Summary
recognizing that plaintiff lacked standing to seek declaratory relief on arbitration provision because she did not "file[] or serve[] any lawsuit alleging that [defendant] . . . [or] anyone representing any of the defendants has informed her that they will seek to invoke the Arbitration Policy"
Summary of this case from Jones v. Sears Roebuck and Co.Opinion
01 Civ. 9282 (RWS)
September 20, 2002
Chinyere Okoronkwo, Esq., SANDRA B. DURANT, Esq., Durant associates, New York, NY, for Plaintiff.
Robert S. Whitman, Esq., Rene Kathawala, Esq., Orrick, Herrington Sutcliffe, Salomon Smith Barney Inc., Alan Parsowith and Susan Chopko, New York, NY, for Defendants.
OPINION
Defendant Salomon Smith Barney, Inc. ("Smith Barney"), Alan Parsowith ("Parsowith") and Susan Chopko ("Chopko"), have moved under Rule 12(b)6, Fed.R.Civ.P., to dismiss the complaint of plaintiff Karla Rivera ("Rivera") seeking a declaratory judgment to invalidate the arbitration agreement between Rivera and Smith Barney. For the reasons set forth below, the motion is granted, and the complaint dismissed.
Prior Proceedings Rivera filed her initial complaint on October 22, 2001 (the "Complaint") and an amended complaint on June 2, 2002 (the "Amended Complaint"), which added additional facts, dropped two defendants, and seeks the same declaratory relief.
The motion to dismiss was marked submitted on June 19, 2002, and as defendants have requested will be deemed to address the Amended Complaint.
On January 25, 2002, Rivera commenced an action against her former manager Alan Hendrickson and Michael Weinberg, Rivera v. Hendrickson, et al, 02 Civ. 632, which was assigned to the Honorable Alan G. Schwartz (Rivera II).
The Parties Rivera was an employee of Smith Barney from October 1996 to May 2000. Parsowith and Chopko are employees of Smith Barney.
Smith Barney is a registered broker-dealer of securities with corporate headquarters in New York City.
Facts In June 1999, Rivera gave notice to Smith Barney of a claim for sex and race discrimination. In September of 1999, she went on disability leave and was terminated in May 2000.
The Amended Complaint seeks a declaration as to existing rights and obligations with respect to claims that Rivera wishes to pursue against defendant Smith Barney, former executive Weinberg, former manager Hendrickson and certain current employees. Rivera's claims are based on a number of events, including but not limited to, events that arose during the first six months of 1999. The claims include causes of action for unlawful discrimination pursuant to 42 U.S.C. § 1981 and N.Y. Admin. Code § 8-107, et seq.
According to the Amended Complaint, Rivera and Travelers Group/Smith Barney, the predecessor-in-interest to Smith Barney, were parties to an agreement dated 1996 that includes an arbitra-tion clause (the "Arbitration Agreement"). The Arbitration Agreement refers to a Travelers Group/Smith Barney employee handbook arbitration policy, presumably one that was already in existence at the time that Rivera executed the Arbitration Agreement. The record now includes a relevant section of an employee handbook that was printed two years later ("1998 Arbitra-tion Policy" or "Policy"). Neither the Arbitration Agreement nor the Policy expressly or impliedly states that complainants must arbitrate employment claims against former employees of Smith Barney. Neither the Agreement nor Policy makes any reference to 42 U.S.C. § 1981.
In her Amended Complaint in this action, Rivera seeks a declaratory judgment to determine whether or not (1) her claims against former Smith Barney employees are subject to mandatory arbitration, (2) the civil rights claims and remedies as codified in 42 U.S.C. § 1981 are subject to arbitration since there is no severability or incorporation by reference into the Arbitration Agreement that she signed in 1996, and (3) the Arbitration Agreement is enforceable as a consequence of high arbitrator fees which is occasioned by the fee shifting provision, and the curtailment of her § 1981 remedies that is occasioned by the provision that truncates the statute of limitations from three years to one year.
Rivera also seeks a determination as to whether the Civil Rights Act of 1991 amendments to Title VII, as codified 42 U.S.C. § 1981(b), expressly or implicitly amend 42 U.S.C. § 1981(a) and whether the Federal Arbitration Act ("FAA"), enacted pursuant to Commerce Clause authority, reaches § 1981 which has its genesis in the Substantive Due Process Clause of the 14th Amendment to the Constitution.
Rivera alleges that the Arbitration Policy unlawfully limits her right to take discovery, prevents an arbitrator from issuing injunctive relief and modifies the standard of proof on her as yet unfiled substantive causes of action.
The Court Lacks Subject Matter Jurisdiction The Declaratory Judgment Act provides, in part, that,
In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and legal relations of any party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.28 U.S.C. § 2201(a). It is well settled that this limitation to cases "of actual controversy" is the same as the "case or contro-versy" requirement under Article III of the Constitution. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40 (1936), rehearing denied, 300 U.S. 687 (1937). The difference between an abstract question and a "controversy" contemplated by the Declaratory Judgment Act is necessarily one of degree, and therefore the determination is made on a case-by-case basis. See Kidder, Peabody Co. v. Maxus Energy Corp., 925 F.2d 556, 562 (2d Cir. 1991), cert. denied, 501 U.S. 1218 (1991).
Similarly, the "ripeness" doctrine provides that a dispute may only be adjudicated when there is "a real, substantial controversy between parties having adverse legal interests, a dispute definite and concrete, not hypothetical or abstract."
Motor Vehicle Mfrs. v. DEC, 79 F.3d 1298, 1305 (2d Cir. 1996) (citations omitted); see also Pacific Gas Elec. Co. v. State Energy Resources Conservation and Dev. Comm'n, 461 U.S. 190, 203 (1983) (ripeness doctrine prevents the premature adjudication of issues that may never arise). An Article III court "cannot entertain a claim which is based upon contingent future events that may not occur as anticipated, or indeed may not occur at all."
Thomas v. City of New York, 143 F.3d 31, 34 (2d Cir. 1998) (internal quotation omitted). Consequently, "when resolution of an issue turns on whether there are nebulous future events so contingent in nature that there is no certainty they will ever occur, the case is not ripe for adjudication." Id. (internal quotation omitted).
Rivera has not filed or served any lawsuit alleging that Smith Barney or the served defendants engaged in any unlawful conduct toward her in connection with her employment or alleged that anyone representing any of the defendants has informed her that they will seek to invoke the Arbitration Policy should she file such a lawsuit. Under these circumstances, the action must be dismissed. See, e.g., United States v. Broadcast Music, Inc., 275 F.3d 168, 178 (2d Cir. 2001) (affirming dismissal where "at this juncture Applicants have suffered no injury, and the threat of an injury is speculative — a `contingent future event' that `may not occur at all'") (citation omitted); see Auerbach v. Board of Educ. of the Harborsfield Cent. Sch. District of Greenlawn, 136 F.3d 104, 108 (2d Cir. 1998) (dismissing claims because "[w]hen the events alleged in a plaintiff's cause of action have not yet occurred, a federal court is precluded from exercising subject matter jurisdiction because a real case or controversy does not exist for purposes of Article III"); Lewis v. Continental Bank Corp., 494 U.S. 472, 477 (1990) (same).
In Texas v. United States, 523 U.S. 296 (1998), the Supreme Court held that the issue of whether the preclearance section of the Voting Rights Act applied to a newly enacted Texas statute was not ripe, because the state failed to identify any school district at risk of facing sanctions under the state statute, the statutory provisions had not yet been interpreted by Texas courts, and the state was not required to engage in or refrain from any conduct unless and until it chose to implement the statute. Id., 523 U.S. at 300.
Rivera has not demonstrated that her objections to Smith Barney's arbitration policy should be appropriately decided at this time. No substantive claims have been filed against defendants and Smith Barney has not indicated that it will seek to enforce the Arbitration Policy against her if she does. If such an action is filed, either the company will not seek to enforce the Arbitration Policy or Rivera will have the right to oppose any motion to compel arbitration. See SEC v. Credit Bancorp., Ltd., 138 F. Supp.2d 512, 530 (S.D.N.Y. 2001) (issue not ripe where hardship is not proved); Texas, 523 U.S. at 302 ("the hardship to Texas of biding its time [is] substantial"); Mussington v. St. Luke's-Roosevelt Hosp. Ctr., 824 F. Supp. 427, 430 (S.D.N.Y. 1993) ("There being no present plan to reduce the number of medical-surgical beds at St. Luke's, any claim based on such reduction necessarily revolves around a hypothetical and is not properly the subject of a suit in federal court").
The cases upon which Rivera relies fail to support her position. For example, in Lida East Theatre Corp. v. Murphy, 337 F. Supp. 1345, 1348 (S.D.N.Y. 1972), the plaintiff was a cinema in the business of showing sexually explicit movies. It filed a declaratory judgment action seeking, among other things, a permanent injunction restraining the defendants from seizing movies until a judicial determination was made as to whether they were "obscene." The basis for the claim was the fact that a "print of the same film" had been "seized previously at a theatre operated and owned by a different exhibitor" pursuant to a New York State Court of Appeals decision that was in conflict with a ruling from the Second Circuit "on the adequacy of constitutional requirements with respect to the seizure process of alleged obscene matter."
Id. The court held that the claim was ripe because the defendants "indicated they feel free to follow" the procedure sanctioned by the Court of Appeals but not the Second Circuit "with respect to other films that" the plaintiff may show in its cinema. Id. at 1347-48.
Here, in contrast, defendants have not indicated that they will enforce the Arbitration Policy against Rivera, and Rivera has not yet filed substantive employment claims against them.
Therefore, contrary to Rivera's statement in her brief that "there are no further requirements that must be met before the issues can be concretely framed") (Pl. Br. at 8), if this Court were to decide Rivera's declaratory judgment action on the merits, it would give Rivera an unwarranted advisory opinion with respect to abstract and theoretical questions.
In Mussington, 824 F. Supp. 427, 430, the court held, contrary to Rivera's parenthetical in her brief, that a challenge to the elimination of hospital beds "does not present a current controversy" where the "evidence submitted establishes that any decision to reduce the number of medical-surgical beds . . . has been delayed at least until 1995, at which time it will be wholly re-evaluated"); Berry v. Housing and Home Finance Agency, 233 F. Supp. 457, 458 (N.D.N.Y. 1964) (does not address issue of whether plaintiff's claims are ripe but rather dismisses complaint because it holds that plaintiffs have no private right of action pursuant to amendment to federal housing statute), aff'd, 340 F.2d 939 (2d Cir. 1965).
Rivera's assertion that "[f]ederal courts are routinely called upon to interpret contract provisions in similar contexts" (Pl. Br. at 8) is both unsupported by case law or standard practice. If a plaintiff bringing employment claims believes she is not bound by an arbitration agreement, then she generally files a complaint in court, to which the defendants (if they believe a valid arbitration agreement exists) respond by moving to compel the matter to arbitration. The Honorable Lewis A. Kaplan's recent decision in Stewart v. Paul, Hastings, Janofsky Walker, 201 F. Supp.2d 291 (S.D.N.Y. 2002), is only one of a string of examples.
Indeed no decision presenting the same procedural posture as this case has been brought to the Court's attention.
Conclusion
Rivera's declaratory judgment action is not ripe and will be dismissed.
It is so ordered.