Valdes v. Swift Transp. Co., Inc.

• Decision Date: 25 November 2003
• Docket Number: No. 02 Civ. 10021(DC).,02 Civ. 10021(DC).
• Citation: 292 F.Supp.2d 524
• Parties: Lori A. VALDES, Plaintiff, v. SWIFT TRANSPORTATION CO., INC., Defendant.
• Court: U.S. District Court — Southern District of New York

292 F.Supp.2d 524

Lori A. VALDES, Plaintiff, v. SWIFT TRANSPORTATION CO., INC., Defendant.

No. 02 Civ. 10021(DC).

United States District Court, S.D. New York.

November 25, 2003.

COPYRIGHT MATERIAL OMITTED

Dan Getman, Esq., New Paltz, NY, for Plaintiff.

Littler Mendelson, P.C. by Davis S. Warner, Esq., New York City, for Defendant.

MEMORANDUM DECISION

CHIN, District Judge.

In this employment case, plaintiff Lori A. Valdes alleges that her employer sexually harassed and retaliated against her in violation of Title VII of the Civil Rights Act of 1964 ("Title VII"), as amended, 42 U.S.C. § 2000e et seq., and the New York State Human Rights Law, N.Y. Exec. Law § 296 et seq. Defendant Swift Transportation Co., Inc. ("Swift") moves to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), or, in the alternative, to stay this action and compel arbitration, pursuant to New York law. Because plaintiff twice executed agreements to arbitrate "all disputes and claims" arising out of her employment with defendant, defendant's motion to dismiss is granted. This action is dismissed, without prejudice to reinstatement in the event further proceedings are necessary following the arbitration.

BACKGROUND

Defendant, an interstate motor carrier, hired plaintiff as a driver in December 1999. (Compl. ¶¶ 5, 7; DiMarco Decl., Exh. C, ¶ 4). Prior to be being hired, while in New York, plaintiff completed and signed two employment applications—one on September 13, 1999 and another on November 30, 1999 — which included identical arbitration clauses. (DiMarco Decl., Exh. C, ¶ 3 and exh. 1 thereto; DiMarco Decl., Exh. D, ¶ 4 and exh. 1 thereto) ("arbitration clause"). The arbitration clause reads as follows:

I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am offered employment by the company, as a condition to that employment, all disputes that cannot be resolved by informal internal resolution which might arise out of my employment with the company, whether during or after that employment, will be submitted to binding arbitration in lieu of any Federal or State investigative, administrative or legal proceeding. I agree that such arbitration shall be conducted under the rules of the American Arbitration Association.

Id.

Plaintiff alleges that, during her training for employment with defendant, she was forced to receive instruction from a male employee who "would regularly be nude" and "at times wore certain sexual devices and often had an erection while driving." (Compl. ¶¶ 8, 10-11, 13). After plaintiff complained about the employee's behavior, Swift retaliated against her and ultimately terminated her in or about February 2000. (Compl. ¶ 19).

On December 19, 2002, plaintiff filed this action alleging sexual harassment and retaliation in violation of Title VII and the New York State Human Rights Law. Plaintiff seeks damages and declaratory and equitable relief.

DISCUSSION

Swift moves to dismiss pursuant to Fed. R.Civ.P. 12(b)(1)¹ and 12(b)(6) or, alternatively, to stay this action and compel arbitration.

On a motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted, the court must accept the factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiff. Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). The issue is not whether the plaintiff will ultimately prevail, but whether she is entitled to offer evidence to support her claim. Id. Dismissal is not warranted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief." Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir.1998) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

A. Choice of Law

As a threshold matter, although neither party has squarely addressed the question, I consider what law governs arbitrability. If a dispute is covered by the Federal Arbitration Act (the "FAA"), 1 U.S.C. § 1 et seq., federal law applies to all questions of "interpretation, construction, validity, revocability, and enforceability." In re Salomon Inc. Shareholders' Derivative Litigation, 68 F.3d 554, 559 (2d Cir. 1995) (citing Coenen v. R.W. Pressprich & Co., 453 F.2d 1209, 1211 (2d Cir.19721)). State arbitration law governs, however, if the FAA does not apply. See Shearson Hayden Stone, Inc. v. Liang, 493 F.Supp. 104, 106 (N.D.Ill.1980).

In cases brought under federal question jurisdiction where the FAA does not apply, and the arbitration agreement contains no choice of law provision, federal common law choice of law rules apply. See Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 794-95 (2d Cir.1980). The federal common law choice of law rule dictates applying the law of the jurisdiction having the "greatest interest in the litigation." In re Koreag, Controle et Revision S.A., 961 F.2d 341, 350 (2d Cir.1992).

1. FAA Exemption for Transportation Workers

Plaintiff argues that the arbitration clause in the two identical employment applications she signed cannot be enforced because the FAA and its arbitration enforcement mechanisms do not apply to her as a transportation worker. Defendant does not dispute whether plaintiff would be exempt from the FAA as a transportation worker, but contends instead that, regardless of the FAA's applicability, the arbitration agreement may still be enforced. I hold that any inapplicability of the FAA would not preclude enforcing the arbitration agreement under state law.

a. FAA's Applicability

Section 1 of the FAA provides in pertinent part that "nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." Transportation workers' employment contracts, like that at issue in this case, have been held to be exempt from the FAA's scope, pursuant to section 1. See Circuit City Stores v. Adams, 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir.1972) (limiting Section 1 exclusion to workers in the "transportation industry" or those "in, or closely related to the actual movement of goods in interstate commerce"); Arakawa v. Japan Network Group, 56 F.Supp.2d 349, 353 (S.D.N.Y.1999) (same); Jamaica Buses, Inc. v. Transport Workers' Union-AFL CIO, Local 100, No. 02-CV-2533 (SJ), 2003 WL 1621026, at *3 (E.D.N.Y. Mar. 26, 2003) (same); Rosen v. Transx Ltd., 816 F.Supp. 1364, 1371 (D.Minn.1993) (excluding truck driver from FAA); Central States, Southeast & Southwest Areas Pension Fund v. Tank Transp., Inc., 779 F.Supp. 947, 949 (N.D.Ill.1991) (same).

b. Effect of FAA's Inapplicability on Enforceability of Arbitration Clause

Although the Second Circuit has not squarely addressed the issue presented in this case, other courts have enforced arbitration provisions against claims arising from FAA-excluded contracts if such provisions were enforceable under state law. See O'Dean v. Tropicana Cruises Int'l, Inc., No. 98 Civ. 4543(JSR), 1999 WL 335381, at *1 (S.D.N.Y. May 25, 1999)("the inapplicability of the FAA does not mean ... that arbitration provisions in seaman's employment contracts are unenforceable, but only that the particular enforcement mechanisms of the FAA are not available"); U.S. ex rel. Mikes, 897 F.Supp. 805, 807 (S.D.N.Y.1995) (enforcing arbitration agreement regardless of FAA exemption); see also Bernhardt v. Polygraphic Co., 350 U.S. 198, 200-01, 205, 76 S.Ct. 273, 100 L.Ed. 199 (1956) (upholding application of state arbitration law to interpretation of arbitration provision in FAA-exempt contract); Central States, Southeast & Southwest Areas Pension Fund v. Tank Transp., Inc., 779 F.Supp. 947, 950 n. 3 (N.D.Ill.1991) ("[T]he fact that the FAA is not immediately applicable to the issues in the instant case does not eliminate arbitration as an acceptable dispute resolution mechanism, nor does it evidence a presumption of non-arbitrability."); cf. Volt Information Sciences, Inc. v. Bd. of Trustees of Leland Stanford University, 489 U.S. 468, 477, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) (holding that FAA does not occupy entire field of arbitration). The effect of the FAA's inapplicability, pursuant to Section 1, is "merely to leave the arbitrability of disputes in the excluded categories as if the [FAA] had never been enacted." Mason-Dixon Lines, Inc. v. Local Union No. 560, 443 F.2d 807, 809 (3d Cir.1971); see also Cole v. Burns Int'l Security Servs., 105 F.3d 1465, 1472 (D.C.Cir.1997) (stating in dicta that, even if FAA was inapplicable, right to enforce employment contract would remain intact); Shearson, 493 F.Supp. at 106 (stating that state arbitration law applies in absence of FAA coverage).

While guidance is sparse regarding the reasons for enforcing contracts not covered by the FAA, both the statute's plain language and case law interpreting the Section 1 exceptions comport with this result. Section 1 states that "nothing herein contained shall apply" to certain categories of employment contracts. 9 U.S.C. § 1. Cases interpreting Section 1 characterize the exceptions contained therein as articulating exclusions from the FAA as a whole. See Circuit City, 532 U.S. at 118, 121 S.Ct. 1302; Erving, 468 F.2d at 1069; Arakawa, 56 F.Supp.2d at 353; Jamaica Buses, 2003 WL 1621026, at *3. Section 1 does not, however, in any way address the enforceability of employment contracts exempt from the FAA. It simply excludes these contracts from FAA coverage entirely.

Plaintiff principally relies on an Eastern District of Pennsylvania case in support of her position that the FAA's exclusion of her employment contract renders the arbitration agreement contained therein unenforceable. See Palcko v. Airborne Express, Inc., No. 02-2990,...