PAUL A. ENGELMAYER, District Judge:
In this employment discrimination action, Jadranka Begonja brings claims
Defendants now move to dismiss the complaint pursuant to a mandatory arbitration clause in a collective bargaining agreement; defendants also seek to recover attorneys' fees. For the following reasons, the Court stays this action, refers all claims brought in the Complaint to arbitration, and denies the request for fees.
Vornado is a foreign business corporation organized under Maryland law with its principal place of business in New York, New York. Compl. ¶¶ 4, 6. 280 Park, in which Vornado has an ownership interest, is a foreign limited liability company organized under Delaware law that owns an office building at 280 Park Avenue, New York, New York.
At all times during Begonja's employment, she and the Corporate Defendants were bound by a collective bargaining agreement known as the Commercial Building Agreement (the "CBA"), formed between the Union and the Realty Advisory Board on Labor Relations ("RAB"), a multiemployer association of which defendants are members. Goldberg Aff. ¶ 6; Dkt. 22 ("Def. Br."), at 2; Pl. Br. 3.
In pertinent part, the CBA provides:
CBA Art. XXI § 24(A). As to the resolution of discrimination claims, the CBA states:
Id. The CBA provides for a grievance procedure "[t]o try to decide without arbitration any issues between the parties which under this agreement they must submit to the Arbitrator." Id. Art. VII § 2. The CBA contemplates that employees will often be represented by the Union. See id. Art. VII § 3. Where a grievance is not settled, the CBA provides for arbitration:
Id. Art. VIII §§ 1-3.
The Union and the RAB dispute whether, under the CBA, an individual employee who has sought but been denied Union support for her claim is required to arbitrate rather than pursue her claims in court. See id. Art. XXI § 24(B)(1). The CBA leaves that question — which it describes as the "reserved question" — for arbitration, providing that either the Union or RAB may initiate arbitration to resolve it. Id. The CBA also sets forth procedures for arbitration of claims which employees bring without Union representation. See id. § 24(B)(3).
During her employment with 280 Park, Begonja was the sole Croatian employee. Compl. ¶ 33. She alleges that she was subject to adverse treatment by supervisors, see generally id. ¶¶ 35-61, including by ethnic Albanian supervisors such as Rama, id. ¶ 39. She asserts that non-Croatian employees were not subjected to similar treatment, id. ¶ 68, and that at times she was denied opportunities given to ethnic Albanian coworkers, id. ¶¶ 48, 55.
Begonja claims that she filed grievances regarding incidents of alleged mistreatment, id. ¶¶ 53, 55, 62, and that, on or about July 22, 2013, she filed an Equal Employment Opportunity Commission ("EEOC") discrimination charge against Vornado and BMS, id. ¶ 24. On or about September 24, 2014, she was indefinitely suspended for the alleged theft of a Windex bottle — an accusation Begonja denies and claims was a pretextual cover for discrimination against her based on her national origin, and an act of retaliation in response to her earlier EEOC filing. Id. ¶¶ 64-67. Both Begonja and defendants treat the indefinite suspension as, effectively, a termination of her employment. See id. ¶ 66; Def. Br. 1-2.
On November 11, 2014, Begonja again filed an EEOC discrimination charge against Vornado and BMS, along with a separate charge against 280 Park. Compl. ¶ 24. She claimed discrimination on the basis of her national origin, and retaliation in response to her complaints about such discrimination. Id. On March 19, 2015, the EEOC mailed Begonja right-to-sue letters corresponding to each of the three EEOC filings.
Concurrently, Begonja has been engaged in an arbitration process to resolve a claim that her termination violated the "just cause" provision of the CBA, although she has not also asserted a discrimination claim in that forum. Goldberg Aff. ¶ 7; see also id. Ex. C.
On June 16, 2015, Begonja filed the Complaint. Dkt. 1. Begonja brings the following causes of action: (1) discrimination based on her national origin, in violation of Title VII (as against the Corporate Defendants) and the NYSHRL and the NYCHRL (as against all defendants), Compl. ¶¶ 71-88; and (2) retaliation in response to her complaints and EEOC filings, in violation of Title VII (as against the Corporate Defendants) and the NYSHRL and the NYCHRL (as against all defendants), id. ¶¶ 89-105. Begonja seeks compensatory damages as well as punitive damages, costs, and attorneys' fees. Begonja's Complaint is silent as to whether she at any point has sought or been denied Union support for her claim.
In a letter dated June 17, 2015, defendants asked Begonja to withdraw this lawsuit, on the ground that she was required under the CBA to pursue her claims through arbitration. See Goldberg Aff., Ex. D. In an e-mail exchange with Begonja's counsel on August 11, 2015, defendants' counsel offered "to waive any [statute of limitations] defense in the arbitration proceeding" in exchange for a voluntary dismissal. Dkt. 30, Ex. A. However, Begonja did not file for voluntary dismissal.
On September 4, 2015, defendants moved to dismiss the Complaint and for attorneys' fees, Dkt. 20, and submitted a supporting affirmation, Dkt. 21, and brief, Dkt. 22. As noted, see supra note 1, the Court construes the motion to dismiss as a motion to compel arbitration, pursuant to the Federal Arbitration Act ("FAA").
On September 24, 2015, Begonja filed a brief in opposition. Dkt. 28. On October 2, 2015, defendants filed a reply brief with an accompanying affirmation. Dkt. 29 ("Def. Reply Br."); Dkt. 30 ("Goldberg Reply Aff.").
On October 9, 2015, the Court held an initial pretrial conference. At that conference, defendants represented that, should the Court compel arbitration of Begonja's claims, they would waive any defense at arbitration to the effect that Begonja's discrimination claims are time-barred. Defendants also represented that they would attempt to consolidate Begonja's discrimination claims with the pending arbitration proceedings at which her separate claim that her termination violated the CBA's "just cause" provision is being heard.
The FAA provides that an arbitration agreement "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 "creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate disputes." Mitsubishi Motor Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n. 32, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)) (internal quotation marks omitted). The FAA was enacted to reverse "centuries of judicial hostility to arbitration agreements" and "to place arbitration agreements upon the same footing as other contracts." Scherk v. Alberto-Culver Co., 417 U.S. 506, 511, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974) (internal quotation marks omitted).
In resolving a claim that an action must be arbitrated pursuant to an arbitration agreement, this Court must determine: (1) whether the parties entered into an agreement to arbitrate; (2) if so, the scope of that agreement; (3) if federal statutory claims are asserted, whether Congress
On a motion to compel arbitration under the FAA, "the court applies a standard similar to that applicable for a motion for summary judgment." Bensadoun, 316 F.3d at 175. "[W]here the undisputed facts in the record require the matter of arbitrability to be decided against one side or the other as a matter of law, we may rule on the basis of that legal issue and avoid the need for further court proceedings." Wachovia Bank, Nat'l Ass'n v. VCG Special Opportunities Master Fund, Ltd., 661 F.3d 164, 172 (2d Cir.2011) (internal 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). Subsequently, the party "seeking to avoid arbitration generally bears the burden of showing the agreement to be inapplicable or invalid." Harrington v. Atl. Sounding Co., Inc., 602 F.3d 113, 124 (2d Cir.2010) (citing Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91-92, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000)).
Begonja does not dispute that she is bound by the CBA or that her discrimination claims fall within the scope of the CBA's mandatory arbitration clause. She also does not argue that Congress exempted Title VII claims from the FAA. Instead, Begonja: (1) argues that the CBA's arbitration provisions are unenforceable because they operate as a substantive waiver of her claims and are unconscionable; (2) asks the Court to deny the motion to dismiss because her claims, if directed to arbitration, would be time-barred; (3) asks the Court to stay rather than dismiss her action, in the event that the arbitration clause is held valid and enforceable; and (4) opposes the award of attorneys' fees sought by defendants. The Court addresses these issues in turn.
At the outset, defendants argue that 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 129 S.Ct. 1456, 173 L.Ed.2d 398 (2009), which involved a similar collective bargaining agreement, resolves this case and mandates arbitration here. See Def. Br. 2-3; Def. Reply Br. 1. The respondents in Pyett had argued that their claims under the Age Discrimination in Employment Act ("ADEA") could not be subject to mandatory arbitration, because a union, rather than individual employee members, had waived the right to bring such claims in court. See 556 U.S. at 257, 260, 129 S.Ct. 1456. Rejecting that argument, the Supreme Court held, in relevant part, that the respondents were bound to arbitrate ADEA claims, because the collective bargaining agreement, negotiated freely between the Union and RAB, so required. Id. at 260, 129 S.Ct. 1456.
The agreement in Pyett appears indistinguishable in relevant part from the CBA here.
Begonja makes two principal arguments why the arbitration provisions of the CBA are unenforceable: that the CBA's arbitration scheme waives her substantive statutory rights, and that its arbitration provisions are unconscionable as a matter of contract law.
As the Supreme Court reiterated in Pyett, "a substantive waiver of federally protected civil rights will not be upheld" in an arbitration agreement. 556 U.S. at 273, 129 S.Ct. 1456.
Here, Begonja argues that the CBA works a waiver of her substantive rights under a federal statute because the Union may decline to bring an employee's claims to arbitration itself. See Pl. Br. 7. As noted, the Supreme Court in Pyett declined to consider whether a substantive waiver of statutory rights would exist where a union "prevent[s] [members] from `effectively vindicating' their `federal statutory rights in the arbitral forum.'" 556 U.S. at 274, 129 S.Ct. 1456 (quoting Green Tree,
To be sure, the CBA leaves it unresolved whether, where (unlike here) the Union has affirmatively declined to pursue a claim on a particular employee's behalf, the employee is obliged to pursue that claim in arbitration as opposed to in the courts. The CBA recites the Union's position that such an employee need not pursue such a claim in arbitration, as well as RAB's position to the contrary. See id. § 24(B)(1). The CBA leaves that forum selection issue for resolution in arbitration. Either way the arbitrator resolved that issue, however, the CBA would leave open a forum (either arbitration or the courts) in which an individual employee may pursue a discrimination claim that the Union has disclaimed.
Next, Begonja argues that the CBA is not enforceable to the extent it does not provide for "all statutory rights and remedies." Pl. Br. 7. This argument is based on a faulty premise. "By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum." Mitsubishi, 473 U.S. at 628, 105 S.Ct. 3346. Consistent with this principle, the CBA provides that "[a]rbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination." CBA Art. XXI § 24(A). Thus, Begonja would be able to pursue, in arbitration, the full panoply of statutory rights. She counters that under the CBA, the Union may undermine her pursuit of her statutory rights, insofar as it provides that "[a]ll Union claims are brought by the Union alone and no individual shall have the right to compromise or settle any claim without the written permission of the Union." CBA Art. VII § 4. But this provision applies only to "Union claims," i.e., those brought by and supported by the Union. It does not apply to claims brought by individuals alone. And to the extent that Begonja fears that the Union may in some way disrupt or interfere with her pursuit in arbitration of her claim, that argument claim is speculative and premature. Upon completion of the arbitral process, should Begonja conclude that her procedural or substantive rights were infringed, she may seek review in court, as both the FAA and the CBA contemplate. See 9 U.S.C. § 10 (grounds for judicial vacatur of arbitration award); Pyett, 556 U.S. at 271-72, 129 S.Ct. 1456
Also unavailing is Begonja's reliance on a California Supreme Court case, Armendariz v. Foundation Health Psychcare Services, Inc., which held certain procedural provisions necessary for statutory rights to be effectively vindicated. See 24 Cal.4th 83, 91, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000) (requiring neutral arbitrator, sufficient discovery, a written award, and reasonable employee costs). That court's application of the FAA is not binding on this Court. And Armendariz is inconsistent with the Supreme Court's 2013 decision in Italian Colors, to the extent that the California Supreme Court found arbitration provisions unenforceable merely because the arbitral forum and procedures made it uneconomical to pursue claims in arbitration.
In any event, the CBA does not, on its face, prevent the Armendariz requirements from being met. It provides for an arbitrator selected by the Union and RAB,
Finally, Begonja argues that the CBA "grievance process deprives [her] of her basic due process rights" because the CBA allows for an arbitration hearing to proceed if the Union were to appear without the grievant. Pl. Br. at 9. The Court construes Begonja to argue that this provision waives her substantive statutory rights, as no due process claim can be made absent state action. See Mussafi v. Fishman, No. 12 Civ. 2071 (JGK), 2012 WL 5473874, at *7 (S.D.N.Y. Nov. 12, 2012) (in challenge to arbitration proceeding, holding that plaintiff "failed to allege any state action, and due process is a requirement before liberty or property is deprived by state action"). It is premature to resolve that issue. Begonja's conjecture that she might be physically absent from her arbitration, and that the Union might appear in her stead against her will, is entirely conjectural.
Because nothing in the CBA prevents Begonja from pursuing her claims in the arbitral forum, the arbitration provisions are not invalid as a substantive waiver of statutory rights.
Begonja further argues that the arbitration provisions are unconscionable, and therefore unenforceable.
It is a "fundamental principle that arbitration is a matter of contract," AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d
Under New York law
Ragone, 595 F.3d at 121-22 (quoting Nayal v. HIP Network Servs. IPA, Inc., 620 F.Supp.2d 566, 571 (S.D.N.Y.2009)) (citations, alterations, and internal quotation marks omitted).
As to substantive unconscionability, Begonja first argues that the CBA is unconscionable because it does not afford her the opportunity to fully pursue her statutory rights and remedies. Because the Court has already found that the CBA does not deny Begonja any statutory rights or remedies, this argument necessarily fails. Next, Begonja argues in general terms that the CBA arbitration provisions "unreasonably favor the employer" because they "prevent employees from seeking judicial intervention." Id. at 11. But this objection merely restates the very definition of a mandatory arbitration provision. Nor has Begonja identified any aspect of the arbitration scheme here that is out of step with those regularly upheld in this District. Therefore, Begonja has failed to demonstrate any substantive unconscionability.
As to procedural unconscionability, Begonja argues that she did not specifically agree to the terms requiring her to arbitrate her discrimination claims; that she was not advised as to such terms; and that she had no ability to turn down such terms. But it is undisputed that the Union properly negotiated this collective agreement on behalf of the covered employees, and thereby bound them, under the National Labor Relations Act ("NLRA"). Under the NLRA, the Union was Begonja's "exclusive representative[] ... for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment,
For these reasons, the arbitration provisions of the CBA are valid and enforceable.
Begonja next urges the Court to deny the motion to dismiss on the ground that, were she to initiate an arbitral action now, her discrimination claims would be time-barred. The Court is skeptical that a litigant may obtain an otherwise contractually-unavailable federal-court forum by bootstrapping from her failure to meet a deadline to pursue her claims in a contractually agreed-upon forum. But, in any event, the question is moot: On October 9, 2015, defendants agreed in a pretrial conference before this Court to waive any possible limitations-based defense at arbitration. And the CBA permits this. It allows an employer to agree to extend the default limitations periods, and an arbitrator to extend such periods for good cause. CBA Art. VII § 7. If Begonja promptly initiates arbitration, therefore, her claim there will be timely.
As to whether to dismiss this action in light of the binding arbitration agreement, or to stay these proceedings pending arbitration, the Second Circuit recently resolved that question. It held that "the text, structure, and underlying policy of the FAA mandate a stay of proceedings when all of the claims in an action have been referred to arbitration and a stay requested." Katz v. Cellco P'ship, 794 F.3d 341, 347 (2d Cir.), cert. denied, ___ U.S. ___, 136 S.Ct. 596, 193 L.Ed.2d 471 (2015). Such a stay has been requested here; and a stay will expedite this case by enabling prompt arbitral resolution of Begonjia's claim and deferring any appellate review until after the arbitration has concluded. Accordingly, the Court stays this case pending arbitration.
Defendants also seek attorneys' fees and costs under Federal Rule of Civil Procedure 11 on the grounds that defense counsel notified Begonja's counsel that Pyett purportedly controlled and that Begonja's claim of an arbitral time bar was incorrect given defendants' offer to waive any such defense. See Def. Br. 4; Goldberg Reply Aff. ¶¶ 3-4.
Rule 11 allows a party to move to sanction an attorney for "presenting to the court a pleading, written motion, or other paper" where "the claims, defenses, and other legal contentions are [not] warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law," among other reasons. Fed. R. Civ. P. 11(b). Such motions "must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b)." Id. (c)(2).
Here, defendants' request for attorneys' fees under Rule 11 was made together with the motion to dismiss rather than as a separate motion, and for that reason alone it must be denied. See, e.g., L.B. Foster Co. v. Am. Piles, Inc., 138 F.3d 81, 89-90 (2d Cir.1998) (reversing Rule 11 sanctions where plaintiff failed to file a separate
For the foregoing reasons, Begonja's claims are referred to arbitration, the present action is stayed pending the out-come of arbitration, and defendants' request for fees and costs is denied. The Clerk of Court is directed to close the motion pending at docket number 20, and to place this case on the suspense docket.
The parties are directed to submit a joint status letter to the Court every 90 days, measured from the date of this decision, advising it as to the status of the arbitration proceedings.
SO ORDERED.
