Opinion
00 Civ. 7410 (DAB) (GWG).
August 3, 2001.
LAW OFFICES OF DANIEL CHERNER, New York, New York, By: Daniel Cherner, Esq., For Plaintiff.
JENKINS GILCHRIST PARKER CHAPIN LLP, New York, New York, By: Sharon H. Stern, Esq., For Defendants Volt Information Sciences, Inc., Volt Services Group and Louise Ross
OPINION AND ORDER
The defendants in this employment discrimination case have moved to compel arbitration of the plaintiff's claims pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and to stay this action pending the outcome of the arbitration. They also seek to strike the plaintiff's jury demand. For the reasons stated below, the defendants' motion to compel arbitration and stay proceedings is granted. Thus, the Court need not reach the request to strike the jury demand.
While the parties have not raised the issue, the Court notes that a motion to stay an action and compel arbitration is not a motion for dispositive relief as set forth in 28 U.S.C. § 636(b)(1)(A). Accordingly, such a motion may be decided by a Magistrate Judge. See, e.g., Touton, S.A. v. M.V. Rizcun Trader, 30 F. Supp.2d 508, 510 (E.D.Pa. 1998); Herko v. Metropolitan Life Ins., 978 F. Supp. 149, 150 (W.D.N.Y. 1997).
FACTUAL BACKGROUND
Plaintiff Dana Tuskey brought this action seeking relief under Title VII, 42 U.S.C. § 2000e et seq.; the New York State Human Rights Law, New York Exec. Law § 296 et seq.; and common-law claims of breach of contract and intentional infliction of emotional distress. All of Tuskey's claims relate to her employment with Volt Information Sciences, Inc ("Volt").The complaint alleges that Tuskey was first employed by Volt in March 1998. Complaint ¶ 9. Volt is a corporation listed on the New York Stock Exchange and is engaged in the business of providing, among other things, technical and clerical services in a consulting capacity to other businesses. Id. ¶ 4. Tuskey's first position at Volt was as a technical recruiter in its Advanced Technology Services ("ATS") division of Volt. Id. ¶ 10. Sometime during November or December 1998, Tuskey was made Branch manager of Volt's ATS division office located in Woodbridge, New Jersey. Id. ¶ 12.
Shortly after being promoted to the Branch Manager position, Tuskey entered into an employment agreement with Volt in connection with her position as Branch Manager. See Affidavit of Dana Tuskey in Support of Plaintiff's Opposition to Defendant's Motion to Compel Arbitration dated March 20, 2001 at ¶ 2 (hereinafter, "Tuskey Aff."). The employment agreement contained the following arbitration provision:
7. AGREEMENT TO ARBITRATE DISPUTES.
Any dispute, controversy or claim arising out of, involving, affecting or related to this Agreement, or breach of this Agreement, or arising out of, involving or related in any way to your employment or the conditions of your employment or the termination of your employment, including but not limited to disputes, controversies or claims arising out of or related to the actions of the Company's other employees, under Federal, State and/or local laws, shall be resolved by final and binding arbitration in accordance with the applicable rules of the American Arbitration Association in the state where you are or were last employed by the Company. The arbitrator shall be entitled to award reasonable attorneys' fees and costs to the prevailing party. The award shall be in writing, signed by the arbitrator, and shall provide the reasons for the award. Judgment upon the arbitrator's award may be filed in and enforced by any court having jurisdiction. This Agreement to Arbitrate Disputes does not prevent you from filing a charge or claim with any governmental agency as permitted by applicable law.See Employment Agreement Letter dated December 16, 1998, ¶ 7 (hereinafter "Employment Agreement"), reproduced as Exhibit B to Affidavit of Howard B. Weinreich in Support of Defendants' Motion to Compel Arbitration and Stay Action, dated February 16, 2001 (hereinafter, "Weinreich Aff."). Tuskey signed the Agreement on December 21, 1998. Employment Agreement at 8.
Tuskey signed an additional document concerning her employment with Volt on July 27, 1999. See Amendment Number 1, dated June 20, 1999 (Annexed as Exhibit A to Tuskey Aff.) (hereinafter "Amendment"). The Amendment was denominated "amendment Number 1" to the Employment Agreement. Id. at 1. It states that it "modifie[s]" only "Paragraph 17 of the [Employment Agreement]." Amendment at 1. Following this statement are a number of terms that relate exclusively to Tuskey's compensation. Amendment at 1-2. Paragraph 17 of the original Employment Agreement also relates exclusively to compensation.
On February 11, 2000, Tuskey filed a charge of sex discrimination and retaliation with the EEOC. Complaint ¶ 46. Subsequent to the filing of this charge, Volt terminated Tuskey's employment. Id. ¶ 47. On July 3, 2000, Tuskey received a right to sue letter from the EEOC.Id. ¶ 48. On September 29, 2000, Tuskey filed her Complaint in this case. Each factual allegation relates to her employment and termination at Volt.
On April 18, 2001, the defendants filed their motion to compel arbitration, to stay these proceedings pending its outcome, and to strike the plaintiff's jury demand.
DISCUSSION
I. MOTION TO COMPEL ARBITRATION
The Federal Arbitration Act provides that
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. The following four factors apply in determining whether or not a court should stay an action and compel arbitration under the Federal Arbitration Act:
[F]irst, [the Court] must determine whether the parties agreed to arbitrate; second, it must determine the scope of the agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the case are arbitrable, it must then determine whether to stay the balance of the proceedings pending arbitration.Genesco, Inc. v. T. Kakiuchi Co., 815 F.2d 840, 844 (2d Cir. 1987) (internal citations omitted). If the four factors are answered in the affirmative, the Court must grant the application to stay the proceedings and compel the arbitration. See, e.g., PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198 (2d Cir. 1996).
Tuskey has not challenged the applicability of the second and fourth factors. Accordingly, we will examine only (1) the agreement to arbitrate and (2) whether the claims are arbitrable.
A. Agreement to Arbitrate
As previously described, the Employment Agreement signed by Tuskey contained an "Agreement To Arbitrate Disputes" clause. Employment Agreement ¶ 7. In her response to the defendants motion and the accompanying affidavit, Tuskey does not contest that she signed the Employment Agreement. Rather, she appears to make three arguments to avoid its effect: (1) that the arbitration agreement is unenforceable because she did not understand it and it was never explained to her, see Tuskey Aff., ¶¶ 3, 5, 8; Plaintiff's Memorandum of Law In Opposition to Defendants' Motion to Compel Arbitration and Stay the Action or Alternative, to Strike the Jury Demand (hereinafter, "Plaintiff's Memorandum") at 5-6; (2) that the Employment Agreement was nullified by the Amendment, Plaintiff's Memorandum at 7-8; and (3) that the arbitration agreement did not contain "any specific waiver [of her statutory right to sue] as contemplated by the courts." Plaintiff's Memorandum at 5.
1. Enforceability of the Arbitration Agreement .
With respect to the enforceability of the Employment Agreement, Tuskey makes numerous assertions in her affidavit that she did not "understand" the agreement, Tuskey Aff., ¶¶ 5, 8; that it was never "properly explained" to her, id. ¶ 3; that she did not "have the opportunity to negotiate any of [its] terms" or "consult with an attorney," id. ¶¶ 4, 5; and that she was "told" she "had to" sign it, id. ¶ 7. In her memorandum of law, however, Tuskey never makes clear why she believes those assertions are relevant. She states only that "[t]here was no level playing field here" and seems to analogize her situation to those cases holding that an employee cannot be bound by an agreement to arbitrate that has never been ratified by an employee because it is contained in a collective bargaining agreement. See Plaintiff's Memorandum at 5. Tuskey cites to just two cases in support of her argument on this point: Bird v. Shearson Lehman/American Express, Inc., 926 F.2d 116 (2d Cir. 1991), and Genesco, supra. See Plaintiff's Memorandum at 5. These cases, however, have no relevance to her argument. Bird rejected an effort to avoid an arbitration agreement and Genesco enforced an agreement that had not even been signed by the party against whom it was being enforced.
As Genesco notes, arbitration agreements are to be interpreted "under federal law, which comprises generally accepted principles of contract law." Genesco, 815 F.2d at 845. Contract law is clear that parties are "conclusively" bound by the contracts they sign whether or not the party has read the contract as long as there is no fraud, duress or some other wrongful act of the other party. See, e.g, State Bank of India v. Star Diamonds, Inc., 901 F. Supp. 177, 179 (S.D.N.Y. 1995) (party is legally bound by his or her signature to a contract and is conclusively presumed to know its contents and to assent to them); Maines Paper and Food Service Inc. v. Adel, 256 A.D.2d 760, 761 (3d Dep't 1998) (holding that the rule applies even where the plaintiff suffers from "an inability to understand the English language") (citing cases); Freda v. McNamara, 254 A.D.2d 251, 252-53 (2d Dep't 1998) (plaintiff was bound by papers signed by him even though they were not explained to him); Schmidt v. Magnetic Head Corp., 97 A.D.2d 151, 157 (2d Dep't 1983) (party's subjective knowledge of the contents of a contract at the time he signs it is irrelevant).
These same principles have been applied to arbitration clauses. See, e.g., Hart v. Canadian Imperial Bank of Commerce, 43 F. Supp.2d 395, 405 (S.D.N Y 1999) ("plaintiff's subjective knowledge of the scope of the arbitration clause is irrelevant and he is presumed to have agreed to all the terms of the contract") (citing cases); Smith v. Lehman Bros., Inc., 1996 WL 383232 at *1 (S.D.N.Y. July 8, 1996) (plaintiff's assertion that he was not aware of arbitration clause does "not constitute economic duress, coercion, or fraud, [because he] is conclusively presumed to have assented to submit his claims to arbitration"); Maye v. Smith Barney Inc., 897 F. Supp. 100, 108 (S.D.N.Y. 1995) ("one who signs or accepts a written contract . . . is conclusively presumed to know its contents and assent to them") (citations and internal quotation marks omitted); Hall v. Metlife Resources/Div. of Metro. Life Ins. Co., 1995 WL 258061, at *2-3 (S.D.N.Y. May 3, 1995) (arbitration clause binding where plaintiffs claimed in affidavits that they were unaware that forms they signed contained arbitration clauses). Thus, Tuskey's allegations that she did not "understand" the agreement or had no opportunity to negotiate the clause are irrelevant. This is all the more so in a case where the plaintiff herself alleges she was a capable, well-paid professional hired for managerial positions with significant job responsibilities. See Complaint ¶¶ 11-14; Amendment at 1-2.
2. Effect of the Amendment.
Tuskey also argues that the Employment Agreement was superseded by the Amendment, which does not contain an arbitration clause. See Plaintiff's Memorandum at 7-8; Tuskey Aff., ¶¶ 9-10. This argument is frivolous. The Amendment states that it "constitute[s] amendment Number 1 . . . to your Employment Agreement dated December 16, 1998" and that "Paragraph 17 of the Agreement is modified" by the contents of the Amendment. Amendment at 1 (emphasis added). As noted, the contents of the Amendment relate exclusively to Tuskey's compensation, which was also the topic of paragraph 17 of the Employment Agreement. Nowhere does the Amendment purport to supersede or modify the other 17 paragraphs of the Employment Agreement, which included the arbitration clause.
3. Plaintiff's Waiver.
Finally, Tuskey argues that "the arbitration clause in this case does not contain any specific waiver as contemplated by the courts," Plaintiff's Memorandum at 5, arguing that "it contains a general, boilerplate provision which really carries no meaning whatsoever." Id. at 5-6. This argument is also frivolous. Tuskey is apparently referring to the Supreme Court's decision in Wright v. Universal Maritime Serv. Corp., 525 U.S. 70 (1998), in which the Court held that it would not "infer from a general contractual provision that the parties intended to waive a statutorily protected right unless the undertaking is `explicitly stated.'" Id. at 80 (citing cases). See Plaintiff's Memorandum at 4-5. Wright, however involved a clause in a collecting bargaining agreement that provided for arbitration only of "matters under dispute," which Wright noted could refer merely to matters disputed under the collective bargaining agreement. 525 U.S. at 80. Here, by contrast, the language of the arbitration clause is absolutely clear that "[a]ny dispute, controversy or claim arising out of, involving, affecting or related in any way to [Tuskey's] employment . . . or the termination of [Tuskey's] employment" would be resolved by "final and binding arbitration." Employment Agreement ¶ 7. It would be difficult to imagine a clearer and more specific agreement to arbitrate.
Tuskey's additional allegation that the Employment Agreement was not given to her until nine months after she was first employed by Volt, Tuskey Aff. at ¶ 2, is similarly unavailing. Tuskey does not explain the legal relevance of this fact to the arbitrability of her claims. To the extent that her argument can be construed as a claim that there was lack of consideration for her promise to arbitrate, Tuskey's submissions concede that she continued her employment following the signing of the Employment Agreement. See Complaint ¶¶ 30-46; Tuskey Aff. ¶ 9, 10. Continued employment is adequate consideration for agreements entered into by the parties after employment has commenced. See Zellner v. Stephen D. Conrad, M.D., P.C., 183 A.D.2d 250, 256 (2d Dep't 1992) (continued employment is sufficient consideration for covenant not to compete signed after employment had already commenced); cf. Andre v. Gaines Berland, Inc., 1996 WL 383239 at *2 (S.D.N.Y. July 8, 1996) (continued maintenance of customer account sufficient consideration for agreement to arbitrate disputes between client and brokerage firm signed after brokerage relationship was already established).
B. Arbitrability of Title VII Claims
The Second Circuit has ruled that claims arising under Title VII are arbitrable. See Desiderio v. NASD, 191 F.3d 198, 206 (2d Cir. 1999); see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 35 (1991) (claims brought under the Age Discrimination in Employment Act are arbitrable); PriceWaterhouse-Coopers LLP v. Rutlen, 2000 WL 460478 at *2 (S.D.N.Y. April 20, 2000) ("consistent with federal policy . . . Title VII claims, like other federal statutory claims, are arbitrable"); Mahant v. Lehman Bros., 2000 WL 1738399 at *3 (S.D.N.Y. November 22, 2000) (citing cases). Tuskey concedes that Desiderio is controlling authority but argues that it is "incorrect and flawed." Plaintiff's Memorandum at 3. Obviously, this Court is bound by its holding.
The plaintiff also argues that the FAA does not apply to labor and employment contracts, see 9 U.S.C. § 1 (excluding from coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce"), relying onCircuit City Stores, Inc. v. Adams, 194 F.3d 1070 (9th Cir. 1999). Subsequent to the filing of plaintiff's brief, however, the Supreme Court reversed the Ninth Circuit's decision in Circuit City. See Circuit City Stores, Inc. v. Adams, 121 S.Ct. 1302 (2001). The Court squarely held that the FAA does not exclude employment contracts from the scope of arbitrable claims.
II. MOTION FOR STAY
Section 3 of the Federal Arbitration Act provides that the district court shall stay the trial of an action brought "upon any issue referable to arbitration under an agreement in writing for such arbitration." 9 U.S.C. § 3. See also McMahan Sec. Co. v. Forum Capital Markets, 35 F.3d 82, 85 (2d Cir. 1994) ("Under the Federal Arbitration Act . . ., a district court must stay proceedings if satisfied that the parties have agreed in writing to arbitrate an issue or issues underlying the district court proceeding."). Because the plaintiff's claims are subject to arbitration, this action must be stayed.
Conclusion
For the foregoing reasons, defendants' motion to compel arbitration and to stay this action is granted. The Clerk is requested to place the matter on the suspense calendar pending any motion to confirm the arbitrator's award.
SO ORDERED.