Yorke v. TSE Group LLC et al
Filing
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MEMORANDUM OPINION AND ORDER re: 16 MOTION to Compel Arbitration filed by TSE Group LLC, Tsion Bensusan. Accordingly, Yorke is ORDERED to show cause no later than July 31, 2019, why the Court should not dismiss the claims against S pencer Graves for failure to serve and/or lack of prosecution. For the foregoing reasons, Defendants' motion to compel arbitration is GRANTED, and the claims against Defendants TSE Group and Bensusan are stayed pending the arbitration. See Virk v. Maple-Gate Anesthesiologists, P.C., 657 F. App'x 19, 20 (2d Cir. 2016) (holding that a district court must stay proceedings where a defendant's motion to compel arbitration seeks "either a stay or dismissal"); Docket No. 17, at 1 (seeking a "stay or dismiss[al]"). The Clerk of Court is directed to terminate Docket No. 16. (Signed by Judge Jesse M. Furman on 7/17/2019) (ne)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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JOHN YORKE,
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Plaintiff,
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-v:
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TSE GROUP LLC d/b/a B.B. KING BLUES
:
CLUB & GRILL et al.,
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Defendants.
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:
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18-CV-5268 (JMF)
MEMORANDUM OPINION
AND ORDER
JESSE M. FURMAN, United States District Judge:
In this case, familiarity with which is presumed, Plaintiff John Yorke sues his former
employers, Defendants TSE Group LLC (doing business as B.B. King Blues Club & Grill),
Tsion Bensusan, and Spencer Graves, for violations of the Fair Labor Standards Act, 29 U.S.C.
§ 203 et seq., and New York Labor Law, N.Y. Lab. Law § 650 et seq. Defendants TSE Group
LLC and Tsion Bensusan (together, “Defendants”) now move to compel arbitration pursuant to
an arbitration clause in the employee handbook. See 9 U.S.C. § 4. For the reasons that follow,
their motion is GRANTED.
“The threshold question facing any court considering a motion to compel arbitration” —
and the only question here — is “whether the parties have indeed agreed to arbitrate.” Schnabel
v. Trilegiant Corp., 697 F.3d 110, 118-19 (2d Cir. 2012). In deciding this issue — which is
governed in this case by New York contract law, see id. at 119; Marcus v. Collins, No. 16-CV4221 (GBD) (BCM), 2016 WL 8201629, at *8 (S.D.N.Y. Dec. 30, 2016) — “courts apply a
standard similar to that applicable for a motion for summary judgment,” deciding whether there
is an issue of fact as to the making of the agreement based on “all relevant, admissible evidence
submitted by the parties and contained in pleadings, depositions, answers to interrogatories, and
admissions on file, together with . . . affidavits.” Nicosia v. Amazon.com, Inc., 834 F.3d 220,
229 (2d Cir. 2016) (internal quotation marks omitted). Under this standard, “[t]he party moving
to compel arbitration ‘must make a prima facie initial showing that an agreement to arbitrate
existed before the burden shifts to the party opposing arbitration to put the making of that
agreement in issue.’” Begonja v. Vornado Realty Tr., 159 F. Supp. 3d 402, 409 (S.D.N.Y. 2016)
(quoting Hines v. Overstock.com, Inc., 380 F. App’x 22, 24 (2d Cir. 2010) (summary order)).
“The moving party need not show initially that the agreement would be enforceable, merely that
one existed.” Id. (internal quotation marks omitted).
Applying those standards here, the Court must grant Defendants’ motion because they
make a prima facie showing that Yorke agreed to arbitrate his claims — namely, by submitting a
signed agreement containing an arbitration clause, see Docket Nos. 18-2, 28-3 — and Yorke
offers no evidence to put the making of that agreement “in issue” (or argument that his claims
are not encompassed by the arbitration clause). Unsurprisingly, Yorke does not dispute the wellestablished proposition that an arbitration agreement purportedly signed by him is prima facie
evidence of a promise to arbitrate. See, e.g., Scone Investments, L.P. v. Am. Third Mkt. Corp.,
992 F. Supp. 378, 381 (S.D.N.Y. 1998) (finding that “a copy of the customer agreement which
includes an arbitration clause and which was purportedly signed by” the plaintiff was prima facie
evidence of an agreement to arbitrate); Hines, 380 F. App’x at 24 (citing with approval Scone
Investments); Victorio v. Sammy’s Fishbox Realty Co., LLC, No. 14-CV-8678 (CM), 2015 WL
2152703, at *11 (S.D.N.Y. May 6, 2015). Instead, he argues that the Court should not consider
the signed agreement because (1) it was originally submitted as an exhibit to defense counsel’s
declaration, and defense counsel lacks personal knowledge that the agreement is what it purports
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to be; and (2) it would be inappropriate for the Court to consider additional evidence regarding
the document submitted with Defendants’ reply papers. See Docket No. 27 (“Yorke Mem.”), at
1-8.
The Court disagrees. For one thing, Yorke argues in his opposition papers that
Defendants’ submission of only portions of the employee handbook, rather than the entire thing,
requires denial of Defendants’ motion. To the extent that the new evidence submitted in reply —
namely, the affidavit of Tsion Bensusan (“Bensusan Affidavit”), and the handbook and signed
agreement, filed as exhibits to the affidavit — respond directly to Yorke’s argument, it is entirely
appropriate to consider them. See, e.g., Bayway Ref. Co. v. Oxygenated Mktg. & Trading A.G.,
215 F.3d 219, 226-27 (2d Cir. 2000) (“[R]eply papers may properly address new material issues
raised in the opposition papers so as to avoid giving unfair advantage to the answering party.”
(internal quotation marks omitted)); Marciano v. DCH Auto Grp., 14 F. Supp. 3d 322, 328 n.2
(S.D.N.Y. 2014) (considering new evidence submitted with a reply brief because “it was directly
responsive to claims Plaintiff made” in her opposition brief and affidavit regarding the format
and pagination of an arbitration agreement). In any event, as Yorke himself concedes, see Yorke
Mem. 5-6, a district court enjoys “broad discretion” to “rely on evidence submitted with the
reply papers,” Compania Del Bajo Caroni (Caromin), C.A. v. Bolivarian Republic of Venezuela,
341 F. App’x 722, 724 (2d Cir. 2009) (summary order) (citing Ruggiero v. Warner-Lambert Co.,
424 F.3d 249, 252 (2d Cir. 2005)), notwithstanding the traditional rule that it is improper for a
party to submit evidence in reply that was available when it filed its motion, see, e.g., Dixon v.
NBCUniversal Media, LLC, 947 F. Supp. 2d 390, 396 (S.D.N.Y. 2013). The Court finds it
appropriate to exercise that discretion here, for three reasons.
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First, Yorke cannot complain that he was surprised by the Bensusan Affidavit or the
signed arbitration agreement submitted along with it. Defendants sent a copy of the signed
agreement to Yorke’s counsel a month before they filed their motion, see Docket No. 18, ¶ 5,
and submitted the agreement with their original motion papers, giving Yorke an opportunity to
challenge the validity of the agreement with an affidavit of his own — which he did, see Yorke
Mem. 4; Docket No. 26 (“Yorke Aff.”), ¶¶ 6-7. See Bayway Ref. Co., 215 F.3d at 227 (finding
no abuse of discretion where the non-moving party “was not surprised by the affidavits in
question”). Second, Yorke never sought leave to file a sur-reply to address the Bensusan
Affidavit, the complete employee handbook, or the signed agreement, “thus fail[ing] to seek a
timely remedy for any injustice.” Id.; accord Ruggiero, 424 F.3d at 252 & n.4. 1 Finally, and
perhaps relatedly, Yorke “makes no claim that [he] has any contrary evidence to introduce even
if [he] were given an opportunity to proffer it.” Bayway Ref. Co., 215 F.3d at 227; accord
Schneider v. Cont’l Serv. Grp., Inc., No. 13-CV-5034 (JG) (MDG), 2013 WL 6579609, at *6
(E.D.N.Y. Dec. 16, 2013). At bottom, Yorke’s objection to Defendants’ reply evidence is purely
procedural, and he suffers no unfair prejudice from its consideration.
In light of that evidence, the burden shifts to shifts to Yorke to “put the making of th[e]
agreement ‘in issue.’” Hines, 380 F. App’x at 24 (quoting 9 U.S.C. § 4). This he fails to do. In
his affidavit, Yorke states, in relevant part, that (1) he was never given an employee handbook or
the opportunity to read or review one; (2) he has never seen or read the “Consent to Arbitration”
portion of the employee handbook; (3) he was never given the opportunity to read or review “any
1
In his opposition, Yorke claimed he would “be prejudiced by having to incur
substantially greater attorney’s fees in having to now potentially respond to potentially wholly
new evidence on reply.” Yorke Mem. 7. Because he did not seek to respond to Defendants’
purported new evidence, however, that prejudice is illusory.
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employment documents”; and (4) he “never agreed to arbitrate any and all claims” he had in
connection with his employment. Yorke Aff. ¶¶ 5, 7-9. Conspicuously, however, Yorke does
not dispute that the signature on the agreement is his, and that (combined with the absence of any
allegations of fraud or wrongful conduct on the part of Defendants) is fatal to his argument.
Under New York law, “in the absence of fraud or other wrongful act on the part of another
contracting party, a party who signs or accepts a written contract is conclusively presumed to
know its contents and to assent to them.” Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144,
149 (2d Cir. 2004) (quoting Metzger v. Aetna Ins. Co., 227 N.Y. 411, 416 (1920)) (ellipsis and
internal quotation marks omitted). That is true even where, as Yorke alleges is the case here, a
party does not read or understand a contract, see, e.g., Marciano, 14 F. Supp. 3d at 330
(collecting cases and authorities), or is provided with only a signature page, see id.; DeBono v.
Washington Mut. Bank, No. 05-CV-10333 (DC), 2006 WL 3538938, at *2 (S.D.N.Y. Dec. 8,
2006) (Chin, J.) (“[I]t is undisputed that plaintiff signed the Agreement. Thus, even if he only
received the last page, plaintiff is bound by the conditions of the Agreement once he signed it.”).
Thus, Yorke’s allegations are not enough to create an issue of fact as to the making of the
agreement. See Scone Investments, 992 F. Supp. at 381 (noting that, in order to create an issue of
fact, a plaintiff “must unequivocally deny that [he] entered into an agreement to arbitrate . . . and
should offer at least some evidence to substantiate [his] factual allegations” (emphasis added)).
In light of the foregoing, Yorke is required to arbitrate his claims against “the Company”
(that is, TSE Group LLC d/b/a B.B. King Blues Club & Grill). Defendants argue that Yorke
must also arbitrate his claims against Bensusan, even though Bensusan is not a signatory to the
arbitration agreement. Docket No. 17, at 6-9. Alternatively, they contend that the issue of
whether Yorke must do so — that is, the arbitrability of his claims against Bensusan — is for the
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arbitrator to decide in the first instance. See id. at 6-9. The Court agrees with the latter
argument. Where, as here, “the parties explicitly incorporate into an arbitration agreement the
AAA’s Commercial Arbitration Rules, including a rule which empowers the arbitrator to rule on
her own jurisdiction, ‘the incorporation serves as clear and unmistakable evidence of the parties’
intent to delegate such issues to an arbitrator.’” Katsoris v. WME IMG, LLC, 237 F. Supp. 3d 92,
104 (S.D.N.Y. 2017) (quoting Contec Corp. v. Remote Sol., Co., 398 F.3d 205, 208 (2d Cir.
2005)); see also Docket No. 28-2, at 12 (incorporating the AAA’s analogous Employment
Arbitration Rules); Docket No. 18-3, at 12 (AAA rule delegating to the arbitrator “the power to
rule on his or her own jurisdiction, including any objections as to the existence, scope or validity
of the . . . agreement”). That delegation encompasses the question of whether non-signatories
are bound by the arbitration agreement where “the parties have a sufficient relationship to each
other and to the rights created under the agreement,” Contec, 398 F.3d at 209. Here, Bensusan
has a “sufficient relationship” with Yorke and his claims under the agreement by virtue of being
the alleged owner, principal, and/or manager of B.B. King. See Docket No. 22, ¶¶ 8-10; see
also, e.g., Katsoris, 237 F. Supp. 3d at 106 (holding that the “founder and president” of a nonprofit could compel arbitration of the arbitrability of his claims even though only the non-profit,
and not he, was a signatory to the arbitration agreement). Accordingly, the Court will compel
arbitration as to Yorke’s claims against both TSE Group LLC and Bensusan, subject to Yorke’s
right to raise the issue of arbitrability with respect to Bensusan before the arbitrator.
That leaves only Defendant Spencer Graves, who did not join Defendants’ motion. On
September 28, 2018, Yorke filed an Affidavit of Service indicating that service of process on
Graves was accepted by “a person of suitable age and discretion” at 131 West 3rd Street, New
York, NY. See Docket No. 11; see also Docket No. 22, ¶ 3 (alleging that TSE Group LLC has
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its place of business at that address). But counsel for Defendants states that “none of the other
individual defendants” (including Graves) “have ever worked” at that address and that, “[o]n
information and belief,” Graves has not been served at his home or principal places of business.
Docket No. 18, ¶ 2. Nor has Graves filed an answer or otherwise appeared in the action. In light
of those facts, the Court is skeptical that Graves was properly served and, by extension, that it
has jurisdiction over him or Yorke’s claims against him. Moreover, to the extent that Graves
was properly served, Yorke has taken no steps to prosecute the case against him. Accordingly,
Yorke is ORDERED to show cause no later than July 31, 2019, why the Court should not
dismiss the claims against Spencer Graves for failure to serve and/or lack of prosecution.
For the foregoing reasons, Defendants’ motion to compel arbitration is GRANTED, and
the claims against Defendants TSE Group and Bensusan are stayed pending the arbitration. See
Virk v. Maple-Gate Anesthesiologists, P.C., 657 F. App’x 19, 20 (2d Cir. 2016) (holding that a
district court must stay proceedings where a defendant’s motion to compel arbitration seeks
“either a stay or dismissal”); Docket No. 17, at 1 (seeking a “stay or dismiss[al]”).
The Clerk of Court is directed to terminate Docket No. 16.
SO ORDERED.
Dated: July 17, 2019
New York, New York
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JESSE M. FURMAN
United States District Judge
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