Mahe v. Tzell Travel, LLC et al

Filing 27

OPINION re: 16 MOTION to Dismiss Plaintiff's Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) and/or Fed. R. Civ. P 12(c) and;. MOTION to Compel Arbitration with respect to Plaintiffs Breach of Contract Claim. filed by T zell Travel, LLC, Delores Suarez: Defendants Tzell Travel, LLC ("Tzell Travel"), Tzell Fifth Avenue, Ltd. ("TFA"), and Dolores Suarez ("Suarez") (collectively, the "Defendants") have moved to dismiss the comp laint of the Plaintiff Nancy Mahe ("Mahe" or the "Plaintiff") (the "Complaint") pursuant to Federal Rule of Civil Procedure 12(b) (6) or Federal Rule of Civil Procedure 12(c) and to compel arbitration pursuant to the Fed eral Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. For the foregoing reasons, Defendants' motion to compel arbitration is granted and motion to dismiss Plaintiff's complaint is denied. This action is stayed pursuant to Section 3 of the FAA. Case referred to arbitration. (Signed by Judge Robert W. Sweet on 6/8/2017) (jwh)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

----------------------------------------x
NANCY MAHE,
Plaintiff,
-against-

16 Civ. 9478
OPINION

TZELL TRAVEL, LLC, a/k/a TZELL TRAVEL
GROUP, LLC, a/k/a and/or d/b/a TZELL FIFTH
AVENUE, LTD and DOLORES SUAREZ, In Her
Individual and Official Capacities,
Defendants.

----------------------------------------x
A P P E A RA N C E S:
Attorneys for Plaintiff
PHILLIPS & ASSOCIATES
45 Broadway, Suite 620
New York, NY 10006
By:
Gregory Calliste, Jr. Esq.
Steven Fingerhut, Esq.

Attorneys for Defendants
SEYFARTH SHAW LLP
620 Eighth Avenue
New York, NY 10018
By:
Cameron Smith, Esq.
Joanne Seltzer, Esq.

(RWS)

Sweet, D.J.

Defendants Tzell Travel, LLC ("Tzell Travel"), Tzell Fifth
Avenue, Ltd.

("TFA"), and Dolores Suarez ("Suarez")

(collectively, the "Defendants") have moved to dismiss the
complaint of the Plaintiff Nancy Mahe ("Mahe" or the
"Plaintiff")

(the "Complaint") pursuant to Federal Rule of Civil

Procedure 12(b) (6) or Federal Rule of Civil Procedure 12(c) and
to compel arbitration pursuant to the Federal Arbitration Act
("FAA"),

9 U.S.C.

§

1 et seq.

Based on the conclusions set forth below, Defendants'
motion is granted in part and denied in part. The action is
stayed and the parties are directed to proceed to arbitration.

I. Facts

The Complaint sets forth the following allegations, which
are assumed true for the purpose of this motion to dismiss. See
Koch v. Christie's Int'l PLC, 699 F.3d 141 , 145 (2d Cir. 2012) .

From approximately June 1996 through July 2016, Plaintiff
worked for Defendants as a travel agent.

(Compl.

~~

18, 43, Dkt.

4.) While employed by Defendants, Plaintiff regularly would
1

overhear Suarez, Plaintiff's manager, make derogatory remarks
about Hispanics, African-Americans, and immigrants.
~~

(See Compl.

24-38.) Plaintiff initially kept silent during such incidents

for fear of retribution or termination.

(Compl.

~

27.)

In July 2016, after another such incident, Plaintiff
emailed Suarez to inform her that Plaintiff thought Suarez's
comments created a "hostile work environment." (Compl.

~

41.).

Within forty-five of Plaintiff's email, Suarez fired Plaintiff.
(Compl.

~

43.)

As a result of the termination, Plaintiff was offered a
severance agreement,
February 7, 2017

(see Declaration of Cameron Smith dated

("Cameron Deel."), Ex. B (the "Agreement")),

which contained a "severance payment of $20,000 (minus
applicable taxes and withholdings)" along with three weeks'
salary and medical benefits.
~

(Agreement

~~

2, 4; see Compl.

49-50.) After reviewing the Agreement and communicating with

Defendants about its terms, Plaintiff accepted the offer and
signed.

(Compl.

~~

51-53.) The Agreement stated it became

"immediately binding and enforceable upon execution by
Employee."

(Agreement~

17.)

2

As part of the Agreement, Plaintiff agreed to cooperate "in
the orderly transition of her duties and responsibilities."
(Agreement~

7(g) .) Plaintiff also agreed to a general release

clause for all of her claims against Defendants arising out of
"Employee's relationship with the Company, or the termination of
Employee's relationship with the Company."

(Agreement~

5.)

The Agreement also contained an arbitration clause where
the Parties mutually agreed that "any dispute arising between
the Parties under this Agreement, under any statute, regulation
or ordinance, under any employment agreement, offer letter or
other agreement, and/or in connection with the Employee's
employment or termination thereof shall be submitted to binding
arbitration" for resolution on a strictly confidential basis.
(Agreement~

11.)

In the event of a material breach of the Agreement by
Plaintiff, the Agreement provided that TFA would have no further
obligations to Plaintiff under the Agreement and would be
entitled to recoup the amounts paid to Plaintiff pursuant to the
Agreement, plus reasonable attorneys' fees and costs incurred in
recouping such amounts,

(Agreement~

12(a)-(b)); in addition,

all of Plaintiff's promises, covenants, representations, and

3

warranties would remain in full force and effect.

(Agreement

~

12 (d).)

After signing the Agreement, Defendants wired Plaintiff
$12,352.92 to her bank account.

(Compl.

~

55.)

Plaintiff emailed

Defendants indicating she believed there had been error in
payment to her, which Defendants said they would investigate.
(Compl.

~

55.) Shortly thereafter, Defendants requested

Plaintiff return to Defendants' office to train Suarez on
aspects of Plaintiff's job, which Plaintiff refused because she
continued to view the environment as hostile.

(Compl.

~~

56-57.)

In response, Defendants withdraw the previously wired money from
Plaintiff's bank account.

(Compl.

~~

59-60.)

When the Plaintiff "called Defendants to find out why her
payment was taken back[,] Plaintiff was told that
Defendants refused to acknowledge their offer, or the agreement
in total[,] and that there would be no severance payment."
(Compl.

~

62 .) The Complaint further alleges that Plaintiff, who

was in a "distraught state[,] began crying during the
conversation [when] Defendants' representative Patrico Suarez
[Suarez's son] informed Plaintiff that they 'did not care how
much Plaintiff cried,' they would not honor the severance

4

agreement and it would be Plaintiff's word against theirs if she
tried to enforce the agreement." (Compl.

II.

<J[<J[

61-63.)

Prior Proceedings

On November 18, 2016, Plaintiff filed her Complaint
alleging discrimination violations under Section 1981 of the
Ci v il Rights Act of 1866, 42 U.S.C. § 1981 ("Section 1981"), the
Executive Law of the New York State (Human Rights Law)

(the

"NYSHRL"), and the New York City Human Rights Law (the
"NYCHRL") .

( Compl.

<J[<J[

7 5-161. ) The Complaint also alleged a

claim for breach of contract between the parties as to the
Agreement.

(Compl.

<J[<J[

162-69.)

Defendants filed the instant motion on February 7, 2017
(Dkt. 16), which was heard and marked fully submitted on March
23, 2017.

III. Applicable Standard

On a Rule 12(b) (6) motion to dismiss, all factual
allegations in the complaint are accepted as true and all
inferences are drawn in favor of the pleader. Mills v. Polar
Molecular Corp., 1 2 F.3d 1170, 1174 (2d Cir. 1993). A complaint
5

must contain "sufficient factual matter, accepted as true, to
'state a claim to relief that is plausible on its face.'"
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009)

(quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim is facially
plausible when "the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Iqbal, 556 U.S. at 663
(quoting Twombly, 550 U.S. at 556). In other words, the factual
allegations must "possess enough heft to show that the pleader
is entitled to relief." Twombly, 550 U.S. at 557

(internal

quotation marks omitted).

While "a plaintiff may plead facts alleged upon information
and belief 'where the belief is based on factual information
that makes the inference of culpability plausible,' such
allegations must be 'accompanied by a statement of the facts
upon which the belief is founded.'" Munoz-Nagel v. Guess,

Inc.,

No. 12 Civ. 1312 (ER), 2013 WL 1809772, at *3 (S.D.N.Y. Apr. 30,
2013)

(quoting Arista Records, LLC v. Doe 3, 604 F.3d 110, 120

(2d Cir. 2010)); Prince v. Madison Square Garden, 427 F. Supp.
2d 372, 384

(S.D.N.Y. 2006); Williams v. Calderoni, 11 Civ. 3020

(CM), 2012 WL 69183 2 , at *7

(S.D.N.Y. Mar. 1, 2012)). The

pleadings, however, "must contain something more than
statement of facts that merely creates a suspicion [of] a
6

. a

legally cognizable right of action." Twombly, 550 U.S. at 555
(citation and internal quotation omitted).

A motion for judgment on the pleadings pursuant to Fed. R.
Civ. P. 12(c) uses the same standard applicable to a motion
brought under Fed. R. Civ. P. 12(b) (6). See Sheppard v. Beerman,
18 F.3d 147, 150 (2d Cir. 1994).

IV.

Agreement is Relied Upon by Plaintiff

Plaintiff contends that the Agreement, which Defendants
attached to their supporting memorandum of law, is "material[]
presented outside the pleadings," and therefore either "must be
disregarded" by the Court or may considered only on a motion for
summary judgment. 1 (Pl.'s Mem. in Opp. at 7.)

In this case, that

is incorrect.

The Second Circuit has held that documents referenced in or
integral to a complaint may be considered in connection with a
motion to dismiss. See Chambers v. Time Warner, Inc., 282 F.3d
1

The Court need not address Plaintiff's similar contention with
regard the Declaration of Dolores Suarez dated February 7, 2017,
(see Pl.'s Mem. in Opp. at 9), a document also submitted
alongside Defendants' supporting motion papers, (Dkt. 18). That
issue, and the document, are unnecessary to the instant
resolution.
7

147, 153 (2d Cir. 2002)

("Even where a document is not

incorporated by reference, the court may nevertheless consider
it where the complaint 'relies heavily upon its terms and
effect,' which renders the document 'integral' to the
complaint." (quoting Int'l Audiotext Network Inc. v. Am. Tel. &
Tel. Co.,

62 F.3d 69, 72

(2d Cir. 1995)).

In the present case, the Agreement is specifically
referenced in the Complaint; in fact,

its existence constitutes

the basis for Plaintiff's breach of contract claim.
~~

162-69; Pl.'s Mem. in Opp . at 8.)

(See Compl .

Furthermore, there has been

no disagreement that the Agreement provided by Defendants is an
accurate copy of the document Plaintiff signed upon her
termination. Given Plaintiff's "reliance on the terms and effect
of the document in drafting the complaint" and there being "no
dispute exist[ing] regarding the authenticity or accuracy of the
document," the Agreement is properly considered on the instant
motion. Kermanshah v. Kermanshah, 580 F. Supp. 2d 247 , 258-59
(S.D.N.Y. 2008) ; see also Acquest Holdings,
Cas. & Sur. Co. of Am., 217 F. Supp. 3d 678,

Inc. v. Travelers
685

(W.D.N.Y. 2016)

(incorporating by reference a proof of loss policy attached to
defendant's motion to dismiss).

8

V. The Motion to Compel Arbitration is Granted

The FAA. provides, in relevant part, that "[a] written
provision in any .

contract evidencing a transaction

involving conunerce to settle by arbitration .

. shall be

valid, irrevocable, and enforceable, save upon such grounds as
exist in law or in equity for the revocation of any contract."
9 U.S.C.

§

2. This provision of the FAA. establishes "a liberal

federal policy favoring arbitration agreements." Moses H. Cone
Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24

(1983); see

also Schreiber v. K-Sea Transp. Corp., 9 N.Y.3d 331, 337, 849
N.Y.S.2d 194

(2007)

(citing Moses H. Cone, 460 U.S. at 24).

In deciding whether parties can be compelled to arbitrate
federal causes of action pursuant to the FAA., a court must
determine:

(1) whether the parties agreed to arbitration;

the scope of that agreement;

(2)

(3) if federal statutory claims are

asserted, whether Congress intended those claims to be
nonarbitrable; and (4) if some, but not all, of the claims in
the case are arbitrable, it must determine whether to stay the
balance of the proceedings pending arbitration. JLM Industries,
Inc. v. Stolt - Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004). For
claims involving non-federal statutes, the test is shorter:

(1)

whether the parties agreed to arbitrate disputes at all and (2)
9

whether the dispute at issue comes within the scope of the
arbitration agreement. ACE Capital Re Overseas Ltd. v. Cent.
United Life Ins. Co., 307 F.3d 24, 28

(2d Cir. 2002).

Those requirements have been met here. The Agreement
contains an arbitration clause, under which the parties mutually
acceded to arbitrate and which neither party disputes was
entered into willingly.

(See Pl.'s Mem. in Opp. at 10; Defs.'

Mem. in Supp. at 16.) Claims brought under Section 1981, the
NYSHRL, and the NYCHRL are arbitable and fall within the
arbitration clause's scope as being "in connection with
Employee's employment, or termination thereof."
~

(Agreement

11); see Lawrence v. Sol G. Atlas Realty Co., 841 F.3d 81, 83

(2d Cir. 2016); Johnson v. Tishman Speyer Properties, L.P., No.
09 Civ. 1959 (WHP), 2009 WL 3364038, at *3 (S.D.N.Y. Oct. 16,
2009). The breach of contract claim likewise falls within under
the arbitration clause by definition of being a "dispute arising
. under th[e] Agreement."

(Agreement~

11.) The Agreement's

arbitration clause remains in effect because, despite
Plaintiff's contention, Defendants' statements and rescission of
wired moneys do not amount to a material breach of the
Agreement, as there remained other significant provisions of the
Agreement in addition to the severance payment which are not
claimed to have been breached. See Wechsler v. Hunt Health Sys.,
10

Ltd., 330 F. Supp. 2d 383, 414

(S.D.N.Y. 2004)

(quoting Felix

Frank Assocs., Ltd. v. Austin Drugs, Inc., 111 F.3d 284, 289 (2d
Cir. 1997))

("Under New York law, a material breach is a breach

that "go[es] to the root of the agreement between the parties,"
and "is so substantial that it defeats the object of the parties
in making the contract.").

In light of guiding federal policy and the parties'
agreement to arbitrate all the claims brought by Plaintiff in
her Complaint, the matter will therefore be submitted to
arbitration. See 9 U.S.C.

§

4.

In ordering arbitration, as Defendants have sought a
dismissal of the Complaint rather than a stay of the action.
Therefore, the Court "has discretion whether to stay or dismiss
Plaintiffs' action under the FAA." Zambrano v. Strategic
Delivery Sols., LLC, No. 15 Civ. 8410 (ER), 2016 WL 5339552, at
*10 (S.D.N.Y. Sept. 22, 2016)
F.3d 341, 347

(citing Katz v. Cellco P'ship, 794

(2d Cir. 2015)). As the Second Circuit has found,

in accordance with the FAA's statutory scheme, "a stay permits
the parties to move their dispute 'out of court and into
arbitration as quickly and easily as possible.'" Id.

(quoting

Katz, 794 F.3d at 346). "A stay will also permit the parties to
avoid the burden of additional litigation and proceed to
11

mediation and arbitration directly." Hamzaraj v. ABM Janitorial
Ne. Inc., No. 15 Civ. 2 030
(S.D.N.Y. June 27, 2016)

(ER), 2016 WL 3571387, at *5

(collecting cases). Accordingly,

Plaintiff's action is stayed pending arbitration.

12

Conclusion

For the foregoing reasons, Defendants' motion to compel
arbitration is granted and motion to dismiss Plaintiff's
complaint is denied. This action is stayed pursuant to Section 3
of the FAA.

It is so ordered.

New Y°d, NY
June

f'

2017

OBERT W. SWEET
U.S.D.J.

13