Opinion
1:22-cv-07196 (PGG) (SDA)
07-07-2023
Prince Davis, Plaintiff, v. Crothall Healthcare, Inc., et al., Defendants.
THE HONORABLE PAUL G. GARDEPHE, UNITED STATES DISTRICT JUDGE
ORDER AND REPORT AND RECOMMENDATION
STEWART D. AARON UNITED STATES MAGISTRATE JUDGE
Plaintiff Prince Davis (“Davis” or “Plaintiff”) brought this action against Defendants Crothall Healthcare, Inc. (“Crothall”), Compass Group USA, Inc. (“Compass”), Ludys Lopez (“Lopez”) and Shannon Caples (“Caples”) (collectively, the “Defendants”) alleging employment discrimination claims against Defendants under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq. (“Title VII”); 42 U.S.C. § 1981; the New York State Human Rights Law, New York Executive Law § 290, et seq.; and the New York City Human Rights Law, Administrative Code of the City of New York § 8-107, et seq. (Compl., ECF No. 1, ¶¶ 1, 49-102.) Pending before the Court is the Defendants' motion to compel arbitration and dismiss or stay the action. (See Defs.' Not. of Mot., ECF No. 18.)
For the reasons set forth below, it is hereby ORDERED that Defendants' motion to compel arbitration is GRANTED and that this action is stayed pending arbitration. In addition, it is respectfully recommended that Defendants' motion to dismiss be DENIED.
BACKGROUND
Around December 10, 2018, Defendants hired Davis as an Operations Manager. (Compl. ¶ 16.) Prior to his employment, on December 6, 2018, Davis electronically signed an arbitration agreement (the “Arbitration Agreement”). (Bell Decl., ECF No. 20, ¶ 17; Ex. A to Bell Decl., Arb. Agmt. (ECF No. 20-1).) Demetra Bell, the Senior Director of Technology Solutions at Compass, describes the process of how Davis electronically signed the Arbitration Agreement, as follows:
According to Davis, Defendants Crothall and Compass were his joint employers and Defendants Lopez and Caples were his supervisors. (Compl. ¶¶ 11, 13-14.)
• Davis created an applicant MyOpportunity account and applied for a position with Compass on November 21, 2018. (Bell Decl. ¶ 18.)
• On November 26, 2018, a conditional offer of employment was extended to Davis via an automated e-mail notification from MyOpportunity; the notification e-mail contained a MyOpportunity generated hyperlink, which provided Davis with access to login to his applicant MyOpportunity portal, where he could view and accept the offer. (Id.)
• Davis accepted the conditional offer of employment on November 26, 2018. (Id.)
• On December 4, 2018, after the successful completion of Davis's reference and background checks, an auto-generated notification e-mail containing a Welcome Letterand link to the MyOpportunity On-Boarding Portal login page was sent to
Davis's personal e-mail address. (Id. ¶ 19.) An auto-generated reminder notification e-mail was sent to Davis on December 6, 2018. (Id.)
• On December 6, 2018, Davis reviewed and signed his onboarding paperwork, which included the Arbitration Agreement. (Id. ¶ 22.)
The Arbitration Agreement signed by Davis provides, in part, as follows:
I and the Compass Related Entities agree to utilize binding individual arbitration as the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to my employment, including but not limited to the termination of my employment and my compensation. I and the Compass Related Entities each specifically waive and relinquish our respective rights to bring a claim against the other in a court of law. Both I and the Compass Related Entities agree that any claim, dispute, and/or controversy that I may have against the Compass Related Entities (or their owners, parents, subsidiaries, affiliated entities, directors, officers, managers, employees, or agents), or that the Compass Related Entities may have against me, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (“FAA”) because my employer's business involves interstate commerce. Included within the scope of this Agreement are all disputes, whether based on tort, contract, statute (including, but not limited to, any claims of discrimination, harassment and/or retaliation, whether they be based on the Title VII of the Civil Rights Act of 1964, as amended, or any other state or federal law or regulation), equitable law, or otherwise.
...
MY SIGNATURE BELOW ATTESTS TO THE FACT THAT I HAVE READ, UNDERSTAND, AND AGREE TO BE LEGALLY BOUND TO ALL OF THE ABOVE TERMS. I
ACKNOWLEDGE THAT I HAVE ALSO RECEIVED A SIGNED COPY OF THIS AGREEMENT FOR MY RECORDS. I FURTHER UNDERSTAND THAT THIS AGREEMENT REQUIRES ME TO ARBITRATE ANY AND ALL DISPUTES THAT ARISE OUT OF MY EMPLOYMENT. DO NOT SIGN UNTIL YOU HAVE READ THE ABOVE AGREEMENT.(See Arb. Agmt.)
Since at least 2018, Compass has utilized a password-protected online portal called SuccessFactors -internally branded by the Company as “MyOpportunity” - for applicants to apply for employment with Compass, and for new hires to complete, acknowledge, and review certain employment policies, employee records, agreements and forms as part of employment onboarding. (Bell Decl. ¶ 6.)
Compass's Welcome Letter notifies a new hire about the orientation and onboarding process. (Bell Decl. ¶ 11.) The Welcome Letter notification e-mail informs the new hire that if he/she is unable to complete the onboarding paperwork before his/her start date, he/she will be able to complete the forms at the workplace using one of the computers at the physical worksite. (Id. ¶ 12.)
The audit log for Davis's MyOpportunity account indicates that the email address he used to create his MyOpportunity account was his personal email address: pdavis718@gmail.com. (Bell Decl. ¶ 20.)
In order to review this paperwork, Davis had to login to his onboarding MyOpportunity account using his assigned username (PDavis8371) and unique password, created by him. (Bell Decl. ¶ 22.) Once within the portal, Davis was required to again enter his unique password before he was able to digitally sign any of the documents, including the Arbitration Agreement. (Id.)
In the Arbitration Agreement, the Compass Related Entities are defined as “Compass Group USA, Inc. and its companies, subsidiaries, sectors, affiliates and divisions” (see Arb. Agmt.), which would include Defendants Compass and Crothall.
In or about February 2020, Davis was terminated from his employment. (Compl. ¶¶ 31-35.) On August 23, 2022, Davis commenced this action. (See Compl.) On December 20, 2022, Defendants filed their motion to compel arbitration that presently is before the Court. (See Defs.' Not. of Mot.) On January 10, 2023, Davis filed his opposition memorandum. (Pl.'s Opp. Mem., ECF No. 23.) On January 24, 2023, Defendants filed their reply memorandum. (Defs.' Reply, ECF No. 26.) On June 26, 2023, Defendants' motion was referred to me. (Order of Ref., ECF No. 28.)
LEGAL STANDARDS
The FAA “creates a body of federal substantive law of arbitrability applicable to arbitration agreements . . . affecting interstate commerce.” Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010) (quoting Alliance Bernstein Inv. Research & Mgmt., Inc. v. Schaffran, 445 F.3d 121, 125 (2d Cir. 2006)). “Enacted to reverse centuries of judicial hostility to arbitration agreements, the FAA embodies the national policy favoring arbitration and places arbitration agreements on equal footing with all other contracts ....” Katsoris v. WME IMG, LLC, 237 F.Supp.3d 92, 100 (S.D.N.Y. 2017) (citing Bird v. Shearson Lehman/Am. Express, Inc., 926 F.2d 116, 119 (2d Cir. 1991); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006)) (internal quotation marks and alterations omitted); see also Ross v. Am. Express Co., 547 F.3d 137, 142 (2d Cir. 2008) (FAA reflects “a strong federal policy favoring arbitration as an alternative means of dispute resolution.”).
Section 2 of the FAA provides, in relevant part, that “[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
In considering a motion to compel arbitration under the FAA, 9 U.S.C. § 4, courts apply “a standard similar to that applicable for a motion for summary judgment.” Meyer v. Uber Techs., Inc., 868 F.3d 66, 74 (2d Cir. 2017) (quoting Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016)). Under this standard, “the Court must grant a motion to compel arbitration if the pleadings, discovery materials before the Court, 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.” Ryan v. JPMorgan Chase & Co., 924 F.Supp.2d 559, 561-62 (S.D.N.Y. 2013). If the facts in the record are undisputed and “require the matter of arbitrability to be decided against one side or the other as a matter of law,” the Court “may rule on the basis of that legal issue and avoid the need for further court proceedings.” Meyer, 868 F.3d at 74 (internal citation and quotation marks omitted).
The party moving to compel arbitration “must make a prima facie initial showing that an agreement to arbitrate existed before the burden shifts to the party opposing arbitration to put the making of that agreement ‘in issue.'” Hines v. Overstock.com, Inc., 380 Fed.Appx. 22, 24 (2d Cir. 2010) (summary order). The moving party need not “show initially that the agreement would be enforceable, merely that one existed.” Id. (emphasis in original) (citation omitted). The burden then shifts to the party “seeking to avoid arbitration” to show that “the agreement [is] inapplicable or invalid.” Harrington v. Atl. Sounding Co., 602 F.3d 113, 124 (2d Cir. 2010).
Section 3 of the FAA provides:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.9 U.S.C. § 3. Thus, “[w]here a party to an arbitration agreement refuses to comply with that agreement, and instead attempts to proceed in litigation, the other party may move to stay the litigation and compel arbitration.” McCants v. Team Elec., Inc., No. 19-CV-09565 (AJN) (RWL), 2021 WL 653122, at *3 (S.D.N.Y. Feb. 19, 2021) (citing FAA §§ 3, 4).
“District courts in this Circuit regularly have concluded that a motion to compel arbitration and stay litigation pending arbitration is non-dispositive and therefore within a Magistrate Judge's purview to decide without issuing a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B) and Fed.R.Civ.P. 72(b).” McCants, 2021 WL 653122, at *1 n.1 (quoting Chen-Oster v. Goldman Sachs, 449 F.Supp.3d 216, 227 n.1 (S.D.N.Y. 2020) (collecting cases)).
DISCUSSION
I. Motion To Compel Arbitration
On its face, the Arbitration Agreement requires Plaintiff to arbitrate his disputes with the Defendants. The Agreement expressly states that the parties “agree to utilize binding individual arbitration as the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to [Plaintiff's] employment . . . [i]nclud[ing] all disputes, whether based on tort, contract, statute (including, but not limited to, any claims of discrimination, harassment and/or retaliation, whether they be based on the Title VII of the Civil Rights Act of 1964, as amended, or any other state or federal law or regulation), equitable law, or otherwise.” (See Arb. Agmt.)
In an effort to avoid arbitration, Plaintiff raises numerous arguments in his opposition memorandum, which are considered below.
A. Purported “Equitable Grounds” Raised By Plaintiff
Plaintiff argues that the Arbitration Agreement is invalid and cannot be enforced on “numerous equitable grounds,” i.e., “it would be unconscionable to enforce an agreement, that if signed, was foisted upon the Plaintiff without any explanation, ability to confer with counsel, or time to consider the agreement,” the Arbitration Agreement is “an unconscionable contract of adhesion,” and there was no consideration for the Arbitration Agreement. (Pl.'s Opp. Mem. at 3-4.)
These arguments lack merit. “[T]he FAA certainly does not preclude the enforcement of employment contracts which make employment conditional upon an employee's acceptance of mandatory arbitration.” Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010) (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991)). Davis received his Welcome Letter on December 4, 2018, and could have waited until his start date to sign the Arbitration Agreement, but chose to electronically sign it on December 6, 2018. (See Bell Decl. ¶¶ 11-12, 14, 19, 22.)
In order to void the Arbitration Agreement on unconscionability grounds, Plaintiff must show that the Arbitration Agreement “is so grossly unreasonable . . . in the light of the mores and business practices of the time and place as to be unenforceable according to its literal terms.” See Cont' Petroleum Corp. v. Corp. Funding Partners, LLC, No. 11-CV-07801 (PAE), 2012 WL 1231775, at *8 (S.D.N.Y. Apr. 12, 2012) (quoting Ragone, 595 F.3d at 121). Plaintiff has made no such showing.
With respect to consideration, the Arbitration Agreement by itself contains sufficient consideration because 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 party's “promise to arbitrate was sufficient consideration to support [the other party's] promise to arbitrate”); see also Meyer v. Starwood Hotels & Resorts Worldwide, Inc., No. 00-CV-08339 (JSR), 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.”).
B. Purported Lack Of Essential Terms
Plaintiff argues that the Arbitration Agreement “is vague and undefined with respect to numerous essential terms this rendering the arbitration agreement unenforceable.” (Pl.'s Opp. Mem. at 4-5; see also id. at 6-7.) Specifically, Plaintiff contends that the Arbitration Agreement is silent with respect to the forum in which disputes would be arbitrated, how the arbitration process is initiated, which party bears the cost of arbitration, the applicable time frame to file an arbitration, whether attorneys' fees may be awarded to the prevailing party and the procedure for selecting an arbitrator in the event the parties cannot mutually agree. (See id. at 4-7.)
Plaintiff's argument lacks merit. All of these allegedly essential terms invoke procedural rules governing arbitration. “Courts within this circuit have routinely rejected the argument that the procedural rules governing arbitration constitute essential terms.” Hudson Specialty Ins. Co. v. New Jersey Transit Corp., No. 15-CV-00089 (ER), 2015 WL 3542548, at *7 (S.D.N.Y. June 5, 2015) (citing cases). “The lack of specific terms governing the arbitration's procedure does not invalidate the agreement, considering that the FAA provides an objective method to fill gaps in arbitration agreements.” Wework Companies Inc. v. Zoumer, No. 16-CV-00457 (PKC), 2016 WL 1337280, at *5 (S.D.N.Y. Apr. 5, 2016) (citing 9 U.S.C. § 5). “Once an arbitrator is selected pursuant to those gap-filling methods, other aspects of the arbitration's procedure, such as discovery and costs, can be decided by the arbitrator.” Id. (citing 9 U.S.C. § 7).
C. Purported Curtailment Of Plaintiff's Rights
Plaintiff argues that the Arbitration Agreement “is also unenforceable as a matter of law because it explicitly curtails the rights that Plaintiff would have if he were to proceed in the judicial forum,” and in particular the right to the same scope of discovery permitted in federal court. (Pl.'s Opp. Mem. at 5-6.) The Arbitration Agreement provides that “[d]iscovery shall be permitted pursuant to the Federal Rules of Civil Procedure or as the arbitrator otherwise deems necessary.” (See Arg. Agmt.) Even assuming, arguendo, that an arbitrator were to limit discovery in some way that is inconsistent with the Federal Rules of Civil Procedure, the Supreme Court has held that limited discovery is an insufficient ground to invalidate an arbitration agreement. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991); see also Stewart v. Paul, Hastings, Janofsky & Walker, LLP, 201 F.Supp.2d 291, 292 (S.D.N.Y. 2002) (“The suggestion that an arbitration clause is unconscionable because discovery either is unavailable or more limited in arbitration than in litigation is preposterous . . ..”). The Supreme Court held that, “[a]lthough [discovery] procedures might not be as extensive as in the federal courts, by agreeing to arbitrate, a party ‘trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of the arbitration.'” Gilmer, 500 U.S. at 31 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).
D. Arbitration Agreement Not Signed By All Parties
Finally, Plaintiff argues that “the arbitration agreement allegedly signed by [him] was not fully executed by the Parties.” (Pl.'s Opp. Mem. at 7.) It is significant to note that Plaintiff does not deny that he signed the Arbitration Agreement. Rather, he states that he has “no recollection of ever signing a binding arbitration agreement.” (Davis Decl., ECF No. 23-1, ¶ 3.) Defendant has made a sufficient evidentiary showing that Plaintiff signed the Arbitration Agreement, and Plaintiff has not come forward with evidence to the contrary.
In addition, the fact that Defendants did not sign the Arbitration Agreement is of no legal consequence. It is well established that an arbitration agreement need not be signed by an employer to be enforceable against the employee. See Reyes v. Gracefully, Inc., No. 17-CV-09328 (VEC), 2018 WL 2209486, at *3 n.3 (S.D.N.Y. May 11, 2018) (finding it was “immaterial” that employer had not signed arbitration agreement because employer “is not the party seeking to avoid arbitration”); Valdes v. Swift Transp. Co., 292 F.Supp.2d 524, 531 (S.D.N.Y. 2003) (“[D]efendant had no obligation to sign the employment application to make the arbitration provision enforceable.”).
II. Motion To Dismiss Or Stay
Defendants seek in their motion to dismiss this action or in the alternative to stay the action. Based upon Second Circuit precedent, the Court recommends that this action be stayed, not dismissed, while the parties arbitrate. See Katz v. Cellco P'ship, 794 F.3d 341, 347 (2d Cir. 2015) (holding that stay rather than dismissal comports with the FAA's underlying policy of moving an arbitrable dispute to arbitration “as quickly and easily as possible”).
CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Defendants' motion to compel arbitration is GRANTED and that this action is stayed pending arbitration. In addition, it is respectfully recommended that Defendants' motion to dismiss be DENIED.
* * *
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure with respect to that part of this Order and Report and Recommendation that makes a recommendation to Judge Gardephe. A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Gardephe.
THE FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); Thomas v. Arn, 474 U.S. 140 (1985).