Sanchez v. Clipper Realty, Inc. et al

Filing 61

ORDER granting 58 Motion to Stay re: 58 LETTER MOTION to Stay Action Pending Interlocutory Appeal of Opinion and Order Denying Motion to Compel Arbitration (ECF Doc. No. 55) addressed to Judge Katherine Polk Failla from Jeffre y D. Pollack dated November 14, 2022. Accordingly, the Court GRANTS Defendants' motion for a stay. The stay will continue pending further order of this Court, which order will be issued after the Second Circuit issues its decision in the pen ding interlocutory appeal. Additionally, the statute of limitations for claims of Plaintiff and the putative collective and class arising from the conduct challenged in this action is TOLLED for the same period. The parties are hereby ORDERED to su bmit a joint letter proposing next steps in this action within two weeks of the Second Circuit's issuance of a decision in this matter. The Clerk of Court is directed to terminate the motion at docket entry 58. SO ORDERED.. (Signed by Judge Katherine Polk Failla on 11/21/2022) (ks)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
RODNEY SANCHEZ, on behalf of himself, FLSA
Collective Plaintiff and the Class,
Plaintiff,
-v.CLIPPER REALTY, INC., doing business as
Clipper Realty; CLIPPER REALTY OP L.P., doing
business as Clipper Realty L.P.; CLIPPER REALTY
CONSTRUCTION LLC; CLIPPER 107 CH LLC,
doing business as Clover House; and CLIPPER
EQUITY LLC, doing business as Clipper Equity,

21 Civ. 8502 (KPF)
ORDER

Defendants.
KATHERINE POLK FAILLA, District Judge:
On October 31, 2022, the Court denied Defendants’ motion to compel
arbitration and/or dismiss the claims against the Moving Defendants. (Dkt.
#55). 1 See Sanchez v. Clipper Realty, Inc., No. 21 Civ. 8502 (KPF), 2022 WL
16578981 (S.D.N.Y. Oct. 31, 2022). On November 9, 2022, pursuant to
statutory authority that permits interlocutory appeals from a denial
of arbitration, 9 U.S.C. § 16(a)(1)(B), Defendants filed a notice of appeal from
the portion of the Opinion denying their motion to compel arbitration. (Dkt.
#57). Shortly thereafter, Defendants moved for a stay of all proceedings in this
Court pending the resolution of that appeal. (Dkt. #58). Plaintiff filed a letter
opposing a stay (Dkt. #59), and Defendants filed a reply in further support of

1

The Court adopts the naming conventions defined in its October 31, 2022 Opinion and
Order. (See Dkt. #55). For ease of reference, the Court refers to the October 31, 2022
Opinion and Order as “Opinion.”

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their motion (Dkt. #60). After careful consideration of the arguments before it,
the Court grants the motion for a stay.
The grant or denial of a stay pending appeal is “an exercise of judicial
discretion.” Virginia Ry. Co. v. United States, 272 U.S. 658, 672 (1926). That
discretion is guided by four considerations: “[i] whether the stay applicant has
made a strong showing that he is likely to succeed on the merits; [ii] whether
the applicant will be irreparably injured absent a stay; [iii] whether issuance of
the stay will substantially injure the other parties interested in the proceeding;
and [iv] where the public interest lies.” Nken v. Holder, 556 U.S. 418, 434
(2009) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). In weighing
these factors, the first and second are the “most critical.” Id. at 343.
The first factor — likelihood of success — is satisfied if there are “serious
questions” about the merits of the dispute and the balance of hardships tips
“decidedly” in favor of the movant. Citigroup Glob. Markets, Inc. v. VCG Special
Opportunities Master Fund Ltd., 598 F.3d 30, 35-38 (2d Cir. 2010). This
standard recognizes that courts will rarely find that their own opinion is likely
to be overturned. Zachman v. Hudson Valley Fed. Credit Union, No. 20 Civ.
1579 (VB), 2021 WL 1873235, at *1 (S.D.N.Y. May 10, 2021); see also Meyer v.
Kalanick, 203 F. Supp. 3d 393, 395 (S.D.N.Y. 2016) (“Admittedly, a district
court that issued an order that is being challenged on appeal may be
predisposed to be unimpressed by the challenges to that ruling.”).
On this point, Defendants have not shown that their appeal is likely to
succeed on the merits. That said, they argue that “whether the CBA
2

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addendum’s mandatory arbitration provision retroactively binds Plaintiff, a
former employee,” is a seriously disputed question. (Dkt. #58 at 2). They note
that “courts in this District have occasionally concluded that former employees
can be bound by post-employment CBAs,” and maintain that the 2022
Addendum’s delegation of questions of arbitrability to the arbitrator
distinguishes this case from a recent Second Circuit opinion declining to bind a
former employee to an arbitration provision enacted after the end of her
employment. See Agaranova v. Stella Orton Home Care Agency, Inc., 794 F.
App’x 138, 140 (2d Cir. 2020) (summary order). The Court remains convinced
that this case falls squarely within Agaranova for the reasons detailed at length
in the Opinion. (Opinion 17-23). But because Agaranova is a summary order
and the New York Court of Appeals has never definitively spoken to this issue
of state law, Defendants’ arguments are not frivolous.
Defendants’ comparatively weak showing on the merits factor is
counterbalanced by a strong showing that they will be harmed irreparably if
this action proceeds in federal court. See Mohammed v. Reno, 309 F.3d 95,
101 (2d Cir. 2002) (“The probability of success that must be demonstrated is
inversely proportional to the amount of irreparable injury [the movant] will
suffer absent the stay.”). In authorizing interlocutory appeals from denials of
arbitration, Congress implicitly determined that “a wrongful denial of the right
to have the case sent promptly to arbitration is a harm that cannot be
adequately remedied by an appeal at the end of the case.” Meyer, 203 F. Supp.
at 396. If Defendants are forced to proceed with this federal court action but
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the Second Circuit later decides that they are entitled to an arbitral forum, they
will forever be deprived of their right to enjoy the procedures and rules that
they bargained for. See Sutherland v. Ernst & Young LLP, 856 F. Supp. 2d 638,
643 (S.D.N.Y. 2012); Starke v. SquareTrade, Inc., No. 16 Civ. 7036 (NGG) (SJB),
2017 WL 11504834, at *2 (E.D.N.Y. Dec. 15, 2017). Although Plaintiff may be
correct that the parties will have to exchange discovery regardless of the
outcome of the appeal (see Dkt. #59 at 1-2), the scope, extent, and timing of
that discovery will vary based on the forum’s rules. See In re Application of
Technostroyexport, 853 F. Supp. 695, 697-98 (S.D.N.Y. 1994) (explaining that
arbitration rules and court rules governing discovery may vary). This factor
weighs heavily in favor of a stay. 2
Next, Plaintiff will not be substantially injured absent a stay. The Court
acknowledges that a stay would harm Plaintiff’s interest in prompt resolution of
this matter. Meyer, 203 F. Supp. 3d at 398. But that blow will be softened by
an award of pre-judgment interest for back wages under the New York Labor
Law (the “NYLL”) if Plaintiff ultimately prevails. See Gamero v. Koodo Sushi
Corp., 272 F. Supp. 3d 481, 515 (S.D.N.Y. 2017) (awarding prejudgment
interest). And given the recency of the conduct at issue in this suit, Plaintiff’s
concern about discoverable evidence becoming less reliable with the passage of
time (Dkt. #59 at 2), is not substantial. Additionally, Defendants consent to

2

The Court is not persuaded by Defendant’s alternate argument, namely, that they will
be harmed by the costs of continuing to defend this action in federal court. (See Dkt.
#58 at 2). “[L]itigation costs do not rise to the level of irreparable injury.” Daniels v.
City of New York, 138 F. Supp. 2d 562, 564 (S.D.N.Y. 2001).

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tolling the statute of limitations during the pendency of the interlocutory
appeal, so the appeal will not prejudice Plaintiff’s ability to add additional
claims following discovery.
Finally, public policy considerations favor a stay as well. Considerations
of judicial economy counsel against investing court resources in proceedings
that may prove to be unnecessary. Sutherland, 856 F. Supp. 2d at 644.
Because resolution of the arbitration issue could be dispositive of this federal
action, there is a risk that further proceedings will be “unproductive and
incompatible with judicial economy.” Payne v. Jumeirah Hosp. & Leisure (USA)
Inc., 808 F. Supp. 2d 604, 604 (S.D.N.Y. 2011). Plaintiff’s suggestion of a
countervailing public interest in the speedy resolution of this matter is not
persuasive. (Dkt. #59 at 2). Plaintiff does not offer any authority establishing
this interest and has not given the Court any reason to believe that an
arbitration would not proceed efficiently in this case.
On balance, the Court finds that a stay is warranted. Although
Defendants have not established a strong likelihood of success on the merits,
they have identified a non-frivolous ground for appeal, and resolution of the
identified issue will likely benefit litigants and courts in future cases.
Moreover, Defendants have made strong showings on each of the three
remaining factors. Accordingly, the Court GRANTS Defendants’ motion for a
stay. The stay will continue pending further order of this Court, which order
will be issued after the Second Circuit issues its decision in the pending
interlocutory appeal. Additionally, the statute of limitations for claims of
5

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Plaintiff and the putative collective and class arising from the conduct
challenged in this action is TOLLED for the same period.
The parties are hereby ORDERED to submit a joint letter proposing next
steps in this action within two weeks of the Second Circuit’s issuance of a
decision in this matter. The Clerk of Court is directed to terminate the motion
at docket entry 58.
SO ORDERED.
Dated: November 21, 2022
New York, New York
KATHERINE POLK FAILLA
United States District Judge

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