Marciano v. DCH Auto Group
Filing
56
OPINION & ORDER: For the foregoing reasons, the Court grants Defendants' Motion To Compel Arbitration, but it denies their Motion for Attorneys' Fees. The case will remain stayed pending arbitration. The Clerk of Court is respectfully requested to terminate the pending Motion. (See Dkt. No. 35.) SO ORDERED. (Signed by Judge Kenneth M. Karas on 3/31/2014) (lnl)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
LUCIA MARCIANO,
Plaintiff,
No. 11-CV-9635 (KMK)
v.
OPINION & ORDER
DCH AUTO GROUP, BRIAN LAM, and
BERNARD FEE,
Defendants.
Appearances:
John A. Beranbaum, Esq.
Jennifer Lea Smith, Esq.
Beranbaum Menken Ben-Asher & Bierman LLP
New York, NY
Counsel for Plaintiff
Dena Calo, Esq.
Kathleen Barnett Einhorn, Esq.
Genova Burns Giantomasi Webster
Newark, NJ
Counsel for Defendants
KENNETH M. KARAS, District Judge:
Plaintiff Lucia Marciano brings this action against DCH Auto Group (“DCH”), a
Delaware corporation that owns and operates a car dealership located in Mamaroneck, New
York, and Brian Lam (“Lam”) and Bernard Fee (“Fee”), the General Manager and Sales
Manager, respectively, of that dealership. (See Third Am. Compl. (“Compl.”) (Dkt. No. 24)
¶¶ 8–9.) She alleges three claims of workplace discrimination arising under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., (see id. ¶¶ 114–17), the Americans with
Disabilities Act, 42 U.S.C. §§ 12101 et seq., (see id. ¶¶ 118–22), and New York’s Human Rights
Law, N.Y. Exec. Law §§ 290 et seq., (see id. ¶¶ 123–28). Before the Court is Defendants’
Motion To Compel Arbitration and for Attorneys’ Fees. (See Dkt. No. 35 (“Mot.”).) For the
following reasons, Defendants’ Motion is granted in part and denied in part.
I. Background
A. Factual History
In January 2009, Plaintiff sought a job at a car dealership owned by Defendant DCH.
(See Mem. of Law in Supp. of Defs.’ Mot. To Compel Arbitration Pursuant to the FAA To
Dismiss Pl.s’ Compl. & for Atty’s Fees (“Mem.”) (Dkt. No. 38) 7.) Plaintiff completed an
employment application (“Employment Application”), wherein she was asked to submit personal
data and to sign two “Acknowledgement [sic] and Authorization” forms. (See Decl. of Gene
Hallenbeck in Supp. of Defs.’ Mot. To Compel Arbitration Pursuant to the FAA & To Dismiss
Pl.s’ Compl. (“Hallenbeck Decl.”) (Dkt. No. 37), Ex. A.) One of the forms (“Employment
Agreement”) solicited Plaintiff’s consent to various terms of employment, such as submission to
random drug and alcohol testing, cooperation in background investigations, and terminable-atwill status. (See id. at unnumbered 6.) The other form (“Arbitration Agreement”) solicited her
consent to submit certain types of claims against the company arising out of her employment
exclusively to binding arbitration. (See id. at unnumbered 4–5.) Plaintiff signed and dated both
forms. (See id. at unnumbered 5–6.)
Plaintiff thereafter accepted Defendants’ offer of an “Internet Manager” position and
commenced her employment on February 23, 2009. (See Compl. ¶ 10.) Over the next two
years, Plaintiff alleges that she suffered various forms of harassment and discrimination based on
her gender, (see id. ¶¶ 17, 26), and a disability, (see id. ¶¶ 29–112). DCH ultimately terminated
Plaintiff on March 30, 2011. (See id. ¶ 113.)
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B. Procedural History
Plaintiff initially filed a pro se Complaint in December 2011, naming DCH as the sole
defendant. (See Dkt. No. 2.) A summons was issued on January 19, 2012, and this Court
granted each of Plaintiff’s four requests to extend the service deadline, thereby effectively
extending the original deadline by over a year. (See Dkt. Nos. 9–13.) Before she complied with
the extended deadline, however, she filed an Amended Complaint—again pro se—in December
2012, re-naming DCH as a defendant and adding Lam and Fee as co-defendants. (See Dkt. No.
15.) Then, before serving the Amended Complaint, Plaintiff retained a law firm to represent her,
and the Court gave her permission to file a Second Amended Complaint, (see Dkt. Nos. 18–19,
21), which she filed on April 8, 2013, (see Dkt No. 23). Shortly thereafter, Plaintiff’s counsel
requested leave to file a Third Amended Complaint due to “several typographical errors” it
discovered in the Second Amended Complaint. (See Dkt. No. 22.) The Court granted this
request, (see id.), and Plaintiff filed her Third Amended Complaint on April 16, 2013, (see
Compl.). Plaintiff completed service on May 13, 2013. (See Dkt. Nos. 25–26, 28.)
On May 10, 2013, Defendants sent a letter to the Court, informing it that they had asked
Plaintiff to consider withdrawing her Complaint and submitting the matter to arbitration. (See
Dkt. No. 29 (Letter from Dena B. Calo to Court (May 10, 2013)).) Three days later, Defendants
sent a letter requesting a premotion conference to discuss a potential motion to compel
arbitration in light of the previously mentioned Arbitration Agreement that Plaintiff signed when
she applied for a job with DCH. (See Decl. of Dena B. Calo, Esq. in Supp. of Defs.’ Mot. To
Compel Arbitration Pursuant to the FAA To Dismiss Pl.s’ Compl. & for Att’ys’ Fees (“Calo
Decl.”) (Dkt. No. 36), Ex. J (Letter from Dena B. Calo to Court (May 13, 2013)).) In response
to this letter, Plaintiff’s counsel informed the Court that she considered “parts of the arbitration
3
agreement” to be “ambiguous,” and that she had consequently “asked Defendants to stipulate to
several additional terms as a condition of [Plaintiff] agreeing to voluntarily dismiss the
Complaint and refile in arbitration.” (Id., Ex. K at unnumbered 1 (Letter from Jennifer Smith to
Court (May 17, 2013)).) Defendants responded directly to Plaintiff’s counsel, informing her that
Defendants would “not agree to the proposed Stipulation” in general, but that they were “willing
to stipulate . . . that they [would] pay all arbitration fees and costs . . . in accordance with [the
American Arbitration Association’s] Employment Arbitration Rules, as well as the initial filing
fee in accordance with the signed Arbitration Agreement.” (Id., Ex. L at unnumbered 1–2
(Letter from Dena B. Calo to Jennifer Smith (May 20, 2013)).) At a hearing held on May 23, the
Court ordered Plaintiff to respond to Defendants’ letter by May 31, (see Dkt. (minute entry for
May 23, 2013)), and it subsequently granted Plaintiff’s request for a two-week extension of that
deadline, (see Dkt. No. 34).
On June 13, Plaintiff’s counsel sent a letter informing Defendants and the Court that
Plaintiff “[did] not consent to transferring the case to arbitration.” (Calo Decl., Ex. N at
unnumbered 1.) Defendants thereafter filed the instant Motion To Compel Arbitration and for
Attorneys’ Fees on July 1. (See Mot.; Mem.) Plaintiff filed an Opposition Memorandum on
August 2, (see Pl.’s Mem. of Law in Opp’n to Defs.’ Mot. To Compel Arbitration Pursuant to
the FAA, To Dismiss Pl.s’ Compl. & for Att’ys’ Fees (“Opp’n”) (Dkt. No. 42)), which was
followed by Defendants’ Reply Memorandum on August 12, (see Reply Mem. of Law in Further
Supp. of Defs.’ Mot. To Compel Arbitration Pursuant to the FAA, To Dismiss Pl.s’ Compl. &
for Att’ys’ Fees (“Reply”) (Dkt. No. 48)). The Court then granted Plaintiff’s request to file a
Sur-reply Memorandum, (see Dkt. No. 49), which Plaintiff filed on September 24, (see Pl.’s Surreply Mem. of Law (“Sur-reply”) (Dkt. No. 50)), and to which Defendant responded on October
4
7, (see Defs.’ Mem. of Law in Opp’n to Pl.’s Sur-reply & in Further Supp. of Defs.’ Mot. To
Compel Arbitration Pursuant to the FAA, To Dismiss Pl.s’ Compl. & for Att’ys’ Fees (“Opp’n to
Sur-reply”) (Dkt. No. 55)). The Court now turns to a discussion of Defendants’ Motion.
II. Discussion
A. Arbitration
1. Legal Standard
Defendants move to compel arbitration under the Federal Arbitration Act (“FAA”),
which allows a party “aggrieved by the alleged failure, neglect, or refusal of another to arbitrate
under a written agreement for arbitration [to] petition any United States district court [with
jurisdiction] . . . for an order directing that such arbitration proceed in the manner provided for in
such agreement.” 9 U.S.C. § 4. In this specific context, courts “appl[y] a standard similar to that
applicable for a motion for summary judgment.” Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d
Cir. 2003). Under this standard, the Court evaluates “[a]llegations related to the question of
whether the parties formed a valid arbitration agreement . . . to determine whether they raise a
genuine issue of material fact.” Schnabel v. Trilegiant Corp., 697 F.3d 110, 113 (2d Cir. 2012).
“If there is a genuinely disputed factual issue whose resolution is essential to the determination
of the applicability of an arbitration provision, a trial as to that issue will be necessary.”
Wachovia Bank, Nat’l Ass’n v. VCG Special Opportunities Master Fund, Ltd., 661 F.3d 164, 172
(2d Cir. 2011); see also 9 U.S.C. § 4 (“If the making of the arbitration agreement . . . be in issue,
the court shall proceed summarily to the trial thereof.”). However, “where the undisputed facts
in the record require the matter of arbitrability to be decided against one side or the other as a
matter of law, [a court] may rule on the basis of that legal issue and avoid the need for further
court proceedings.” Wachovia Bank, 661 F.3d at 172 (internal quotation marks omitted); see
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also 9 U.S.C. § 4 (“[U]pon being satisfied that the making of the agreement for arbitration or the
failure to comply therewith is not in issue, the court shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the agreement.”); Ryan v. JPMorgan
Chase & Co., 924 F. Supp. 2d 559, 561–62 (S.D.N.Y. 2013) (“[A] [c]ourt must grant a motion to
compel arbitration if the pleadings, discovery materials before the [c]ourt, and any affidavits
show there is no genuine issue as to any material fact and it is clear the moving party is entitled
to judgment as a matter of law.”).
2. Analysis
The Parties’ dispute essentially concerns the “question of arbitrability,” i.e. “whether the
parties have submitted [this] dispute to arbitration.” Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 83 (2002) (internal quotation marks omitted). To answer this question, courts in the
Second Circuit generally “follow a two-part test,” whereby they consider “(1) whether the
parties have entered into a valid agreement to arbitrate, and, if so, (2) whether the dispute at
issue comes within the scope of the arbitration agreement.” In re Am. Express Fin. Advisors Sec.
Litig., 672 F.3d 113, 128 (2d Cir. 2011); see also Granite Rock Co. v. Int’l Bhd. of Teamsters,
130 S. Ct. 2847, 2857–58 (2010) (noting that a court “should order arbitration of a dispute only
where the court is satisfied that neither the formation of the parties’ arbitration agreement nor . .
. its enforceability or applicability to the dispute is at issue” (first emphasis added)). Here,
Defendants contend that the Arbitration Agreement is a valid agreement to arbitrate the specific
claims raised in Plaintiff’s Complaint, thus satisfying both parts of this test. (See Mem. 10–16.)
Plaintiff disputes only the first part, arguing that “[t]he only issue to be decided . . . is whether
6
the parties agreed to arbitrate,” such that “other issues . . . , including the scope of the alleged
agreement and whether Plaintiff’s claims [are] arbitrable, simply do not come into play . . .
because there was no agreement to arbitrate.” (See Opp’n 5.)
“Whether one can be bound by an arbitration clause is usually determined by looking at
generally accepted principles of contract law.” Gold v. Deutsche Aktiengesellschaft, 365 F.3d
144, 149 (2d Cir. 2004); see also Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002)
(“[T]he ultimate question of whether the parties agreed to arbitrate is determined by state law.”).1
Pursuant to these principles, “a party is bound by the provisions of a contract that [s]he signs,
unless [s]he can show special circumstances that would relieve h[er] of such an obligation.”
Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir. 1987). In the context of
evaluating whether “special circumstances” sufficient to warrant relief from an arbitration
agreement exist, “the party resisting arbitration bears the burden of proving that the claims at
issue are unsuitable for arbitration.” Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91
(2000).
Plaintiff argues that the Arbitration Agreement is not enforceable for four independent
reasons. First, she argues that she did not see, read, or understand the Agreement, possibly due
to Defendants’ actions. Second, she argues that the Agreement consists of an illusory promise.
1
Although the Arbitration Agreement does not specify which state’s law applies to the
agreement, the Parties’ Memoranda apply New York law. (See Mem. 11 (applying New York
law); Opp’n 6 (same).) Consequently, the Court applies New York law when interpreting the
agreement. See Motorola Credit Corp. v. Uzan, 388 F.3d 39, 61 (2d Cir. 2004) (“[T]he parties’
briefs assume that New York law controls . . . , and such implied consent . . . is sufficient to
establish choice of law.” (internal quotation marks omitted) (third alteration in original)).
7
Third, she argues that she received no consideration for agreeing to binding arbitration. Fourth,
she argues that the Agreement is substantively unconscionable because of the high costs it
imposes on her. The Court will address each argument in turn.
a. Lack of Assent
Plaintiff first argues that, although her signature appears on the Arbitration Agreement,
she “never agreed to arbitrate her claims.” (Sur-reply 1 (alterations omitted).) Specifically, she
argues that “language relating to arbitration . . . was not on any page that [she] saw or signed,”
that “Fee pressured [her] into signing [both] Acknowledgement [sic] and Authorization pages
and misrepresented to her that by signing, she was only assenting to the language he read to her
above the signature lines,” which language “did not include the alleged agreement to arbitrate,”
and that “Fee never said anything to [her] about arbitration and deliberately prevented her from
reading the language on the reverse side of her signature pages that discussed arbitration.” (Id.
at 2.)
According to Defendants, the Employment Application was presented to Plaintiff as a
“tri-fold document” consisting of three double-sided pages connected to each other such that the
entire six-page application was printed on a single, twenty-five-and-a-half-inch-wide sheet of
paper. (See Decl. of Carrie Ferrantino in Further Supp. of Defs.’ Mot. To Compel Arbitration
Pursuant to the FAA, To Dismiss Pl.s’ Compl. & for Att’ys’ Fees (“Ferrantino Decl.”) (Dkt. No.
47) ¶¶ 6–7; id., Ex. A (containing photographs of the original Employment Agreement).)2
2
Plaintiff asserts that, “because Defendants have raised [this] argument in their reply
papers for the first time, and submitted new evidence, [the argument and the evidence] should be
disregarded.” (Sur-reply 1.) However, consideration of the argument and the evidence is
appropriate because it was directly responsive to claims Plaintiff made in her Memorandum of
Law and associated Declaration. (See Opp’n 1–2 (“[T]he application was a three page document
that made no reference at all to arbitration. . . . At no point during the application process was
8
Initially, Plaintiff’s recollection of the Application implicitly conflicted with Defendants’
recollection, in that Plaintiff described the Application as consisting of six unattached, singlesided pages:
Fee handed me an employment application, containing three pages for me to fill out.
...
....
When I had finished filling out the three pages . . . I returned [them] to Fee.
. . . . After a few minutes Fee called me to his office and told me that I had to sign
the employment application. I told Fee that I did not see a place for my signature.
Fee showed me two additional pages, neither of which were part of the original
three page application, and told me that I had to sign both pages. . . . Fee told me
that the two pages were supposed to be attached to my employment application and
explained that these papers got lost in the mess of papers on his desk. . . .
....
Fee told me the pages were not numbered and he place[d] them behind my
employment application . . . .
(Decl. of Lucia Marciano (“Marciano Decl.”) (Dkt. No. 44) ¶¶ 3–8 (emphasis added).)
However, after Defendants submitted photographs of the original tri-fold application, showing
that all three pages were connected, Plaintiff offered a different recollection:
When Fee handed me the employment application, it was folded. The only page that
was visible was the first page, which had the words “Application for
Employment—NY” on the top. I filled that page out and turned over that first page.
[Plaintiff] ever shown the actual arbitration agreement that is the subject of this motion; she was
presented with two signature pages, neither of which themselves contained any information
about arbitration.”); Decl. of Lucia Marciano (“Marciano Decl.”) (Dkt. No. 44) ¶¶ 3, 5–6, 8.)
Moreover, there is no prejudice because the evidence is merely another copy of the same
document provided in the moving papers, and the Court granted Plaintiff leave to file a Sur-reply
Memorandum in response.
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When I did so, only the second and third pages were visible—the pages that have the
words “Employment History” . . . and “Education” . . . on top. I filled those out as
well. . . .
I did not see any other pages when I filled out the employment application. I
returned the application to Fee.
After a few minutes, Fee called me into his office and . . . . told me that I had to sign
two pages that I believed were separate pages because he never told me they were
attached on the backside of my employment application and I had not seen any pages
other than the three I had filled out. . . .
Fee[,] still holding the application, showed me the signature page [for the
Employment Agreement] and told me to sign. He then showed me [the signature
page for the Arbitration Agreement] and told me to sign that page also. Fee refused
to give me either page to read on my own, and rushed me through the language on
the pages while I tried to follow along. There was no language on either page about
arbitration.
....
[I]t appears [that] a page containing alleged arbitration language . . . may have been
on the reverse side of one of the signature pages that was folded behind the last page
of my application, but I did not see that page and was not notified of it. Nothing
required me to read, fill out or sign that page at the time I filled out the 3 page
application. There was no language on either signature page to notify me that there
was arbitration language on the reverse side or that my signature meant I was
agreeing to arbitration. Fee did not turn the page over to show me the reverse side,
when he told me that I had to sign [the two signature pages], and rushed me to sign
them. Fee did not show me the page containing arbitration language and he did not
tell me anything about arbitration before I signed. Fee refused to give me the page
to read on my own[. I]n fact, I believe he deliberately misrepresented the
Acknowledgment and Authorization signature pages and prevented me from seeing
the page containing arbitration language . . . .
(Decl. of Lucia Marciano (“Second Marciano Decl.”) (Dkt. No. 51) ¶¶ 2–5, 8 (emphasis added).)
Plaintiff thus ultimately agrees with Defendants as to the form of the Employment Application
and the placement of both pages of the Arbitration Agreement, but she disputes Defendants’
contention that her signature constituted a valid acceptance of that agreement.
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Under New York law, “[a] party is under an obligation to read a document before he or
she signs it, and a party cannot generally avoid the effect of a [document] on the ground that he
or she did not read it or know its contents.” Brandywine Pavers, LLC v. Bombard, 970 N.Y.S.2d
653, 655 (App. Div. 2013) (internal quotation marks omitted) (second alteration in original); see
also In re Lehman Brothers Inc., 478 B.R. 570, 587 n.19 (S.D.N.Y. 2012) (noting that, under
New York law, “[a] party’s failure to read or understand a contract that it signs does not relieve
it of its obligation to be bound by the contract”); Superior Officers Council Health & Welfare
Fund v. Empire HealthChoice Assurance, Inc., 927 N.Y.S.2d 324, 326 (App. Div. 2011)
(“[P]arties are presumed to know the contents of the agreements they have signed.” (citation
omitted)). Furthermore, “[a] signer’s duty to read and understand that which it signed is not
diminished merely because [the signer] was provided with only a signature page.” Dasz, Inc. v.
Meritocracy Ventures, Ltd., 969 N.Y.S.2d 653, 655 (App. Div. 2013) (citations and internal
quotation marks omitted) (alterations in original); see also Overseas Private Inv. Corp. v. Kim,
895 N.Y.S.2d 217, 219–20 (App. Div. 2010) (enforcing an agreement against a party who
claimed that “she was only provided with the last page of the agreement” and that “she signed
[it] without seeing the entire document”). Thus, Plaintiff’s contention that she did not read the
entire Arbitration Agreement, by itself, does not create a material factual dispute, because “a
party who signs a document without any valid excuse for having failed to read it is conclusively
bound by its terms.” Patterson v. Somerset Investors Corp., 946 N.Y.S.2d 217, 218 (App. Div.
2012) (citations and internal quotation marks omitted); see also Smith v. Lehman Bros., Inc., No.
95-CV-10326, 1996 WL 383232, at *1 (S.D.N.Y. July 8, 1996) (holding that plaintiff’s
assertions “that he was never provided with a copy of the [employment] application nor was he
aware of the arbitration provision” did not, standing alone, “constitute economic duress,
11
coercion, or fraud,” such that plaintiff was “conclusively presumed to have assented to submit
his claims to arbitration”).3
Because a “wrongful act on the part of [a] contracting party” creates an exception to the
general rule that “a party who signs or accepts a written contract . . . is conclusively presumed to
know its contents and to assent to them,” Plaintiff alleges multiple acts that, she contends, make
the Arbitration Agreement unenforceable. See Gold, 365 F.3d at 149 (internal quotation marks
omitted) (second alteration in original); see also Isaacs v. OCE Bus. Servs., Inc., — F. Supp. 2d
—, 2013 WL 4744807, at *3 (S.D.N.Y. Sept. 4, 2013) (“The plaintiff in this case does not
dispute that he signed, dated, and spelled out his name on the [agreement] as a condition of his
employment . . . . Therefore, he is bound by the [agreement] unless he can show special
grounds, such as fraud, duress or coercion, which would justify the revocation or
3
Plaintiff cites two cases that appear to be at odds with this holding, both of which are
unavailing. First, Plaintiff cites Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir.
2002), for the proposition that a party is not bound to contractual language that she did not read
“when the writing [did] not appear to be a contract and the terms [were] not called to the
attention of the recipient.” (Sur-reply 2 (quoting Specht, 306 F.3d at 30) (internal quotation
marks omitted).) In Specht, however, the Second Circuit applied California law—and, in fact,
the entirety of the quoted language came from a California court decision. See Specht, 306 F.3d
at 30 (quoting Marin Storage & Trucking, Inc. v. Benco Contracting & Eng’g, Inc., 107 Cal.
Rptr. 2d 645, 651 (Ct. App. 2001)). Second, Plaintiff cites Arthur Philip Export Corp. v.
Leathertone, Inc., 87 N.Y.S.2d 665 (App. Div. 1949), for the proposition that “a party should not
be bound by clauses printed on the reverse side of a document unless it is established that such
matters were properly called to its attention and that it assented to the provisions there stated.”
(Sur-reply 2–3 (quoting Arthur Philip Export Corp., 87 N.Y.S.2d at 667) (internal quotation
marks omitted).) Regardless of whether this holding still applies in light of the Appellate
Division’s more recent holdings, e.g. Dasz, 969 N.Y.S.2d at 655 (holding that “[a] signer’s duty
to read and understand that which it signed is not diminished merely because [the signer] was
provided with only a signature page”), the Second Circuit has applied New York contract law to
reject this argument. See Chelsea Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d
289, 293, 297 (2d Cir. 1999) (holding that plaintiff “was bound by the arbitration clause printed
on the reverse side of” a contract, even though it “denied ever receiving or reading the reverse
side of the form”).
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nonenforcement of contract.”). These include Plaintiff’s allegations—made in her second
Declaration—that Fee “rushed [her] through the language on the [signature] pages while [she]
tried to follow along,” that “[t]here was no language on either [signature] page about
arbitration,” that Fee represented to her that “there was no language [in the agreement] other
than what Fee had already shown [her] on the signature pages he made [her] sign,” that “Fee did
not show [her] the page containing arbitration language and he did not tell [her] anything about
arbitration before [she] signed,” that he “refused to give [her] the page to read on [her] own,”
and that she “believe[s] he deliberately misrepresented the Acknowledgment and Authorization
signature pages.” (Second Marciano Decl. ¶¶ 5, 7–8.)4
Plaintiff does not argue that these allegations satisfy the elements of any specific legal
doctrine—such as fraud, duress, coercion, or misrepresentation—that would justify invalidating
the Arbitration Agreement. However, a review of potentially applicable doctrines reveals that
none apply to this case. To state a claim for fraud, Plaintiff must establish that it was reasonable
for her to rely on Defendants’ alleged misrepresentation. See Cont’l Airlines, Inc. v. Lelakis, 943
F. Supp. 300, 305 (S.D.N.Y. 1996) (“A party’s mere assertion of reliance . . . is not sufficient to
support a defense of fraudulent inducement; the party’s reliance must be reasonable under the
circumstances.”); Kinsella v. Powerguard Specialty Ins. Servs., LLC, 976 N.Y.S.2d 65, 66 (App.
Div. 2013) (dismissing fraudulent-inducement claim because the plaintiff “failed to sufficiently
allege reasonable reliance”); Dabriel, Inc. v. First Paradise Theaters Corp., 952 N.Y.S.2d 506,
521 (App. Div. 2012) (dismissing fraudulent-inducement claim where “it was not reasonable for
4
In her first Declaration, Plaintiff alleged that “Fee rushed [her] through both [signature
pages], pointing to selected sentences and reading through them while [she] tried to follow
along,” and that she “was never given the opportunity to read” the first page of the Arbitration
Agreement. (Marciano Decl. ¶¶ 6, 11.)
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plaintiffs to rely on . . . oral representations from defendant” that contradicted the “express[]”
terms of the agreement); Whitehead v. Town House Equities, Ltd., 780 N.Y.S.2d 15, 17 (App.
Div. 2004) (“To sustain a cause of action sounding in fraud, a party must show . . . justifiable
reliance of the other party on the misrepresentation or material omission . . . .” (internal
quotation marks omitted)). Alternatively, she can show that her “ignorance” of the contents of
the agreement was nevertheless “excusable.” Del Turco v. Speedwell Design, 623 F. Supp. 2d
319, 335–36 (E.D.N.Y. 2009) (holding that, where a party argues that he or she “sign[ed] [a
contract] without knowing or having a reasonable opportunity to know of [the contract’s]
character or essential terms,” the party “is not absolved of the basic responsibility to review a
document before signing it and must show excusable ignorance of the contents of the writing
signed” (alterations and internal quotation marks omitted)). Moreover, although a contract may
be void due to a “misread[ing] or misrepresent[ation] . . . by the other party,” this rule generally
applies “where the signer is illiterate, or blind, or ignorant of the alien language of the writing.”
In re Toscano, 799 F. Supp. 2d 230, 245 (E.D.N.Y. 2011) (internal quotation marks omitted)
(quoting Cash v. Titan Fin. Servs., Inc., 873 N.Y.S.2d 642, 645 (App. Div. 2009)). Plaintiff has
not made any such allegation. Additionally, in light of the language on the page Plaintiff
admittedly reviewed and signed, it would have been unreasonable for her to rely on Fee’s alleged
representation that the Agreement contained no other relevant language, or any other oral
representation made by Fee. Immediately above the signature line, the words “DO NOT SIGN
THIS UNTIL YOU HAVE READ THE ABOVE STATEMENT & AGREEMENT” appear in
bold, capitalized letters. (See Marciano Decl., Ex. C; Second Marciano Decl. ¶ 7.) These words,
in turn, appeared below language informing Plaintiff that “[i]f [she] ha[d] any questions
regarding this statement,” she should “ask a Company representative before signing.” (Marciano
14
Decl., Ex. C (emphasis removed).) Therefore, “[i]f [Plaintiff] had questions concerning the
document, it was [her] responsibility to raise them prior to placing [her] signature on th[e]
document.” DeBono v. Wash. Mut. Bank, No. 05-CV-10333, 2006 WL 3538938, at *2
(S.D.N.Y. Dec. 8, 2006); see also Moss v. Rent-A-Center, Inc., No. 06-CV-3312, 2007 WL
2362207, at *5 (E.D.N.Y. Aug. 15, 2007) (“If Plaintiffs did not understand the form of the
arbitration agreement or had questions about it, the burden was upon them to have their concerns
addressed before placing their signatures on the agreement.”).
The language on that page also includes an acknowledgment that “[n]o implied, oral or
written agreements contrary to the express language of this agreement are valid unless they are
in writing and signed by the President of the Company,” and that “[n]o supervisor or
representative of the Company, other than the President of the Company, has any authority to
make any agreements contrary to the foregoing.” (See Marciano Decl., Ex. C; Second Marciano
Decl. ¶ 7.) This language thus “destroys” Plaintiff’s allegations “that the agreement was
executed in reliance upon . . . contrary oral representations,” including any oral representations
about the meaning of the contract or the lack of other contractual language. Danann Realty
Corp. v. Harris, 157 N.E.2d 597, 599 (N.Y. 1959); see also Minuteman Press Int’l, Inc. v.
Matthews, 232 F. Supp. 2d 11, 16 (E.D.N.Y. 2002) (rejecting a “fraud in the inducement” claim
that was “based on alleged oral misrepresentations in the face of . . . clear and unambiguous
[contractual] language”).
Finally, Plaintiff’s purported reliance on Fee’s alleged representation that the signature
page contained the entirety of the Agreement’s language would have been unreasonable in light
of the first sentence on the page, which is, in fact, a sentence fragment. (See Marciano Decl., Ex.
C (Arbitration Agreement signature page, beginning with the sentence fragment “Company’s
15
unrestricted option at any time, with or without good cause”).) See Sorenson v. Bridge Capital
Corp., 861 N.Y.S.2d 280, 282 (App. Div. 2008) (dismissing a claim because the “[p]laintiff’s
negligent failure to read the agreements prevent[ed] him from establishing justifiable reliance”);
cf. U.S. Bank Nat’l Ass’n v. Ables & Hall Builders, 696 F. Supp. 2d 428, 443 (S.D.N.Y. 2010)
(“[T]he signer of a deed or other instrument . . . is conclusively bound thereby . . . . If the signer
could read the instrument, not to have read it was gross negligence; if he could not read it, not to
procure it to be read was equally negligent; in either case the writing binds him.” (alterations in
original) (internal quotation marks omitted) (quoting Pimpinello v. Swift & Co., 170 N.E. 530,
531 (N.Y. 1930))).
In addition to alleging that Fee effectively concealed the other page of the Arbitration
Agreement from her, Plaintiff also alleges that Fee actively prevented her from reading it. (See
Second Marciano Decl. ¶ 8 (“Fee refused to give me the [signature] page to read on my own[,
and,] in fact, I believe he deliberately misrepresented the Acknowledgment and Authorization
signature pages and prevented me from seeing the page containing arbitration language . . . .”).)
Courts have recognized that a party might not be bound by a contract where the other party
prevents it from reading the contract’s terms. See, e.g., In re Toscano, 799 F. Supp. 2d at 245
(rejecting party’s claim that he did not assent to the terms of an agreement where there was no
evidence in the record that the party “was impaired or otherwise personally prevented from
reading the” agreement); Dunn v. Northgate Ford, Inc., 794 N.Y.S.2d 449, 451 (App. Div. 2005)
(noting that the plaintiff was “deemed to be conclusively bound by [a contract’s] terms whether
or not . . . she read [them]” absent an allegation that “defendants committed any cognizable
wrongdoing to . . . preclude her from reading [the terms]” (second alteration in original) (internal
quotation marks omitted)). Here, however, Plaintiff offers no more than self-serving speculation
16
that she “believe[s]” that Fee “prevented [her] from seeing the page containing [the] arbitration
language.” (Second Marciano Decl. ¶ 8.) Moreover, her allegation that Fee “refused to give
[her]” the Agreement “to read on [her] own,” (id.), is belied by her concession that Fee gave her
the opportunity to review and complete the entire employment application when Plaintiff
initially inquired about a position. (See id. ¶¶ 2–3 (admitting that “Fee handed [her] the
employment application,” and that she “returned the application to Fee” after filling out three of
the six pages); Marciano Decl. ¶¶ 3, 5 (admitting that “Fee handed [Plaintiff] an employment
application[] . . . for [her] to fill out,” and that “[w]hen [she] had finished filling [it] out . . . ,
[she] returned [it] to Fee”).)5
Furthermore, Plaintiff has not sufficiently alleged that Defendants used “high pressure
tactics or any other form of coercion in attaining her consent.” Nayal v. HIP Network Servs.
IPA, Inc., 620 F. Supp. 2d 566, 572 (S.D.N.Y. 2009). Although she alleges that Fee “rushed
[her] through the language” and “rushed [her] to sign” the agreements, (Second Marciano Decl.
¶¶ 5, 8), she also alleges that she was able to ask Fee to clarify at least some of the language on
the signature page, and that Fee was responsive to this request, (see id. ¶ 7).6 And even if Fee
5
Although Plaintiff disputes Defendants’ account of the circumstances surrounding the
contract signing, the Court will not allow her to create a fact dispute through her own
contradictory statements made in two affidavits. (See Marciano Decl. ¶¶ 6, 8 (alleging that the
employment-application pages were not attached to each other); Second Marciano Decl. ¶ 2
(conceding that the pages were folded and attached).) See Margo v. Weiss, 213 F.3d 55, 60–61
(2d Cir. 2000) (“[T]he plaintiffs cannot defeat a motion for summary judgment by responding
with affidavits recanting . . . earlier testimony. . . . [A]n attempt to conjure up a triable issue of
fact through the proffer of a late affidavit . . . . will [not] defeat a motion for summary
judgment.”); Hayes v. N.Y.C. Dep’t of Corr., 84 F.3d 614, 619 (2d Cir. 1996) (“[F]actual issues
created solely by an affidavit crafted to oppose a summary judgment motion are not ‘genuine’
issues for trial.”).
6
Plaintiff specifically alleges that she “asked Fee what [the words “Please continue to
Back Page” on the Arbitration Agreement’s signature page] meant,” and that “he told [her that]
17
did rush her, she still had to satisfy her “obligation to read [the] document before [she] sign[ed]
it.” Brandywine Pavers, 970 N.Y.S.2d at 655 (internal quotation marks omitted); see also
Martin v. Creative Mgmt. Grp., Inc., No. 10-CV-2214, 2010 WL 2629580, at *2 (S.D.N.Y. June
29, 2010) (“[A] person who signs a written contract is bound by its terms regardless of his or her
failure to read and understand its terms.” (internal quotation marks omitted)); Beatie & Osborn
LLP v. Patriot Scientific Corp., 431 F. Supp. 2d 367, 392 (S.D.N.Y. 2006) (rejecting an
argument that a contract was invalid where the party alleging fraud “had a duty to read and
understand the contents of the [contract] before accepting it,” that task “would not have been
strenuous,” and the party did not otherwise demonstrate fraud); Elite Parfums, Ltd. v. Rivera,
872 F. Supp. 1269, 1273 (S.D.N.Y. 1995) (rejecting an argument that a contract clause was void
for lack of time to review it because the party “had no need to sign the contract before having it
translated and reviewed by an attorney; he could have simply informed the plaintiff that he
needed more time”); cf. Shklovskiy v. Khan, 709 N.Y.S.2d 208, 209–10 (App. Div. 2000) (“[A]
party will not be excused from his failure to read and understand the contents of a release. A
party who signs a document without any valid excuse for having failed to read it is conclusively
bound by its terms. Persons who are illiterate in the English language are not automatically
excused from complying with the terms of a contract which they sign simply because they could
the pages were not numbered and answered . . . that the ‘Back Page’ was the page he made [her]
sign first,” i.e. the signature page of the Employment Agreement. (Second Marciano Decl. ¶ 7.)
Plaintiff further alleges that she “understood [Fee’s response] to mean that there was no
language other than what [he] had already shown [her] on the signature pages he made [her]
sign.” (Id.) However, the photographs of the Employment Application make clear that Fee’s
explanation fairly interpreted the language, because in the context of the tri-fold document,
where the Arbitration Agreement preceded the Employment Agreement, the latter document
was, in fact, the “Back Page” of the entire Employment Application. (See Ferrantino Decl., Ex.
A.)
18
not read it. Such persons must make a reasonable effort to have the contract read to them.”
(citation omitted)). Moreover, Plaintiff has not sufficiently alleged that she was under duress
when she signed the Agreement in the context of her concession that she voluntarily sought
employment and voluntarily completed the entire Employment Application, including the two
signature pages. See Tarulli v. Circuit City Stores, Inc., 333 F. Supp. 2d 151, 157–58 (S.D.N.Y.
2004) (finding “no fraud, duress, unconscionability or wrongful act” and therefore “a valid
agreement to arbitrate” where plaintiff “voluntarily attended the [d]efendant’s job fair” and
“voluntarily signed [an arbitration agreement], even without . . . reviewing the [a]greement”).
Brennan v. Bally Total Fitness, 198 F. Supp. 2d 377 (S.D.N.Y. 2002), the one case Plaintiff cites
to support her argument, (see Sur-reply at 2), is specifically distinguishable on that basis. See
Isaacs, 2013 WL 4744807, at *4 (distinguishing Brennan—where the arbitration agreement was
“signed during the course of the plaintiff’s employment,” “plaintiff was given 15 minutes to
review a newly instituted ‘sixteen-page single-spaced’ arbitration agreement,” she was “told she
would be ineligible for promotions if she did not sign it,” “the terms of the arbitration agreement
. . . allowed the company to modify it at any time,” and the agreement “denied the plaintiff the
right to proceed on an already pending sexual harassment claim against the company”—from the
case at hand, where the arbitration agreement “was given to the plaintiff as a condition of his
employment at the outset,” it “did not require the plaintiff to discontinue already pending
litigation,” it “was only two pages long and legibly printed,” and “the terms of the [agreement]
ma[d]e no mention of any unilateral right . . . to modify the agreement”); Valdes v. Swift Transp.
Co., 292 F. Supp. 2d 524, 533 (S.D.N.Y. 2003) (distinguishing Brennan because, “to the extent
that the coercion in Brennan arose from the employee’s fear of losing her job, plaintiff in [the]
case [at hand] was not similarly situated, as she had not yet been hired”); Stewart v. Paul,
19
Hastings, Janofsky & Walker, LLP, 201 F. Supp. 2d 291, 294 (S.D.N.Y. 2002) (distinguishing
Brennan because “the agreement in that case was forced upon the plaintiff after the dispute arose
rather than prior to the acceptance of the employment and was obtained in manifestly unfair
circumstances”). The Court therefore finds that none of Plaintiff’s allegations is sufficient to
create a genuine dispute over a material fact related to the validity of Plaintiff’s assent to the
Arbitration Agreement.
b. Illusory Promise
Plaintiff next contends that, even if she assented to the Arbitration Agreement, it is
nonetheless unenforceable because it contains an illusory promise. See In re 114 Tenth Ave.
Assoc., Inc., 441 B.R. 416, 428 (S.D.N.Y. 2010) (“[I]f the promisor is free to perform it or not,
as he wills, [a promise] is wholly illusory and will not be enforced.” (internal quotation marks
omitted)); Strobe v. Netherland Co., 283 N.Y.S. 246, 252 (App. Div. 1935) (“The promises of
neither party are binding unless those of both are obligatory.”). Plaintiff does not dispute that
the Arbitration Agreement provides that Plaintiff and DCH “both agree that any claim, dispute,
and/or controversy” within the scope of the agreement “shall be submitted to and determined
exclusively by binding arbitration,” and that both Plaintiff and DCH agreed to “give up [their]
rights to trial by jury” when Plaintiff executed the agreement. (Marciano Decl., Ex. D (emphasis
removed).) Plaintiff nevertheless grounds her argument in subsequent language appearing at the
bottom of the first page of the Arbitration Agreement and continuing to the second page:
If hired, I agree as follows: My employment and compensation are terminable atwill, are for no definite period, and my employment and compensation may be
terminated by the Company at any time and for any reason whatsoever, with or
without good cause at the option of either the Company or myself. Consequently,
all terms and conditions of my employment, with the exception of the arbitration
agreement, may be changed or withdrawn at the Company’s unrestricted option at
any time, with or without good cause. No implied, oral or written agreements
20
contrary to the express language of this agreement are valid unless they are in writing
and signed by the President of the Company. No supervisor or representative of the
Company, other than the President of the Company, has any authority to make any
agreements contrary to the foregoing. This agreement is the entire agreement
between the Company and the employee, and takes the place of all prior agreements,
representations, and understandings of the employee and the Company.
(Id., Exs. C, D (emphasis removed).) She contends that this language “gives Defendants . . . the
unrestricted right to modify” the Agreement, such that DCH “can do whatever [it] wants with
respect to the [Agreement], including decide that it does not apply to the company’s claims.”
(Opp’n 9–10.)
“[U]nder New York law, contract claims are generally not subject to summary judgment
if the resolution of a dispute turns on the meaning of an ambiguous term or phrase.” Fed. Ins.
Co. v. Am. Home Assurance Co., 639 F.3d 557, 567 (2d Cir. 2011). However, a court “should
not find the language ambiguous on the basis of the interpretation urged by one party, where that
interpretation would strain the contract language beyond its reasonable and ordinary meaning.”
Id. at 568 (internal quotation marks omitted). Plaintiff’s reading of the Arbitration Agreement
fails under this standard. First, although the Agreement states that “all terms and conditions of
. . . employment . . . may be changed or withdrawn at the Company’s unrestricted option at any
time, with or without good cause,” that provision expressly excludes the Arbitration Agreement.
(Marciano Decl., Exs. C, D (applying provision to “all terms and conditions of [Plaintiff’s]
employment, with the exception of the arbitration agreement” (emphasis added)).) Second,
Plaintiff’s argument that the following sentence “make[s] it clear that Defendants can make oral
or written agreements contrary to the express language of the foregoing purported ‘agreement’ as
long as they are signed by the President of the Company,” (Opp’n 9–10 (emphasis in original)),
also fails, because that sentence makes the President’s signature a necessary but not sufficient
21
condition to the effectiveness of any “implied, oral or written agreements contrary to the express
language” of the contract—i.e., such agreements “are [not] valid unless they are in writing and
signed by the President of the Company,” (Marciano Decl., Ex. C (emphasis added)). Third,
Piano v. Premier Distributing Co., 107 P.3d 11 (N.M. Ct. App. 2004), wherein the New Mexico
Court of Appeals found an arbitration agreement to be an unenforceable illusory promise after
addressing what Plaintiff contends was a “nearly identical fact situation,” (Opp’n 10), is readily
distinguishable. In that case, an employee handbook provided that “[t]he Company retain[ed]
the right to add, change or delete wages, benefits, policies and all other working conditions at
any time (except the policy of at-will employment and Arbitration Agreement . . . .).” Piano,
107 P.3d at 15 (internal quotation marks omitted). But it further specified that the arbitration
agreement “may not be changed, altered, revised or modified unless in writing and signed by the
Owner of the Company.” Id. The New Mexico Court of Appeals held that “the most natural
reading of [this language was] that although [the Company] [could not] modify the terms of the
Arbitration Agreement any way or at any time, it [could], in its sole discretion, modify the terms
of the Arbitration Agreement provided that it complie[d] with the minimal formalities set forth,”
and it noted that the agreement was “completely silent with respect to Plaintiff’s signature or
approval.” Id. Here, however, the Arbitration Agreement’s presidential-signature condition
applies only to the validity of “implied, oral or written agreements,” (Marciano Decl., Ex. C
(emphasis added)), and not, as in Piano, to any “change[s], alter[ations], revis[ions] or
modifi[cations],” 107 P.3d at 15, whether agreed to or not. Unlike Piano, therefore, this
Agreement is not “silent with respect to Plaintiff’s . . . approval,” id., because it specifically
applies to agreements between Plaintiff and DCH. Plaintiff is thus incorrect that “Defendants
remain[ed] free to selectively abide by [their] promise to arbitrate.” (Opp’n 11 (internal
22
quotation marks omitted).) Accordingly, the Court rejects Plaintiff’s claim that the Arbitration
Agreement is an unenforceable illusory promise.
c. Consideration
Plaintiff next contends that the Arbitration Agreement is unenforceable because Plaintiff
received “no consideration” for her “purported promise to submit to arbitration.” (Opp’n 12.)
She specifically claims that she was “promised nothing in return for her giving up her right to [a]
jury trial,” in that “Defendants [did] not agree to consider her application” in return for signing
the Agreement, and “they [did] not offer her employment[,] . . . continued employment[,] . . .
[or] any other benefit to which Plaintiff was not otherwise entitled.” (Id.) Moreover, she asserts
that there was no “detriment to Defendants.” (Id.) Even if Plaintiff was correct that Defendants
did not promise to hire or to consider hiring her in exchange for signing the Arbitration
Agreement, the Agreement by itself contains sufficient consideration because, as discussed, it
mutually binds both parties to submit claims exclusively to arbitration. See Hellenic Lines, Ltd.
v. Louis Dreyfus Corp., 372 F.2d 753, 758 (2d Cir. 1967) (holding that a party’s “promise to
arbitrate was sufficient consideration to support [the other party’s] promise to arbitrate”); Teah v.
Macy’s Inc., No. 11-CV-1356, 2011 WL 6838151, at *5 (E.D.N.Y. Dec. 29, 2011) (“There is
clearly adequate consideration for the arbitration agreement, as it binds both parties to arbitrate
their claims, and formed part of a valid employment agreement.”); Meyer v. Starwood Hotels &
Resorts Worldwide, Inc., No. 00-CV-8339, 2001 WL 396447, at *1 (S.D.N.Y. Apr. 18, 2001)
(“[In] a contract to arbitrate disputes respecting employment, . . . the mutually binding nature of
the arbitration clause constitutes valid consideration.”). Plaintiff’s claim that the Agreement is
unenforceable for lack of consideration thus fails.
23
d. Substantive Unconscionability
Plaintiff finally claims that the Agreement is unenforceable because it is substantively
unconscionable due to the “more than speculative” “risk of prohibitive arbitration cost[s].”
(Opp’n 15.) She specifically asserts that “[c]osts are not addressed in the alleged agreement,”
that “Defendants are only obligated to pay the initial filing fee,” and that “Defendants nowhere
agree[d] to abide by any particular set of rules . . . that would govern the allocation of costs
between the parties.” (Id.) In this context, she further asserts that “she is not in a position to
afford the costs associated with arbitration,” and that she will thus “be effectively precluded
from vindicating her rights should she be forced to arbitrate.” (Id.) See Green Tree Fin. Corp.Ala., 531 U.S. at 90 (noting that “the existence of large arbitration costs could preclude a litigant
. . . from effectively vindicating her federal statutory rights in the arbitral forum”).
“[W]here . . . a party seeks to invalidate an arbitration agreement on the ground that
arbitration would be prohibitively expensive, that party bears the burden of showing the
likelihood of incurring such costs.” Green Tree Fin. Corp.-Ala., 531 U.S. at 92. Furthermore,
an asserted “risk” that a plaintiff “will be saddled with prohibitive costs is too speculative to
justify the invalidation of an arbitration agreement.” Id. at 91 (internal quotation marks
omitted). Plaintiff asserts that “the risk of prohibitive arbitration cost is more than speculative”
in this case because “[s]hould [she] have to absorb any part of the cost of arbitration herself, the
cost to her will be prohibitive.” (Opp’n 15.) This assertion, in turn, is based on her assertion
that she is “unemployed and [has] no income,” that she “ha[s] no money,” that she “ha[s]
incurred significant debt for necessary living expenses,” and that she is “entirely reliant on a
family member.” (Marciano Decl. ¶ 13.) These allegations, however, do not satisfy Plaintiff’s
burden to show a “likelihood of incurring [prohibitively expensive] costs,” for multiple reasons.
24
First, the Arbitration Agreement expressly states that DCH “will initially pay for any and all
filing fees associated with the arbitration.” (Id., Ex. D.) Plaintiff has identified no costs beyond
these fees that she might incur. Second, the Agreement provides that DCH “agrees not to seek
any costs, filing fees, or . . . attorneys’ fees” from Plaintiff, “but rather will bear these costs
regardless of the outcome of the arbitration.” (Id.) Not only does this provision effectively
guarantee that Plaintiff bears no financial risk in arbitrating her claims with respect to
Defendants’ ability to seek reimbursement, it appears to make arbitration somewhat less likely to
be prohibitively costly than litigation in this Court in the context of Defendants’ demonstrated
willingness—in this Motion—to seek attorneys’ fees from Plaintiff. Finally, in light of
Defendants’ offer during this litigation to pay “all arbitration fees and costs (e.g. hearing room
rental fee, arbitrator costs) . . . as well as the initial filing fee,” (Calo Decl., Ex. L), Plaintiff
cannot demonstrate more than a speculative risk that she will bear these costs—unless, of course,
she declines Defendants’ offer. In any event, the Court finds that Plaintiff has not met her
burden in a way that “justif[ies] the invalidation of [the] arbitration agreement.” Green Tree Fin.
Corp.-Ala., 531 U.S. at 91.
3. Conclusion—The Arbitration Agreement Is Enforceable
For the foregoing reasons, the Court finds that the Arbitration Agreement constitutes “a
valid agreement to arbitrate.” In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d at 128. And,
because Plaintiff did not dispute the issue, the Court also finds that Plaintiff’s claims “come[]
within the scope of the arbitration agreement.” Id. (See also Marciano Decl., Ex. D (providing
that the Arbitration Agreement would apply to “any claim, dispute, and/or controversy,”
including “any claims of employment discrimination, harassment, and/or retaliation under Title
VII and all other applicable federal, state, or local statute, regulation or common law
25
doctrine[,] . . . arising from, related to, or having any relationship or connection whatsoever with
[Plaintiff’s] . . . employment by, or other association with the Company, whether based on tort,
contract, statutory, or equitable law, or otherwise”).)7 Moreover, although the Parties did not
discuss this issue, the Court notes that the Arbitration Agreement between Plaintiff and DCH
also appears to require Plaintiff to arbitrate her claims against Fee and Lam. (See Marciano
Decl., Ex. D (requiring Plaintiff to arbitrate claims “between [herself] and [DCH] (and/or its
subsidiaries, affiliates, owners, directors, officers, managers, employees, agents, and parties
affiliated with its employee benefit and health plans)”).) The Court thus grants Defendants’
Motion To Compel Arbitration. See Forbes v. A.G. Edwards & Sons, Inc., No. 08-CV-552, 2009
WL 424146, at *3 (S.D.N.Y. Feb. 18, 2009) (“When a district court determines that the issue
before it is referable to arbitration pursuant to an arbitration agreement, the FAA ‘leaves no
place for the exercise of discretion,’ but instead, mandates that the court ‘direct the parties to
proceed to arbitration on issues as to which an arbitration agreement has been signed.’” (quoting
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985))). And it stays the case pending
the arbitration. See 9 U.S.C. § 3 (“[T]he court . . . , upon being satisfied that the issue . . . is
referable to arbitration under . . . an agreement, shall on application of one of the parties stay the
7
Although the Parties do not appear to dispute this issue, the Court notes that claims
brought under Title VII, the ADA, and New York’s Human Rights Law (“NYHRL”) are
arbitrable. See Parisi v. Goldman, Sachs & Co., 710 F.3d 483, 487 (2d Cir. 2013) (finding Title
VII claim arbitrable and noting that, “as a general matter, courts have consistently found that
[Title VII] claims can be subject to mandatory arbitration” (alterations and internal quotation
marks omitted)); Valdes v. Swift Transp. Co., 292 F. Supp. 2d 524, 530 (S.D.N.Y. 2003)
(“Anticipatory or pre-dispute arbitrat[ion] agreements . . . have repeatedly been enforced to
compel arbitration of employment discrimination claims under not just Title VII but also the
NYHRL.”); Stewart v. Paul, Hastings, Janofsky & Walker, LLP, 201 F. Supp. 2d 291, 294
(S.D.N.Y. 2002) (granting motion to compel arbitration of an ADA claim where plaintiff did not
demonstrate that the arbitration agreement was unenforceable).
26
trial of the action until such arbitration has been had in accordance with the terms of the
agreement.” (emphasis added)).8
B. Attorneys’ Fees
Defendants further request that the Court award them attorneys’ fees “in connection with
the filing of this [M]otion” because, according to them, “Plaintiff has irrationally and
inexplicably refused to abide by her contractual obligations to arbitrate” despite “[being] given
multiple opportunities . . . by Defendants . . . [and] by this Court[] to fulfill her agreement to
arbitrate.” (Mem. 18.) It is true, as Defendants note, that the Court “may, pursuant to its
inherent equitable powers, assess attorneys’ fees and costs when a party has ‘acted in bad faith,
vexatiously, wantonly, or for oppressive reasons.’” First Nat’l Supermarkets, Inc. v. Retail,
Wholesale & Chain Store Food Emps. Union Local 338, 118 F.3d 892, 898 (2d Cir. 1997)
(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45–46 (1991)). But the Court disagrees with
8
The Court rejects Defendants’ request that it dismiss the case instead of staying it. (See
Mem. 15–16.) Defendants cite a number of cases in this circuit recognizing that dismissal is
appropriate despite the FAA’s clear command that courts “shall . . . stay the trial of the action.”
9 U.S.C. § 3; see, e.g., Bimota SPA v. Rousseau, 628 F. Supp. 2d 500, 506 (S.D.N.Y. 2009)
(“[A]ll courts of which we are aware have followed the rule that, where all of the issues raised in
the Complaint must be submitted to arbitration, the [c]ourt may dismiss an action rather than
stay proceedings.” (some alterations and internal quotation marks omitted)); Nayal, 620 F. Supp.
2d at 574 (same). The Second Circuit has not expressly held that dismissal is appropriate under
9 U.S.C. § 3, but in Salim Oleochemicals v. M/V SHROPSHIRE, 278 F.3d 90 (2d Cir. 2002), it
intimated that dismissal might be allowed. Id. at 93 (recognizing a district court’s ability to
“decid[e] whether to dismiss an action or instead to grant a stay” in certain circumstances).
However, the court in that case also instructed district courts to “be aware that dismissal renders
an order appealable under [9 U.S.C.] § 16(a)(3), while the granting of a stay is an unappealable
interlocutory order under § 16(b),” and that “[u]nnecessary delay of the arbitral process through
appellate review is disfavored” in light of “the pro-arbitration tilt of the [FAA].” Id. (internal
quotation marks omitted). Given this language disfavoring appellate review of orders
compelling arbitration, and given the FAA’s clear language mandating that district courts stay an
action rather than dismiss it, this Court opts to stay this case pending the outcome of the
arbitration.
27
Defendants’ characterization of Plaintiff’s refusal to arbitrate as “irrational[] and inexplicabl[e],”
and, as is clear from this Opinion, Defendants are incorrect that Plaintiff “has provided no case
law supporting her position” and that “Plaintiff has no basis in law or equity to support” what
Defendants inaccurately claim is a “patently frivolous argument.” (Mem. 18 (emphasis added).)
Notably, after Plaintiff filed an Opposition Memorandum of Law articulating her position,
Defendants did not appear to press their specific request for fees in their Reply Memorandum of
Law, even while maintaining that Plaintiff “is grasping at straws, making arguments that do not
apply to these facts, relying on clearly distinguishable law and . . . fabricating stories that are
literally impossible to have occurred.” (See Reply 5.) The Court therefore denies Defendants’
Motion for Attorneys’ Fees. See Josie-Delerme v. Am. Gen. Fin. Corp., No. 08-CV-3166, 2009
WL 2366591, at *5 (E.D.N.Y. July 31, 2009) (granting motion to compel arbitration but denying
motion for attorneys’ fees even while agreeing that the plaintiff’s “claims regarding the validity
and applicability of the [arbitration agreement were] without merit” and that “her response to
[the] defendants’ motion was cursory”); Tri-Built Const., Inc. v. N.Y.C. Dist. Council of
Carpenters Pension Fund, No. 05-CV-0694, 2005 WL 1265865, at *3 (S.D.N.Y. May 17, 2005)
(granting motion to compel arbitration but denying motion for attorneys’ fees); Austin Nichols &
Co. v. Wine, Liquor & Distillery Workers’ Union, Local No. 1, No. 80-CV-2063, 1980 WL 2154,
at *3 (S.D.N.Y. Nov. 12, 1980) (granting motion to compel arbitration but denying motion for
attorneys’ fees based on a finding “that plaintiff’s claim had some legal and factual support and
was therefore colorable” (internal quotation marks omitted)); cf. Amaprop Ltd. v. Indiabulls Fin.
Servs. Ltd., No. 10-CV-1853, 2011 WL 1002439, at *3 (S.D.N.Y. Mar. 16, 2011) (“In cases
28
involving unfounded opposition to petitions to compel arbitration, courts have awarded
attorneys' fees where the party refusing arbitration acted without justification or did not have a
reasonable chance to prevail." (internal quotation marks omitted)).
III. Conclusion
For the foregoing reasons, the Court grants Defendants' Motion To Compel Arbitration,
but it denies their Motion for Attorneys' Fees. The case will remain stayed pending arbitration .
The Clerk of Court is respectfully requested to terminate the pending Motion. (See Dkt. No. 35.)
SO ORDERED.
DATED:
March~, 2014
White Plains, New York
ETHM. KARA
D STATES DISTRICT JUDGE
29
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