Fantastic Industries, Inc. v. Kryman

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

NOT FOR PUBLICATION

Fantastic Industries, Inc.,

MEMORANDUM & ORDER

Plaintiff,

20-cv-2402 (ERK) (RER)

– against –

Jacob Kryman and KCH Corporation,

Defendants.

KORMAN, J.:

Plaintiff Fantastic Industries, Inc. (Fantastic), a corporation owned by

Shimshon Jalas, petitions for an order directing defendants Jacob Kryman and KCH

Corporation (KCH) to arbitrate a business dispute. Jalas seeks to compel arbitration

under an agreement that the parties signed in 2017. Kryman argues that there was

no valid arbitration agreement or, if there was, that Jalas has waived his right to

compel arbitration.

BACKGROUND

The dispute is the result of family business dealings gone awry. Jalas is

Kryman’s uncle, and both are members of a “close-knit community of Hasidic

Jews.” ECF No. 22 at 5. Jalas’s corporation, Fantastic, is a distributor of household

products and, until 2011, Kryman worked as its National Sales Manager. ECF No.

1 at 3. The complaint alleges that Fantastic fired Kryman because Jalas discovered

that he was selling goods to Fantastic customers for his own account and those of

his companies, including KCH. Id. Jalas soon learned that KCH had also applied

for and obtained trademark registrations that he contends properly belonged to

Fantastic. Id. Kryman maintains that KCH is the rightful owner of the disputed

marks and he counters that Jalas has infringed on the marks and stolen industry

contacts, proprietary information, and trade secrets from KCH for the benefit of his

own business.1 ECF No. 21-9 at 2.

I review the history of this case because it is relevant to determining whether

Jalas has waived its right to demand arbitration. In 2011, Kryman commenced the

string of litigation and attempted arbitrations that led to this motion by seeking an

injunction against Fantastic in state court, which the court denied. ECF No. 1 at 3–

4. Soon after, Kryman obtained an ikul — the equivalent of an injunction — from a

beth din2 that purported to enjoin Jalas from using any of the disputed marks. ECF

No. 21-9 at 3; ECF No. 21-11 at 4. Separately, Jalas filed an opposition to Kryman’s

1 For ease of reading I refer to plaintiff Fantastic by its owner’s name, “Jalas,”

and defendants together as “Kryman.”

2 A beth din is “a rabbinical tribunal having authority to advise and pass upon

matters of traditional Jewish law.” Avitzur v. Avitzur, 58 N.Y.2d 108, 112 (1983).

Some Jewish communities either prefer to — or believe themselves religiously

bound to — resolve disputes between members by referring matters to arbitration at

a beth din rather than exposing them in secular courts. See Ginnine Fried, Note, The

Collision of Church and State: A Primer to Beth Din Arbitration and the New York

Secular Courts, 31 Fordham Urb. L.J. 633, 641–42 (2004).

application before the Trademark Trial and Appeal Board (TTAB) contesting

ownership of one of the disputed marks. ECF No. 21-2 at 2.

In 2012, the parties agreed to arbitrate before a beth din (1) whether Jalas

could recover civil costs for the state court proceeding, and (2) whether Kryman’s

claims “ought not to be entertained in a Jewish court [because] he pursued [them] in

a civil court.” ECF No. 21-13 at 5. The parties agreed to discontinue the state action

with prejudice because the claims were proceeding to arbitration. ECF No. 20-3 at

6. Kryman filed that discontinuance with the TTAB, and that proceeding was stayed

as well. ECF No. 21-2 at 2. Between 2012 and 2019, Kryman repeatedly informed

the TTAB that the action could remain stayed because arbitration “was ongoing

under the auspices of a rabbinical court.” ECF No. 21-2 at 1. No arbitration actually

took place, and each party blames the other for that failure. See ECF No. 21-9 at 4;

ECF No. 22-2 at 4.

The matter lay dormant until 2017, when Jalas served Kryman with a hazmana

— the equivalent of a summons — to appear before a beth din. ECF No. 21-9 at 5.

Kryman claims he was shocked by the summons, while Jalas responds that he

renewed his attempts at arbitration because Amazon removed Fantastic’s products

from its platform in response to complaints from Kryman’s attorneys. ECF No. 21-

9 at 5; ECF No. 22-2 at 4. Jalas served two more summonses and threatened Kryman

with a seruv (rabbinical contempt order) if he failed to appear for arbitration. Id.

Kryman eventually agreed to appear before a different beth din, Mechon

L’Hoyroa, to “get Jalas off [his] back” and avoid the issuance of a seruv. ECF No.

21-9 at 5. Kryman sent Jalas a signed electronic copy of a standard arbitration

agreement used by Mechon L’Hoyroa. Id. In that document the parties agreed to

“settle all our controversies (including all the Parties’ claims and counter claims)”

before Mechon L’Hoyroa. ECF No. 20-3 at 9. Kryman handwrote an additional

clause at the bottom of the agreement, which specified that there would be a “first

hearing” at which it would “be determined whether the parties are obligated to bring

their dispute for litigation in accordance with the law of the Torah.” Id. Neither

party disputes that this addition is part of any agreement.

The parties appeared before Mechon L’Hoyroa twice. Jalas alleges that at the

first appearance, Kryman refused to produce the original copy of the arbitration

agreement or to sign a new copy. ECF No. 20-3 at 3. The arbitrators declined to

resolve any disputes because they were unsure whether courts would enforce an

arbitral decision reached absent an original copy of the arbitration agreement and

suggested that the parties return for another session and negotiate a new agreement.

Id. At the second session, Kryman proposed a new arbitration agreement that Jalas

refused to sign both because he thought it was unfair and because he continued to

believe that the original agreement was binding on Kryman. Id. The arbitrators

issued a notice that a hearing had been held but that “no arbitration agreement was

signed before the court at that time.” ECF No. 21-18 at 4.

The parties then attempted arbitration using the zabla procedure, which allows

parties to create an ad-hoc beth din by selecting two arbitrators who together appoint

a third. ECF No. 20-3 at 4. At the only session of the zabla panel, Kryman presented

the same draft arbitration agreement Jalas had earlier refused to sign, Jalas declined

again, and the arbitration stalled. ECF No. 20-3 at 4; ECF No. 21-9 at 9. Kryman

then moved to reopen the TTAB proceeding, telling the board that despite his earlier

statements, “no agreement to arbitrate was ever executed by the parties and no

formal hearings were commenced.” ECF No. 21-2 at 3. When Jalas did not respond,

the TTAB resumed the proceeding and set a new schedule. ECF No. 21-3 at 3. Jalas

now moves the court to compel Kryman to arbitrate under the arbitration agreement

signed in 2017.

DISCUSSION

I. Legal Framework

The Federal Arbitration Act (FAA) “declare[s] a national policy favoring

arbitration.” Perry v. Thomas, 482 U.S. 483, 489 (1987) (internal quotation omitted).

This policy is grounded in “a desire to preserve the parties’ ability to agree to

arbitrate, rather than litigate, disputes. Schnabel v. Trilegiant Corp., 697 F.3d 110,

118 (2d Cir. 2012). The FAA “places arbitration agreements on an equal footing

with other contracts . . . and requires courts to enforce them according to their

terms.” Rent-A-Center W., Inc. v. Jackson, 561 U.S. 63, 67–68 (2010) (internal

citation omitted). Parties to a covered “written agreement for arbitration” may

petition federal courts for an order directing arbitration under that agreement. 9

U.S.C. § 4.

The FAA “does not require parties to arbitrate when they have not agreed to

do so.” Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S.

468, 478 (1989). A court must therefore ask “(1) whether the parties have entered

into a valid agreement to arbitrate, and, if so, (2) whether the dispute at issue comes

within the scope of the arbitration agreement.” In re Am. Exp. Fin. Advisors Secs.

Litig., 672 F.3d 113, 128 (2d Cir. 2011). “Whether or not the parties have agreed to

arbitrate is a question of state contract law,” Schnabel, 697 F.3d at 119, but federal

policy requires that “any doubts concerning the scope of arbitrable issues should be

resolved in favor of arbitration.” In re Am. Exp., 672 F.3d at 128.

The parties agree that New York contract law applies. “To create a binding

contract, there must be a manifestation of mutual assent sufficiently definite to assure

that the parties are truly in agreement with respect to all material terms.” 26th St.

Partners, LLC v. Fed’n of Orgs. for N.Y. State Mentally Disabled, Inc., 182 A.D.3d

543, 543 (2d Dep’t 2020). Courts will “look to the basic elements of offer and

acceptance to determine whether there is an objective meeting of the minds sufficient

to give rise to a binding and enforceable contract.” Id.; see also Starke v.

SquareTrade, Inc., 913 F.3d 279, 289 (2d Cir. 2019). A meeting of the minds is

shown by the “objective manifestations of the intent of the parties as gathered by

their expressed words and deeds.” Flores v. Lower E. Side Serv. Ctr., Inc., 4 N.Y.3d

363, 368 (2005) (quoting Brown Bros. Elec. Contractors, Inc. v. Beam Constr. Corp.,

41 N.Y.2d 397, 399 (1977)). “[T]he existence of a binding contract is not dependent

on the subjective intent” of either party. Brown Bros., 41 N.Y.2d at 399.

The standard for resolving a motion to compel arbitration is similar to the

summary judgment standard. See Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229

(2d Cir. 2016). That means a court must “consider all relevant, admissible evidence

submitted by the parties and contained in pleadings, depositions, answers to

interrogatories, and admissions on file, together with affidavits” and “draw all

reasonable inferences in favor of the non-moving party.” Id. (internal quotation and

alteration omitted).

II. Jalas and Kryman agreed to arbitrate

Jalas attached a Hebrew copy and certified English translation of the

November 2017 agreement to his motion. See ECF No. 20-3 at 8–10. As noted

above, the agreement provides that the parties will “settle all our controversies

(including all the Parties’ claims and counter claims)” before Mechon L’Hoyroa. Id.

at 9. The handwritten provision provides that “[a]t the first hearing it will be

determined whether the parties are obligated to bring their dispute for litigation in

accordance with the Law of the Torah.” Id. Kryman does not dispute the

authenticity of this document, but he argues that it does not constitute a valid

agreement to arbitrate.

None of Kryman’s arguments are persuasive. His fundamental objection is

that he claims he signed a boilerplate “agreement to agree” that he “never understood

nor intended . . . [to be] a delegation of authority to Mechon L’Hoyroa to decide any

threshold or substantive issues.” ECF No. 21-9 at 6. Kryman alleges that he thought

the document was “an agreement to meet and discuss whether and under what

conditions the parties would or could agree to voluntarily arbitrate their disputes.”

Id. However, “[t]he best evidence of what parties to a written agreement intend is

what they say in their writing,” Greenfield v. Philles Records, Inc., 98 N.Y.2d 562,

569 (2002), and the document Kryman signed unambiguously commits the parties

to “settle all [their] controversies (including all the Parties’ claims and counter

claims)” before Mechon L’Hoyroa, provided that the arbitrators first determine that

“the parties are obligated” to do so. ECF No. 20-3 at 9. Kryman’s subjective

understanding of the situation cannot defeat his objective manifestation of assent to

the agreement’s plain language. See Brown Bros., 41 N.Y.2d at 399; see also W.W.W.

Assocs., Inc. v. Giancontieri, 77 NY.2d 157, 162 (1990) (holding that “[e]vidence

outside the four corners of the [contract] as to what was really intended but unstated

or misstated is generally inadmissible to add to or vary the writing.”).

Kryman next argues that the agreement is not “sufficiently definite to assure

that the parties are truly in agreement with respect to all material terms.” ECF No.

21 at 21 (quoting Medrite Care, LLC v. Medrite 243 LLC, 2020 WL 3962010, at *2

(S.D.N.Y. July 13, 2020)). Kryman’s attempt to liken his case to Medrite fails. The

parties in that case agreed that they did not have a written agreement for arbitration

before the lawsuit began, but they also agreed that Jewish law obligated them to

attempt arbitration. Medrite, 2020 WL 3962010, at *3. The defendant in that case

asked the court to construe the parties’ representations about their religious

obligations in court papers as forming an agreement to arbitrate, but the court

declined to do so both because the parties could not agree on a specific forum and

because the purported offer and acceptance were not clear and unequivocal. Id. at

*2–3.

Here, the parties have a written agreement to arbitrate. That agreement

specifies the forum — Beth Din Mechon L’Hoyroa — and there is no issue of offer

and acceptance because both parties signed the agreement. The only indefiniteness

Kryman points to is the wide sweep of matters to be arbitrated, but an agreement to

arbitrate can be both broad and definite in its scope. Parties are free to delegate “all

the disputes between them” to an arbitrator, Matter of Meisels v. Uhr, 79 N.Y.2d 526,

532 (1992), and the Court of Appeals has explicitly affirmed that these types of

agreements, “which apparently are widely used in Beth Din arbitrations . . . are

permissible” under New York law. Id. at 538.

Kryman also argues that the handwritten provision conflicts with the broad

statement of scope in the body of the document, rendering the arbitration agreement

as a whole ambiguous and unenforceable. Ambiguity of a writing “is a question of

law to be resolved by the courts,” Giancontieri, 77 N.Y.2d at 162, and, as noted

above, I find no ambiguity in the agreement. The parties agreed to “settle all [their]

controversies” before Beth Din Mechon L’Hoyroa. ECF No. 20-3 at 9. Kryman

claims that this language is inconsistent with his handwritten addition, which says

that “[a]t the first hearing it will be determined whether the parties are obligated to

bring their dispute for litigation in accordance with the Law of the Torah.” ECF No.

20-3 at 9.

The handwritten language directs the arbitral panel to first answer the

“gateway question[],” Rent-A-Center, 561 U.S. at 68–69, of “whether the parties are

obligated to bring their dispute for litigation in accordance with the law of the

Torah.” ECF No. 20-3 at 9. If the answer is yes, then Mechon L’Hoyroa will serve

as the forum for arbitration under the agreement. If the answer is no, then the parties

are presumably free to pursue other means for resolving their dispute. That reading

is the only one to which the language is “reasonably susceptible,” Greenfield, 98

N.Y.2d at 570, and thus the agreement is not ambiguous. Kryman argues that the

handwritten addition shows that the parties intended that Mechon L’Hoyroa would

merely facilitate a discussion about possible arbitration, but that interpretation

cannot be squared with the mandatory language used in the agreement. A mere

discussion does not typically “determine” whether participants “are obligated” to do

anything. ECF No. 20-3 at 9. The agreement “‘clearly and unmistakably’ delegates

the issue of arbitrability to the arbitrator,” and that delegation is enforceable.

Gingras v. Think Fin., Inc., 922 F.3d 112, 126 (2d Cir. 2019) (quoting Rent-A-Center,

561 U.S. at 69 n.1).

Kryman also claims that there was no mutual assent because he signed the

agreement “against the backdrop of coercive behavior by Jalas,” who threatened him

with a seruv. ECF No. 21 at 17. A seruv “subjects the recipient to shame, scorn,

ridicule and public ostracism by other members of the Jewish religious community.”

Lieberman v. Lieberman, 566 N.Y.S.2d 490, 494 (N.Y. Sup. Ct. 1991). Kryman

asserts the threat was intentionally made while he was in Israel to attend his son’s

wedding — when the potential for disruption and embarrassment within the

community was highest — and I draw that inference in his favor. See ECF No. 21

at 17.

Although Kryman styles this argument as going to mutual assent, it is

effectively duress in disguise. “In the absence of fraud, duress, or some other

wrongful act by a party to a contract, a signer of an agreement is deemed to be

conclusively bound by its terms.” Maines Paper & Food Serv. Inc. v. Adel, 256

A.D.2d 760, 761 (2d Dep’t 1998). Duress requires a “showing of a wrongful threat

and the preclusion of the exercise of free will.” Wujin Nanxiashu Secant Factory v.

Ti-Well Int’l Corp., 14 A.D.3d 352, 352 (1st Dep’t 2005). “The ‘threat’ of a siruv . . .

is prescribed as an enforcement mechanism by the religious law to which [Kryman]

freely adheres, [and] cannot be deemed duress.” Greenberg v. Greenberg, 238

A.D.2d 420, 421 (2d Dep’t 1997); see also Lieberman, 566 N.Y.S.2d at 494 (“While

the threat of a Sirov may constitute pressure, it cannot be said to constitute duress.”).

Even if Jalas sought to exert maximum pressure on Kryman, that action does not

constitute duress as a matter of New York law.

III. The agreement covers this dispute

When asking whether a dispute comes within the scope of an arbitration

agreement, courts must apply a “presumption in favor of arbitrability.” Abdullayeva

v. Attending Homecare Servs. LLC, 928 F.3d 218, 222 (2d Cir. 2019). The broad

arbitration agreement in this case covers “all [the parties’] controversies (including

all the Parties’ claims and counter claims),” ECF No. 20-3 at 9, and that language

reaches the party’s current disputes.

IV. Jalas has not waived his right to arbitration

Kryman argues that even if the arbitration agreement is binding and covers

this dispute, Jalas has waived his right to enforce it by refusing to arbitrate in 2012,

rejecting his draft agreements in 2017, and litigating before the TTAB. “Waiver will

be inferred when a party engages in protracted litigation that results in prejudice to

the opposing party,” Cotton v. Slone, 4 F.3d 176, 179 (2d Cir. 1993), or otherwise

“act[s] inconsistently with the right to arbitrate.” Doctor’s Assocs., Inc. v. Stuart, 85

F.3d 975, 981 (2d Cir. 1996). “The key to a waiver analysis is prejudice” to the party

opposing arbitration. Thyssen, Inc. v. Calypso Shipping Corp., 310 F.3d 102, 105

(2d Cir. 2002) (per curiam); see also Hoxworth v. Blinder, Robinson & Co., 980 F.2d

912, 925 (3d Cir. 1992) (holding that prejudice to the other party is “the touchstone”

for waiver analyses). “[A] party claiming waiver must demonstrate prejudice before

waiver will be found.” Schreiber v. Friedman, 2017 WL 5564114, at *7 (E.D.N.Y.

Mar. 31, 2017).

Prejudice may be (1) substantive, “such as when the party seeking arbitration

‘loses a motion on the merits and then attempts, in effect, to relitigate the issue by

invoking arbitration,’” or (2) result from the “unnecessary delay or expense” caused

“when an opponent delays invocation of its contractual right to arbitrate.” Doctor’s

Assocs., Inc. v. Distajo, 107 F.3d 126, 131 (2d Cir. 1997) (quoting Kramer v.

Hammond, 943 F.2d 176, 179 (2d Cir. 1991)). Substantive prejudice can occur when

the party seeking arbitration “obtains information through discovery procedures not

available in arbitration,” id., or litigates “substantial issues going to the merits”

before seeking arbitration. Com-Tech Assocs. v. Comput. Assocs. Int’l, Inc., 938 F.2d

1574, 1576 (2d Cir. 1991). Although waiver is “fact-specific and there are no bright-

line rules,” S & R Co. of Kingston v. Latona Trucking, Inc., 159 F.3d 80, 83 (2d Cir.

1998), determination of the issue must be made “with a healthy regard for the policy

of promoting arbitration,” Distajo, 107 F.3d at 130, and waiver is “not to be lightly

inferred.” Cotton, 4 F.3d at 179 (internal quotation omitted); see also Hoxworth,

980 F.2d at 926 (noting that “waiver is not favored”). Any doubts concerning waiver

must be resolved in favor of arbitration. Louis Dreyfus Negoce S.A. v. Blystad

Shipping & Trading Inc., 252 F.3d 218, 229 (2d Cir. 2001).

Kryman has not shown that Jalas has waived his right to arbitrate. First,

Kryman has not shown that Jalas engaged in “protracted litigation.” Cotton, 4 F.3d

at 179. The Supreme Court proceeding — which Kryman, not Jalas, filed — was

dismissed well before either party “sought and received discovery,” Baker & Taylor,

Inc. v. AlphaCraze.Com Corp., 602 F.3d 486, 492 (2d Cir. 2010), or filed any

“substantive motions,” Thyssen, 310 F.3d at 105, much less motions “going to the

merits” of the dispute. Com-Tech, 938 F.2d at 1576. The case was dismissed at an

early stage because the parties had agreed to arbitrate on a “narrow” set of issues,

ECF No. 21-9 at 3 ¶ 14, but that arbitration never took place — at least in part

because Kryman “decided to set the matter aside.” Id. ¶ 18. Nor has Kryman

submitted evidence that the parties conducted discovery, substantive motion

practice, or any other type of “extensive litigation,” Dreyfus, 252 F.3d at 229, in the

TTAB proceeding, either before or after it was stayed based on Kryman’s own

representations that the parties had agreed to arbitrate.

The examples of non-litigation actions that Kryman presents as inconsistent

with a right to arbitrate are unpersuasive.3 He claims that Jalas refused to arbitrate

in 2012, when Kryman issued a hazmana. But Kryman issued that summons before

the parties had executed any arbitration agreement — even the first, narrower one.

See ECF No. 21-9 at 3 ¶ 9. Jalas’s decision not to arbitrate on Kryman’s terms before

the two had reached an arbitration agreement has little bearing on waiver. These

3 There is some suggestion in the cases that questions of waiver should be

decided by the arbitrators — rather than by a court — unless “the waiver defense

was based on prior litigation by the party seeking arbitration.” Doctor’s Assocs. Inc.

v. Distajo, 66 F.3d 438, 456 (2d Cir. 1995); see also Howsam v. Dean Witter

Reynolds, Inc., 537 U.S. 79, 84 (2002) (stating in dicta that “the presumption is that

the arbitrator should decide allegations of waiver, delay, or a like defense to

arbitrability”) (internal quotation and alteration omitted); Schreiber, 2017 WL

5564114, at *8 (discussing when courts should decide questions of waiver); Canada

Life Assur. Co. v. Guardian Life Ins. Co. of Am., 242 F. Supp.2d 344, 353 (S.D.N.Y.

2003) (deciding waiver question based on pre-litigation conduct). That rule would

require me to decide Kryman’s waiver claims based on Jalas’s participation in

litigation, but refer those claims rooted in non-litigation conduct to Mechon

L’Hoyroa. Because Jalas does not argue that waiver must be decided by the

arbitrators (and indeed does not discuss the issue at all), I decide all the waiver claims

together.

agreements are “matters of contract,” Am. Exp. Co. v. Italian Colors Restaurant, 570

U.S. 228, 233 (2013), and a party to a contract “may not waive any right it does not

yet have” as a result of contract formation. 13 Williston on Contracts § 39:19 (4th

Ed. 2021); see also Kule Res., Ltd. v. Reliance Grp., Inc., 49 N.Y.2d 587, 592 (1980)

(stating that “the concept of prior waiver is legally anomalous”); cf. Lane, Ltd. v.

Larus & Bro. Comp., 243 F.2d 364, 365–67 (2d Cir. 1957) (finding that a party’s

refusal to arbitrate certain issues under an agreement was “an express and

intransigent repudiation of the obligation to arbitrate” that barred it from enforcing

the same arbitration agreement in a later lawsuit).

For the same reason, Jalas did not expressly waive his right to arbitrate by

stating in the 2012 agreement that Kryman’s claim “ought not to be entertained in a

Jewish court, since he pursued it in the civil courts.” ECF No. 21-13 at 5. That

agreement is not the one Jalas asks me to enforce in this case, and both he and

Kryman were entitled to change their positions on arbitration before concluding a

new agreement in 2017. Even if, as Kryman alleges, Jalas “refused to appear” under

the 2012 agreement, ECF No. 21-9 at 4 ¶ 17, that is not enough to show waiver under

the 2017 agreement. If Kryman felt that he was prejudiced by the litigation the

parties had already undertaken by 2017, he was free to refuse to sign a new

arbitration agreement at that time.

Nor did Jalas waive his right to arbitrate by refusing to consider Kryman’s

offers to conclude a new arbitration agreement. Jalas’s position was (and is) that the

2017 arbitration agreement was valid and binding. Standing on his “right to insist

upon arbitration,” Baker, 602 F.3d at 490, under that agreement — rather than

entertaining offers to replace it with an entirely new one — weighs against waiver,

not in favor. See Zhang v. Wang, 317 F. App’x 26, 28 (2d Cir. 2008) (holding that

waiver requires conduct “which reflects a positive and unequivocal election to

ignore his or her arbitration rights”).

Jalas never refused to arbitrate under the agreement he now seeks to enforce,

which is what distinguishes this case from Schreiber. See 2017 WL 5564114, at *9.

In that case, the party seeking to compel arbitration had previously been summoned

under the same agreement but unjustifiably “refused to participate in the arbitration

proceedings.” Id. at *10; see also Canada Life, 242 F. Supp.2d at 353 (explaining

that the Second Circuit has found waiver where “[t]he issues defendant requested to

be referred to arbitration were precisely the same issues that he previously refused

to arbitrate” and those issues “were clearly covered by the arbitration clause.”).

Simply showing that a party refused to consider arbitration in some way, at some

time is not enough to establish that it has waived its rights under a particular

agreement.

Finally, even if Jalas’s conduct was inconsistent with his right to arbitrate,

Kryman has failed to make the “key” showing that it prejudiced him, an issue on

which he bears the burden. Thyssen, 310 F.3d at 105; Schreiber, 2017 WL 5564114,

at *7. Kryman argues that he “would be prejudiced if this motion [to compel

arbitration] is granted” because, among other things, it would delay resolution of the

TTAB proceeding. ECF No. 21 at 27. Prejudice flows from the “inherent

unfairness . . . that occurs when the party’s opponent forces it to litigate an issue and

later seeks to arbitrate that same issue,” but it “does not refer to enforcing a

bargained-for agreement.” Louis Dreyfus, 252 F.3d at 229–30. The question is

whether Jalas’s past conduct so prejudiced Kryman that Jalas should now be barred

from asking a court to compel the parties to arbitrate. Whether Kryman would be

inconvenienced by an order forcing him to arbitrate is immaterial, even if he has

good reasons for preferring a court proceeding. “Incurring legal expenses inherent

in litigation, without more, is insufficient evidence of prejudice to justify a finding

of waiver.” PPG Indus., Inc. v. Webster Auto Parts, Inc., 128 F.3d 103 107 (2d Cir.

1997).

Kryman’s discovery argument also misunderstands the prejudice analysis. He

claims that he will be prejudiced “by having to appear and arbitrate before a Beth

Din that will likely not permit . . . formal exchange of discovery [or] commissioning

[of] stenographers,” which would be available in a court proceeding. ECF No. 21 at

27. Prejudice is caused when the party seeking to compel arbitration “secure[s] for

himself the benefits of pretrial discovery that is often unavailable in an arbitral

forum.” Cotton, 4 F.3d at 180. In other words, a party may not reap the benefits of

compulsory discovery and then force the case into arbitration with those materials

in hand. See Zwitserse Maatschappij Van Levensverzekering En Lijfrente v. ABN

Int’l Cap. Mkts. Corp., 996 F.2d 1478, 1480 (2d Cir. 1993) (holding that the party

opposing arbitration “suffered prejudice because the deposition-type discovery

obtained [by the party seeking to compel] . . . would not have been available in []

arbitration.”).

Kryman seeks to turn the doctrine inside out by claiming that he, as the party

opposing arbitration, would be prejudiced if he is deprived of the discovery tools

available in a court. But again, the inquiry must focus on unfair prejudice caused by

Jalas’s past conduct, not the possibility that arbitration could disadvantage Kryman

in the future. Kryman is not prejudiced by the prospect of arbitrating under an

agreement he signed simply because he would now prefer to litigate in court. If

changing one’s mind about arbitration down the line were enough to establish

prejudice, then precious few arbitration agreements could ever be enforced. Federal

policy points in the other direction.

CONCLUSION

Plaintiff’s motion to compel arbitration pursuant to 9 U.S.C. § 4 is granted.

SO ORDERED.

Brooklyn, New York Edward R. Korman

July 6, 2021 United States District Judge