .”) (internal citations omitted). Accordingly, the Court does not find
the Arbitration Clause to have any ambiguity that would necessitate further analysis. Cf. Holick,
802 F.3d at 397 (“Since the plain language of the Compensation Agreement is ambiguous, we turn
to whether parol evidence sheds light on the parties’ intent.”).
Having reviewed the arguments and the relevant case law, the Court finds that Holick and
the other controlling cases that Defendants cite in objecting to the R & R are inapposite. See Objs.
at 7. In Arrigo v. Blue Fish Commodities, Inc., 408 F. App’x 480 (2d Cir. Feb. 7, 2011), the claims
concerned allegations regarding unpaid overtime wages under federal and state law. The Circuit
determined that those claims were within the scope of the operative arbitration clause that
“encompasse[d] ‘all federal and state statutory claims’ and ‘any other . . . basis of action pertaining
to [the plaintiff’s] employment.’” Id. at 482 (internal citations omitted). In Smith/Enron
Cogeneration Ltd. P’ship, the Circuit found that allegations of fraudulent inducement to contract
were “related to” the resultant contract and, therefore, controlled by its arbitration clause. 198 F.3d
at 99. In Coenen v. R. W. Pressprich & Co., 453 F.2d 1209, 1212 (2d Cir. 1972), the Circuit found
that an arbitration clause applied because it required the plaintiff to “arbitrate any controversy
between members.” (internal quotation marks omitted) (emphasis added). Finally, in Holick, the
controversy concerned the following arbitration clause: “All claims, disputes, or controversies
arising out of, or in relation to this document or Employee’s employment with [defendant] shall
be decided by arbitration.” Id. at 393 (internal citations omitted). The Circuit only addressed the
latter half of that clause and explicitly stated that it was not “analyz[ing] the portion of the
arbitration agreement that references ‘disputes . . . arising out of, or in relation to this document.’”
Id. at 394 n.6 (internal citations omitted). The parties have not cited, and the Court has not found,
any opinion from the Second Circuit Court of Appeals squarely addressing the impact and
significance of the limiting phrase “this Agreement” in an arbitration clause.
Defendants counter that the language of the Arbitration Clause is defeated by the inclusion
of Section 10(a) of the contract, “the plain meaning and effect” of which means that the 2015
Agreement “stands in the shoes of the prior one[s].” Objs. at 15; see also Id. at 8-9; Def. Reply at
3. This is false.
According to Section 10(a),
This Agreement sets forth the entire understanding between TCI and
[the plaintiff] and any and all prior agreements, understandings, and
representations are hereby terminated and canceled in their entirety
and are of no further force and effect.
Ex. A at 12; Ex. B at 12. This Court previously has held that “a subsequent contract not pertaining
to the same subject matter will not supersede an earlier contract unless the subsequent contract has
definitive language indicating it revokes, cancels or supersedes that specific prior contract.”
Stewart v. Target Corp., No. 11-CV-3557 (DLI) (RER), 2013 WL 1182080, at *3 (E.D.N.Y. Mar.
20, 2013) (internal citations and quotation marks omitted) (emphasis added). Section 10(a) does
not have any language revoking any specific contract, but rather, generally states that “all prior
agreements” are terminated. Ex. A at 12; Ex. B at 12. This provision is insufficient to permit the
most recent agreements “stand in the shoes” of any previous contracts.
As discussed above, the language of the contract unambiguously restricts the Arbitration
Clause to the 2015 Agreement thereby differentiating it from any other previous contracts, and
Section 10(a) does not effectively revoke any previous agreements. The Court finds, as did the
magistrate judge, that the Arbitration Clause does not apply to Faroque’s and Ikbal’s claims that
predate their execution of the 2015 Agreement. As such, the Court overrules Defendants’
objections and adopts the magistrate judge’s recommendation that Defendants’ motion to compel
arbitration be denied.
THE MAGISTRATE JUDGE PROPERLY DETERMINED
SHOULD NOT BE STAYED
Defendants’ remaining objection to the R & R is that the magistrate judge erred in
recommending that the Court deny their request to stay any other claims until the resolution of
arbitration concerning Faroque’s and Ikbal’s claims. Objs. at 16-18. Like their arguments
concerning Holick, this objection is a rehashing of the issues brought before the magistrate judge.
Compare Def. Mot. at 23-25 and Def. Reply at 8-10, with Objs. at 16-18. In the R & R, after the
magistrate judge recommended that Faroque’s and Ikbal’s claims not be subject to arbitration, she
correspondingly found no reason to grant a stay. See R & R at 25-26.
In light of the Court’s decision to adopt the magistrate judge’s recommendation that
Defendants’ motion to compel arbitration be denied and the fact that no claims are proceeding to
arbitration, there is no reason to stay the action. Defendant’s objection is overruled as moot.
Upon due consideration and review, as discussed above, and including those portions of
the R & R to which Defendants did not object, the recommendations contained in the R & R are
adopted in their entirety. Accordingly, Defendants’ motion to compel arbitration as to Faroque and
Ikbal, dismiss the individual defendants, and stay any remaining claims pending arbitration is
Dated: Brooklyn, New York
March 31, 2017
DORA L. IRIZARRY
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