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holding arbitration was appropriate because pro se plaintiff failed to show that Congress intended to preclude arbitration for his Title VII and § 1981 claims
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10 Civ. 9647 (PKC)(JCF)
07-20-2011
MARCUS ISAIAH WASHINGTON, Plaintiff, v. WILLIAM MORRIS ENDEAVOR ENTERTAINMENT, LLC, JEFF MEADE, and SARAH WINIARSKI, Defendants.
MEMORANDUM AND ORDER
:
Plaintiff Marcus Isaiah Washington, proceeding pro se, brings this action against defendants William Morris Endeavor Entertainment, LLC ("William Morris Endeavor") formerly known as William Morris Agency, Inc. ("William Morris Agency"), and two William Morris Endeavor Human Resources employees, Jeff Meade and Sarah Winiarski (the "Individual Defendants"). Plaintiff asserts claims of discrimination and retaliation under 42 U.S.C. § 1981, Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-1 et seq., as well as New York State Human Rights Law, N.Y. Exec. Law § 296, and New York City Human Rights Law, N.Y.C. Admin. Code § 8-107. Defendants have moved to dismiss the Complaint or, in the alternative, stay the action pending arbitration on the grounds that all claims asserted in the Complaint fall within the scope of an arbitration agreement. Plaintiff opposes the motion, arguing that the arbitration agreement and certain of its provisions are unenforceable. Defendants assert that the issue of whether the arbitration agreement and certain of its provisions are enforceable is an issue for an arbitrator to decide. For the reasons set forth below, the action is stayed pending an award in arbitration. SUMMARY OF FACTS ALLEGED IN THE COMPLAINT
Plaintiff started working for William Morris Agency, a talent agency that represents actors, authors, musicians and public figures, as an "Agent Trainee" on September 2, 2008 in their New York City office. (Compl. ¶¶ 5, 11, 14.) Plaintiff alleges that Meade and Winiarski, two employees within the Human Resources Department at William Morris, were constantly assigning him "dead-end assignments that involved working more with support staff (mailroom, accounting, reception, business affairs, IT, etc.) or being an Assistant's Assistant, than getting the opportunity to work with/for Agents." (Compl. ¶¶ 83, 87.) He alleges that "[a]lthough Whites were also given similar assignments, the frequency in which [plaintiff] and the other African American Agent Trainee were assigned these [dead-end] tasks exceeded that of Whites significantly." (Compl. ¶ 83.) According to plaintiff, this was a tactic designed "to impair his interest in [William Morris] so that he would quit on his own accord or . . . leave involuntarily as a result of not being able to advance . . . ." (Compl. ¶ 87.)
Plaintiff explains in his opposition memorandum that William Morris Agency merged with "Endeavor" in April 2010 to become William Morris Endeavor Entertainment, LLC, the defendant in this lawsuit. (Pl. Opp. Mem. 14.) In the Complaint, plaintiff refers to both William Morris Agency and William Morris Endeavor Entertainment, LLC as either the "Company" or "William Morris." I refer specifically to William Morris Agency or William Morris Endeavor where the facts permit a distinction.
Shortly after plaintiff expressed his belief that he was being discriminated against, plaintiff was informed "that because of [a] new [c]ompany policy, Floaters and Trainees who couldn't land a desk within three months would be asked to leave the [c]ompany . . . ." (Compl. ¶¶ 144, 149.) Thereafter, plaintiff scheduled a meeting with Carole Katz, the head of Human Resources, "to express his certainty that he was being set up to fail and [was being] discriminated against . . . ." (Compl. ¶¶ 95, 150.) During the meeting, plaintiff delineated the numerous incidents that "led him to believe . . . he was being discriminated against." (Compl. ¶ 151.) He also told Ms. Katz, "I'm talking about this with you behind closed doors, but I can make this a much bigger issue." (Compl. ¶ 152.) Ms. Katz "immediately gave [plaintiff] the option of either working for the next five months[,] or being paid with insurance benefits for the next five months . . . " and using the five months to look for another job. (Compl. ¶ 153.) The next day, April 9, 2010, plaintiff was given a check in an amount equivalent to five months pay. (Compl. ¶ 154.) This was plaintiff's last day as an employee of William Morris. (Compl. ¶ 156.) THE ARBITRATION AGREEMENTS
The parties agree that plaintiff signed two arbitration agreements during the course of his employment. (Pl. Opp. Mem. 13; Defs. Mem. 3; Reply 4.) On the first day of plaintiff's employment, he executed the first agreement with William Morris Agency (the "2008 Arbitration Agreement") as a condition of employment. (Pl. Opp. Mem. 13.) He entered into a second agreement with William Morris Endeavor on July 1, 2009 (the "2009 Arbitration Agreement") as a condition of remaining employed before William Morris Agency merged to become William Morris Endeavor Entertainment, LLC in April 2010. (Pl. Opp. Mem. 14.)
The 2009 Arbitration Agreement provides in relevant part:
The parties agree that any claim, dispute, and/or controversy that either Employee may have against the Company (as define above), or that the Company may have against Employee, arising from, related to, or having any relationship or connection whatsoever with Employee's seeking employment with, maintaining employment by, or other association with the Company, shall be submitted to and determined exclusively by binding arbitration under the [FAA] . . . . 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, or retaliation, whether based on city, state or federal law, claims for wages or compensation, claims based in equity, or otherwise.(2009 Arbitration Agreement at 1, attached as Carbone Decl. Ex. B.) It also provides that "[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all or any part of this Agreement is void or voidable" (the "Delegation Provision"). (2009 Arbitration Agreement at 2.) The 2009 Arbitration Agreement further provides that "[t]he arbitration will be conducted by the American Arbitration Association ("AAA") in accordance with its then-current Employment Arbitration Rules" and that "[t]he Arbitrator shall apply the substantive law of the State in which Employee works or federal law, or both, as applicable to the claims and defenses asserted." (2009 Arbitration Agreement at 1-2.)
The William Morris Agency Policy Manual also states that "[i]t is the policy of the William Morris Agency, to arbitrate any dispute which arises between WMA and the employee regarding any aspect of their employment relationship, including disputes regarding compensation, benefits, duties or termination, before a single neutral arbitrator acceptable to both parties." (Carbone Decl. Ex. D at 1.)
The parties do not dispute that the 2009 Arbitration Agreement was an agreement to arbitrate, that plaintiff and William Morris Endeavor both executed the Agreement, or that its scope includes within it the claims asserted in the Complaint. Rather, plaintiff argues that the Court should not stay the litigation or dismiss the Complaint because the 2009 Arbitration Agreement as a whole, as well as certain of its provisions, are unenforceable and thus he did not waive his right to judicial resolution of his claims. Specifically, he argues that the 2009 Arbitration Agreement is unfair, one-sided and the product of undue influence and economic duress because he signed the Agreement as a condition of remaining employed, he had economic pressure to sign the Agreement due to his student loan debt, he entered into the Agreement with an entity that had superior bargaining power, and there was no negotiation as to its terms. (Pl. Opp. Mem. 9-10, 13-15.) He also asserts that the provision requiring that claims alleging "discrimination" or "retaliation" must be submitted to arbitration is unconscionable because it is in direct violation of the language of Section 1981 and Title VII. (Pl. Opp. Mem. 9-10.) This is, according to plaintiff, because William Morris "promote[d] racist behavior in a systematic and subtle manner" and rather than correcting these problems, William Morris instead "compel[led] minorities to waive their civil and human rights through mandatory arbitration agreements as conditions for employment." (Pl. Opp. Mem. 8.) Defendants respond that issues of enforceability are for the arbitrator to decide and not the court, and even if judicial resolution of these issues were appropriate, plaintiff has not set forth facts sufficient to preclude enforcement of the 2009 Arbitration Agreement. (Reply 3-4.) DISCUSSION
I. Legal Standard
The Federal Arbitration Act (the "FAA"), 9 U.S.C. § 1 et seq., "is an expression of 'a strong federal policy favoring arbitration as an alternative means of dispute resolution.' " Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010) (quoting Hartford Accident & Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219, 226 (2d Cir. 2001)). Section 2 of the FAA provides:
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, 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.
The FAA also establishes procedures by which federal courts may implement Section 2's substantive rule. Section 3 of the FAA provides that "upon being satisfied that the issue involved in [a] suit or proceeding [pending before it] is referable to arbitration under" an arbitration agreement, the district court "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.
A district court must resolve four inquiries to determine whether all or part of an action is arbitrable:
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that 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 decide whether to stay the balance of the proceedings pending arbitration.JLM Indus. Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004) (quoting Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 75-76 (2d Cir. 1998) (alteration in original)).
The Supreme Court recently "reemphasize[d] the proper framework for deciding when disputes are arbitrable . . . ." Granite Rock Co. v. Int'l Bhd. of Teamsters, 130 S.Ct 2847, 2856 (2010). It explained that "a court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute." Id. (emphasis in original) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995); AT & T Technologies, Inc. v. Commc'ns Workers, 475 U.S. 643, 648-49 (1986)). "To satisfy itself that such agreement exists, the court must resolve any issue that calls into question the formation or applicability of the specific arbitration clause that a party seeks to have the court enforce." Id. (citing Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772, 2778-79 (2010)). "Where there is no provision validly committing them to an arbitrator, see [Rent-A-Center, 130 S.Ct. at 2776-78], these issues typically concern the scope of the arbitration clause and its enforceability. In addition, these issues always include whether the clause was agreed to, and may include when that agreement was formed." Id.
When a party disputes the enforceability of an arbitration agreement, by arguing, for example, that the agreement is void because it is unconscionable, this is a gateway matter that is typically decided by the court. Rent-A-Center, 130 S.Ct. at 2777-78; see also Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 452 (2003) (plurality opinion) (gateway matters include "whether the parties have a valid arbitration agreement at all"). However, "parties can agree to arbitrate 'gateway' questions of 'arbitrability,' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Rent-A-Center, 130 S.Ct. at 2777 (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83-85 (2002); Bazzle, 539 U.S. at 452).
When the presenting issue is whether a court or an arbitrator should determine arbitrability, "[t]he law [applies a] reverse[ ] . . . presumption to favor judicial rather than arbitral resolution." Shaw Group Inc. v. Triplefine Int'l Corp., 322 F.3d 115, 120-21 (2d Cir. 2003) (citing First Options, 514 U.S. at 944-45). This is a "reverse" presumption because in determining the scope of arbitration clauses, courts generally apply a presumption in favor of arbitrability. See Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 223 (2d Cir. 2001) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)) ("It is familiar law that the [FAA] . . . expresses 'a liberal federal policy favoring arbitration agreements' and that 'any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.' ") Under the reverse presumption, "[u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator." AT & T Technologies, Inc., 475 U.S. at 649.
In Prima Paint, the Supreme Court recognized that agreements to arbitrate, which are presumptively valid, are severable from a potentially invalid contract. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967); see also Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445-46 (2006) ("as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract.") Thus, in determining arbitrability, a court considers whether a party is challenging the validity of the arbitration agreement specifically, or whether the challenge is directed more generally to the contract within which the arbitration clause is contained. Buckeye, 546 U.S. at 449. When a contract contains an arbitration agreement and the challenge is directed against the contract as a whole, the dispute is committed to the arbitrator to decide the general contract dispute. Id.
The Supreme Court, in Rent-A-Center, recently applied the Prima Paint concept of severability to an agreement that was itself an agreement to arbitrate. See Rent-A-Center, 130 S.Ct. at 2778-79. The underlying agreement at issue provided for arbitration of all " 'past, present or future' disputes arising out of [respondent's] employment with Rent-A-Center, including 'claims for discrimination' and 'claims for violation of any federal . . . law.' " Id. at 2775. The parties disputed whether the underlying agreement was unconscionable. Id. at 2779. Petitioner sought court enforcement of a "delegation provision" contained within the underlying arbitration agreement which delegated the issue of enforceability to the arbitrator. Id. at 2777. The provision in Rent-A-Center is similar to the provision contained within the 2009 Arbitration Agreement and stated that "[t]he Arbitrator . . . shall have exclusive authority to resolve any dispute relating to the . . . enforceability of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable." Id. (alterations in original). The Rent-A-Center Court concluded that because the respondent only challenged the enforceability of the arbitration agreement as a whole, rather than the specific provision petitioner sought to enforce—the delegation provision—the challenge was for the arbitrator to decide. Id. at 2779-80.
Federal courts apply state law to determine whether a contract defense may invalidate an arbitration agreement. See e.g., Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996); Rent-A-Center, 130 S.Ct. at 2780. But federal substantive law governs questions concerning the interpretation and construction of arbitration agreements. See e.g., Moses H. Cone Memorial Hospital v. Mecury Construction Corp., 460 U.S. 1, 25 (1983). The party opposing arbitration has the burden to show that the agreement is unenforceable. Green Tree Financial Corp.—Alabama v. Randolph, 531 U.S. 79, 91-92 (2000).
II. Application
A. The Governing Agreement
In seeking to dismiss the Complaint or stay the litigation pending arbitration, defendants assume that the 2009 Arbitration Agreement, rather than the 2008 Arbitration Agreement, is the governing agreement for the purposes of this motion. (Defs. Mem. 3-5.) Plaintiff does not specifically dispute this point; he argues that both Agreements are unenforceable.
The 2009 Arbitration Agreement is the governing agreement. First, the 2009 Arbitration Agreement includes in its scope disputes preexisting the execution of the 2009 Arbitration Agreement. The 2009 Arbitration Agreement includes within its scope "all disputes" against William Morris Endeavor and it does not place a temporal limitation on arbitrable claims. See United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (1960) ("An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.") Second, the 2009 Arbitration Agreement was executed last-in-time and provides that it "supersedes any and all prior and contemporaneous agreements . . . ." (2009 Arbitration Agreement at 2.) Third, plaintiff asserted his claims against "William Morris Endeavor Entertainment, LLC, formerly known as the William Morris Agency, Inc." (Compl. at 1) (emphasis added.) William Morris Endeavor is the entity plaintiff named in the Complaint and the entity with whom plaintiff entered into the 2009 Arbitration Agreement.
B. The Parties Agreed to Arbitrate Issues of Arbitrability, Including Whether the 2009 Arbitration Agreement and Its Provisions Are Enforceable and the Scope of the Agreement
Defendants assert that the dispute between the parties as to whether the 2009 Arbitration Agreement is voidable is an issue to be decided by an arbitrator and not this Court. (Reply 3-4.) "[T]he issue of arbitrability may only be referred to the arbitrator if there is clear and unmistakable evidence from the arbitration agreement, as construed by the relevant state law, that the parties intended that the question of arbitrability shall be decided by the arbitrator." Contec Corp. v. Remote Solution Co., Ltd., 398 F.3d 205, 208 (2d Cir. 2005) (emphasis in original) (quoting Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002)).
Construing the 2009 Arbitration Agreement under New York state law, I conclude it clearly and unmistakably provides the arbitrator with the exclusive authority to decide issues of arbitrability, including whether the 2009 Arbitration Agreement and any part thereof is enforceable, as well as the scope of the arbitration agreement. First, the Delegation Provision expressly provides that the arbitrator "shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all of any part of this Agreement is void or voidable." (2009 Arbitration Agreement at 2.) Second, the parties incorporated by reference the "then-current" Employment Arbitration Rules of the AAA. (2009 Arbitration Agreement at 1.) Rule 6(a) of the AAA Employment Arbitration Rules provides that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement." AAA Employment Arbitration Rule 6(a). This language provides for the arbitrator to decide issues of arbitrability. The Second Circuit, has "held that when . . . parties explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties' intent to delegate such issues to an arbitrator." Contec Corp., 398 F.3d at 208 (construing the agreement under New York law) (citing Shaw Group Inc. v. Triplefine Int'l Corp., 322 F.3d 115, 122 (2d Cir. 2003); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1202 (2d Cir. 1996)).
Plaintiff assumes that New York law is the applicable state law. Defendants do not dispute this and cite to cases applying New York law. (Reply 4.) I therefore apply New York state law in determining whether the Delegation Provision is enforceable. See In re Tehran-Berkeley Civil and Env't Eng'rs, 888 F.2d 239, 242 (2d Cir. 1989) (explaining that "implied consent to use a forum's law is sufficient to establish choice-of-law . . . ."); Casarotto, 517 U.S. at 687 (explaining that federal courts apply state law to determine whether a contract defense may invalidate an arbitration agreement).
C. The Delegation Provision is Enforceable
Under Rent-A-Center, a remaining inquiry is whether plaintiff contests the validity of the Delegation Provision and if so, whether under the applicable state law, this provision is enforceable. See Rent-A-Center, 130 S.Ct. at 2778 (severing the specific agreement to arbitrate arbitrability from the underlying arbitration contract and noting that "a party's challenge to another provision of the contract, or to the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate"); Ragone, 595 F.3d at 121 (applying state law to determine whether the arbitration agreement was unconscionable); see also Dedon GmbH v. Janus et Cie, 2010 WL 4227309, at *7 (S.D.N.Y. Oct. 19, 2010) (citing Granite Rock, 130 S.Ct. at 2858) ("whenever a party contests the existence or the enforceability of an arbitration agreement, the court must resolve the disagreement.")
Plaintiff does not dispute whether an agreement between the parties was ever concluded. "The issue of the contract's validity is different from the issue whether any agreement between the alleged obligor and obligee was ever concluded." Buckeye, 546 U.S. at 444 n. 1. The Court noted in dicta that these other contract formation issues include, for example, "whether the alleged obligor ever signed the contract," "whether the signor lacked authority to commit the alleged principal," "and whether the signor lacked the mental capacity to assent." Id.
In opposing defendants' motion to compel arbitration, plaintiff specifically mentions the Delegation Provision only once—to support his position that the 2009 Arbitration Agreement is unfair, one sided, and the product of undue influence. (Pl. Opp. Mem. 9-10.) Plaintiff asserts that "[t]erms such as . . . '[the Arbitrator . . . shall have] exclusive authority to resolve dispute[s] . . . including but not limited to any claim that all or any part of this Agreement is void or voidable' . . . leaves no room for judicial review of the decision and negates the [d]efendant's [sic] request for [a] 'stay pending arbitration.' " (Pl. Opp. Mem. 10.) In concluding his opposition memorandum, plaintiff requests "that the Court invalidate the[ ] unconscionable provisions." (Pl. Opp. Mem. 16.) Construing this argument liberally in light of plaintiff's pro se status, I construe it as challenging the enforceability of the Delegation Provision as unconscionable.
Under New York law, "[a] determination of unconscionability generally requires a showing that the contract was both procedurally and substantively unconscionable when made . . . ." Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10 (1988) (citation omitted). "The procedural element of unconscionability concerns the contract formation process and the alleged lack of meaningful choice; the substantive element looks to the content of the contract[, per se]." Ragone, 595 F.3d at 121-22 (alterations in original) (quoting State v. Wolowitz, 468 N.Y.S.2d 131, 145 (2d Dep't 1983)). "The concept of unconscionability must necessarily be applied in a flexible manner depending upon all the facts and circumstances of a particular case." Matter of Friedman, 407 N.Y.S.2d 999, 1008 (2d Dep't 1978). In determining whether an agreement is procedurally unconscionable, New York courts analyze factors such as the setting of the transaction, whether the party seeking to enforce the contract used high pressure tactics or deceptive language in the contract, whether there is inequality of bargaining power between the parties, and the experience and education of the party claiming unconscionability. See Morris v. Snappy Car Rental, Inc., 637 N.E.2d 253, 256 (N.Y. 1994); Gillman, 73 N.Y.2d at 11. Although a party must typically show that the agreement was both procedurally and substantively unconscionable, "there have been exceptional cases where a provision of the contract is so outrageous as to warrant holding it unenforceable on the ground of substantive unconscionability alone." Gillman, 73 N.Y.2d at 11; see also Brower v. Gateway 2000, Inc., 676 N.Y.S.2d 569, 574 (1st Dep't 1998).
Plaintiff argues that the 2009 Arbitration Agreement was procedurally unconscionable because it is the product of undue influence and economic duress, and there was no negotiation as to its terms. (Pl. Opp. Mem. 9-10; 13-15.) Specifically, he explains that he was in an unequal bargaining position with William Morris Endeavor and "[i]n order to advance my career, agreeing to the terms and conditions stated in the[ ] contract[ ] was not up for debate," (Pl. Opp. Mem. 13.) He states that "the only alternative [to signing the agreement] would have been to re-enter the job market during a [r]ecession." (Pl. Opp. Mem. 14.) He asserts that remaining employed was "a necessity" because he needed health insurance and money to repay his student loans. (Pl. Opp. Mem. 15.) With respect to the Delegation Provision in particular, he argues it is substantively unconscionable because it "leaves no room for judicial review of the decision." (Pl. Opp. Mem. 10.)
The 2009 Arbitration Agreement was not signed under procedurally unconscionable conditions. First, plaintiff has not asserted that he attempted to negotiate the terms of the Agreement. He assumes that the 2009 Arbitration Agreement was offered "on a take-it-or-leave-it, non-negotiable basis." (Pl. Opp. Mem. 10.) Second, even if William Morris Endeavor offered the 2009 Arbitration Agreement on a "take-it-or-leave-it" basis and refused to negotiate, this is not sufficient under New York law to render it procedurally unconscionable. See Nayal v. HIP Network Servs. IPA, Inc., 620 F. Supp. 2d 566, 571 (S.D.N.Y. 2009) (applying New York law and concluding that a form contract offered on a take-it-or-leave-it basis does not alone render a contract procedurally unconscionable); Sablosky v. Edward S. Gordon Co., Inc., 535 N.E.2d 643, 647 (N.Y. 1989) (finding that it was not procedurally unconscionable for a real estate brokerage firm to include as a condition of employment an agreement to arbitrate claims). Third, plaintiff is an educated individual with a bachelor's and master's degree who accepted the terms "to advance [his] career." (Compl. ¶ 15; Pl. Opp. Mem. 13.) There is no evidence that he was precluded from reading the 2009 Arbitration Agreement or asking questions about its terms before signing it. See Morris, 637 N.E.2d at 256-57 (declining to find an agreement containing an arbitration clause procedurally unconscionable where the plaintiff was a high school graduate with some college education and plaintiff was not prevented from reading the agreement or asking questions about it); Tsadilas v. Providian Nat'l Bank, 786 N.Y.S.2d 478, 481 (1st Dep't 2004) (explaining that "[a]rbitration agreements are enforceable despite inequality in bargaining power.")
Nor has plaintiff set forth a sound basis upon which this Court could conclude that the Delegation Provision is substantively unconscionable, such that this alone could be a basis to find the provision unenforceable. Plaintiff asserts that the language in the Delegation Provision "leaves no room for judicial review of the decision," but this Court sees no grounds for such a conclusion. The terms of the Delegation Provision do not preclude a court from vacating the arbitration award if a proper showing is made. See 9 U.S.C. § 10 (setting forth the grounds for vacating an arbitration award). Because the Delegation Provision is enforceable and the Agreement sets forth clear and unmistakable evidence of the parties intent to arbitrate issues of arbitrability, plaintiff's other arguments are for the arbitrator to decide. See Rent-A-Center, 130 S.Ct. at 2779-80.
D. The Individual Defendants As Non-Signatories to the 2009 Arbitration Agreement May Compel Enforcement of the Delegation Provision
Although arbitration agreements are broadly construed, "such agreements must not be so broadly construed as to encompass claims and parties that were not intended by the original contract." Thomson-CSF, S.A. v. American Arbitration Ass'n, 64 F.3d 773, 776 (2d Cir. 1995). "[J]ust because a signatory has agreed to arbitrate issues of arbitrability with another party does not mean that it must arbitrate with any non-signatory." Contec, 398 F.3d at 209. But where a court determines that the "parties have a sufficient relationship to each other" and "when the issues the non-signatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed" a signatory to a contract may be estopped from avoiding arbitration. Id. (quoting Choctaw Generation Ltd. P'ship v. Am. Home Assurance Co., 271 F.3d 403, 404 (2d Cir. 2001). Factors to consider in making this determination include "the relationship among the parties, the contracts they signed (or did not), and the issues that ha[ve] arisen." Id. (quoting Choctaw, 271 F.3d at 406).
Here, the Individual Defendants are non-signatories to the 2009 Arbitration Agreement but seek an order dismissing the Complaint or staying the litigation. Defendants argue that as employees of William Morris Endeavor, the Individual Defendants "are expressly entitled to the benefits of and to enforce" the terms of the 2009 Arbitration Agreement, (Defs. Mem. 3 n. 2.) After analyzing the 2009 Arbitration Agreement and the relationship between the parties, I conclude that the Individual Defendants may enforce the terms of the Delegation Provision. Thus, I need not reach the issue of whether plaintiff is estopped from avoiding arbitration with the Individual Defendants because, pursuant to the Delegation Provision, this is a matter for the arbitrator. See Contec, 398 F.3d at 209 (declining to reach the question of whether the signatories were estopped from avoiding arbitration with a non-signatory where the arbitration agreement indicated that "arbitration of the issue of arbitrability [was] appropriate" and there was a sufficient relationship between the parties and the agreement).
First, the terms of the 2009 Arbitration Agreement indicate that plaintiff agreed to arbitrate claims asserted against William Morris Endeavor employees. The 2009 Arbitration Agreement provides for arbitration of "any claim, dispute and/or controversy that either Employee may have against the Company (as defined above) . . . ." (2009 Arbitration Agreement at 1.) It defines "Company" to include its employees and agents, which would therefore include the Individual Defendants. (2009 Arbitration Agreement at 1.) Second, the Individual Defendants are employees of William Morris Endeavor and the actors who carry out the company functions. The allegations against the Individual Defendants relate to the manner in which they executed their duties as William Morris Endeavor employees. These factors demonstrate that a sufficient relationship exists between the parties and the 2009 Arbitration Agreement for this Court to stay the action against all the defendants pending arbitration. See Contec, 398 F.3d at 211 (concluding "that as a signatory to a contract containing an arbitration clause and incorporating by reference the AAA Rules, [the plaintiff] cannot now disown its agreed-to obligation to arbitrate all disputes, including the question of arbitrability" as against a non-signatory when there is a sufficient relationship between the parties and the arbitration agreement); Campaniello Imports, Ltd. v. Saporiti Italia S.p.A., 117 F.3d 655, 668 (2d Cir. 1997) ("Courts in this and other circuits consistently have held that employees or disclosed agents of an entity that is a party to an arbitration agreement are protected by that agreement,"); Ross v. American Exp. Co., 547 F.3d 137, 146 (2d Cir. 2008) (noting that courts are more likely to apply the estoppel principle to compel arbitration where there is "a relationship among the parties which either supported the conclusion that [the party opposing arbitration] had consented to extend its agreement to arbitrate to [the non-signatory], or, otherwise put, made it inequitable for [the party opposing arbitration] to refuse to arbitrate on the ground that it had made no agreement with [the non-signatory]" ); Cicchetti v. Davis Selected Advisors, 2003 WL 22723015, at *3 (S.D.N.Y. Nov. 17, 2003) (concluding that a former employee who signed an arbitration agreement with employer was estopped from avoiding arbitration as to claims asserted against a supervisor who was not a signatory to the arbitration agreement).
E. Congressional Intent
The third arbitrability inquiry is whether Congress intended the Federal claims asserted "to be nonarbitrable." JLM Indus., 387 F.3d at 169 (quoting Oldroyd, 134 F.3d at 75-76). Generally, "although all statutory claims may not be appropriate for arbitration, having made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude waiver of judicial remedies for the statutory rights at issue." 14 Penn Plaza LLC v. Pyett, 129 S.Ct. 1456, 1465 (2009) (quoting Gilmer v. Interstate/Johnson Lane Corp, 500 U.S. 20, 25 (1991)). "[T]he burden lies with the party attempting to avoid arbitration 'to show that Congress intended to preclude a waiver of a judicial forum' for his claims." Arciniaga v. General Motors Corp., 460 F.3d 231, 235 (2d Cir. 2006) (quoting Gilmer, 500 U.S. at 26).
Plaintiff has not shown that Congress intended to preclude arbitration for claims asserted under either Title VII or 42 U.S.C. § 1981. Moreover, courts have concluded that discrimination claims asserted under both provisions are arbitrable. See e.g., 14 Penn Plaza LLC, 129 S.Ct. at 1470 n. 9 ("nothing in the text of Title VII . . . precludes contractual arbitration"); Arciniaga, 460 F.3d at 234, 238 (finding discrimination claim asserted under 42 U.S.C. § 1981 arbitrable).
F. Discretion to Dismiss
"While Section 3 of the FAA requires a district court to stay proceedings where an issue before it is arbitrable under an agreement, courts have the discretion to dismiss - rather than stay - an action when all of the issues in it must be arbitrated." Johnson v. Tishman Speyer Properties, L.P., 2009 WL 3364038, at *4 (S.D.N.Y. Oct. 16, 2009) (emphasis omitted). I decline to exercise my discretion to dismiss the Complaint. The action is therefore stayed. CONCLUSION
For the reasons stated above, defendants' motion (Docket # 12) is GRANTED insofar as they seek an order staying the litigation. The Clerk of the Court is directed to terminate this motion. This case is placed on the suspense docket. Counsel for defendants is directed to provide plaintiff with copies of any unpublished opinions cited in this Memorandum and Order.
SO ORDERED.
/s/_________
P. Kevin Castel
United States District Judge Dated: New York, New York
July 20, 2011