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explaining that where no claims remain unresolved by the court, "there is no reason to stay-rather than dismiss-[an] action"
Summary of this case from IDX Inc. v. Standing Stone Gaming, LLCOpinion
99 Civ. 4421 (MBM).
November 20, 2000.
Scott Michael Mishkin, Esq., Islandia, NY, for Plaintiff.
Kevin B. LeBlang, Esq. and Izabel P. McDonald, Esq., Kramer Levin Naftalis Frankel, NY, for Defendant.
OPINION ORDER
Plaintiff, Sarika Mahant, sues her former employer, Lehman Brothers ("Lehman"), alleging that she was fired in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. (1994), Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (1994), the N.Y. Human Rights Law, § 290 et seq. (McKinney 1993) and the New York City Human Rights Law, N.Y.C. Admin. Code § 8-107 (1996). Defendant moves pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (1994), and Fed.R.Civ.P. 12(b)(1) and 12(b)(6) to compel arbitration of plaintiff's claims and to dismiss or stay the action before this court. For the reasons stated below, defendant's motion is granted.
I.
American Express, Lehman's parent company, hired plaintiff in September 1974 as a corporate librarian. (First Amend. Compl. ¶ 7; Mahant Aff. ¶ 4) Plaintiff remained employed by American Express until 1986, when she was transferred to Lehman to work as a librarian for identical pay and benefits. (Mahant Aff. ¶ 5) Approximately six weeks after her transfer, plaintiff alleges that she met with a Lehman Human Resources representative who presented her with an employment application to sign. (Id. ¶ 7) According to plaintiff, the representative insisted that she sign the application immediately, without reviewing its provisions, and that she refrain from completing certain sections of the application which the representative said were insignificant. (Id. ¶¶ 10, 21-25) Plaintiff signed the application, which contained the following arbitration provision:
I hereby agree that any controversy arising out of or in connection with my compensation, employment or termination of employment shall be submitted to arbitration before the National Association of Securities Dealers, Inc., the New York Stock Exchange, Inc., or the American Stock Exchange, Inc. and be resolved in accordance with the rules, then in effect, of such entities.
(McDonald Aff., Exh. B) Plaintiff has submitted an affidavit, but has not averred that this arbitration provision was discussed or even mentioned at the time she signed the application.
Lehman terminated plaintiff's employment on or about April 8, 1997. (First Amend. Compl. ¶ 59) Plaintiff subsequently filed an action in this court, alleging that her termination violated various federal, state and municipal laws. Defendant now moves to compel arbitration pursuant to the arbitration provision set forth above. In response, plaintiff argues that the arbitration provision is unenforceable because she was under duress when she signed the employment application containing the provision. (Pl. Mem. at 6)
II.
In deciding whether to compel arbitration, district courts must determine: (1) whether there is an agreement to arbitrate; (2) the proper scope of the arbitration agreement; (3) whether Congress intended any federal statutory claims to be non-arbitrable; and (4) if only some claims are arbitrable, whether to stay proceedings relating to non-arbitrable claims pending arbitration. Genesco, Inc. v. T. Kakiuchi Co., 815 F.2d 840, 844 (2d. Cir. 1987). Here, application of the first three prongs of Genesco compel a finding in favor of arbitration; the fourth prong is inapplicable.
As to the first prong, there is no dispute that the parties to this action expressly agreed to arbitrate. Plaintiff signed an employment application that provided for arbitration of "any controversy arising out of or in connection with [plaintiff's] compensation, employment, or termination of employment." (McDonald Aff., Exh. B); see Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 200 n. 2 (2d Cir. 1998), cert. denied, 526 U.S. 1034 (1999) (noting that party's signature on arbitration agreement established a "presumption of arbitrability"). Plaintiff does not deny that she signed the employment application containing the arbitration provision. Rather, plaintiff argues that the arbitration provision is unenforceable because she signed the application under duress or coercion.
The Federal Arbitration Act ("FAA") provides that written agreements to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Duress in the execution of an agreement to arbitrate is a proper ground for revocation of the agreement. See Hellenic Lines, Ltd. v. Louis Dreyfus Corp., 372 F.2d 753, 756 (2d Cir. 1967). However, even a credible showing of duress may not be sufficient to prevent a court from compelling arbitration. In Prima Paint Corp. v, Flood Conklin Mfg. Co., 388 U.S. 395, 402-04 (1967), the Supreme Court held that, in determining whether there is an agreement to arbitrate, the FAA does not permit federal courts to consider claims of fraud in the inducement of contracts generally. Rather, courts are permitted to consider "only issues relating to the making and performance of the agreement to arbitrate." Id. (emphasis added). In other words, under Prima Paint, courts may consider allegations of fraud in the inducement only if such allegations relate to the arbitration provision itself — not if they relate generally to the contract containing the arbitration provision.
Here, plaintiff alleges that the arbitration provision is unenforceable because she was under duress at the time she signed her employment application. However, as was the case with the fraudulent inducement claim in Prima Paint, all of plaintiff's allegations supporting her duress claim relate to the enforcement of the employment application generally — not the enforcement of the arbitration provision alone. Plaintiff's duress claim therefore must be resolved in arbitration. See Hueston v. Hueston, 1998 WL 903635, *2 98 Civ. 1126 (N.D.N.Y. Dec. 23, 1998) (directing arbitration where plaintiff claimed duress with respect to entire contract); Acquaire v. Canada Dry Bottling, 906 F. Supp. 819, 826 (E.D.N.Y. 1995) ("[A]n arbitrator must resolve claims that an entire agreement, containing an arbitration clause, was executed by duress.");Nilsen v. Prudential-Bache Sec., 761 F. Supp. 279, 287 (S.D.N.Y. 1991) ("[C]laims of fraud or duress as reason to avoid enforcing the signed contract with its arbitration clause . . . themselves [are] subject to arbitration."); Brener v. Becker Paribas, Inc., 628 F. Supp. 442, 446 (S.D.N.Y. 1985) ("Claims concerning duress, unconscionability, coercion, or confusion in signing should be determined by an arbitrator because those issues go to the formation of the contract.").
All of the claims asserted in the First Amended Complaint are within the scope of the arbitration provision. Plaintiff seems to argue that, because the arbitration provision fails to reference the specific statutory claims set forth in the First Amended Complaint, the arbitration provision does not encompass these claims. (See Pl. Mem. at 4-5) I disagree. As defendants correctly observe, federal courts are required to "`construe arbitration clauses as broadly as possible'" and to enforce arbitration agreements "`unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" McMahan Sec. Co. v. Forum Capital Markets, 35 F.3d 82, 88 (2d Cir, 1999) (quoting Mineracao Da Trindade-Samitri v. Utah Int'l, Inc., 745 F.2d 190, 194-95 (2d Cir. 1984). Here, plaintiff agreed to arbitrate "any controversy arising out of or in connection with [plaintiff's] compensation, employment, or termination of employment." (McDonald Aff., Exh. B) This provision certainly is broad enough to encompass plaintiff's claims under Title VII, the ADEA, and the New York State and City Human Rights Laws, all of which arose out of plaintiff's employment or the termination of her employment at Lehman.
The burden of demonstrating the third Genesco prong — whether Congress intended to preclude the arbitrability of a claim founded on statutory rights — is on the party opposing arbitration. See Bird v. Shearson Lehman/American Express, Inc., 926 F.2d 116, 119 (2d Cir. 1991). Plaintiff bears this burden here. As discussed, plaintiff asserts claims arising under Title VII, the ADEA, and the New York State and City Human Rights Laws. There is ample authority holding that these statutory claims are arbitrable. See Desiderio v. Nat'l Assoc. of Sec. Dealers, Inc., 191 F.3d 198, 203 (2d Cir. 1999) (enforcing pre-dispute arbitration agreement regarding Title VII claims); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 35 (1991) (holding that ADEA claims may be subject to compulsory arbitration); Fletcher v. Kidder, Peabody Co., Inc., 81 N.Y.2d 623, 601 N.Y.S.2d 686 (1993) (holding that claims under New York Human Rights Law may be subject to compulsory arbitration). Based on this authority, and because plaintiff offers no evidence or authority to the contrary, plaintiff has failed to meet her burden of establishing that Congress intended to preclude the arbitrability of plaintiff's claims. Moreover, because all of plaintiff's claims are arbitrable, the fourthGenesco prong need not be addressed.
When an enforceable agreement to arbitrate is found, a court may stay proceedings pending the conclusion of arbitration. See, e.g., McMahan, 35 F.2d at 85. However, in the present case, none of plaintiff's claims remains to be resolved by this court, and therefore there is no reason to stay — rather than dismiss — this action. Accordingly, this action is dismissed without prejudice to reinstatement in the event further proceedings are necessary, including without limitation a proceeding to enforce an arbitration award, if any.
For the reasons set forth above, defendant's motion to compel arbitration is granted. Plaintiff's claims are dismissed without prejudice. The Clerk is directed to close this case.