McClain v. Rochdale Village

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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RAYMOND MCCLAIN, :

: MEMORANDUM AND ORDER

Plaintiff, : 18-cv-03781 (DLI)(CLP)

:

-against- :

:

ROCHDALE VILLAGE, et al., :

:

Defendants. :

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DORA L. IRIZARRY, United States District Judge:

On June 29, 2018, Raymond McClain (“Plaintiff”) timely filed this action after receiving

a right to sue letter from the Equal Employment Opportunity Commission (“EEOC”) against

Rochdale Village, Timothy Dickinson, and Gil Francisco (“Defendants”) for, inter alia,

employment discrimination, hostile work environment, wrongful termination, and unlawful

retaliation pursuant to Title VII of the Civil Rights Act (“Title VII”), 42 U.S.C. § 2000 et seq.,

New York State Human Rights Law (“NYSHRL”), N.Y. Exec. Law § 290 et seq., and the New

York City Human Rights Law (“NYCHRL”), N.Y.C. Admin. Code § 8-101 et seq. See, Complaint

(“Compl.”), Dkt. Entry No. 1, at ¶¶ 1, 10-11.

Defendants moved to compel arbitration and to dismiss or stay the action pending

arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, and Fed. R. Civ. P. 12(b)(6).

See, Defendants’ Motion to Compel Arbitration and to Dismiss or Stay the Action (“Defs.’ Mot.”),

Dkt. Entry No. 37. Plaintiff opposed the motion. See, Plf.’s Opp’n to Defs.’ Mot. (“Plf.’s Opp’n”),

Dkt. Entry No. 39. Defendants replied. See, Defs.’ Rep. in Supp. of Defs.’ Mot. (“Defs.’ Rep.”),

Dkt. Entry No. 40. For the reasons set forth below, Defendants’ motion to compel arbitration and

stay proceedings is granted, and Defendants’ motion to dismiss is denied.

BACKGROUND

Plaintiff alleges that, in November 2013, he was hired as Rochdale Village’s first Black

plant technician after achieving the highest score in a qualifying exam administered by Rochdale

Village. Compl. at ¶ 13. After Defendants learned that Plaintiff was Black, he was subjected to

various forms of discrimination, including being given a different uniform to wear, assignment to

menial tasks, and having his desk moved from the management office to a storage area. Id. at ¶¶

14-15. After Plaintiff complained to Rochdale Village’s Human Resources department,

Defendants retaliated against him by initiating various unjustified disciplinary actions such as for

being late to receive work assignments and sleeping on the job. Id. at ¶¶ 16-20. Plaintiff further

alleges that Caucasian employees at Rochdale Village were treated more leniently than Plaintiff

for more severe infractions and were afforded higher pay and more opportunities to earn overtime

pay. Id. at ¶¶ 19-22. On or about January 19, 2017, Plaintiff alleges he was fired in retaliation for

reporting the alleged discriminatory acts to the Human Resources department and the EEOC. Id.

at ¶¶ 18, 23.

It is undisputed that, during his employment with Rochdale Village, Plaintiff was a part of

the International Union of Operating Engineers Local Union No. 94, which was subject to a

collective bargaining agreement (“CBA”) with Rochdale Village. See, Decl. of Jay Williams in

Supp. of Defs.’ Mot. (“Williams Decl.”), Dkt. Entry No. 36 at ¶¶ 9-10; Aff. of Tracey L. Brown

in Supp. of Plf.’s Opp’n (“Brown Aff.”), Dkt. Entry No. 38 at ¶ 5. The parties have submitted

different versions of the CBA for the Court’s review. Defendants submitted the CBA in effect

from September 1, 2015 through August 31, 2020. See, CBA, Exhibit A to the Williams Decl.,

Dkt. Entry No. 36-1. Plaintiff submitted the CBA in effect for that same period as well as the

version in effect from September 1, 2012 through August 31, 2015. See, CBA, Exhibit 3 to the

Brown Aff., Dkt. Entry No. 38-3. Defendants do not dispute the applicability of Plaintiff’s version

of the CBA. Moreover, the pertinent language at issue in Articles 6 and 7 of the CBA, as explained

below, is the same in all versions provided by the parties.

DISCUSSION

I. Arbitrability of Plaintiff’s Claims Under the Collective Bargaining Agreement

“The Federal Arbitration Act (‘FAA’) creates a body of federal substantive law of

arbitrability applicable to arbitration agreements affecting interstate commerce.” Ragone v.

Atlantic Video, 595 F.3d 115, 121 (2d Cir. 2010) (internal citation, alteration, and quotation marks

omitted). “The overarching purpose of the FAA . . . is to ensure the enforcement of arbitration

agreements according to their terms so as to facilitate streamlined proceedings.” AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 344 (2011). The Supreme Court “repeatedly [has] described

the [FAA] as embodying a national policy favoring arbitration, and a liberal federal policy favoring

arbitration agreements[.]” Id. at 346 (internal citations, alterations, and quotation marks omitted).

When a party seeks to compel arbitration under the FAA, the Court must engage in a four-

step inquiry: “ [f]irst, it must determine whether the parties agreed to arbitrate; second, it must

determine the scope of that agreement; third, if federal statutory claims are asserted, it must

consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court

concludes that some, but not all, of the claims in the case are arbitrable, it must then determine

whether to stay the balance of the proceedings pending arbitration.” McDonnell Douglas Fin.

Corp. v. Pa. Power & Light Co., 858 F.2d 825, 830 (2d Cir. 1988). “In deciding motions to compel

[arbitration], courts apply a ‘standard similar to that applicable for a motion for summary

judgment.’” Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016) (quoting Bensadoun

v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003)). This standard “requires a court to ‘consider all

relevant, admissible evidence submitted by the parties and contained in the pleadings[.]’” Id.

(quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 155 (2d Cir. 2002)). “In doing so, the

court must draw all reasonable inferences in favor of the non-moving party.” Id.

The Court finds, and the parties do not dispute, that the CBA is a contract “involving

commerce” under the FAA. 9 U.S.C. § 2. The parties agree that they are subject to the terms of

the CBA. See, Williams Decl. at ¶ 10; Brown Aff. at ¶ 5. The parties also agree that Articles 6

and 7 of the CBA govern the applicable grievance and arbitration procedures. See, Defs.’ Mot. at

2-3; Plf.’s Opp’n at 3. While Plaintiff’s opposition cites to Articles 5 and 6 of the CBA, the cited

language actually is contained in Articles 6 and 7. See, Plf.’s Opp’n at 3. Therefore, there is no

dispute as to whether the parties agreed to arbitrate under the terms of the CBA.

The parties disagree as to the scope of arbitration. Defendants maintain that the arbitration

language of the CBA is broad and covers all of Plaintiff’s claims, including those for wrongful

termination, retaliation, and discrimination. See, Defs.’ Mot. at 8. Plaintiff maintains that the

CBA contains no provisions regarding such claims or a requirement that such claims be resolved

through arbitration. See, Plf.’s Opp’n at 2. However, the Court first must determine whether the

parties agreed to delegate the question of arbitrability to an arbitrator.

“The law generally treats arbitrability as an issue for judicial determination ‘unless the

parties clearly and unmistakably provide otherwise.’” NASDAQ OMX Group, Inc. v. UBS Sec.,

LLC, 770 F.3d 1010, 1031 (2d Cir. 2014) (quoting Howsam v. Dean Witter Reynolds, Inc., 537

U.S. 79, 83 (2002)). Where the “parties explicitly incorporate rules that empower an arbitrator to

decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the

parties’ intent to delegate such issues to an arbitrator.” Contec Corp. v. Remote Solution, Co., Ltd.,

398 F.3d 205, 208 (2d Cir. 2005). Therefore, “the question of who decides arbitrability is itself a

question of contract.” Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S. Ct. 524, 527

(2019). “When the parties’ contract delegates the arbitrability question to an arbitrator, the courts

must respect the parties’ decision as embodied in the contract.” Id. at 528.

“[V]irtually every circuit to have considered the issue has determined that incorporation

of the American Arbitration Association’s (AAA) arbitration rules constitutes clear and

unmistakable evidence that the parties agreed to arbitrate arbitrability.” Paduano v. Express

Scripts, Inc., 55 F. Supp.3d 400, 415 (E.D.N.Y. 2014) (collecting cases); See, also Gwathmey

Siegel Kaufman & Assocs. Architects, LLC v. Rales, 518 Fed. Appx. 20, 21 (2d Cir. 2013)

(affirming grant of motion to dismiss where the AAA’s rules were incorporated into employment

agreement); Mobile Real Estate, LLC v. NewPoint Media Grp., LLC, 460 F. Supp.3d 457, 470

(S.D.N.Y. 2020) (incorporation of AAA rules is clear and unmistakable evidence of intent to

delegate questions of arbitrability).

Article 7 of the CBA provides that:

A. In the event a grievance has not been finally adjusted or resolved in Step 2 of

the grievance procedures, a Party may, within the time limits set forth herein,

submit the grievance to arbitration pursuant to the rules of the Federal Mediation

and Conciliation Service (“FMCS”) or the Labor Arbitration Rules of the American

Arbitration Association (“AAA”) . . . .

CBA Article 7(A). The Court is satisfied that Article 7(A) and the additional clauses in Article 7

discussing the AAA sufficiently incorporate the AAA’s arbitration rules into the CBA. Id. Article

7(B)-(D) and (G). Moreover, Plaintiff does not dispute AAA’s incorporation into the CBA or its

applicability here.

The CBA states that parties may avail themselves of either the FMCS or AAA. Id. Article

7(A). However, the parties have not submitted any admissible evidence of the rules governing the

FMCS. Neither party suggests that the rules of the FMCS would have any bearing on the question

of arbitrability. Thus, the Court does not consider the FMCS as it is not part of the record.

The AAA’s rules provide in pertinent part that:

a. The arbitrator shall have the power to rule on his or her own jurisdiction,

including any objections with respect to the existence, scope, or validity of the

arbitration agreement.

b. The arbitrator shall have the power to determine the existence or validity of a

contract of which an arbitration clause forms a part. Such an arbitration clause shall

be treated as an agreement independent of the other terms of the contract . . . .

AAA Labor Arbitration Rules 3(a)-(b) (July 1, 2013),

https://adr.org/sites/default/files/Labor_Arbitration_Rules_3.pdf. The CBA further provides that

“[i]t is the function of the Arbitrator to interpret the Agreement.” CBA Article 7(E). Taken

together, this indicates a clear intent by the parties to delegate arbitrability to an arbitrator.

Plaintiff contends that his claims fall outside the scope of arbitration under the CBA.

Article 6 of the CBA applies the grievance and arbitration process where “any grievance or dispute

arises out of the interpretation, performance or applicability of any term or provision of this

contract.” CBA Article 6. However, even if “the argument that the arbitration agreement applies

to the particular dispute is ‘wholly groundless,’” no such exception exists within the FAA, and

“the court must respect the parties’ decision as embodied in the contract.” Henry Schein, Inc., 139

S. Ct. at 528. The Supreme Court explained that “the ‘wholly groundless’ exception is inconsistent

with the text of the [FAA] and with our precedent.” Id. at 529. “When the parties’ contract

delegates the arbitrability question to an arbitrator, a court may not override the contract.” Id. In

other words, under these circumstances, even assuming, arguendo, that the CBA does not appear

to govern Plaintiff’s claims, that is ultimately a question for an arbitrator to resolve, not the Court.

Plaintiff cites to several cases that are factually distinct from the case at bar and do not

account for the CBA’s incorporation of the AAA’s rules delegating arbitrability to an arbitrator.

Those cases require a collective bargaining agreement to include a “clear and unmistakable”

waiver of certain federal statutory claims in order to avoid arbitration. See, Wright v. Universal

Maritime Serv. Corp., 525 U.S. 70, 80 (1998); Lawrence v. Sol G. Atlas Realty Co., Ins., 841 F.3d

81, 83 (2d Cir. 2016); Bratten v. SSI Servs., Inc., 185 F.3d 625, 631 (6th Cir. 1999). As discussed

above, the AAA’s rules establish such a waiver. Plaintiff’s reliance on Jackson v. Birmingham

Board of Education, 544 U.S. 167, 171 (2005) also is misplaced as it does not discuss a collective

bargaining agreement, arbitration, or waiver of federal statutory rights. See, Id. (discussing motion

to dismiss a Title IX claim).

Section 2.2 of Rochdale Village’s Employee Manual (“the Manual”) also includes a

mandatory binding arbitration clause between employees and Rochdale Village:

. . . any claim, dispute, or controversy which would otherwise require or allow resort

to any court . . . (including, but [sic] limited to any and all claims of discrimination

and harassment) . . . whether based on tort, contract, statutory or otherwise . . . shall

be submitted to and determined exclusively by binding arbitration. Employee

understands that by agreeing to this binding arbitration provision, both Rochdale

Village, Inc. and the employee give up their rights to trial by jury or judge.

The Manual, Exhibit 2 to the Brown Aff., Dkt. Entry No. 38-2 at 15-16. While included as part of

Rochdale Village’s Sexual Harassment Policy, the text of the policy is much broader than the name

suggests and discusses “any form of prohibited discrimination/harassment, including sexual

harassment.” Id. at 13. The mandatory binding arbitration clause, if applicable, clearly resolves

this dispute in favor of arbitration, and would appear to make plaintiff’s opposition frivolous.

Indeed, Plaintiff’s counsel avers to the Manual’s authenticity. See, Brown Aff. at ¶ 4. However,

the submitted Manual is unsigned by any employee, and the parties have not presented any

evidence that the Manual was binding on Plaintiff and Defendants at any point in time. Thus, the

Court does not consider the Manual in reaching its decision. However, Plaintiff is cautioned to be

mindful of its Rule 11 obligations when making future representations and arguments to the Court

or face sanctions.

Accordingly, the CBA’s incorporation of the AAA’s rules demonstrates a clear and

unmistakable intent by the parties to have arbitrability determined by an arbitrator.

II. Waiver of Defendants’ Right to Arbitration

In determining whether a party has waived its contractual right to arbitration, courts

consider three factors: “(1) the time elapsed from when litigation was commenced until the request

for arbitration; (2) the amount of litigation to date, including motion practice and discovery; and

(3) proof of prejudice.” La. Stadium & Exposition Dist. v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 626 F.3d 156, 159 (2d Cir. 2010) (citation omitted). While there is no bright line rule, “[t]he

key to a waiver analysis is prejudice.” Thyssen, Inc. v. Calypso Shipping Corp., S.A., 210 F.3d

102, 105 (2d Cir. 2002). The Second Circuit has “recognized two types of prejudice: substantive

prejudice and prejudice due to excessive cost and time delay.” La. Stadium, 626 F.3d at 159.

Waiver “is not to be lightly inferred.” Thyssen, 210 F.3d at 104-05. Substantive prejudice can

result “when a party loses a motion on the merits and then attempts, in effect, to relitigate the issue

by invoking arbitration, or it can be found when a party too long postpones his invocation of his

contractual right to arbitration [causing] unnecessary delay or expense.” Kramer v. Hammond,

943 F.2d 176, 179 (2d Cir. 1991). “[A]ny doubts concerning whether there has been a waiver are

resolved in favor of arbitration.” Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d

20, 25 (2d Cir. 1995).

The Court finds that Defendants have not waived their right to arbitration and the record

does not support a finding that Plaintiff has suffered any prejudice. First, the time elapsed, by

itself, does not establish waiver. Plaintiff commenced this action by filing his Complaint on June

29, 2018. Dkt. Entry No. 1. Two months later, on August 29, 2018, Defendants alleged that

Plaintiff failed to exhaust his “arbitral remedies” as an affirmative defense in their Answer. See,

Dkt. Entry No. 11. The parties conducted discovery before participating in mediation, during

which time this action was stayed for approximately three months. See, Dkt. Entry No. 27.

Following an unsuccessful mediation, by letter dated April 21, 2020, the parties advised that

Defendants intended to file the instant motion to compel arbitration. See, Dkt. Entry No. 29.

Second, it appears that the parties nearly completed fact discovery with only one deposition

remaining. Id.; Plf.’s Opp’n at 6. No dispositive motions such as a motion to dismiss or motion

for summary judgment were filed. Thus, while Defendants first raised the prospect of arbitration

in their Answer, they waited to move to compel arbitration until after the parties had engaged in

discovery and failed to reach an agreement at mediation nearly two years after the action was

commenced. While the Court struggles to understand why Defendants waited so long to pursue

arbitration, this alone does not establish waiver. See, Rush v. Oppenheimer & Co., 779 F.3d 885,

891 (2d Cir. 1985) (“Although granting defendants’ demand for arbitration at this point may be

sanctioning a less efficient means of resolving this dispute, we reemphasize that neither efficiency

nor judicial economy is the primary goal behind the arbitration act.”).

Third, there is insufficient evidence of actual prejudice to Plaintiff. Beyond undertaking

pretrial discovery and a delay during mediation, Plaintiff does not present any other evidence of

prejudice. Plaintiff does not claim that Defendants availed themselves of discovery not available

in an arbitral forum. See, Cotton v. Slone, 4 F.3d 176, 180 (2d Cir. 1993). The parties sharply

dispute the necessity and substance of the discovery taken to date. See, Defs.’ Rep. at 5; Plf.’s

Opp’n at 6. That raises doubt as to the existence of prejudice, which must be “resolved in favor

of arbitration.” Leadertex, 67 F.3d at 25. Accordingly, the Court finds that Defendants have not

waived their contractual right to arbitration.

III. Defendants’ Motion to Dismiss

Defendants seek dismissal or, in the alternative, a stay of this action pending arbitration.

The FAA requires a stay of proceedings where all claims have been referred to arbitration and a

stay is sought. See, 9 U.S.C. § 3. New York State law also mandates a stay when a motion to

compel arbitration is granted. See, CPLR § 7503(a). Where a party’s motion to compel arbitration

seeks either a stay or a dismissal, dismissal is inappropriate. See, Abdullayeva v. Attending

Homecare Servs. LLC, 928 F.3d 218, 226 n.5 (2d Cir. 2019). Defendants’ motion to dismiss is

not premised on anything other than the desire for arbitration. Accordingly, the motion to dismiss

is denied, and all proceedings in this case are stayed pending the conclusion of arbitration.

CONCLUSION

For the reasons set forth above, Defendants’ motion to compel arbitration and stay this

matter pending arbitration is GRANTED and Defendants’ motion to dismiss is DENIED.

SO ORDERED.

Dated: Brooklyn, New York

July 16, 2021

/s/

DORA L. IRIZARRY

United States District Judge