Zambrano v. Strategic Delivery Sols.
| Decision Date | 28 September 2021 |
| Docket Number | 15 Civ. 8410 (ER) |
| Parties | CHRISTIAN ZAMBRANO, LUZ DURANGO, MOIRA RIVEROS, and RIGOBERTO ROMERO, on behalf of themselves and all others similarly situated, Plaintiffs, v. STRATEGIC DELIVERY SOLUTIONS, LLC, DAVID KRONICK, ANDREW KRONICK, and MIKE RUCCIO, Defendants. |
| Court | U.S. District Court — Southern District of New York |
CHRISTIAN ZAMBRANO, LUZ DURANGO, MOIRA RIVEROS, and RIGOBERTO ROMERO, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
STRATEGIC DELIVERY SOLUTIONS, LLC, DAVID KRONICK, ANDREW KRONICK, and MIKE RUCCIO, Defendants.
No. 15 Civ. 8410 (ER)
United States District Court, S.D. New York
September 28, 2021
OPINION & ORDER
Edgardo Ramos, U.S.D.J.
Christian Zambrano, Luz Durango, Moira Riveros, and Rigoberto Romero (“Lead Plaintiffs”) brought this putative collective and class action against Strategic Delivery Solutions, LLC (“SDS”), David Kronick, Andrew Kronick, and Mike Ruccio (“Defendants”), alleging that Defendants improperly classified them as independent contractors and denied them wages in violation of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). Between March and April of 2016, twenty-three other plaintiffs opted in to the litigation (“Opt-in Plaintiffs”; together with Lead Plaintiffs, “Plaintiffs”). On September 22, 2016, the Court granted Defendants' motion to compel arbitration and stayed the case. Doc. 64. Two of the Opt-in Plaintiffs, Blanca Alulema and Maria Tacoaman (“Moving Plaintiffs”), now move to lift the stay and amend the Complaint to add claims under New York and New Jersey law. For the reasons stated below, Moving Plaintiffs' motion is GRANTED in part and DENIED in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
Tacoaman began working for SDS as a delivery driver in July 2010, and Alulema in August 2010. Docs. 108-1 ¶ 2, 108-2 ¶ 2. While working for SDS, their duties included delivering pharmaceutical merchandise to various stores and locations in New York and New
Jersey, including an SDS facility in Elizabeth, New Jersey. Docs. 108-1 ¶ 3, 108-2 ¶ 3. The job required them to use their own cars, and they were responsible for car maintenance, gas, and parking costs that ate into their earnings. Docs. 108-1 ¶ 5, 108-2 ¶ 4.
In July 2014, after they had worked for SDS for approximately four years, Moving Plaintiffs and David Kronick, on behalf of SDS, signed documents titled Independent Vendor Agreement for Transportation Services (“Vendor Agreement”). See Doc. 111-2. The signatures of both Moving Plaintiffs on the Vendor Agreements are electronic signatures. Doc. 111-2 at 10, 21. The Vendor Agreements include a clause providing that the parties agree to arbitrate disputes or claims “arising out of or in any way relating to” the Vendor Agreement or to the transportation services provided to SDS. Id. at 8 ¶ 20(a), 19 ¶ 20(a).
On October 26, 2015, Lead Plaintiffs initiated this action, on behalf of themselves and all others similarly situated, against Defendants, their purported employers. Doc. 1. Lead Plaintiffs allege that they worked for Defendants as drivers, id. ¶¶ 13, 27, 39, 51, and that they routinely worked more than 40 hours per week, id. ¶¶ 14, 28, 40, 52. Lead Plaintiffs allege that Defendants violated the FLSA and NYLL by, among other things, failing to pay them overtime wages, failing to provide notices as required by NYLL, making unlawful deductions from their wages, and requiring them to incur expenses for Defendants' benefit without reimbursement, including through the required rental of scanners and payment of gas and parking costs. Id. ¶¶ 130, 135, 139, 142, 143.
On January 29, 2016, before any Opt-in Plaintiffs had joined this action, Defendants moved to dismiss the Complaint and compel arbitration with respect to Lead Plaintiffs.[1] Doc. 21. Durango, Riveros, and Romero had executed Vendor Agreements for Transportation
Services with SDS. See Doc. 24. Zambrano performed work for Defendants but had not executed a Vendor Agreement; Defendants argued that he was “Vendor Support Personnel” of the business entity of Riveros, his partner, [2] and therefore bound by the terms of her Vendor Agreement. Doc. 22 at 10-11. The Vendor Agreements executed by Moving Plaintiffs, which Defendants submit for the first time in connection with their opposition to the instant motion, are identical to those executed by Durango, Riveros, and Romero. Doc. 111-2.[3] The Vendor Agreements state, in relevant part:
Agreement to Arbitrate: The parties agree to comply and be bound by The Federal Arbitration Act. The parties agree that any dispute, difference, question, or claim arising out of or in any way relating to this Agreement or the transportation services provided hereunder shall be subject to binding arbitration in accordance with the Rules for Commercial Arbitration of the American Arbitration Association (“AAA”) in effect at the time such arbitration is initiated. The parties agree that the issue of arbitrability shall be determined by the arbitrator applying the law of the state of residence of the Vendor. The parties shall bear their own costs including, without limitation attorneys' fees, and shall each bear one half (1/2) of the fees and costs of the arbitrator. Any arbitration shall be conducted before a single arbitrator selected from a list of potential arbitrators provided by the AAA
Doc. 24, Exs. A-C ¶ 20(a); see also Doc. 111-2 at 8 ¶ 20(a), 19 ¶ 20(a). Defendants invoked this provision and section 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 4, to compel Lead Plaintiffs to arbitrate their claims. In opposing the motion to dismiss and compel arbitration, Lead Plaintiffs argued that the arbitration clause prevented them from vindicating their rights and that the provision requiring both parties to share in the administrative costs of arbitration would make proceeding in an arbitral forum cost prohibitive for them. Doc. 27 at 16-19. Defendants' motion to dismiss and compel arbitration was fully briefed as of March 14, 2016, before any Opt-in Plaintiffs joined this action. Docs. 21-35.
Between March 22 and April 27, 2016, twenty-three other plaintiffs, including Moving Plaintiffs, joined the action as Opt-in Plaintiffs. Docs. 36-60. On March 22, 2016, Tacoaman filed her consent to become a party plaintiff. Doc. 39. On April 5, 2016, Alulema filed her consent to become a party plaintiff. Doc. 46. The consent forms provide in part:
By my signature below, I hereby authorize the filing and prosecution of the above-styled Fair Labor Standards Act action in my name and on my behalf by the above representative Plaintiffs and designate the class representatives as my agents to make decisions on my behalf concerning the litigation, the method and manner of conducting this litigation, the entering of an agreement with Plaintiffs' counsel concerning attorneys' fees and costs, and all other matters pertaining to this lawsuit. I choose to be represented in this matter by the named plaintiffs and my own designated counsel, Slater Slater Schulman LLP and The Marlborough Law Firm PC.[4]
Docs. 39, 46. In their consent forms, Moving Plaintiffs also alleged that Defendants paid them less than the federal minimum wage and/or that they had not received overtime compensation for hours worked in excess of forty hours per week. See Docs. 39, 46.
On September 22, 2016, the Court denied Defendants' motion to dismiss but granted their motion to compel arbitration and stayed the case pending arbitration. See Zambrano v. Strategic Delivery Sols., LLC, No. 15 Civ. 8410 (ER), 2016 WL 5339552, at *10 (S.D.N.Y. Sept. 22, 2016) (“Zambrano I ”). The Court's September 2016 Order did note that twenty-three individuals filed consents to join the litigation since the action was brought, Zambrano I, 2016 WL 5339552, at *1 n.2, but the Order defined “Plaintiffs” as Zambrano, Durango, Riveros, and Romero and found that they were compelled to arbitrate. See Id. at * 1, 5-9. The Court determined that, whether either the FAA or New York law applied, the Vendor Agreements required the parties to proceed to arbitration to resolve their disputes. Id. at *7-9. Despite Lead Plaintiffs' concerns as to the high cost of arbitration, the Court determined that the existence of hardship provisions in the American Arbitration Association (“AAA”) rules rendered their concerns speculative. Id. at *8. The Court concluded that a stay would permit the parties to move their dispute “out of court and
into arbitration as quickly and easily as possible.” Id. at *10 (citation omitted). The Court noted that it could, at a later date, “address any claim by Plaintiffs that they were not able to vindicate all their statutory rights due to costs or fees imposed on them in arbitration.” Id. at *10. At no time throughout the pendency of this case have Defendants moved the Court to compel arbitration as to any individuals other than the Lead Plaintiffs.
Following the Court's decision, on November 23, 2016, SDS brought a Demand for Arbitration against Opt-in Plaintiff Martin Forero (“Forero”). See Doc. 81-1 at 1. However, when presented with an invoice for $11, 900 for the deposit to cover the arbitrator's anticipated compensation, Forero abandoned his claims.[5] Despite Forero's clear indications that he could not afford the deposit and therefore would not contest Defendants' contentions, Defendants and arbitrator Judge Albert M. Rosenblatt (the “Arbitrator”) proceeded with the hearing without Forero or his counsel. Zambrano v. Strategic Delivery Sols., LLC, No. 15 Civ. 8410 (ER), 2018 WL 4462360, at *3 (S.D.N.Y. Sept. 17, 2018) (“Zambrano II ”); see also Doc. 81-1 at 2. On June 23, 2017, the Arbitrator issued a written opinion determining: (1) that Forero was an independent contractor, and (2) that in signing the Vendor Agreement, he waived his right to proceed in any class action against Defendants. Doc. 81-1 at 7. The Arbitrator awarded SDS $7, 010.00 as reimbursement for Forero's half of the arbitration fees.[6] Id.
Following the Arbitrator's decision and award against Forero, SDS brought a demand for arbitration against Lead Plaintiff Riveros. Riveros' arbitration proceedings were scheduled...
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