Binienda v. Atwells Realty Corp. et al

Filing 107

MEMORANDUM AND ORDER denying 83 Motion to Compel Arbitration and to Dismiss (and denying 83 Motion to Stay, in the Alternative); denying as moot 85 Motion to Stay. So Ordered by Chief Judge William E. Smith on 3/9/2018. (Jackson, Ryan)

Case 1:15-cv-00253-WES-PAS Document 107 Filed 03/09/18 Page 1 of 11 PageID #: 938

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
SAMANTHA BINIENDA, on behalf of
)
herself and all others similarly
)
situated,
)
)
Plaintiff,
)
)
v.
)
C.A. No. 15-253 WES
)
ATWELLS REALTY CORP. and
)
THE ONE, INC.,
)
all d/b/a CLUB DESIRE and LUST
)
VIP,
)
)
Defendants.
)
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
Defendants

Atwells

Realty

Corp.

and

The

One,

Inc.

(collectively, “Defendants”) moved to dismiss this action and
compel arbitration (ECF No. 83), and to stay the action and amend
the pre-trial scheduling order (ECF No. 85).

For the reasons that

follow, both motions are DENIED.
I.

Background
The facts as they relate to Defendants’ motions are simple

and undisputed.

Plaintiff Samantha Binienda (“Plaintiff”) began

performing as an exotic dancer at Defendants’ club in November
2013.

On June 20, 2015, Plaintiff brought this putative class

action, alleging, inter alia, that Defendants misclassified exotic
dancers as independent contractors instead of employees, which

Case 1:15-cv-00253-WES-PAS Document 107 Filed 03/09/18 Page 2 of 11 PageID #: 939

resulted in violations of the Fair Labor Standards Act, 29 U.S.C.
§

201

et

seq.,

and

Rhode

Island

state

law.

Both

parties

participated in the litigation, engaging in discovery and filing
pre-trial motions.
During discovery, both parties discussed whether Plaintiff
had

ever

signed

Defendants’

Contractor Agreement.

standard

Entertainers

Independent

Gerard DiSanto II (“DiSanto”), Defendants’

general manager, testified that he did not know whether all of the
dancers at the club had signed such a contract, and that many
signed contracts had gone missing in the disorderly records room.
Defs.’ Mot. To Compel 2 (ECF No. 83-1).

During Plaintiff’s

deposition on March 31, 2017, she was asked if she ever signed the
standard contract, to which she replied, “No, I never did.

I can

specifically remember the first day I worked there, and I never
signed a contract.”

Id.

After discovery closed, both parties filed cross-motions for
summary judgment and cross-motions for class certification.
some

point

Entertainers

in

June

or

Independent

July

of

Contractor

2017,

DiSanto

Agreement,

At

located

which

had

the
been

signed by Plaintiff on November 5, 2013 (“Binienda Contract”).
July

20,

2017,

twenty-five

Complaint,

Defendants

arbitration

pursuant

filed
to

an

months

after

Plaintiff

the

instant

motion

arbitration
2

provision

filed
to

On
the

compel

within

the

Case 1:15-cv-00253-WES-PAS Document 107 Filed 03/09/18 Page 3 of 11 PageID #: 940

Binienda

Contract. 1

In

response,

Plaintiffs

contend

that

Defendants waived their arbitration rights under the contract by
waiting more than two years to move to compel arbitration.
II.

Discussion
A.

Threshold Matter

The parties dispute whether this Court or an arbitrator should
decide the issue of waiver.

For the reasons that follow, this

decision remains with the Court.
The Supreme Court in BG Group PLC v. Republic of Argentina
explained that this threshold question — whether this Court or an
arbitrator should decide the waiver issue — is guided by a set of
presumptions.

134 S. Ct. 1198 (2014).

First, “courts presume

that the parties intend courts, not arbitrators, to decide what we
have called disputes about ‘arbitrability’ . . . such as ‘whether

1

Paragraph 10 of the Binienda Contract provides:

The entertainer/independent contractor agrees that all
claims and disputes arising under or relating to this
agreement shall be settled by binding arbitration in the
state of Rhode Island pursuant to the Federal
Arbitration Act (the “FAA”). The arbitration shall be
conducted on a confidential basis pursuant to the
Commercial Arbitration Rules of the American Arbitration
Association. . . . The Entertainer waives her right to
litigate any controversy, dispute, claim or any other
matter in a court of law, and waive the right to jury
trial.
(Ex. A to Defs.’ Mot. to Dismiss and Compel
Arbitration 2 (ECF No. 83-2).)
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the parties are bound by a given arbitration clause.’”

Id. at

1206.

intend

However,

“courts

presume

that

the

parties

arbitrators, not courts, to decide disputes about the meaning and
application of particular procedural preconditions for the use of
arbitration,”

such

arbitrability.”

as

“waiver,

delay,

or

a

like

defense

to

Id. at 1207.

Although the Court in BG Group included “waiver” among the
issues that arbitrators are presumed to decide, a review of prior
Supreme Court and First Circuit precedent convinces this Court
that the “waiver” contemplated in BG Group is not the litigationconduct waiver that Plaintiffs allege in the instant case.
Traditionally, litigation-conduct waiver has been decided by
the court, not an arbitrator.

Marie v. Allied Home Mortg. Corp.,

402 F.3d 1, 14 (1st Cir. 2005).
with

this

decision.

very

issue

in

The First Circuit was presented

Marie,

which

predates

the

BG

Group

The Marie court grappled with two earlier Supreme Court

decisions: Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
(2002), and Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003)
(plurality opinion).
In Howsam, the arbitration provision provided that a dispute
was not eligible for arbitration if more than six years had elapsed
since the event giving rise to the dispute.

537 U.S. at 82.

The

Court held that “condition[s] precedent to arbitrability” and
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procedural questions such as “waiver, delay, or a like defense to
arbitrability . . . are presumptively not for the judge, but for
an arbitrator, to decide.”
six-year

time

limit

was

Id. at 84-85.
a

procedural

The Court held that the
condition

precedent

to

arbitrability, and therefore, a matter for the arbitrator to
decide.

Id. at 84-85.

In Green Tree, the parties disputed whether

their arbitration agreement permitted class arbitration.
at 452.

539 U.S.

The Court held that “[a]rbitrators are well situated to

answer that question” because it “does not concern . . . judicial
procedures,” but rather, it “concerns contract interpretation and
arbitration procedures.”

Id. at 452-53.

“The Court in both Howsam and Green Tree . . . stressed issues
of comparative expertise.

In the face of contractual silence,

courts should presume that parties intend to give their disputes
to

the

most

able

decisionmaker

on

a

contractual and public policy reasons.”

given

issue,

both

for

Marie, 402 F.3d at 10.

The Marie court also noted that “the Howsam and Green Tree rules
exist partly ‘to avoid . . . delay.’”

Id. at 14 (quoting Shaw's

Supermarkets, Inc. v. United Food & Commercial Workers Union, Local
791, 321 F.3d 251, 255 (1st Cir. 2003)).

Finding that the district

court was in the best position to decide issues of litigationconduct waiver, the Marie court held “that the Supreme Court in
Howsam and Green Tree did not intend to disturb the traditional
5

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rule that waiver by conduct, at least where due to litigationrelated activity, is presumptively an issue for the court.” Marie,
402 F.3d at 14.
Contrary to Defendants’ argument, BG Group simply restates
the Howsam and Green Tree rules.

Compare BG Group, 134 S. Ct. at

1207

presumptively

(holding

that

arbitrators

decide

“waiver,

delay, or a like defense to arbitrability”) with Howsam, 537 U.S.
at 84 (holding that “conditions precedent to arbitrability” and
procedural questions such as “waiver, delay, or a like defense to
arbitrability” are presumptively for an arbitrator to decide) and
Green Tree, 539 U.S. at 453 (holding that arbitrators are wellsuited to answer questions of arbitration procedures).

Nothing in

BG Group undercuts the holding in Marie, that the Supreme Court
did not intend to alter traditional rule that courts presumptively
decide issues of litigation-conduct waiver.

See Vine v. PLS Fin.

Servs., Inc., 689 F. App'x 800, 803 (5th Cir. 2017) (noting that
“a

majority

of

the

[circuit

court]

decisions

addressing

litigation-conduct waiver pre-date BG Group, but the logic of those
decisions interpreting Howsam is equally applicable to BG Group”).
For the foregoing reasons, the Court will decide the merits
of Plaintiff’s litigation-conduct waiver argument.

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B.

Waiver

“Federal law favors agreements to arbitrate,” Joca-Roca Real
Estate, LLC v. Brennan, 772 F.3d 945, 946 (1st Cir. 2014), yet “an
arbitration provision has to be invoked in a timely manner or the
option is lost,” Rankin v. Allstate Ins. Co., 336 F.3d 8, 12 (1st
Cir. 2003).

“Where we are dealing with a forfeiture by inaction

(as opposed to an explicit waiver), the components of waiver of an
arbitration clause are [1] undue delay and [2] a modicum of
prejudice to the other side.”

Id.

In analyzing these factors,

“reasonable doubts as to whether a party has waived the right to
arbitrate should be resolved in favor of arbitration.”

In re Tyco

Int'l Ltd. Sec. Litig., 422 F.3d 41, 44 (1st Cir. 2005).
1.

Undue Delay

Undue delay is determined by factors including: “the length
of the delay, the extent to which the party seeking to invoke
arbitration has participated in the litigation, the quantum of
discovery

and

other

litigation-related

activities

that

have

already taken place, [and] the proximity of the arbitration demand
to an anticipated trial date.”

Joca-Roca, 772 F.3d at 948.

Consideration of these factors reveals that Defendants unduly
delayed

asserting

their

arbitration

rights.

See

id.

at

949

(holding that “[u]ndue delay [was] manifest” because discovery was
nearly complete, a motion for summary judgment was imminent, and
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trial was less than two months away).

Here, Plaintiff filed her

complaint in June 2015, discovery ended in January 2017, Defendants
filed a motion for summary judgment in May 2017, Plaintiff filed
her motions for summary judgment and class certification in June
2017, and then Defendants moved to compel arbitration in July 2017.
These facts are even more compelling than Joca-Roca because when
Defendants filed the motion to compel arbitration, discovery was
complete, motions for summary judgment were filed, and trial would
soon follow.
Defendants put forth numerous arguments, none of which carry
the day.

Defendants first argue that they continually asserted

their arbitration rights during pre-trial conferences and in their
proposed amended Answer.

However, the First Circuit has held that

these actions only “articulate [Defendants’] potential intentions
to raise the arbitrability . . . as an affirmative defense,” but
they are not assertions of the right to arbitration.

Lomas v.

Travelers Prop. Cas. Corp. (In re Citigroup, Inc.), 376 F.3d 23,
27 (1st Cir. 2004).

Defendants first asserted their right when

they filed the motion to compel arbitration on July 20, 2017.

See

id.
Defendants next contend that their two-year delay in bringing
the motion to compel arbitration was not undue because during
Plaintiff’s deposition, she denied ever signing an agreement.
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Defendants argue that because of Plaintiff’s denial, Defendants
had no incentive to search for a phantom agreement, and had no
basis by which to compel arbitration.

However, the deposition

took place on March 31, 2017, one year and nine months after the
suit

commenced,

so

Plaintiff’s

representation

can,

at

most,

account for the three-month delay between the March deposition and
June or July, when Defendants found the Binienda Contract.
Defendants’

argument

that

Plaintiff’s

unclean

hands

Thus,

bars

her

waiver argument is not convincing.
Next, Defendants rely on Tristar Fin. Ins. Agency, Inc. v.
Equicredit Corp. of Am. in support of their argument that they
could not assert their right to arbitration because they could not
locate the Binienda Contract.

97 F. App’x 462 (5th Cir. 2004).

However, in that case, the defendant was in the process of “winding
down its business and vastly downsizing its staff . . . and did
not have the ready access to important documents that would be
expected of a typical ongoing corporate enterprise.”

Id. at 465.

Here, Defendants have no such excuse for their inability to locate
the Binienda Contract for more than two years.

The Binienda

Contract was in Defendants’ possession for the entirety of this
case.

Absent extenuating circumstances, business owners are

presumed to possess a baseline level of constructive knowledge of
the documents in their custody.

Cf. id. at 466 (“We do not condone
9

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a party’s failure to apprise itself of its own key documents in
litigation.”).
Lastly, Defendants argue there was no undue delay because
they did not knowingly sit on their arbitration rights.

However,

a showing of bad faith is not necessary to find undue delay.

See

In re Citigroup, 376 F.3d at 27 (finding undue delay when defendant
waited eighteen months to file a motion to compel arbitration);
Menorah Ins. Co. v. INX Reinsurance Corp., 72 F.3d 218, 221-22
(1st Cir. 1995) (finding waiver after one year delay).
2.

Prejudice

“When a defendant has failed to timely invoke its rights, and
during that delay, the litigation has proceeded into discovery, it
cannot, particularly in the context of a class action, claim that
the

class

prejudice.”

members

subject

to

arbitration

will

not

suffer

In re Citigroup, 376 F.3d at 28; see also In re Tyco

Int'l, 422 F.3d at 46 (requiring a showing of a “modicum of
prejudice”).

Here, Plaintiff points to the time and money spent

on two years of litigation that would be wasted if this Court
compels arbitration.

At the time Defendants moved to compel

arbitration, discovery had been complete for five months, and
Plaintiff had already responded to Defendants’ summary judgment
motion, and filed one of her own.

10

The parties have advanced far

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enough in the litigation that Plaintiff would be prejudiced if she
were compelled to arbitrate her claims.
III.

Conclusion
For the reasons discussed above, the Court DENIES Defendants’

Motion To Dismiss and Compel Arbitration (ECF No. 83).

The Court

also DENIES Defendants’ Motion to Stay (ECF No. 85) as moot.
IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: March 9, 2018

11