Zhu et al v. Hakkasan NYC LLC et al
OPINION AND ORDER: re: 33 MOTION to Compel Arbitration, filed by Hakkasan Holdings, LLC, Hakkasan NYC LLC. Defendants' motion to compel arbitration is GRANTED, though Defendants' request that the Court order individual arbitration in this matter is DENIED. That question, like the question regarding the validity of the confidentiality clause, is to be resolved by the arbitrator in the first instance. Pursuant to binding Second Circuit precedent, the Clerk of Cour t is ORDERED to stay the case pending the outcome of arbitration, and as further set forth in this order. See Katz v. Cellco P'ship, 794 F.3d 341, 345 (2d Cir.), cert. denied, 136 S. Ct. 596 (2015). Case stayed. Motions terminated: 33 MOTION to Compel Arbitration, filed by Hakkasan Holdings, LLC, Hakkasan NYC LLC. (Signed by Judge Katherine Polk Failla on 11/28/2017) (ap) Modified on 11/28/2017 (ap).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SUQIN ZHU, INDIVIDUALLY AND ON
BEHALF OF ALL OTHER EMPLOYEES
HAKKASAN NYC LLC, HAKKASAN
DOC #: _________________
November 28, 2017
DATE FILED: ______________
16 Civ. 5589 (KPF)
OPINION AND ORDER
KATHERINE POLK FAILLA, District Judge:
Defendants move, pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1
to 16 (the “FAA”), to compel arbitration of Plaintiffs’ claims alleging violations of
the Fair Labor Standards Act, 29 U.S.C. §§ 201 to 219 (the “FLSA”), and the
New York Labor Law (the “NYLL”) on a class and collective action basis, as well
as individual discrimination claims under the New York State Human Rights
Law (the “NYSHRL”) and New York City Human Rights Law (the “NYCHRL”).
What is more, Defendants request that this Court order arbitration on an
individual basis. Plaintiffs oppose the motion, claiming that the arbitration
agreement that each signed (the “Arbitration Agreement” or “Agreement”) is
unconscionable because (i) Plaintiffs were told to sign the Agreement
immediately upon viewing it, without receiving translated versions in Plaintiffs’
native languages, and (ii) the Agreement contains a confidentiality clause that,
in Plaintiffs’ view, is invalid under Cheeks v. Freeport Pancake House, 796 F.3d
199 (2d Cir. 2015), and dissuades employees from bringing claims against
Defendants. In the alternative, Plaintiffs ask the Court to strike the
confidentiality clause and to order that arbitration proceed on a collective
As detailed in the remainder of this Opinion, the Court finds that the
Arbitration Agreement is valid and enforceable and that Plaintiffs’ claims fall
within its scope. Accordingly, the Court grants Defendants’ motion to compel
arbitration. However, because the availability of collective arbitration is not a
“question of arbitrability,” the Court reserves the question for the arbitrator.
The Court similarly finds that Plaintiffs’ claim that the confidentiality clause is
invalid under Cheeks is not a “question of arbitrability” and must therefore be
decided in the first instance by the arbitrator.
Plaintiffs’ Employment at Defendants’ Restaurant
Plaintiff Suqin Zhu was employed by Defendants as a sous chef at their
restaurant — located at 311 West 43rd Street in Manhattan — from February
15, 2012 to July 1, 2016. (Compl. ¶¶ 9, 18). Nelson Leung was employed by
Defendants as a sous chef starting in January 2012. (Leung Decl. ¶ 2). Lip
For ease of reference, the Court refers to the Complaint as “Compl.” (Dkt. #1); to
Defendants’ opening brief as “Def. Br.” (Dkt. #34); to Plaintiffs’ opposition brief as
“Pl. Opp.” (Dkt. #37); to Defendants’ reply as “Def. Reply” (Dkt. #38); to Plaintiff Nelson
Leung’s Declaration in Opposition to Defendants’ Motion to Compel Arbitration as
“Leung Decl.” (Dkt. #36-2); to Plaintiff Lip Kuen Moy’s Declaration in Opposition to
Defendants’ Motion to Compel Arbitration as “Moy Decl.” (Dkt. #36-3); and to the
Arbitration Agreement as “Arb. Agmt.” (Dkt. #36-4).
Kuen Moy was employed by Defendants as a kitchen prep worker starting in
January 2012. (Moy Decl. ¶ 2).
Plaintiffs’ Alleged Violations of the FLSA, NYLL, NYCHRL, and
On July 12, 2016, Plaintiff Zhu signed a Consent to Sue Under Federal
Fair Labor Standards Act. (Compl., Ex. 1). The next day — July 13, 2016 —
Zhu filed a Collective Action Complaint against Defendants Hakkasan NYC LLC
and Hakkasan Holdings, LLC. (Compl.). Plaintiff Zhu alleged that: (i) between
March 17, 2013, and July 1, 2016, Defendants failed to provide Zhu with
overtime compensation for time worked beyond 40 hours each workweek (id. at
¶ 29); (ii) “Plaintiff’s workdays frequently lasted longer than 10 hours,” but
“Defendants did not pay Plaintiff ‘spread of hours’ premium for every day in
which she worked over 10 hours” (id. at ¶¶ 37, 38); (iii) Defendants
misclassified Plaintiff and other members of the contemplated class as salaried,
exempt employees (id. at ¶ 35); (iv) “Defendants did not provide Plaintiff with
proper written notice about the terms and conditions of her employment upon
hire [or upon pay increases] in relation to their rate of pay, regular pay cycle[,]
and rate of overtime pay” (id. at ¶ 38); (v) Defendants failed to provide detailed
paystub information every payday (id. at ¶¶ 80-81); (vi) Zhu, who is Han
Chinese, was required to work substantially more hours for the same pay as
her Caucasian colleagues who performed similar work functions (id.
at ¶¶ 41-43); and (vii) Defendants provided Caucasian employees with more
paid holidays than they did to Chinese employees (id. at ¶ 45).
Plaintiff Zhu brought these claims on behalf of herself and “all persons
who are or were formerly employed by Defendants as a sous chef and other
similarly situated current and former employee[s] holding comparable positions
but different titles, at any time from July 30, 2012 to the entry of judgment in
this case.” (Compl. ¶ 46). On November 8, 2016, Leung and Moy signed
consent to sue forms similar to that originally executed by Zhu. (Dkt. #21, 22).
Plaintiffs’ Arbitration Agreement
As a condition of their employment by Defendants, Plaintiffs signed a
Dispute Resolution/Arbitration Agreement. (Arb. Agmt.). Zhu executed the
Agreement on February 15, 2012; Moy, on February 13, 2012; and Leung, on
January 26, 2012. (Id.). In declarations filed with the Court, Zhu, Leung, and
Moy all stated that, “[around the start of my employment] I was provided with a
document in English that resembles the arbitration agreement at issue.” (Zhu
Decl. ¶ 5, Leung Decl. ¶ 5, Moy Decl. ¶ 5). All further stated that, “I was asked
by a Chinese speaking secretary at Hakkasan to sign the document without
first having the document translated to me[; t]he secretary informed me that
the document must be signed immediately[; and b]efore signing the document I
never had any opportunity to determine its contents, or understand its
implications.” (Zhu Decl. ¶¶ 6-7, Leung Decl. ¶¶ 6-7, Moy Decl. ¶¶ 6-7).
In the Arbitration Agreement, each Plaintiff agreed to “waive [his/her]
right to a court and/or jury trial and agree[d] that disputes relating to [his/her]
employment, or the termination of such employment, shall be decided by a
mutually agreed-upon Arbitrator in final and binding arbitration.” (Arb.
Agmt. 1). Each further agreed to:
bring any and all claims [he/she] may wish to assert
against the Company, other than those claims
specifically excluded below, only through arbitration.
Such claims, whether based upon statute, regulation,
contract, tort, or other common law principles, include
but are not limited to, any claim for breach of contract,
unpaid wages, wrongful termination, violation of
federal, state[,] or city laws forbidding discrimination,
harassment, and retaliation on the basis of race, color,
religion, gender, sexual orientation, age, national origin,
disability, and any other protected status which may be
brought under applicable federal, state[,] or local law,
and disputes relating to the interpretation of this
(Id.). The Agreement goes on to describe the arbitration process, specifying
that arbitration “shall be before a single Arbitrator … and conducted in
accordance with the Employment Arbitration Rules of the American Arbitration
Association to the extent consistent with applicable law, including the Federal
Arbitration Act, the Federal Rules of Civil Procedure (relating to filing deadlines,
discovery processes, and dispositive motions), and the Federal Rules of
Evidence (relating to the presentation of evidence).” (Id.).
Plaintiffs’ Linguistic Backgrounds
Plaintiff Zhu’s native language is Mandarin Chinese. (Zhu Decl. ¶ 4).
Leung’s and Moy’s native language is Cantonese Chinese, and both are fluent
in Mandarin Chinese. (Leung Decl. ¶ 4, Moy Decl. ¶ 4). According to their
declarations, Zhu, Leung, and Moy are unable to read or understand English.
(Zhu Decl. ¶ 4, Leung Decl. ¶ 4, Moy Decl. ¶ 4).
Plaintiff Zhu commenced this putative collective action by filing the
Complaint on July 13, 2016, on behalf of all persons employed by Defendants
as sous chefs and other similarly situated employees holding comparable
positions after July 30, 2012. (Compl. ¶ 46). In lieu of answering the
Complaint, Defendants filed a pre-motion letter on October 18, 2016,
requesting leave to move to compel arbitration and dismiss the case pursuant
to Federal Rule of Civil Procedure 12(b) or stay the action pursuant to the FAA,
and for costs and fees associated with the pre-motion letter. (Dkt. #14). The
bases for the anticipated motion, which was directed specifically to Plaintiff
Zhu, were that: “[i] Plaintiff signed a valid and enforceable arbitration
agreement in consideration for her employment; [ii] Plaintiff’s claims fall within
the scope of the arbitration provision; and [iii] Plaintiff has withheld her
consent to withdraw this lawsuit and proceed to arbitration.” (Id. at 1).
On October 20, 2016, Plaintiff Zhu filed a letter motion requesting leave
to file a motion to certify a collective action. (Dkt. #16). On October 21, 2016,
Plaintiff Zhu filed a subsequent letter opposing Defendants’ pre-motion letter to
compel arbitration in which Zhu argued that she “was fraudulently induced
into signing the agreement.” (Dkt. #18). Zhu asserted that “a binding
agreement was never created since it was never fully executed” and that
“arbitration agreements, such as the one at issue here are incompatible with
recent Second Circuit case law, namely Cheeks v. Freeport Pancake House Inc.,
796 F.3d 199 (2d Cir. 2015).” (Dkt. #18).
At a pre-motion conference on October 27, 2016, the Court considered
Plaintiff Zhu’s request for leave to file a certification motion and Defendants’
request for leave to file a motion to compel arbitration. At that conference, the
parties indicated that they wished to engage in settlement discussions before
engaging in motion practice. For that reason, the Court did not rule on the
parties’ letter motions. (Dkt. #20).
On November 8, 2016, Leung and Moy filed consent forms. (Dkt. #21,
22). The Court notes that it had not certified a collective action in this case
and that, to this day, Plaintiffs have filed neither a conditional certification
motion nor an amended complaint adding Leung and Moy as plaintiffs.
However, the parties’ submissions refer to Leung and Moy as individual
plaintiffs and state that Leung and Moy joined the case when they filed
consents to sue. (See Def. Br.; Pl. Opp.; Def. Reply). The Court adopts the
parties’ framework and, following the parties’ lead, refers to Leung and Moy as
Plaintiffs in this action.
On March 31, 2017, after the parties tried unsuccessfully to settle the
case, the Court ordered Defendants to file their motion to compel arbitration on
or before April 20, 2017; Plaintiffs to file their opposition on or before May 11,
2017; and Defendants to file their reply, if any, on or before May 25, 2017.
(Dkt. #32). The parties filed their papers accordingly. (See Dkt. #33-38).
Federal Policy Favoring Arbitration Agreements
A court’s decision to compel arbitration, or not, is governed by the FAA.
Section 2 of the FAA provides that “[a] written provision in … a contract
evidencing a transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract … shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. “This provision establishes ‘a liberal
federal policy favoring arbitration agreements.’” CompuCredit Corp. v.
Greenwood, 565 U.S. 95, 98 (2012) (quoting Moses H. Cone Memorial Hosp.
v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)); see Arciniaga v. Gen. Motors
Corp., 460 F.3d 231, 234 (2d Cir. 2006) (“[I]t is difficult to overstate the strong
federal policy in favor of arbitration[.]”). The FAA “requires courts to compel
arbitration in accordance with the terms of an arbitration agreement, upon the
motion of either party to the agreement, provided that there is no issue
regarding its creation.” Kutluca v. PQ New York Inc., No. 16 Civ. 3070 (VSB),
2017 WL 2963486, at *7 (S.D.N.Y. July 10, 2017) (citations omitted).
The FAA applies with equal force in the employment context, and courts
have consistently upheld arbitration agreements — like the one here —
between employers and employees. See, e.g., Circuit City Stores, Inc. v. Adams,
532 U.S. 105, 123 (2001) (“Arbitration agreements allow parties to avoid the
costs of litigation, a benefit that may be of particular importance in
employment litigation[.]”); Victorio v. Sammy’s Fishbox Realty Co., LLC, No. 14
Civ. 8678 (CM), 2015 WL 2152703, at *19 (S.D.N.Y. May 6, 2015) (“Courts in
this District have repeatedly found both FLSA and NYLL claims to be
arbitrable.”). As the Second Circuit has stated, the FAA “certainly does not
preclude the enforcement of employment contracts which make employment
conditional upon an employee’s acceptance of mandatory arbitration.” Ragone
v. Atl. Video at the Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010) (citing
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991) (“[m]ere
inequality in bargaining power” is not a basis for declining to enforce
arbitration agreements contained in employment contracts)).
Whether a valid arbitration agreement exists “is a matter of contract.”
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). Put differently,
“[a]rbitration is strictly ‘a matter of consent.’” Granite Rock Co. v. Int’l Bhd. of
Teamsters, 561 U.S. 287, 299 (2010) (quoting Volt Info. Scis., Inc. v. Bd. of Trs.
of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). Accordingly, a
court order compelling arbitration is warranted where the parties entered into a
valid, enforceable agreement. Conversely, “[i]f there is an issue of fact as to the
making of the agreement for arbitration, then a trial is necessary.” Bensadoun
v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003).
There are four factors that courts must consider in determining whether
to send an action to arbitration:
[F]irst, it must determine whether the parties agreed to
arbitrate; second, it must determine the scope of the
agreement; third, if federal statutory claims are
asserted, it must consider whether Congress intended
those claims to be nonarbitrable; and, fourth, if the
court concludes that some, but not all, of the claims in
the case are arbitrable, it must then decide whether to
stay the balance of the proceedings pending arbitration.
Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 75-76 (2d Cir. 1998).
In deciding a motion to compel arbitration under the FAA, “the court
applies a standard similar to that applicable for a motion for summary
judgment.” Bensadoun, 316 F.3d at 175. “If there is an issue of fact as to the
making of the agreement for arbitration, then a trial is necessary.” Id. (citing 9
U.S.C. § 4). But “[i]f the party seeking arbitration has substantiated the
entitlement by a showing of evidentiary facts, the party opposing may not rest
on a denial but must submit evidentiary facts showing that there is a dispute
of fact to be tried.” Oppenheimer & Co., Inc. v. Neidhardt, 56 F.3d 352, 358 (2d
Cir. 1995). The “party to an arbitration agreement seeking to avoid arbitration
generally bears the burden of showing the agreement to be inapplicable or
invalid.” Harrington v. Atl. Sounding Co., Inc., 602 F.3d 113, 124 (2d Cir. 2010);
see also Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91 (2000)
(“[T]he party resisting arbitration bears the burden of proving that the claims at
issue are unsuitable for arbitration.”).
Enforceability of Arbitration Agreements
Whether parties agreed to arbitrate is determined under state law. See
Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002) (“Because an
agreement to arbitrate is a creature of contract … the ultimate question of
whether the parties agreed to arbitrate is determined by state law.”). Under
New York law, 2 the party seeking arbitration must prove by a preponderance of
the evidence that a valid arbitration agreement exists. Progressive Cas. Ins. Co.
v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42, 46 (2d Cir. 1993).
A valid arbitration agreement requires “a manifestation of mutual assent
sufficiently definite to assure that the parties are truly in agreement[.]” Matter
of Express Indus. & Term. Corp. v. N.Y. State Dept. of Transp., 93 N.Y.2d 584,
By signing a written instrument, a party creates presumptive evidence of
its assent to enter into a binding agreement. See, e.g., Gold v. Deutsche
Aktiengesellschaft, 365 F.3d 144, 149 (2d Cir. 2004); Gillman v. Chase
Manhattan Bank, 73 N.Y.2d 1, 11 (1988) (holding that a party’s signature
generally creates a presumption that the party assented to the terms of the
agreement). Failure to read or understand a contract does not relieve a signer
of its obligations thereunder. See, e.g., In re Lehman Bros. Holdings Inc., 478
B.R. 570, 587 n.19 (S.D.N.Y. 2012), aff’d sub nom. In re Lehman Bros. Holdings
Inc., 761 F.3d 303 (2d Cir. 2014); see also Brandywine Pavers, LLC v. Bombard,
970 N.Y.S.2d 653, 655 (4th Dep’t 2013) (“[A] party cannot generally avoid the
effect of a document on the ground that he or she did not read it or know its
Where, as here, a court exercises supplemental jurisdiction over New York state law
claims, the court applies New York choice of law rules, see North Atl. Instruments, Inc. v.
Haber, 188 F.3d 38, 43 (2d Cir. 1999), according to which claims that involve regulation
of conduct are determined by the “law of the locus jurisdiction,” AroChem Int’l, Inc. v.
Buirkle, 968 F.2d 266, 270 (2d Cir. 1992) (citing Schultz v. Boy Scouts of America, Inc.,
65 N.Y.2d 189, 198 (1985)). Because all acts and omissions giving rise to the claims in
this case took place in New York, the Court applies New York law to assess whether the
parties agreed to arbitrate.
contents.” (alterations and internal quotation marks omitted)). This is equally
true where the signer’s failure to understand the terms of the contract stems
from the signer’s illiteracy or other language barriers. See Horvath v. Banco
Comercial Portugues, S.A., No. 10 Civ. 4697 (GBD), 2011 WL 666410, at *4
(S.D.N.Y. Feb. 15, 2011) (collecting cases).
A party that has signed a contract may be relieved from its attendant
obligations if a court finds — as Plaintiffs argue this Court should do — that
the contract is unconscionable. Under New York law, a contract is
unconscionable when it is “so grossly unreasonable or unconscionable in the
light of the mores and business practices of the time and place as to be
unenforceable according to its literal terms.” Gillman, 73 N.Y.2d at 10 (internal
quotation marks omitted). That generally requires a finding of both procedural
and substantive unconscionability. See id. “The procedural element of
unconscionability concerns the contract formation process and the alleged lack
of meaningful choice; the substantive element looks to the content of the
contract[.]” State v. Wolowitz, 468 N.Y.S.2d 131, 145 (2d Dep’t 1983); see also
Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc., 191 F.3d 198, 207 (2d Cir. 1999)
(“A contract or clause is unconscionable when there is an absence of
meaningful choice on the part of one of the parties together with contract terms
which are unreasonably favorable to the other party.” (quotation marks
Without more, an inability to speak English or to understand the terms
of a contract is an insufficient cause for unconscionability. See, e.g., Victorio,
2015 WL 2152703, at *15; Ragone, 595 F.3d at 122 (“New York courts have
repeatedly ruled that even the fact that a prospective employee possesses an
imperfect grasp of the English language will not relieve the employee of making
a reasonable effort to have the document explained to him.”). Language
barriers will not justify a finding of unconscionability where there is “no
evidence that high pressure tactics were used to cause the Plaintiffs to feel that
they had no choice but to sign on the spot without reviewing the terms.”
Victorio, 2015 WL 2152703, at *13. It is only when “inequality [in bargaining
power is] coupled with high pressure tactics that coerce an employee’s
acceptance of onerous terms [that a signatory can be considered to have]
lacked a meaningful choice.” Brennan v. Bally Total Fitness, 198 F. Supp. 2d
377, 382 (S.D.N.Y. 2002) (internal citation omitted).
Collective Arbitration and “Questions of Arbitrability”
Defendants seek to compel arbitration on an individual basis only.
Plaintiffs, for their part, ask the Court to order arbitration on a collective basis,
if at all. Who decides if collective arbitration is permissible — whether the
arbitrator or the court — turns on whether the question can meaningfully be
described as a “question of arbitrability.” Howsam v. Dean Witter Reynolds,
Inc., 537 U.S. 79, 83 (2002). In Howsam, the Supreme Court explained that
“questions of arbitrability” implicate “whether the parties have submitted a
particular dispute to arbitration” and are “issue[s] for judicial determination
[u]nless the parties clearly and unmistakably provide otherwise.” Id. (internal
citation omitted). The Court specifically rejected the proposition that “any
potentially dispositive gateway question” constitutes a question of arbitrability,
noting that the latter is “far more limited [in] scope.” Id.
The phrase “question of arbitrability” is “applicable in the kind of narrow
circumstance where contracting parties would likely have expected a court to
have decided the gateway matter[.]” Howsam, 537 U.S. at 83. For example, it
applies to disputes over whether “the parties are bound by a given arbitration
clause,” id. at 84, which might emerge from questions over the arbitration
agreement’s validity or its applicability to the underlying claims. See, e.g., First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-46 (1995) (concluding
that a court should decide whether the arbitration contract binds parties who
did not sign the agreement); John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543, 546-47 (1964) (concluding that a court should decide whether an
arbitration agreement survives a corporate merger and binds the resulting
corporation); Granite Rock, 561 U.S. at 298-300 (concluding that a court
should decide whether a controversy falls within the arbitration clause of a
collective bargaining agreement).
The phrase “question of arbitrability” does not apply to “other kinds of
general circumstance where parties would likely expect that an arbitrator
would decide the gateway matter,” including “procedural questions which grow
out of the dispute and bear on its final disposition.” Howsam, 537 U.S. at 84
(internal quotation marks omitted). Generally, the interpretation of specific
provisions of the arbitration agreement are not questions of arbitrability and
are reserved for the arbitrator. See, e.g., Tarulli v. Circuit City Stores, Inc., 333
F. Supp. 2d 151, 158 (S.D.N.Y. 2004) (“[O]nce a district court determines that
the arbitration agreement is valid and the parties have agreed to arbitrate, the
arbitrator should determine the meaning of specific provisions of the
arbitration agreement at issue.” (internal citations omitted)); Ciago v.
Ameriquest Mortg. Co., 295 F. Supp. 2d 324, 330 (S.D.N.Y. 2003) (“Once this
Court determines that the parties have agreed to arbitrate, the validity and
meaning of specific provisions within the Agreement to arbitrate is a matter for
the arbitrator to decide.”).
The Supreme Court and the Second Circuit have not definitively
answered the particular question presented here: whether the availability of
collective arbitration is a “question of arbitrability.” However, two Supreme
Court cases establish a framework within which lower courts may assess the
question. In Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003), a
four-Justice plurality of the Supreme Court found that, when an arbitration
agreement is silent on the availability of class arbitration, the question should
be reserved for the arbitrator to decide in the first instance. The Bazzle
plurality reasoned that the availability of class arbitration is not a question of
arbitrability because it “concerns neither the validity of the arbitration clause
nor its applicability to the underlying dispute between the parties.” Id. at 452.
Instead, the plurality held that the question “concerns contract interpretation
and arbitration procedures” and that “matter[s] of contract interpretation
should be for the arbitrator, not the courts, to decide.” Id. at 453.
In Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010), the
Court reviewed an arbitral decision that permitted class arbitration under an
arbitration agreement that was silent on the issue. The Court noted that, in
Bazzle, “no single rationale commanded a majority,” id. at 678, and that “only
the plurality decided the question [whether an arbitrator, not a court, must
decide whether a contract permits class arbitration],” id. at 680. The Court
then cautioned against finding an implicit assent to class arbitration. It held
that “a party may not be compelled under the FAA to submit to class
arbitration unless there is a contractual basis for concluding that the party
agreed to do so.” Id. at 684. It went on to explain that “[a]n implicit agreement
to authorize class-action arbitration … is not a term that the arbitrator may
infer solely from the fact of the parties’ agreement to arbitrate … because classaction arbitration changes the nature of arbitration to such a degree that it
cannot be presumed the parties consented to it by simply agreeing to submit
their disputes to an arbitrator.” Id. at 685. It is worth noting, as Justice
Ginsburg did in dissent, that (i) “the Court does not insist on express consent
to class arbitration,” but rather insists only on there being a contractual basis
to conclude that the parties agreed to class arbitration; and (ii) the Court
“spares from its affirmative-authorization requirement contracts of adhesion
presented on a take-it-or-leave-it basis.” Id. at 699.
Since the Supreme Court decided Stolt-Nielsen, some courts in this
District have ordered arbitration on an individual basis rather than reserving
the question for the arbitrators. For example, in Anwar v. Fairfield Greenwich
Ltd., 950 F. Supp. 2d 633, 637 (S.D.N.Y. 2013), a putative class action by
shareholders against financial advisors, the court ordered arbitration on an
individual basis after finding that “the language of the [arbitration agreement]
clearly does not contain any provision or language that anticipates class
arbitration.” Similarly, in Sanders v. Forex Capital Mkts., LLC, No. 11 Civ. 0864
(CM), 2011 WL 5980202, at *10 (S.D.N.Y. Nov. 29, 2011), the court held that
the parties must arbitrate “on an individual basis as there is no provision in
the contract which contemplates class arbitration.” 3
But most courts in this Circuit that have addressed the issue have held
that the availability of class or collective arbitration is for the arbitrator to
decide. In In re A2P SMS Antitrust Litigation, No. 12 Civ. 2656 (AJN), 2014 WL
2445756, at *12 (S.D.N.Y. May 29, 2014), the court was “persuaded by the
reasoning in Bazzle and h[e]ld that the availability of class arbitration is an
issue to be resolved by the arbitrators in the first instance” because “the issue
raised is not one of enforcement of an arbitration agreement or the power of the
arbitrator to hear a dispute, but rather the form of the proceedings as to a
dispute that is … subject to the arbitrator’s authority.” The court noted that
“Bazzle remains the most pertinent authority and, in the absence of other
It is worth noting that Defendants cite two additional cases — Sutherland v. Ernst &
Young LLP, 768 F. Supp. 2d 547 (S.D.N.Y. 2011), rev’d and remanded, 726 F.3d 290 (2d
Cir. 2013), and Chen-Oster v. Goldman, Sachs & Co., 785 F. Supp. 2d 394 (S.D.N.Y.
2011) — in their opening brief to support their claim that the Court should decide the
collective arbitration question. Neither case is relevant here: In Sutherland, the court
did not reach the threshold question of who decides the availability of class arbitration;
and in Chen-Oster, the parties agreed that the question of class arbitration should be
decided by the court.
Supreme Court or Second Circuit precedent or a clear trend to the contrary
among the lower courts, the Court assigns its analysis substantial weight.” Id.
In Wells Fargo Advisors, L.L.C. v. Tucker, 195 F. Supp. 3d 543 (S.D.N.Y.
2016), the court held that the arbitrator, rather than the court, must determine
whether former employees could arbitrate their FLSA and NYLL claims on a
collective basis. It noted that, “[w]hile the Supreme Court and Second Circuit
have yet to issue binding precedent, the weight of authority among district
courts in the Circuit is that the arbitrator, rather than the Court, should decide
questions regarding the availability of class arbitration.” Id. at 547. Other
courts have held similarly. See, e.g., Edwards v. Macy’s Inc., No. 14 Civ. 8616
(CM) (JLC), 2015 WL 4104718, at *11 (S.D.N.Y. June 30, 2015) (“the issue of
whether the language [in the arbitration agreement] authorizes class-wide
arbitration is for the arbitrators in the first instance, not for the court”); Guida
v. Home Sav. of America, Inc., 793 F. Supp. 2d 611 (E.D.N.Y. 2011) (availability
of collective arbitration was a procedural question involving contract
interpretation and was to be determined by arbitrator); see also Rice Co. v.
Precious Flowers Ltd., No. 12 Civ. 0497 (JMF), 2012 WL 2006149, at *4
(S.D.N.Y. June 5, 2012) (“courts have uniformly held that, absent a clear
agreement to the contrary, the question of whether arbitration proceedings
should (or should not) be consolidated is a procedural matter to be decided by
the arbitrators, not by a court”); Safra Nat’l Bank of N.Y. v. Penfold Inv. Trading,
Ltd., No. 10 Civ. 8255 (RWS), 2011 WL 1672467, at *3 (S.D.N.Y. 2011)
(“Numerous courts have ruled that the propriety of consolidated arbitration
proceedings is an issue to be determined by the arbitrator, not the court.”).
The Parties Executed Valid, Enforceable Arbitration
Plaintiffs concede that they each signed the Arbitration Agreement as a
condition of their employment and that the Agreement was supported by valid
consideration. Plaintiffs contend, however, that the Agreement each of them
signed is procedurally and substantively unconscionable and therefore void.
Specifically, they claim that the Agreement is procedurally unconscionable
because Plaintiffs do not read or understand English and were allegedly told to
sign the Agreement without the opportunity first to review it in Plaintiffs’ native
languages. Plaintiffs further argue that the Agreement is substantively
unconscionable because it contains a confidentiality clause that, in Plaintiffs’
view, violates Cheeks, 796 F.3d at 199, and dissuades employees from filing
claims against Defendants. The Court disagrees on both fronts.
The Agreement Is Not Procedurally Unconscionable
Plaintiffs’ procedural unconscionability claim rests on their assertions
that they are “unable to read or understand any English”; were “asked by a
Chinese speaking secretary at Hakkasan to sign the [Arbitration Agreement]
without first having [them] translated to [us]”; and were told that “the
document must be signed immediately.” (Zhu Decl. ¶¶ 4, 6; Leung Decl. ¶¶ 4,
6; Moy Decl. ¶¶ 4, 6). Without more, that is insufficient to substantiate
Plaintiffs’ claim that the Agreement is procedurally unconscionable. Plaintiffs
do not allege that they ever tried to negotiate the terms of the Agreement or
that Defendants prevented them from doing so; that Plaintiffs requested and
were denied a translated version of the Agreement or the opportunity to review
it; or that Defendants used high-pressure or coercive tactics. Even if
Defendants’ secretary told Plaintiffs to sign immediately, that would not suffice
to establish procedural unconscionability. See, e.g., Victorio, 2015 WL
2152703, at *33 (enforcing arbitration agreements despite Plaintiffs’ claims
that they could not read English and felt pressured to sign the documents
immediately where the Court found “no evidence that high pressure tactics
were used [and where] there [wa]s no evidence that anyone actually uttered  a
Plaintiffs also produce no evidence that they took reasonable steps to
have the Agreement translated or to obtain any explanations from the
Defendants’ secretary after being asked to sign the Agreement, even though
that secretary spoke a Chinese dialect that each Plaintiff understood. Under
New York law, it is incumbent upon parties who do not read or understand
English to “make a reasonable effort to have the document explained to
[them].” Kassab v. Marco Shoes Inc., 723 N.Y.S.2d 352, 353 (1st Dep’t 2001).
Because Plaintiffs failed to do so, and because there is no evidence that
Defendants employed coercion, deception, or high-pressure tactics, Plaintiffs’
procedural unconscionability claim fails.
The Agreement Is Not Substantively Unconscionable
“While determinations of unconscionability are ordinarily based on [a]
conclusion that both the procedural and substantive components [of
unconscionability] are present, there have been exceptional cases where a
provision of the contract is so outrageous as to warrant holding it
unenforceable on the ground of substantive unconscionability alone.” Ragone,
595 F.3d at 122. An agreement is substantively unconscionable only “if it is so
grossly unreasonable as to be unenforceable according to its literal terms and
those contract terms are unreasonably favorable to the party seeking to enforce
the contract.” Isaacs v. OCE Bus. Servs., Inc., 968 F. Supp. 2d 564, 569
(S.D.N.Y. 2013) (internal citation omitted). Here, Plaintiffs argue that the
Arbitration Agreement is unconscionable because it contains a confidentiality
clause that, in Plaintiffs’ view, violates Cheeks and deters employees from
bringing claims against Defendants. Like their procedural challenges,
Plaintiffs’ substantive unconscionability argument fails.
To begin with, the Arbitration Agreement’s confidentiality requirements
apply equally to Plaintiffs and Defendants, and the terms of the Agreement are
not one-sided. Courts in this District have repeatedly held that, “when both an
employer and its employees are bound to an agreement to arbitrate, when the
terms of the agreement are equally applicable to both parties, and when the
employer bears any unreasonable cost of the arbitration, the arbitration
agreement is not unreasonably favorable to the employer.” See, e.g., Isaacs,
968 F. Supp. 2d at 569 (collecting cases). Here, all of the terms of the
Arbitration Agreement — including those in the confidentiality clause — apply
equally to Plaintiffs and Defendants, and Defendants bear all of the arbitration
costs. For this reason, the confidentiality clause cannot be said to render the
Arbitration Agreement substantively unconscionable.
In addition, the Arbitration Agreement contains a severability clause and
a saving clause. The former states, in relevant part, that “[t]he provisions of
this Agreement are severable, and if any provision is determined to be
unenforceable, then the remaining provisions shall remain in full effect.” (Arb.
Agmt. 2). The latter qualifies the confidentiality clause’s prohibition on
disclosure with the phrase, “unless otherwise required by law.” (Id.). Because
the Court reserves questions of contract interpretation to the arbitrator in the
first instance, it declines to analyze these clauses. It does, however, note that
if the arbitrator were to decide that the confidentiality clause is unenforceable
under Cheeks, that would not necessarily void the entire agreement. Plaintiffs
would still have to show that the confidentiality clause is not severable or
subject to the saving clause, something the Plaintiffs have not even attempted
to do here. For this reason, and because the confidentiality requirements apply
equally to Plaintiffs and Defendants, the Court finds that the Arbitration
Agreement is not substantively unconscionable.
The Arbitration Agreement Encompasses Plaintiffs’ Claims
Having found the Arbitration Agreement to be enforceable, the Court next
considers whether it is applicable. Courts generally construe arbitration
clauses broadly. See, e.g., McMahon Sec. Co. L.P. v. Forum Capital Mkts., L.P.,
35 F.3d 82, 88 (2d Cir. 1994) (“federal policy favoring arbitration requires us to
construe arbitration clauses as broadly as possible” (internal quotation marks
omitted)). That is particularly true where the agreement itself uses broad
language to define the scope of arbitration. Such language “creates a
presumption of arbitrability which is only overcome if it may be said with
positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute.” Smith/Enron Cogeneration
Ltd. P’ship v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 99 (2d Cir. 1999).
That the Arbitration Agreement contains broad language is irrefutable.
Under the Agreement, Plaintiffs must arbitrate “any and all claims [they] wish
to assert against the Company … whether based upon statute, regulation,
contract, tort, or other common law principles[.]” (Arb. Agmt. 1 (emphasis
added)). The Agreement also includes a non-exhaustive list of claims covered
by it. That list explicitly references claims for “unpaid wages [and] violation of
federal, state[,] or city laws forbidding discrimination, harassment, and
retaliation on the basis of race, color, religion, gender, sexual orientation, age,
national origin, [or] disability[.]” (Id.).
Plaintiffs’ claims fall squarely within the terms of the Agreement. All are
covered by the Agreement’s reference to “any and all claims [Plaintiffs] wish to
assert against the Company.” (Arb. Agmt. 1). And most, if not all, are captured
within the Agreement’s illustrative list of arbitrable claims. As but one
example, the Agreement’s reference to claims for “unpaid wages” (id.), covers
Plaintiffs’ FLSA and NYLL claims for unpaid overtime wages and spread-of-hour
premiums; and the Agreement’s reference to claims for “violation of … laws
forbidding discrimination” (id.), captures Plaintiffs’ NYSHRL and NYCHRL
claims. For these reasons, the Court finds that the Arbitration Agreement
encompasses Plaintiffs’ claims.
Federal Law Compels Arbitration of Plaintiffs’ Claims
Contrary to Plaintiffs’ arguments, federal law — specifically, the FLSA —
does not operate to foreclose arbitration of any of Plaintiffs’ claims. On the
contrary, courts have consistently held that agreements to arbitrate claims
arising from the employment context — including the claims brought here —
are valid and enforceable. See, e.g., Adams, 532 U.S. at 105; Thomas v. Pub.
Storage, Inc., 957 F. Supp. 2d 496 (S.D.N.Y. 2013) (granting motion to compel
arbitration of claims of discrimination brought under NYSHRL and NYCHRL);
Sinnett v. Friendly Ice Cream Corp., 319 F. Supp. 2d 439 (S.D.N.Y. 2004)
(granting motion to compel arbitration of FLSA claims). 4
The Availability of Collective Arbitration Is a Question for the
Arbitrator to Decide in the First Instance
The remaining issues implicated by Defendants’ motion concern the
allocation of authority to decide arbitration-related issues between the Court
and the as-yet-unassigned arbitrator. Defendants claim that “the scope of the
Arbitration Agreement is a ‘gateway’ issue [that is] for this Court to decide.”
(Def. Br. 8). Most courts in this District that have addressed the issue have
There is nothing in the record to suggest that some but not all claims are arbitrable.
For this reason, and because none of the parties argue this point in their briefs, the
Court declines to assess the fourth Oldroyd factor.
held to the contrary. See, e.g., In re A2P SMS Antitrust Lit., 2014 WL 2445756,
at *1; Tucker, 195 F. Supp. 3d at 543; Edwards, 2015 WL 4104718, at *1. This
Court agrees with its sister courts: The availability of collective arbitration is a
question for the arbitrator, not the court, to decide.
In Bazzle, the plurality held that the availability of collective arbitration
“concerns neither the validity of the arbitration clause nor its applicability to
the underlying dispute between the parties [and is a question of] contract
interpretation and arbitration procedures.” 539 U.S. at 452-53. The Bazzle
plurality pointed to the “sweeping language concerning the scope of the
questions committed to arbitration,” id. at 453, in concluding that the
availability of collective arbitration is one for the arbitrator to decide. Here, the
relevant language is at least as sweeping as in Bazzle. The Bazzle arbitration
provision covered “[a]ll disputes, claims, or controversies arising from … this
contract or the relationships which result from this contract[.]” Id. at 448.
Here, the Arbitration Agreement covers “any and all claims [Plaintiffs] may wish
to assert against the Company, other than those specifically excluded below[.]”
(Arb. Agmt. 1). Unlike in Bazzle, the arbitration provision here covers all
claims that Plaintiffs might bring against Defendants, irrespective of their
provenance. Such broad language militates strongly in favor of reserving the
question for the arbitrator, particularly against the backdrop of a “federal
policy favoring arbitration agreements.” Greenwood, 565 U.S. at 98.
In reserving the question for the arbitrator, this Court is guided by the
Supreme Court’s characterization of questions of arbitrability as “narrow” and
“limited.” Bazzle, 539 U.S. at 452; see also Howsam, 537 U.S. at 83-84
(explaining that “questions of arbitrability” should not be read to include “any
potentially dispositive gateway question” merely because “its answer will
determine whether the underlying controversy will proceed to arbitration on the
merits”). Questions of arbitrability arise only in the “narrow circumstances
where contracting parties would likely have expected a court to have decided
the gateway matter.” Howsam, 537 U.S. at 83-84. The Court is unpersuaded
that the availability of collective arbitration falls within the narrow bounds that
the Supreme Court has established for “questions of arbitrability.”
Defendants argue that Stolt-Nielsen requires this Court to hold otherwise.
(Def. Br. 8-9). They are wrong, and their reliance on Stolt-Nielsen is misplaced.
To begin with, the Stolt-Nielsen parties stipulated that the arbitration
agreement was silent on the availability of collective arbitration, 559 U.S.
at 668, and the Court’s holding hinged on the agreement’s silence on the
matter, id. at 684. Here, the parties have made no such stipulation and, in
fact, claim that the contract is not silent on the question of collective
arbitration. To be sure, Plaintiffs and Defendants disagree on what the
Arbitration Agreement says, but they both believe that the Agreement speaks —
even if only implicitly so — to the question. Defendants claim that “the
language of the Arbitration Agreement establishes the Parties’ intent to litigate
disputes only on an individualized basis.” (Def. Br. 10). Plaintiffs, for their
part, argue that the Agreement “contains language that implies th[e] absence of
any sort of collective action waiver.” (Pl. Opp. 8). Unlike in Stolt-Nielsen, the
parties here disagree on how properly to interpret the contract. Such contract
interpretation disputes are for the arbitrator to decide in the first instance.
See, e.g., Tarulli, 333 F. Supp. 2d at 158.
In addition, in Stolt-Nielsen, the parties were “sophisticated business
entities” operating in an industry where “there is no tradition of class
arbitration.” 559 U.S. at 684. Justice Ginsburg, in a dissenting opinion, noted
that “by observing that the parties [here] are sophisticated entities, and that it
is customary for the shipper to choose the charter party that issued for a
particular shipment, the Court apparently spares from its affirmativeauthorization requirement [other] contracts[.]” Id. at 699 (internal quotation
marks omitted). Here, the parties do not claim to be sophisticated business
entities; rather, they are individual employees who cannot read or understand
English, and who claim to have been instructed to sign the Arbitration
Agreement immediately and without the opportunity to review translated
versions of the Agreement, much less to negotiate its terms. (Zhu Decl. ¶¶ 4,
6-7; Leung Decl. ¶¶ 4, 6-7; Moy Decl. ¶¶ 4, 6-7).
Finally, the Stolt-Nielsen Court never reached the “who decides” question
and, for this reason, cannot control the issue. The Stolt-Nielsen Court merely
held that a party “may not be compelled under the FAA to submit to class
arbitration unless there is a contractual basis for concluding that the party
agreed to do so.” 559 U.S. at 684. All that means is that whoever decides the
issue — whether a court or the arbitrator — may not compel a party to
arbitrate on a collective basis absent some indication from the contract’s terms
that the parties have consented to such procedures.
Whether the Confidentiality Provision Renders the Arbitration
Agreement Unenforceable Is Similarly Reserved for the
Plaintiffs contend that the Agreement’s confidentiality provision renders
the entire contract substantively unconscionable and void. They argue that the
confidentiality provision violates Cheeks and seeks to “ensure that as few
employees as possible br[ing] claims under the FLSA, in clear contrast to the
overarching public policy motivations behind the [FLSA].” (Pl. Opp. 6).
Defendants respond by asserting that Cheeks “has no bearing on the
enforceability of Plaintiffs’ arbitration agreements.” (Def. Reply 4). They
further note that the confidentiality provision is protected by a saving clause:
“the information and documents in connection with the arbitration shall be
confidential ‘unless required by law.’” (Id. (citing Arb. Agmt. 2) (emphasis
added)). Though they elected not to do so, Defendants could have also argued
that, because the Agreement contains a severability clause, any infirmity that
might affect the confidentiality clause would not render the rest of the
The Court declines to resolve this issue. Doing so would require the
Court to engage in inquiries involving contract interpretation that are properly
reserved for the arbitrator. For example, the Court would have to determine
the scope of the saving clause and the severability clause in the Arbitration
Agreement, as well as the interaction between those clauses and the
confidentiality provision. These are precisely the sorts of inquiries that the
Bazzle plurality and courts in this District have held are for the arbitrator to
decide in the first instance. Nothing in the Defendants’ submissions persuades
this Court to hold otherwise.
Defendants’ motion to compel arbitration is GRANTED, though
Defendants’ request that the Court order individual arbitration in this matter is
DENIED. That question, like the question regarding the validity of the
confidentiality clause, is to be resolved by the arbitrator in the first instance.
Pursuant to binding Second Circuit precedent, the Clerk of Court is
ORDERED to stay the case pending the outcome of arbitration. See Katz v.
Cellco P’ship, 794 F.3d 341, 345 (2d Cir.), cert. denied, 136 S. Ct. 596 (2015).
November 28, 2017
New York, New York
KATHERINE POLK FAILLA
United States District Judge
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