Yost v. Everyrealm, Inc.
| Decision Date | 10 April 2023 |
| Docket Number | 22 Civ. 6549 (PAE) |
| Parties | KATHERINE YOST, Plaintiff, v. EVERYREALM, INC., REPUBLIC, REPUBLIC OPERATIONS LLC, OPENDEAL INC., OPENDEAL PORTAL LLC, JANINE YORIO, ZACH HUNGATE, AND WILLIAM KERR, Defendants. |
| Court | U.S. District Court — Southern District of New York |
This decision resolves a pending motion to compel the arbitration of the claims of plaintiff Katherine Yost against her former employer, Everyrealm, Inc. (“Everyrealm”); its officers, Janine Yorio, Zach Hungate, and William Kerr (with Everyrealm, the “Everyrealm defendants”); and its affiliates Republic Realm Inc., Republic, Republic Operations LLC, OpenDeal Inc., and OpenDeal Portal LLC (the “affiliate defendants”). See Dkt. 35 (“Second Amended Complaint” or “SAC”). These claims centrally allege discrimination and retaliation, under federal, state, and local law, based on Yost's gender, sexual orientation disability, and marital status.[1] The motion, by the Everyrealm defendants, is based on three successive agreements between Yost and Everyrealm containing broad mandatory arbitration provisions. Dkt. 10. These were: (1) the “Independent Contractor Agreement” or “Contractor Agreement,” Dkt. 20-1; (2) the “Employee Agreement,” Dkt 12-2; and (3) the “Worksite Employment Agreement,” Dkt. 79, Ex. A. See Dkt. 90 (“February 24 Decision”) at 4 n.2.
The Court significantly nanowed the issues relevant to this motion in its February 24 decision. There, the Court dismissed Yost's sexual harassment claims as implausibly pled. The Court therefore held that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “EFAA”), Pub. L. No. 117-90,135 Stat 25, codified at 9 U.S.C. §§ 401-02, did not apply and could not be invoked by Yost to block arbitration. See id. at 40. The Court also noted that Yost's remaining claims fell within the scope of the three arbitration agreements. The Court, however, deferred resolving the motion to compel arbitration, and directed the parties to address, in supplemental briefs, three interrelated issues that the initial briefing had not adequately addressed: (1) which arbitration agreement controls; (2) whether Yost's claims against the affiliate defendants fall within the operative arbitration agreement, and, if so, whether these defendants move to compel arbitration; and (3) whether Yost's challenge on the grounds of unconscionability to a cost-shifting provision in the first two agreements, but not the third, is moot; if not, whether that challenge is meritorious; and if so, what remedy is proper. See id. at 21-22; see also id. at 43-44.
On March 10, 2023, Yost filed a supplemental opposition to the motion to compel arbitration, Dkt. 91 (“Supp. Opp.”), and a supporting declaration, Dkt. 92 (“Seppinni Deci.”). On March 24, 2023, the Everyrealm defendants submitted a supplemental reply, Dkt. 94 (“Supp. Reply”), and a supporting declaration, Dkt. 95 (“Chinn Deci.”). The same day, the affiliate defendants submitted a supplemental letter brief. Dkt. 93 (“Affiliate Supp. Ltr.”).
For the foregoing reasons, the Court grants the Everyrealm defendants' motion to compel arbitration as to the claims against them. The Court does not compel arbitration of Yost's claims against the affiliate defendants, solely because these defendants have not invoked their right to arbitration. The Court stays this action in its entirety pending the outcome of the arbitration. The Court denies all pending motions to dismiss, including that of the affiliate defendants, without prejudice to renewal of such motions following completion of the arbitration between Yost and the Everyrealm defendants.
The Court incorporates the February 24 decision, including its account of the SAC and the procedural history of this case, see February 24 Decision at 4-21, and recounts here only the facts necessary to the issues at hand.
For the first six weeks of her work, Yost worked on a contractor basis, as Everyrealm's external chief Human Resources (“HR”) officer. SAC ¶ 53. On December 21, 2021, Yost signed the first of her three employment agreements: the Contractor Agreement, as to which Yost's counterparty was Everyrealm's predecessor, Republic Realm, Inc. See Dkt. 20-1.
On January 21, 2022, Yost transitioned from an independent contractor to a full-time employee, and entered a second agreement: the Employee Agreement. See Dkt. 12-2.[2] It was also with Republic Realm, Inc. As to the issues relevant here, the Employee Agreement and the Contractor Agreement are functionally identical.
As to arbitration, the Contractor Agreement provides:
Arbitration. ... Contractor agrees that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in the State of New York, in accordance with the rules then in effect of the American Arbitration Association [“AAA”]. The arbitrator [sic] shall be final, conclusive, and binding on both Realm and Contractor. Judgment may be entered on the arbitrator's decision in any court having jurisdiction. Realm and Contractor shall each pay one-half of the costs and expenses of such arbitration, and each of Realm and Contractor shall separately pay counsel fees and expenses.
Dkt. 20-1 § 13.5.1. The Employee Agreement contains a substantively identical provision; it differs only in that it uses “you” in place of “Contractor.” Dkt. 12-2 § 13(e)(i).
As to severability, the Contractor Agreement provides:
Severability. If one or more of the provisions in this Agreement is deemed void or unenforceable to any extent in any context, such provisions shall nevertheless be enforced to the fullest extent allowed by law in that and other contexts, and the validity and force of the remainder of this Agreement shall not be affected.
Dkt. 20-1 § 13.3 (emphasis in original). The Employee Agreement again contains a substantively identical provision; it differs only in that it uses “are deemed void” in place of “is deemed void.” Dkt. 12-2 § 13(c). Yorio and Yost signed both the Contractor and Employee Agreements. See Dkt. 20-1 at 13; Dkt. 12-2 at 6.
Finally, as to modifications, the Contractor Agreement provides:
Entire Agreement; Modifications. This Agreement, together with its schedules and exhibits attached hereto and thereto, sets forth the entire agreement and understanding between Realm and Contractor relating to its subject matter and merges all prior discussions between the Parties. No amendment to this Agreement will be effective unless in writing signed by both Parties to this Agreement. Realm shall not be deemed to have waived any rights or remedies it may have in law or equity, nor to have given any authorizations or waived any of its rights under this Agreement, unless, and only to the extent, it does so by a specific writing signed by a duly authorized officer of Realm, it being understood that, even if Contractor is (or any of Contractor's Representatives is) an officer of Realm, he/she will not have authority to give any such authorizations or waivers for Realm without specific approval by its board of directors (or similar governance body in the case that Realm is not a corporation). Any subsequent change or changes in Contractor's duties, obligations, rights or compensation will not affect the validity or scope of this Agreement.
Dkt. 20-1 § 13.2. The Employment Agreement again contains a substantively identical provision; it differs only in that it uses “you” in place of “Contractor.” Did. 12-2 § 13(b).
Id. The arbitration provision extends to all claims by Yost against the “Worksite Employer (or its owners, directors, officers, managers, employees or agents)” and the same for Justworks. Id.
It include[s] within [its] scope ... all disputes, whether based on tort, contract, statute (including, but not limited to, any claims brought under the Fair Labor Standards Act or any other similar state or local law or regulation, or claims of discrimination, harassment and/or retaliation, whether they be based on the Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the American with Disabilities Act ... or other similar local, state, or federal law or regulation), equitable law, or otherwise.
Id. Unlike the Contractor and Employee Agreements the Worksite Employment Agreement's arbitration provision does not...
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