Cornelius v. Macy's

Filing 33

DECISION AND ORDER; denying 17 Motion to Compel; granting 19 Motion to Amend or Correct; adopting Report and Recommendations re 25 Report and Recommendations. Signed by Hon. John L. Sinatra, Jr. on 2/2/2021. (CGJ)

UNITED STATES DISTRICT COURT

FEB

2 2021

WESTERN DISTRICT OF NEW YORK

^^=^5^distrjct0^
MARILYN CORNELIUS,
Plaintiff,

18-CV-678(JLS)(JJM)

V.

MACY'S RETAIL HOLDINGS,INC.,i
Defendant.

DECISION AND ORDER
I.

Background

On June 14, 2018, Plaintiff Marilyn Cornelius commenced this action against

her former employer. Defendant Macy's Retail Holdings, Inc., alleging employment
discrimination claims in violation of Title VII, the Age Discrimination in
Employment Act, and New York State Human Rights Law. See Dkt. 1. Defendant

answered the complaint on April 29, 2019, raising numerous affirmative defenses,
including that Cornelius's claims "are subject to binding arbitration pursuant to
[her] agreement to arbitrate all disputes arising from or related to her
employment." Dkt. 10, at 4 f 1.2

1 Cornelius named "Macy's" as the defendant in this case. See Dkt. 1. Defendant
states that Macy's Retail Holdings, Inc. is the "correctly-named Defendant in this
matter." See Dkt. 10, at 2 T| 2; Dkt. 17-1, at 1 n.l. Because Cornelius does not
oppose this change—and,in fact, requests it—the Court will ask the Clerk of Court
to update the docket to reflect the amended caption, above. See Dkt. 19, at 1.

2 All page references are to the numbering automatically generated by CM/ECF,
which appears in the header of each page.

This Court^ referred the case to United States Magistrate Judge Jeremiah J.

McCarthy for all proceedings under 28 U.S.C. §§ 636(b)(1)(A),(B), and (C). Dkt. 11.
At the preliminary pretrial conference, Defendant indicated that it would move to
compel arbitration. See Dkts. 14, 15. Defendant filed that motion on June 18, 2019,

asking Judge McCarthy to compel arbitration of Cornelius's claims and to dismiss

her complaint. See Dkt. 17. Cornelius opposed the motion. Dkt. 19.^ Defendant

replied in further support(Dkt. 22), and Cornelius filed a sur-reply (Dkt. 23). Judge
McCarthy heard oral argument on July 24, 2019. Dkt. 24.

Judge McCarthy issued a Report, Recommendation, and Order ("RR&O")on

August 5, 2019:(1) denying Defendant's motion to compel arbitration; and (2)
recommending that this Court deny Defendant's motion to dismiss. See Dkt. 25, at
1. In particular. Judge McCarthy held that Defendant conceded Cornelius's

argument that its conduct rendered the arbitration agreement voidable, which
required denying Defendant's motion to compel arbitration. See id. at 2-4. And he
recommended denying Defendant's motion to dismiss because the Federal

Arbitration Act authorizes courts to stay cases pending arbitration, not dismiss
them. See id. at 4-5.

3 Honorable Lawrence J. Vilardo was originally assigned to this case and ordered
the referral to Judge McCarthy. Dkt. 11. On January 5, 2020, this case was
reassigned to the undersigned. Dkt. 31.
4 Cornelius also moved for leave to amend the complaint to substitute Macy's Retail
Holdings, Inc. as defendant. As previously mentioned, the Court grants her motion.
See supra note 1.

On August 19, 2019, Defendant objected to the RR&O, arguing that denial of
its motion to compel arbitration is clearly erroneous, and that Judge McCarthy
erred in recommending denial of its motion to dismiss. See Dkt. 27, at 6, 22-23.
Cornelius responded to Defendant's objections, and Defendant replied in further
support. Dkts. 29, 30.
II.

Review of Order Denying Motion to Compel Arbitration

The referral order authorized Judge McCarthy to "hearQ and dispos[e] of all
non-dispositive motions or applications." Dkt. 11. When a party timely objects to a
magistrate judge's order, the Court must modify or set aside any part of the order
that is clearly erroneous or is contrary to law. See Fed. R. Civ. P. 72(a). An order
"is clearly erroneous or contrary to law when it fails to apply or misapplies relevant
statutes, case law or rules of procedure." Tracy v. NVR,Inc., 791 F. Supp. 2d 340,
342(W.D.N.Y. 2011)(internal quotations and citation omitted).

Judge McCarthy recognized—and Defendant does not dispute—that motions
to compel arbitration are non-dispositive. See Dkt. 25, at 4; Gumming v.
Independent Health Ass'n, Inc., No. 13-CV-969 A(F), 2014 WL 3533460, at *l-*2

(W.D.N.Y. July 16, 2014). The Court therefore reviews the order denying
Defendant's motion to compel arbitration under the clearly erroneous/contrary to
law standard.

Judge McCarthy concluded that, by failing to respond to Cornelius's

argument in a written reply. Defendant conceded that it voided any agreement to
arbitrate. See Dkt. 25, at 3-4. Defendant does not dispute that its reply

memorandum lacked an opposition to Cornelius's argument. See generally Dkt. 27;
see also Dkt. 22. Instead, Defendant argues that Cornelius did not fully develop
this argument until oral argument, Defendant addressed the argument at oral
argument, and Defendant was denied a chance to file a post-argument submission
to address Cornelius's argument.

But Cornelius's opposition contains more detail than Defendant suggests.
Cornelius states:

[W]ithout having all ofthe pertinent information and given the option
to opt-out the Plaintiff did not enter into a binding agreement to
arbitrate all of her employment related claims, including those raised
in her Complaint and because Defendant did not continue to follow
the steps in [its] own process. [It] voided any such agreement.
With regards to the Declaration of Cynthia Ripak, when the Plaintiff
contacted the Office of Solutions InStore the associate was not very
accommodating and did not offer to explain the process[.] I was told
he would forward my complaint to Theresa Hoy and she would contact
the Plaintiff.

Dkt. 19, at 5. Defendant chose not to respond to this argument in its reply
submission. See generally Dkt. 22. Given that choice, the Court cannot conclude

that Judge McCarthy clearly erred when he denied Defendant's motion to compel
arbitration. See Dkt. 25, at 3-4 (citing cases regarding concession by silence).®

® Defendant also argues that Judge McCarthy erred in denying its motion because
"Plaintiffs argument has no merit that would not constitute a ground for denying
the Motion to Compel," suggesting that the record lacked evidence and legal support
to deny Defendant's motion. See Dkt. 27, at 7-8. But Judge McCarthy based his
decision on Defendant conceding Cornelius's argument. See Dkt. 25, at 3-4. The
clear error standard applies to the Court's review here, and the Court declines to
engage in the de nova review that Defendant invites.

III.

Review of Recommendation to Deny Motion to Dismiss

Defendant asked the Court to dismiss—rather than stay—this action after

granting its motion to compel arbitration. See Dkt. 27, at 22-23. Judge McCarthy
concluded that dismissal would be inappropriate. See Dkt. 25, at 4-5. A district

court must conduct a de novo review of those portions of a magistrate judge's
recommendation to which a party objects. 28 U.S.C. § 686(b)(1); Fed. R. Civ. P.

72(b)(3). Defendant's objection to the recommendation that this Court deny the
motion to dismiss is a dispositive matter subject to de novo review. 28 U.S.C.
§ 636(b)(1); Fed. R. Civ. P. 71(b)(3).

Because the Court affirms Judge McCarthy's order denying Defendant's
motion to compel arbitration, it need not reach this objection. But the Court
nevertheless reviewed the RR&O,the briefing on objections, and the relevant

record. Based on that de novo review, the Court accepts and adopts Judge
McCarthy's recommendation to deny the motion to dismiss. Whether or not "[a]ll of

Cornelius'[s] claims against Macy's are arbitrable," dismissal is inappropriate. Dkt.
17-1, at 26; see Katz v. Cellco P'ship, 794 F.3d 341, 345 (2d Cir. 2015)(joining "those

Circuits that consider a stay of proceedings necessary after all claims have been
referred to arbitration and a stay requested," and noting that the "plain language

[of the FAA]specifies that the court 'shall' stay proceedings pending arbitration,

provided an application is made and certain conditions are met").

CONCLUSION

For the reasons stated above and in the RR&O, the Court:

• Affirms Judge McCarthy's order denying Defendant's motion to compel
arbitration (Dkt. 17) and, to the extent necessary, grants Cornelius's motion
requesting that the Court deny the motion to compel arbitration (Dkt. 19);
• Accepts and adopts Judge McCarthy's recommendation to deny Defendant's
motion to dismiss (Dkt. 17); and

• Refers the case back to Judge McCarthy for further proceedings consistent
with the referral order at Dkt. 11.

The Clerk of Court shall update the docket to reflect the caption on this
decision and order.
SO ORDERED.

Dated:

February 2, 2021
Buffalo, New York

J0W L. SINATRA, JR.
HTED STATES DISTRICT JUDGE