Johnson v. Costar Grp. Inc., 13-CV-8600-RA

• Decision Date: 21 July 2014
• Docket Number: 13-CV-8600-RA
• Parties: ISAIAH N. JOHNSON, Plaintiff, v. COSTAR GROUP INC., Defendant.
• Court: U.S. District Court — Southern District of New York

ISAIAH N. JOHNSON, Plaintiff, v. COSTAR GROUP INC., Defendant.

13-CV-8600-RA

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Dated: July 21, 2014

OPINION AND ORDER

RONNIE ABRAMS, United States District Judge:

Pro se Plaintiff Isaiah Johnson commenced this action against Defendant CoStar Realty Information, Inc. ("CoStar") on November 26, 2013, alleging employment discrimination on the basis of race in violation of Title VII, 42 U.S.C. § 2000e et seq. On February 27, 2014, CoStar filed the motion to dismiss the complaint and compel arbitration that is presently before the Court. CoStar also seeks to recover the costs and fees it has incurred in litigating this motion. For the reasons that follow, CoStar's motion is granted in part and denied in part.

BACKGROUND

In June of 2012, Johnson was offered a position as an account executive in CoStar's New York office. (Edgerton Aff. ¶ 4.) In connection with the employment offer, the parties signed an agreement (the "Agreement") entitled "Terms and Conditions of Employment." (Campbell Aff. Ex, A at 1, 8.) Section 5.10 of the Agreement pertains to the "Arbitration of Controversies" and provides as follows:

(a) When Arbitration is Required. In the event of any dispute, claim or controversy cognizable in a court of law between the Company and the Employee concerning any aspect of the employment relationship, including disputes upon termination, the parties agree to submit such dispute to final and bindingarbitration before a single arbitrator pursuant to the provisions of the American Arbitration Association's Employment Dispute Resolution Procedures. The parties acknowledge that this obligation to arbitrate disputes applies to claims for discrimination or harassment under . . . Title VII of the Civil Rights Act of 1964

. . . .

(Id. at 6.) The signature page further provides in bolded text that "Employee understands that by signing this Agreement, Employee agrees to resolve certain disputes with the Company by means of binding arbitration as set forth in paragraph 5.10, above." (Id. at 8.)

Section 4 of the Agreement states that "in the event of any breach or anticipatory breach of this Agreement by Employee, . . . the parties agree that the Company shall be entitled to . . . recovery of all reasonable sums and costs, including attorney's fees, incurred by the Company to defend or enforce the provisions of this Agreement." (Id. at 5.) In addition, Section 5.7 provides that "[a] party who breaches the terms of this Agreement shall pay to the non-defaulting party all of the non-defaulting party's costs and expenses, including attorneys' fees, incurred in enforcing the terms of the Agreement, subject to the provisions of Section 5.10(f)," which limits the fees and costs to be paid by the Employee in the event of arbitration. (Id. at 6-7.) The Agreement also contains a choice-of-law clause that provides that the "Agreement shall be governed by the laws of the District of Columbia, without reference to its conflict of law provisions." (Id. at 5.)

Johnson avers that, "[d]ue to the time constraints given to accept employment, [he] did not have enough time to fully read and understand the terms of the [A]greement." (Johnson Aff. at 2.) He further claims that he "should have been clearly advised to hire an attorney to assist in understanding the [A]greement" and that the Agreement "overwhelmingly favors the employer." (Id.) The email from CoStar's Recruiting Coordinator that transmitted Johnson's formal offer package, including the Agreement, requested that all documents be signed and returned "within two business days." (Pl.'s Apr. 16, 2014 letter, ECF No. 28, at 3.)

After Johnson filed the complaint in this action, CoStar sent Johnson a letter dated January 21, 2014 advising him that the Agreement required that his claims be submitted to binding arbitration. (Campbell Aff. Ex. C at 1.) The letter further warned Johnson that, unless he immediately withdrew his complaint, CoStar would seek to collect all costs and fees associated with his alleged breach of the Agreement. (Id.)

DISCUSSION

"Section 2 of the Federal Arbitration Act (FAA) makes agreements to arbitrate 'valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'" AT&T Mobility LLC v. Conception, 131 S. Ct. 1740, 1744(2011) (quoting 9 U.S.C. § 2).¹ Section 4 "requires courts to compel arbitration 'in accordance with the terms of the agreement' upon the motion of either party to the agreement (assuming that the 'making of the arbitration agreement or the failure . . . to perform the same' is not at issue)." Id. at 1748 (alteration in original). "In line with these principles, courts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms." Id. at 1745 (citations omitted).

A court asked to compel arbitration must consider four issues:

[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 ofthe proceedings pending arbitration.

JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004) (alteration in original) (quoting Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 75-76 (2d Cir. 1998)).² "In the context of motions to compel arbitration brought under the [FAA], the court applies a standard similar to that applicable for a motion for summary judgment." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003).

A. Did the Parties Agree to Arbitrate?

Johnson and CoStar undoubtedly agreed to arbitrate certain disputes. Whether the Agreement as a whole is unconscionable, as Johnson claims, is a question for the arbitrator and does not prevent enforcement of the arbitration provision.

It is undisputed that Johnson and CoStar signed the Agreement and that the Agreement contains the arbitration provision described above. Johnson contends, however, that the "two business days" within which he was to review and return the Agreement "simply was not enough time to adequately review and/or have an attorney review the contracts." (Pl.'s Apr. 16, 2014 letter, ECF No. 28, at 1.) He further argues that "the 'terms of employment' agreement is clearly substantive [sic] unconscionable as it overwhelmingly favors the employer." (Johnson Aff. at 2.) Consequently, Johnson asks the Court to "deem the 'terms of employment' unenforceable and invalid." (Id.) CoStar argues that, regardless of whether District of Columbia or New York lawapplies, the Agreement is neither procedurally nor substantively unconscionable. (Def.'s Reply 2.)

Section 2 of the FAA provides that arbitration agreements are "enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This section "permits agreements to arbitrate to be invalidated by 'generally applicable contract defenses, such as . . . unconscionability.'" Concepcion, 131 S. Ct. at 1746 (quoting Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 682 (1996)). "A recurring question under § 2 is who should decide whether 'grounds . . . exist at law or in equity' to invalidate an arbitration agreement." Preston v. Ferrer, 552 U.S. 346, 353 (2008) (emphasis added) (second alteration in original).

Here, Johnson's challenge to the Agreement must be considered by an arbitrator, not the Court. "There are two types of validity challenges under § 2[.]" Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70 (2010). "One type challenges specifically the validity of the agreement to arbitrate." Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 (2006). "The other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract's provisions renders the whole contract invalid." Id.

Section 2 of the FAA "states that a 'written provision' 'to settle by arbitration a controversy' is 'valid, irrevocable, and enforceable' without mention of the validity of the contract in which it is contained." Rent-A-Ctr., 561 U.S. at 70. As a result, "only the first type of challenge is relevant to a court's determination whether the arbitration agreement at issue is enforceable," and "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." Id. It followsthat "attacks on the validity of an entire contract, as distinct from attacks aimed at the arbitration clause, are within the arbitrator's ken." Preston, 552 U.S. at 353; see also Buckeye Check Cashing, 546 U.S. at 449 ("[A] challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator."); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403 (1967); JLM Indus., Inc., 387 F.3d at 170; Kowalewski v. Samandarov, 590 F. Supp. 2d 477, 487 (S.D.N.Y. 2008) (collecting cases); Bank of Am., N.A. v. D.C., 80 A.3d 650, 663-64 (D.C. 2013), cert. denied, 134 S. Ct. 2293 (2014).

Johnson's arguments go to the validity of the Agreement as a whole, rather than the arbitration clause in particular. Johnson repeatedly asks the Court to deem the '"terms of employment' agreement" or "terms and conditions" to be unenforceable. (Johnson Aff. at 2; Pl.'s Apr. 16, 2014 letter, ECF No. 28, at 1-2.) As these phrases approximate the title of the Agreement—Terms and Conditions of Employment, (Campbell Aff. Ex. A at 1)—it is clear that he is not referring solely to the arbitration clause.

The argument that Johnson did not have enough time to review the offer package or...