Clarke et al v. Upwork Global, Inc.

Filing 19

MEMORANDUM & ORDER: For the foregoing reasons, Plaintiffs' motion for a preliminary injunction is DENIED. The Court will schedule an initial pretrial conference by separate order. The parties are directed to ECF file any papers submitted in connection with the motion resolved herein that do not yet appear on the public docket within 3 business days of this Order. (As further set forth in this Order.) (Signed by Judge Alison J. Nathan on 5/10/2017) (cf)

USDCSDNY
DCCUMENT
ELECTRONICALLY FILED
DOC#:
DATEF-IL-E1 ,D_:_,,..,.,MR~~~1~0~~~17-

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

Chris Clarke and Timothy Peterson,
Plaintiffs,
17-CV-560 (AJN)

-vMEMORANDUM &
ORDER

Upwork Global, Inc.,
Defendant.

ALISON J. NATHAN, District Judge:
Plaintiffs Chris Clarke and Timothy Peterson (together, "Plaintiffs") bring this diversity
action against Defendant Upwork Global, Inc. ("Upwork"), seeking declaratory and injunctive
relief precluding Upwork' s further prosecution of certain claims asserted against Plaintiffs in an
ongoing JAMS arbitration proceeding, reference number 1110019847, pending in California
before the Honorable Richard J. McAdams (Ret.) (the "Arbitration"). Before the Court is
Plaintiffs' motion for an order preliminarily enjoining Upwork from pursuing such claims and
generally from taking any further action with respect to Plaintiffs in the Arbitration during the
pendency of this lawsuit. For the reasons set forth below, Plaintiffs' motion is DENIED. 1

I.

Background
A.

Factual Background

The facts pertinent to the instant motion are substantially undisputed. Upwork operates a
website that allows businesses and self-employed professionals to find and contract with one

1 This

Memorandum and Order constitutes the Court's findings of fact and conclusions of law to the extent
required by Federal Rules of Civil Procedure 52 and 65. Any findings at this stage "are not binding at a trial on the
merits." Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1049 (2d Cir. 1992).

1

another directly for various services and to invoice and pay for such services through pre-funded
escrow accounts. Declaration of Kimberly L. Owens, Dkt. No. 8-1 ("Owens Dec."), if 2.
Through its website, Upwork offers certain premium solutions to larger enterprise clients,
including "Upwork Enterprise" services. Id.

if 3.

A company that purchases Upwork Enterprise

services receives, among other things, a private portal accessible to the company and its
authorized users, the ability to apply standard terms and requirements across multiple contractual
engagements, an option to consolidate invoicing across engagements, and an option to obtain
"Enterprise Billing" services by which Upwork advances payment to the company's contractual
partners and then invoices the company for reimbursement of these payments on a monthly
basis. Id.

ifil 3-4.

At all times relevant to this action, Plaintiffs were employed as officers of the CHR
Group ("CHR"), a marketing services firm, with Clarke serving as Executive Vice President of
Corporate Development and Mergers and Acquisitions and Peterson serving as Vice President,
Digital. 2 On December 15, 2015, Upwork entered into a contract with CHR's subsidiary, Studio
One Networks, Inc. ("Studio One"), by which Studio One purchased one year's worth of
Upwork Enterprise and Enterprise Billing services (the "Enterprise Agreement"). Owens Dec.

if 5 &

Ex. A ifil 2-3, 6-7; Clarke Dec. if 5; Peterson Dec.

if 5.

The Enterprise Agreement

explicitly incorporates by reference certain defined "Terms of Service," including a "User
Agreement," available electronically through Upwork's website. Owens Dec.

2

ifil 5-6, 10 &

Ex.

See Declaration of Chris Clarke in Support of Plaintiffs Chris Clarke and Timothy Peterson's Motion for
Preliminary Injunction ("Clarke Dec.") ii 2; Declaration of Timothy Peterson in Support of Plaintiffs Chris Clarke
and Timothy Peterson's Motion for Preliminary Injunction ("Peterson Dec.") ii 2.

2

Peterson and Clarke each registered as users of Studio One's account with Upwork, on or
around January 6, 2016 and April 15, 2016, respectively. Owens Dec.
Peterson Dec.

if 12; Clarke Dec. if 5;

if 5. In order to register as an authorized user of a preexisting enterprise account,

one is required to complete an electronic form on Upwork's website that calls for at least basic
personal information, such as full name and e-mail address, and also to affirmatively check an
electronic box confirming the following statement: "Yes, I understand and agree to the

Upwork Terms of Service, including the User Agreement and Privacy Policy." Owens
Dec.

iii! 6-9. The words "Upwork Tenns of Service," "User Agreement," and "Privacy Policy,"

as set forth in the foregoing statement as it appears on Upwork's website, are hyperlinks to
electronic versions of the referenced documents. Owens Dec.

if 10.

Several provisions ofUpwork's User Agreement are relevant to this action. The User
Agreement's preamble states, among other things:

This User Agreement (this 'Agreement') is a contract between
you ('you' or 'User') and Upwork Global, Inc. ('Upwork', 'we',
or 'us') and, to the extent expressly stated in this Agreement,
our Affiliates Elance Escrow Corporation ('EEC') and Elance
Limited. You must read, agree to, and accept all of terms and
conditions contained in this Agreement in order to use our
website located atwww.upwork.com(http://www.upwork.com)

Owens Dec. Ex. B at 1. The preamble further provides:

YOU UNDERSTAND THAT BY USING THE SITE OR SITE
SERVICES AFTER THE EFFECTIVE DATE, YOU AGREE
TO BE BOUND BY THIS AGREEMENT, INCLUDING THE
MANDATORY BINDING ARBITRATION AND CLASS
ACTION/JURY TRIAL WAIVER PROVISION IN SECTION
21.4. . . . IF YOU AGREE TO THIS AGREEMENT ON
BEHALF OF AN ENTITY, OR IN CONNECTION WITH
PROVIDING OR RECEIVING SERVICES ON BEHALF OF
AN ENTITY OR AGENCY, YOU REPRESENT AND
WARRANT THAT YOU HAVE THE AUTHORITY TO BIND
THAT ENTITY OR AGENCY TO THIS AGREEEMENT. IN
3

THAT EVENT, 'YOU' AND 'YOUR' WILL REFER AND
APPLY TO THAT ENTITY OR AGENCY.
Id. at 2 (capitalization in original). The referenced arbitration provision in tum states, among
other things:

This Mandatory Binding Arbitration and Class Action/Jury
Waiver provision ('Arbitration Provision') applies to all Users
except Users located outside of the United States and its
territories.
In the unlikely event that parties are unable to resolve a Claim
within 60 days of the receipt of the applicable Notice, you,
U pwork, and our Affiliates agree to resolve the Claim by
binding arbitration before an arbitrator from JAMS.
Id. § 21.4. It further provides:

This Arbitration Provision is the full and complete agreement
relating to the formal resolution of Claims. For the avoidance
of doubt, this Arbitration Provision covers, and the arbitrator
shall have exclusive jurisdiction to decide, all disputes arising
out of or relating to the interpretation, enforcement, or
application of this Arbitration Provision, including the
enforceability, revocability, scope, or validity of the Arbitration
Provision or any portion of the Arbitration Provision. All such
matters shall be decided by an arbitrator and not by a court.
The parties expressly agree that the arbitrator and not a court
will decide any question of whether the parties agreed to
arbitrate, including but not limited to any claim that all or part
of this Agreement is void or voidable.
Id. § 21.4.B. The arbitration provision also includes an opt-out clause, which provides in
relevant part: "You may opt out of the foregoing arbitration ... provision of this Agreement by
notifying Upwork in writing within 30 days of the date you first registered for the Site." Id. §
21.4.D.
In approximately the spring of 2016, Upwork "became concerned" about certain

dispersals ofUpwork funds to contractors through Studio One's account, and certain actions
taken on Upwork's platform by Peterson and Clarke in particular. Owns Dec. iii! 15-17. On

4

September 7, 2016, Upwork filed a formal Demand for Arbitration, naming as respondents
Studio One, CHR, Clarke, and Peterson. It alleged that Studio One and/or CHR - purportedly
Studio One's alter ego - had encountered financial difficulty and that respondents were
(i) improperly using Upwork's online platform and funds to satisfy outstanding payment
obligations incurred for services contracted for and received outside of the Upwork platform and,
frequently, prior to the execution of the Enterprise Agreement, and (ii) failing to timely pay
Upwork invoices. See Declaration of Bill Frimel, Dkt. No. 8-2 ("Frimel Dec."), Ex. A iii! 7, 15,
27-34; Ex.Fat 2. Upwork asserted nine claims, including, as relevant here, claims against
Clarke and/or Peterson for breach of the User Agreement, conversion, promissory fraud, and
fraudulent concealment. Frimel Dec. Ex. A iii! 37-94. Upwork served Clarke and Peterson with
the demand on September 7 and 26, 2016, respectively. Frimel Dec. iii! 3-4 & Ex. B.
JAMS issued a Commencement of Arbitration Notice on September 12, 2016, and Justice
McAdams was appointed arbitrator pursuant to a September 23, 2016 Appointment of Arbitrator
notice. Frimel Dec. Ex. F at 2. Justice McAdams scheduled an initial arbitration management
conference for October 28, 2016, and, on October 23, 2016, he e-mailed counsel for Upwork and
Plaintiff Clarke to share a proposed agenda for the October 28 conference. Frimel Dec. iii! 6, 8 &
Ex. D. The agenda included "Identifying the basis for arbitration" as its second item. Id. Ex. D.
Clarke acknowledged receipt of the agenda and indicated that he would "review and prepare" for
the conference. Frimel Dec. Ex. E.
Clarke appeared at the October 28 conference before Justice McAdams and expressly
stated that he represented all respondents, including Peterson. Frimel Dec. ii 9 & Ex. F at 1.
During the conference, Justice McAdams identified Section 21 of the User Agreement (the
mandatory arbitration provision) as the basis for arbitration, and Clarke specifically represented

5

that neither he nor Plaintiff Peterson objected to arbitration of the claims asserted against them.
Frimel Dec. if 10. Moreover, either Clarke or another representative of the respondents present at
the conference advised Justice McAdams that the respondents would not contest the
"responsibility and liability on the part of the corporate entity [r]espondents, as separate and
distinct and from the named individual [r]espondents." Frimel Dec. Ex.Kat 1.
Following the October 28 conference, Justice McAdams issued a Report of Preliminary
Conference and Arbitration Management Conference Order No. 1 (the "First Arbitration
Order"). See Frimel Dec. Ex. 2F. Among other things, the First Arbitration Order - which
clearly listed Plaintiffs Clarke and Peterson among the respondents and Plaintiff Clarke as one of
three representatives for the respondents - expressly identified Section 21 of the User Agreement
as the basis for arbitration. Id. at 1-2. It also explicitly stated that the "[t]he claims are
arbitrable" and that "[r]espondents generally deny all claims," and ordered the parties to proceed
with discovery, noting their "agree[ment] to cooperate in good faith in the voluntary and
informal exchange of information pursuant to [JAMS rules]." Id. at 2-3. Further, it invoked
JAMS' expedited procedures pursuant to language in Upwork's User Agreement and set an
Arbitration hearing for March 27, 2017 with a March 13, 2017 deadline for the submission of
pre-hearing materials and briefs. Id. at 3-4. Finally, it scheduled an interim case management
conference for February 14, 2017, and noted the parties' agreement to service of documents and
orders by e-mail. Id. at 4.
The Arbitration respondents, including Clarke and Peterson, participated in discovery in
November and December 2016, at least to some extent. Largely through Peter Clark (the Chief
Executive Officer of CHR and another representative ofrecord for the respondents), the
respondents traded correspondence with Upwork regarding the timing of their responses to

6

Upwork's requests for production of documents and to Upwork's requests to depose Clarke and
Peterson. Frimel Dec. iii! 12-14, 17-18 & Exs. G-I, L-0, Q. Plaintiffs Clarke and Peterson were
copied on much, if not, all of that correspondence. Id.
On December 7, 2016, Justice McAdams convened- at Upwork's request- a second
case management conference to discuss respondents' failure to timely produce documents and
the parties' inability to negotiate a stipulation to memorialize respondents' agreement not to
contest the liability of the corporate respondents. Frimel Dec. Exs. J, Kat 1-2. Respondents
appeared through representative Peter Clark. Id. Ex. Kat 1. During the conference, the parties
reached agreements as to an amended schedule for document production and a deadline by which
respondents would accept or reject stipulations proposed by Upwork. Id. at 1-2. The Arbitration
hearing date would remain unchanged. Id. at 2. In an order issued followed the conference,
Justice McAdams noted that respondents, having to that point proceeded without counsel, had
expressed a "potential need" for legal representation. Id. In the weeks following the December
7 conference, respondents reiterated to Upwork on at least one occasion that they were
considering engaging counsel, but apparently did not do so. Frimel Dec. Ex. L.
Respondents finally produced documents to Upwork, including documents from Clarke's
and Peterson's e-mail accounts, during the final ten days of December 2016. Frimel Dec.

iii! 18,

20 & Exs. M-0, Q. Clarke, at least, participated personally in portions of the document
collection process, according to e-mail correspondence from Peter Clark. Frimel Dec. Ex. Q. As
of at least December 19, 2016, respondents - again through Peter Clark - represented in e-mail
correspondence that they were still trying to schedule deposition dates for Clarke and Peterson in
the following month. Frimel Dec.

if 17 &

Ex. L. There is no indication that such depositions

ever took place. On December 22, 2016, Justice McAdams granted Upwork's request to file a

7

motion for summary disposition, with no objection from respondents. Frimel Dec. if 19 & Ex. P.
Clarke and Peterson were copied on Upwork's e-mail request. Frimel Dec.

if 19.

Nothing in the record suggests that Clarke or Peterson protested the arbitrability of
Upwork's claims against them at any point during these proceedings or sought to assert any
defense premised on Justice McAdams' purported lack of jurisdiction.

B.

Procedural History

On January 24, 2017, Clarke and Peterson, having now retained counsel, requested that
Upwork voluntarily dismiss them from the Arbitration. Upwork refused. 3 The following day, on
verbal notice to Upwork, Plaintiffs initiated the instant action and hand-delivered to the
undersigned's Chambers a motion for a preliminary injunction and temporary restraining order,
as well as a proposed order to show cause that would enjoin pursuit ofUpwork's Arbitration
claims against Plaintiffs pending resolution of Plaintiffs' motion. See Dkt. No. 3. The Court,
aware of no basis to proceed ex parte, ordered Plaintiffs to serve Upwork with copies of their
summons and complaint, motion papers, and proposed order to show cause, and scheduled a
teleconference with all parties for January 27, 2017. Id.
During the January 27 teleconference, the parties consented to entry of Plaintiffs'
proposed order to show cause substantially as submitted, including its temporary injunctive
provisions, and agreed to a briefing schedule on Plaintiffs' motion for a preliminary injunction.
Dkt. No. 7. Following briefing, the parties advised the Court by joint letter dated February 27,
2017 that neither requested an evidentiary hearing or oral argument, and expressly waived their
right to the former. Dkt. No. 14. The Court deemed Plaintiffs' motion fully submitted upon its
receipt of that letter.

3
See Declaration of Adam J. Gana in Support of Plaintiffs Chris Clarke and Timothy Peterson's Motion for
Preliminary Injunction ("Gana Dec") i! 6.

8

II.

Discussion
A.

Preliminary Injunction Standards

"A preliminary injunction is an equitable remedy and an act of discretion by the court."
Am. Civil Liberties Union v. Clapper, 804 F.3d 617, 622 (2d Cir. 2015). "A party seeking a
preliminary injunction must generally show a likelihood of success on the merits, a likelihood of
irreparable harm in the absence of preliminary relief, that the balance of equities tips in the
party's favor, and that an injunction is in the public interest." Id. (citing Winter v. Nat. Res. Def
Council, 555 U.S. 7, 20 (2008)).
When, however, a party seeks a so-called "mandatory injunction" - that is, an injunction
that "alter[ s] the status quo by commanding some positive act" - rather than the "typical"
prohibitory injunction, which "seeks only to maintain the status quo pending a trial on the
merits," a heightened standard applies. Tom Doherty Assocs., Inc. v. Saban Entm 't, Inc., 60 F.3d
27, 34 (2d Cir. 1995) (citing, inter alia, Abdul Wali v. Coughlin, 754 F.2d 1015, 1025 (2d Cir.
1985)). Indeed, a mandatory injunction "should issue 'only upon a clear showing that the
moving party is entitled to the relief requested, or where extreme or very serious damage will
result from a denial of preliminary relief.'" Id. (quoting Abdul Wali, 754 F .2d at 1025); see also
Cacchillo v. Insmed, Inc., 638 F.3d 401, 405-06 (2d Cir. 2011) (noting that the "burden is even
higher on a party ... that seeks a mandatory preliminary injunction that alters the status quo by
commanding some positive act, as opposed to a prohibitory injunction seeking only to maintain
the status quo") (internal quotation marks omitted). At least one court in this District has
concluded that granting a preliminary injunction that would, as here, "in effect disrupt" ongoing
arbitration proceedings and thereby "alter the status quo" would be "akin to [issuing] a

9

mandatory injunction," and that the injunction application should therefore be subject to the
corresponding heighted standard. 522 W 38th St. NY. LLC v. NY. Hotel & Motel Trades

Council, 517 F. Supp. 2d 687, 688 n.1 (S.D.N.Y. 2007).
Regardless of the applicable standard, "[a] preliminary injunction is an extraordinary
remedy never awarded as of right." Winter, 555 U.S. at 24. "The party seeking the injunction
carries the burden of persuasion to demonstrate, 'by a clearing showing,' that the necessary
elements are satisfied." Reckitt Benckiser Inc. v. Motomco Ltd., 760 F. Supp. 2d 446, 451-52
(S.D.N.Y. 2011) (quoting Mazurekv. Armstrong, 520 U.S. 968, 972 (1997)). And "[i]n each
case, courts 'must balance the competing claims of injury and must consider the effect on each
party of the granting or withholding of the requested relief."' Winter, 555 U.S. at 24 (quoting

Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 542 (1987)).
B.

Plaintiffs Fail to Carry Their Burden of Persuasion on Both the Likelihood
of Success on the Merits and the Balance of the Equities

Plaintiffs' claims are predicated on the central contention that they may not be compelled
to arbitrate Upwork's claims against them because, quite simply, they are not parties - in their
individual capacities - to any contractual agreement to arbitrate. See Complaint for Declaratory
and Injunctive Relief ("Comp.") ifif 1-4, 25-30; Plaintiffs' Memorandum in Support of Their
Motion for Preliminary Injunction ("Br.") at 1-2, 8-10. To the extent, Plaintiffs argue, that they
assented to the terms ofUpwork's User Agreement, including its mandatory arbitration
provision, by electronically checking the relevant box in the course of registering to use Studio
One's Upwork account, they did so solely as "corporate and administrative representatives" of
Studio One and CHR, and therefore they are not personally bound to that Agreement. Br. at 81O; Clarke Dec.

if 5; Peterson Dec. if 5.

That position comports, according to Plaintiffs, with the

plain language of the User Agreement's preamble, which provides, as noted, that "[i]fyou agree
10

to this agreement on behalf of an entity, or in connection with providing or receiving services on
behalf of an entity or agency .... 'you' and 'your' will refer and apply to that entity or agency."
Owens Dec. Ex. B at 2 (capitalization omitted); see also Plaintiffs' Reply Memorandum of Law
in Support of Their Motion for Preliminary Injunction, Dkt. No. 10 ("Reply"), at 3-4.
Defendants press several arguments in opposition but contend first and foremost that,
regardless of the contractual language, Plaintiffs' participation in - and express declination to
object to - the Arbitration has effectuated a waiver of their right to seek the reliefrequested
here. 4 The Court agrees.
It is as a general matter true that, under the Federal Arbitration Act, 5 "'arbitration is a

matter of contract and a party cannot be required to submit to arbitration any dispute which he
has not agreed so to submit."' AT&T Techs., Inc. v. Commc 'ns Workers ofAm., 475 U.S. 643,
648 (1986) (quoting United Steelworkers ofAm. v. Warrior & GulfNavigation Co., 363 U.S.
574, 582 (1960)). Still, it is well-settled that even when a party has not expressly agreed to
submit a dispute to arbitration, an agreement to arbitrate "'may be implied from [a] party's
conduct."' Opals on Ice Lingerie v. Bodylines Inc., 320 F.3d 362, 368 (2d Cir. 2003) (emphasis
added) (quoting Gvozdenovic v. United Air Lines, Inc., 933 F.2d 1100, 1105 (2d Cir. 1991)). "In
other words, if a party participates in arbitration proceedings without making a timely objection
to the submission of the dispute to arbitration, that party may be found to have waived its right to
object to the arbitration." Opals on Ice, 320 F.3d at 368 (citing ConnTech Dev. Co. v. Univ. of
Conn. Educ. Props., 102 F.3d 677, 685 (2d Cir. 1996)); see also Sands Bros. & Co. Ltd. v.
Zipper, 03-cv-7731, 2003 WL 22439789, at *1 (S.D.N.Y. Oct. 27, 2003) ("[C]ourts have

4
See Defendant Upwork's Brief in Opposition to Plaintiffs' Motion for Preliminary Injunction, Dkt. No. 8
("Opp."), at 9-11.
5 See 9 U.S.C. § 1 et seq. The parties appear to agree that federal law governs the question of waiver, and
the Court will assume so for purposes of this motion.

11

repeatedly held that a party, through its conduct, may waive its right to object to going forward
with an arbitration even if not contractually bound to do so."). Indeed, the Court of Appeals has
specifically recognized "assumption" as one of the "five theories" under which "nonsignatories
may be bound to the arbitration agreements of others," noting that even "[i]n the absence of a
signature, a party may be bound by an arbitration clause if its subsequent conduct indicates that it
is assuming the obligation to arbitrate." Thomson-CSF, S.A. v. Am. Arbitration Ass 'n, 64 F.3d
773, 776-77 (2d Cir. 1995).
Relying on these principles, several courts in this District have denied motions to stay or
enjoin ongoing arbitration proceedings - including applications predicated on the movant's
purported lack of assent to an arbitration agreement - based on the plaintiffs participation in the
relevant proceeding. In Merrill Lynch & Co., Inc. v. Optibase, Ltd., for example, Judge Swain
concluded that a plaintiff seeking a preliminary injunction had likely failed to preserve its
objection to arbitration because, after initially asserting a jurisdictional defense in answer to the
defendant's arbitration claim, it then proceeded to participate in merits-related discovery and
motion practice before the arbitrator and waited until approximately a month before the
arbitration hearing was scheduled to begin to seek judicial relief. 03-cv-4191, 2003 WL
21507322, at *3-5 (S.D.N.Y. Jun. 30, 2003). Likewise, in Sands Bros., Judge Marrero deemed
objections to arbitration waived because the plaintiff, after "giv[ing] every indication that it
intended to proceed with the arbitration," sought an injunction approximately three weeks before
the scheduled hearing, after the "arbitration panel ha[ d] been selected," "discovery ha[ d]
occurred," and defendant "ha[d] incurred substantial expenses preparing for the arbitration."
2003 WL 22439789, at *3.

12

Plaintiffs in this case appeared, either in person or through a representative, at at least two
Arbitration conferences before a designated arbitrator. At one such conference, Plaintiff Clarke

expressly advised Justice McAdams that Plaintiffs did not object to arbitration of the claims
against them, agreed to expedited proceedings, and consented to entry of a discovery schedule
and a hearing date. Following that conference, Justice McAdams issued a written order
concluding that the claims were arbitrable. Plaintiffs then participated in discovery, collecting
and producing e-mails and working to schedule depositions. Despite being copied on much or
all of the parties' Arbitration-related e-mail correspondence, Plaintiffs declined to raise any
jurisdiction-related objections to discovery requests or, later, to Upwork's request to file a
dispositive motion. They did not seek an adjournment of any conference or hearing date.
Indeed, on the record before the Court, Plaintiffs waited until late January 2017 - nearly five
months after Upwork filed its arbitration demand, two months before the arbitration hearing
under the parties' expedited schedule, and with Upwork's dispositive motion forthcoming- to
first contest arbitrability in any way.
Under the circumstances, and bracketing the question of whether Plaintiffs expressly
bound themselves to the User Agreement's arbitration provision by affirmatively "agree[ing] to"
and "accept[ing]" the Agreement's terms and conditions, the Court finds it likely that Plaintiffs
have at least impliedly agreed to arbitrate Upwork's claims against them and have waived their
rights to object to proceeding with the Arbitration. It therefore cannot conclude that Plaintiffs
are likely to succeed on the merits of their claims here, regardless of whether the usual or the
heightened standard applies to their injunction application.
Seeking to avoid this result, Plaintiffs, unsurprisingly, characterize their participation in
the Arbitration as minimal and argue that it is insufficient to support a finding of waiver. Reply

13

at 5-6. It may be true that many of the decisions in this Circuit deeming objections to arbitration
waived did involve somewhat more extensive involvement in the arbitration proceeding by the
objecting party than is evident on the part of Plaintiffs here - participation in argument on the
merits, for example. See, e.g., Testamentary Trust Under Article Seventh of the Last Will and

Testament of Walter H Jones v. Watts Inv. Co., 99-cv-10590, 2000 WL 546490, *4 (S.D.N.Y.
May 3, 2000). On the other hand, all of the authorities relied upon by Plaintiffs for the
proposition that a party may retain viable objections to an arbitration proceeding notwithstanding
some level of participation in that proceeding tum in significant part on the relevant party
making its resistance to arbitration expressly known early and often, whether by formal
objection, motion practice, or otherwise. See, e.g., Herman Miller, Inc. v. Worth Capital Inc.,
173 F.3d 844, 1999 WL 132183, at *1 (2d Cir. 1999) (Summary Order) ("from the outset,"
plaintiff seeking stay of arbitration "repeatedly reserved the right to contest the existence of an
agreement to arbitrate"); Penrod Mgmt. Grp. v. Stewart's Mobile Concepts, Ltd., 07-cv-10649,
2008 WL 463720, at *l, 3 (S.D.N.Y. Feb. 19, 2008) (plaintiff filed motion to dismiss with
arbitrator arguing that arbitrator lacked jurisdiction because plaintiff was not a party to the
arbitration agreement); cf Woodcrest Nursing Home v. Local 144, Hotel, Hosp., Nursing Home
& Allied Servs. Union, SE.I. U, AFL-CIO, 788 F .2d 894, 897-99 (2d Cir. 1986) (parties seeking

to permanently enjoin series of arbitrations repeatedly responded to arbitration notices by
requesting that hearings be delayed and then obtaining ex parte stay orders in state court).
Plaintiffs, by contrast, not only failed to dispute arbitrability or to raise any jurisdictional
objection for almost five of the seven scheduled months of Arbitration proceedings, they

expressly confirmed to Justice McAdams that they did not object to Upwork's claims against
them being resolved in the Arbitration. Plaintiffs identify no authority, and the Court is aware

14

of none, for enjoining an ongoing arbitration under such circumstances. Cf !Payment, Inc. v. I st
Americard, Inc., 15-cv-1904, 2016 WL 1544736, at *4 (S.D.N.Y. Mar. 25, 2016) (while
"' [p]articipating in the arbitration hearings in order to resolve the question of arbitrability itself
does not constitute waiver of a party's objection to the arbitration,'' "[f]ailing to maintain an
objection to the arbitrator's jurisdiction" and "participating beyond disputing arbitrability, such
as engaging in discovery, testifying, and submitting papers on the merits of the underlying
dispute[] may evidence waiver") (quoting Opals on Ice, 320 F.3d at 369).
For these reasons, the Court concludes that Plaintiffs fail to carry their burden of
persuasion to demonstrate a likelihood of success on the merits under either the general standard
applicable to prohibitory injunctions or the heightened standard applicable to mandatory
injunctions.
And even if Plaintiffs could satisfy that requirement, they still fail to persuade the Court
that the equities weigh in their favor. As discussed, Plaintiffs eschewed nearly half a year's
worth of opportunities to object to the Arbitration. During that time, Upwork expended
resources prosecuting its claims through outside counsel, pursuing discovery, engaging in
correspondence with its adversaries and JAMS, scheduling and appearing at conferences, and
preparing dispositive motion papers. To now, on Plaintiffs' belated application, require Upwork
to pursue those claims, which are based on substantially similar (if not identical) underlying
factual predicates, in a disjointed manner in two separate fora would be to impose unjustified
hardship. See, e.g., Optibase, 2003 WL 21507322, at *5 (balance of hardships did not tip in
plaintiffs favor when it sought, at a "late hour," to enjoin upcoming arbitration of a subset of
defendant's claims that were "largely intertwined" factually with its arbitrable claims). That
constitutes an independent basis for denial of Plaintiffs' motion.

15

III.

Conclusion
For the foregoing reasons, Plaintiffs' motion for a preliminary injunction is DENIED.

The Court will schedule an initial pretrial conference by separate order.
The parties are directed to ECF file any papers submitted in connection with the motion
resolved herein that do not yet appear on the public docket within 3 business days of this Order.

SO ORDERED.

Dated: May 10, 2017
New York, New York

16