Summary
granting defendants' motion to compel arbitration of Title VII claims because plaintiff executed an employment contract with a clause specifically providing that "all disputes and/or controversies arising out of [plaintiff's] employment ... shall be settled by binding arbitration"
Summary of this case from Chen-Oster v. Goldman, Sachs & Co.Opinion
02 Civ. 2380 (SAS)
July 10, 2002
Lawrence A. Kushnick, Esq., Kushnick Associates, P.C., Melville, NY., Attorney for Plaintiff.
Peter T. Shapiro, Esq., Jones, Hirsch, Connors Bull P.C., New York, Ny., Attorney for Defendant.
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
On January 27, 2002, Adam Weiss brought this action against his employer, Travex Corporation ("Travex"), and his supervisor, Evangeline Yabut, under the Civil Rights Act of 1964, 42 U.S.C. § 2000e to 2000e-17 ("Title VII"), along with other common law and state law claims. See Complaint ("Compl.") ¶¶ 43, 55, 67, 70, 76, 88, 97, 107, 112. Defendants now move to dismiss or stay the action and compel arbitration. See Defendants' Memorandum of Law in Support of the Motion to Dismiss ("Def. Mem.") at 1. For the reasons discussed below, defendants' motion is granted.
Plaintif identifies nine causes of action in his Complaint. See Compl. ¶¶ 43, 55, 67, 70, 76, 88, 97, 107, 112. Five of these claims are for violations of Title VII due to defendants' alleged sexual harassment. See id. ¶¶ 43, 88, 96, 107, 112. The remaining claims are for intentional infliction Of emotional distress, breach of contract and harassment. See id. ¶¶ 55, 67, 70, 76.
II. FACTUAL BACKGROtThID
On March 14, 2000, plaintiff entered into an employment contract with Travex. See Employment Agreement between Weiss and Travex (the "Contract"), Ex. A to the Affidavit of Evangeline Yabut, § 1. Plaintiff and Yabut executed this Contract despite the "consensual, personal- relationship" that existed between them at the time. Id. The Contract contains the following language:
[Plaintiff and defendants] hereby agree that all disputes and/or contoversies arising out of Mr. Weiss's employment wkh [Travex], including, without limitation, any and all disputes as to the interpretation of this agreement and any and all claims arising under any federal, state, or local statute or the common law, including but not limited to Title VII . . . the New York State Human Rights Law, and/or the New York City Human Rights Statutes shall be settled by binding arbitration.
Contract § 9 (emphasis in original).
Plaintiff alleges that Yabut and her attorney, Elliot Mendel, demanded that he sign the Contract as a condition of his employment. See Affidavit of Adam Weiss ("Weiss Aff."), Attachment to Affirmation of Lawrence Kushnick, plaintiff's attorney, in Opposition to Defendants' Motion, ¶ 3. Plaintiff further claims that he "was never afforded the opportunity to have this [Contract] reviewed by an attorney, and [he] was never afforded the opportunity to discuss this matter with an attorney." Id. ¶ 4. Plaintiff alleges that his signature was fraudulently induced because he lacked the advice of counsel and was unaware that the arbitration clause operated as a forfeiture of his rights to discovery and a trial. See id. ¶¶ 5-6.
In July 2000, plaintiff terminated his "consensual, sexual and personal relationship" with Yabut. Compl. ¶¶ 17-18. Soon after, plaintiff alleges that Yabut demanded sexual contact with him and engaged in further acts of sexual harassment. See id. ¶¶ 20-21. Plaintiff claimshe spurned Yabut's advances and was fired on May 4, 2001 as a result. See id. ¶¶ 23-24.
On July 12, 2001, plaintiff filed a discrimination claim with the Equal Employment Opportunity Commission ("EEOC"). See id. ¶ 13; 3/13/02 EEOC Notice of Right to Sue ("EEOC Letter"), Attachment to Compl. On March 13, 2002, plaintiff received a right-to-sue letter from the EEOC. See EEOC Letter. Plaintiff brought this action two weeks later.
III. STANDARD OF REVIEW
To compel arbitration, a court must find that: (1) the parties agreed to arbitrate; and (2) the arbitration clause encompasses the claims at issue. See Raiola v. Union Bank of Switzerland, LLC, 47 P. Supp.2d 499, 502 (S.D.N.Y. 1999) (citing Bird v. Shearson Lehman/American Express, Inc., 926 F.2d 116, 118 (2d Cir. 1991)). The Federal Arbitration Act states that "an agreement in writing to submit to arbitration . . . 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.
Courts traditionally decides. two other issues before compelling arbitration: (1) whether the claims brought under a particular statute were intended by Congress to be arbitrable; and (2) whether to stay a case if some of the claims are not arbitrable. See Genesco, Inc. v. T. Kakiuchi Co., 815 F.2d 840, 844 (2d Cir. 1987). It is well settled that Title VII claims are arbitrable. See Raiola, 47 F. Supp.2d at 505 (citing cases). Because. all of plaintiff's claims are arbitrable, there is no need to decide whether to grant a stay. See id. at n. 2.
To find a valid agreement to arbitrate, a court must apply the "generally accepted principles of contract law." Genesco, 815 F.2d at 845. "[A] party is bound by the provisions of a contract that he signs, unless he can show special circumstances that would relieve him of such obligation." Id. A court should consider only "whether there was an objective agreement with respect to the entire contract." Id.
To determine the scope of the arbitration agreement, "arbitration clauses must be construed `as broadly as possible' and arbitration should be ordered" unless there is no "interpretation that covers the asserted dispute." Raiola, 47 F. Supp.2d at 502 (quoting McMahan Sec. Co. L.P. v. Forum Capital Markets LiP., 35 F.3d 82, 88 (2d Cir. 1994)). All questions about "`the scope of arbitrable issues should be resolved in favor of arbitration.'" Raiola, 47 F. Supp.2d at 502 (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-5 (1983)).
"Claims regarding fraud in a contract containing an arbitration clause are, for the most part, also subject to arbitration." Garten v. Kurth, 265 F.3d 136, 142 (2d Cir. 2001) (citing Campaniello Imports. Ltd. v. Saporiti Italia, S.p.A., 117 F.3d 655, 666 (2d Cir. 1997)). Courts "should consider the question of fraud only in the arbitration clause itself" and "courts may not adjudicate claims of fraud in the inducement of the contract generally." Garten, 265 F.3d at 142-43 (internal quotation marks and citations omitted). There must be "some substantial relatipnship between the fraud or misrepresentation and the arbitration clause in particular" for a court to retain jurisdiction over an arbitrable dispute. Campaniello, 117 F.3d at 667. If there is no evidence of fraud specific to the arbitration clause, "the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." Garten, 265 F.3d at 142 (citing 9 U.S.C. § 4)
IV. DISCUSSION
A. Defendants' Motion to Compel Arbitration Must Be Granted
Defendants move to compel arbitration because plaintiff executed the Contract, which contained a clause requiring that all disputes be settled by binding arbitration. See Contract § 9; Def. Mem. at 1. Plaintiff and defendants signed the Contract. Because parties are deemed to agree to and understand the terms of the contracts they sign, plaintiff is bound to arbitrate any dispute arising out of his employment with Travex. See, e.g., Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 200 n. 2 (2d Cir. 1998) (holding that an employee who signed a contract with a broad arbitration clause had agreed to resolve his age discrimination claim through arbitration).
Plaintiff's claims are within the scope of the arbitration clause of the Contract. This clause specifically provides that "all disputes and/or controversies arising o.ut of Mr. Weiss's employment . . . shall be settled by binding arbitration." Conjract § 9. The clause covers all Title VII claims, as well as New York State law claims and the common law claims alleged in the Complaint. See id. Because all of plaintiff's claims arose from his employment with Travex, plaintiff is required to arbitrate his disputes.
B. Plaintiff's Claim of Fraudulent Inducement Must Be Heard by the Arbitrator
Plaintiff seeks limited discovery on the issue of fraudulent inducement. See Plaintiff's Memorandum in Opposition to Defendants' Motion ("Pl. Opp.") at 4. Plaintiff alleges that Yabut and her attorney "surreptitiously" induced him to sign the Contract without advice of counsel. Id. at 3. See also Weiss Aff. ¶¶ 6-8. Plaintiff further alleges that he was "deceive[d]" as to the effect of the arbitration clause. Pl. Opp. at 3.
Plaintiff's request for discovery is denied. When an arbitration clause is included in an employment contract, the arbitrator must resolve issues of fraudulent inducement in the formation of the contract. See Garten, 265 F.3d at 143. Plaintiff alleges that he was fraudulently induced to enter into the Contract by Yabut and her attorney. See Weiss Aff. ¶ 6. This allegation fails to demonstrate the required "substantial relationship" between the purported fraudulent conduct and plaintiff's assent to the arbitration clause in particular.
Plaintiff also argues that he was fraudulently induced to agree to an arbitration clause because he did not realize that he would be unable to obtain discovery in an arbitration proceeding. See id. ¶¶ 5, 8. This claim, however, "is preposterous, doubly so here in light of the fact that" the American Arbitration Association's ("AAA") rules specifically provide for depositions and discovery, where appropriate. Stewart v. Paul, Hastings, Janof sky Walker, LLP, 201 F. Supp.2d 291 (S.D.N.Y. 2002) . Plaintiff also received a copy of the AAA rules when he signed the Contract. See Contract § 9 (stating that a copy of the AAA's National Rules were appended to the Contract) . While plaintiff waived his right to a trial, he alleges no misrepresentation by Yabut, or any other employee of Travex, that made him agree to the arbitration clause. The issue of fraud in the inducement must therefore be resolved by an arbitrator in accordance with the terms of the Contract.
V. CONCLUSION
For the foregoing reasons, plaintiff's claims must be arbitrated pursuant to the Contract. Defendant's motion to compel is granted, and the parties are directed to proceed to arbitration. The Clerk of the Court is directed to close the case.