Isaacs v. Oce Bus. Servs., Inc.

Decision Date04 September 2013
Docket NumberNo. 13 Civ. 0548(JGK).,13 Civ. 0548(JGK).
Citation968 F.Supp.2d 564
PartiesMichael ISAACS, Plaintiff, v. OCE BUSINESS SERVICES, INC., Defendant.
CourtU.S. District Court — Southern District of New York

OPINION TEXT STARTS HERE

Alan Lawrence Sklover, Sklover & Donath, LLC, New York, NY, for Plaintiff.

David Wayne Garland, Jason Kaufman, Epstein Becker & Green, P.C., New York, NY, for Defendant.

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

The plaintiff, Michael Isaacs, brings this action against the defendant, Océ Business Services, Inc. (OBS), under the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201 et seq., and the New York Labor Law (“NYLL”), N.Y. Lab. Law § 650 et seq. The plaintiff claims he is entitled to unpaid overtime compensation for work allegedly performed in excess of forty hours per week. OBS now moves, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., to dismiss or stay this action and to compel arbitration of the plaintiff's claims. For the reasons explained below, the motion is granted and the complaint is dismissed.

I.

The role of federal courts, in ruling on a petition to compel arbitration under the FAA, is “limited to determining two issues: i) whether a valid agreement or obligation to arbitrate exists, and ii) whether one party to the agreement has failed, neglected, or refused to arbitrate.” Shaw Group Inc. v. Triplefine Int'l Corp., 322 F.3d 115, 120 (2d Cir.2003) (internal quotation marks and citation omitted). It has long been settled that arbitration is a matter of contract and that, therefore, a party cannot be compelled to arbitrate issues that a party has not agreed to arbitrate. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995); Shaw Group, 322 F.3d at 120;see also Stemcor USA, Inc. v. Trident Steel Corp., 471 F.Supp.2d 362, 365–66 (S.D.N.Y.2006). To determine whether a party has agreed to submit certain issues to arbitration, courts “should apply ordinary state-law principles that govern the formation of contracts.” T.Co Metals, LLC. v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 344 (2d Cir.2010) (internal quotation marks and citation omitted). In applying state law principles, however the FAA will preempt state law that “treats arbitration agreements differently from any other contracts.” Schnabel v. Trilegiant Corp., 697 F.3d 110, 119 (2d Cir.2012) (quoting Chelsea Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d 289, 295–96 (2d Cir.1999)).1

II.
A.

The following facts are undisputed, unless otherwise noted. OBS is a service business that sells document-related services to the public. (Compl. ¶ 7.) On January 16, 2004, the plaintiff began employment at OBS as an Enterprise Print Solutions Specialist. (Decl. of Rory G. Schnurr in Supp. of Def.'s Mot. to Compel Arbitration (“Schnurr Decl.”) ¶ 3.) As a condition of his employment, OBS required the plaintiff to sign an arbitration agreement, entitled “Dispute Resolution Policy” (“the Policy”), agreeing to submit certain claims to arbitration. (Schnurr Decl. ¶ 6.) The plaintiff executed the policy on January 16, 2004. (Schnurr Decl. Ex. A at 3.)

The Policy provides that OBS and the covered employee have the right to submit to arbitration “any controversies, claims or disputes ... arising out of or relating to any employment relationship including ... statutory claims for wages or other compensation ....” (Schnurr Decl. Ex. A ¶ 2.a.) The Policy also provides that any claims arising under the Policy must be submitted to the American Arbitration Association (“AAA”) “within one (1) year from the date when the claim arose.” (Schnurr Decl. Ex. A ¶ 2.c.) The Policy additionally provides that the party filing a claim with AAA is responsible for paying the filing fee for the arbitration. (Schnurr. Decl. Ex. A ¶ 5.) The Policy also contains a choice of law provision, which provides that “th[e] policy shall be construed and governed according to the laws of the State of New York without reference to the principles of the conflict of laws thereof.” (Schnurr Decl. Ex. A ¶ 10.)

In or around January 2011, OBS amended its Employee Handbook and revised certain parts of the Policy (“the Revised Policy”). The Revised Policy, which is contained in the Employee Handbook, differs from the Policy in three ways, each of which is more favorable to employees. First, the Revised Policy provides OBS employees with a choice to file claims arising under the Policy with either AAA or the Judicial Arbitration and Mediation Services (“JAMS”), rather than exclusively with AAA. (Schnurr Decl. Ex. B ¶ 1.(c)(i).) Second, the Revised Policy allows for claims arising under the Policy to be brought “within the time set forth by the appropriate statute of limitations,” rather than the one year timeframe in the original Policy. (Schnurr Decl. Ex. B ¶ 1.(c)(ii).) Third, the Revised Policy provides that [t]he associated fees for arbitration and fees for the Arbitrator shall be paid solely by OBS,” rather than by the party filing for arbitration as was required under the original Policy. (Schnurr Decl. Ex. B ¶ 5.)

On or around January 31, 2011, OBS forwarded the Revised Policy, contained in the updated Employee Handbook, via email to all OBS employees. (Schnurr Decl. Ex. D.) The email provides, in relevant part, that the “Employee Handbook sets forth important information regarding policies and procedures that explain the terms and conditions of your continued employment with [OBS]. All employees are responsible for reading and abiding by these policies, therefore please take an opportunity to read the entire Handbook.” (Schnurr Decl. Ex. D.)

The introduction to the Employee Handbook provides that neither the Handbook nor any other OBS Guidelines Policies or Practices “CREATES AN EMPLOYMENT CONTRACT OR CONFERS ANY CONTRACTUAL RIGHTS WHATSOEVER.” (Decl. of James R. Flanagan, Esq. in Opp'n to the Def's Mot. to Compel Arbitration (“Flanagan Decl.”) ¶ 10.) However, the Dispute Resolution Policy containing the arbitration provisions provides: “OBS agrees to be bound by the terms and conditions of [the] Policy, including any changes made to it, to the same degree and extent as its employees.” (Schnurr Decl. Ex. B ¶ 1.)

OBS employed the plaintiff from the date he signed the original Policy until April 19, 2012, when OBS terminated the plaintiff's employment. (Schnurr Decl. ¶¶ 3, 5.) During the course of his employment at OBS, the plaintiff had an annual salary of approximately $81,000 per year, and he received bonuses/ commission of approximately $60,000 per year. (Compl. ¶ 15.) The plaintiff alleges that while he was employed by OBS, he often worked approximately 80 hours or more in a workweek, and his work at OBS did not meet the definition of exempt work under the FLSA or NYLL. (See Compl. ¶ 24–25.) The plaintiff claims that because he was misclassified as an exempt employee, OBS denied him significant overtime wages to which he was entitled.

On January 24, 2013, the plaintiff filed the current Complaint against OBS for overtime compensation. On March 13, 2013, the defendant filed a motion to compel arbitration and dismiss the Complaint, or in the alternative, to stay the Complaint pending an arbitration decision.

B.

There is no dispute in this case that the plaintiff's claims under the FLSA and the NYLL are included within the scope of the original Policy and that all of the claims are arbitrable. (Flanagan Decl. ¶ 22.) The sole issue before the Court is whether there is a valid and enforceable agreement to arbitrate between the plaintiff and OBS. The plaintiff asserts that the original Policy is unenforceable and that the Revised Policy did not create a valid and enforceable agreement to arbitrate. The defendant argues that the plaintiff is still bound by the original Policy he signed in 2004, and that the Revised Policy is an independent basis to compel arbitration. The plaintiff is bound to arbitrate his claims against OBS because the Policy signed by the plaintiff in 2004 is still valid and enforceable, and OBS is also correct that the Revised Policy is also binding.

The question of whether there is a valid agreement to arbitrate between parties is generally a question of state law. See Schnabel, 697 F.3d at 119. The Policy provided that New York law governed the Policy and the parties agree that the Court should apply New York law.

Under New York law, a person “who signs or accepts a written contract is conclusively presumed to know its contents and assent to them.” Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144, 149 (2d Cir.2004) (internal quotation marks and citation omitted). The plaintiff in this case does not dispute that he signed, dated, and spelled out his name on the Policy as a condition of his employment in 2004. Therefore, he is bound by the Policy unless he can show special grounds, such as fraud, duress or coercion, which would justify the revocation or nonenforcement of contract. See9 U.S.C. § 2; see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir.1987).

The plaintiff's memorandum of law in opposition to the defendant's motion to compel arbitration cites to cases invalidating arbitration agreements on grounds of unconscionability. However, there is no reasonable argument in this case that the Policy is unconscionable. Generally, to prevail on an unconscionability claim under New York law, a plaintiff must show that an agreement is both substantively and procedurally unconscionable at the time it is entered into. See Lawrence v. Miller, 11 N.Y.3d 588, 873 N.Y.S.2d 517, 901 N.E.2d 1268, 1270 (2008). This requires some showing of “an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” King v. Fox, 7 N.Y.3d 181, 818 N.Y.S.2d 833, 851 N.E.2d 1184, 1191 (2006). The arbitration agreement in ...

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