De Jesus v. Gregorys Coffee Management, LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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AMADOR DE JESUS, on behalf of himself, FLSA

Collective Plaintiffs and the Class,

Plaintiff, MEMORANDUM & ORDER

20-CV-6305 (MKB) (TAM)

v.

GREGORYS COFFEE MANAGEMENT, LLC,

and GREGORY ZAMFOTIS,

Defendants.

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MARGO K. BRODIE, United States District Judge:

Plaintiff Amador De Jesus, on behalf of himself and others similarly situated,

commenced the above-captioned class and collective action against Defendants Gregorys Coffee

Management, LLC (“Gregorys Coffee”), and Gregory Zamfotis on December 29, 2020, alleging

violations of the Fair Labor Standards Act and the New York Labor Law. (Compl., Docket

Entry No. 1.) On September 17, 2021, Defendants moved to compel arbitration, asserting that

Plaintiff must arbitrate his employment claims, and Plaintiff opposed the motion and moved for

attorneys’ fees.1 By Memorandum and Order dated November 29, 2021, the Court ordered an

evidentiary hearing (the “Hearing”) regarding the validity and unconscionability of the

arbitration agreements signed by Plaintiff in 2018 and 2019 (the “Arbitration Agreements”) and

deferred ruling on all other arguments presented by the parties. (Mem. & Order dated Nov. 29,

1 (Defs.’ Mot. to Compel Arb. (“Defs.’ Mot.”), Docket Entry No. 33; Defs.’ Mem. in

Supp. of Defs.’ Mot. (“Defs.’ Mem.”), Docket Entry No. 34; Pl.’s Opp’n to Defs.’ Mot. and Mot.

for Att’ys’ Fees (“Pl.’s Opp’n”), Docket Entry No. 36; Defs.’ Reply in Supp. of Defs.’ Mot.

(“Defs.’ Reply”), Docket Entry No. 39; Pl.’s Reply in Supp. of Pl.’s Mot. for Att’ys’ Fees (“Pl.’s

Reply”), Docket Entry No. 41.)

2021 (“November 2021 Order”), Docket Entry No. 45.) The Court referred the Hearing to

Magistrate Judge Taryn A. Merkl, (Order dated Nov. 29, 2021), who conducted the Hearing on

January 13, 2022, (Min. Entry dated Jan. 13, 2022). On June 9, 2022, Judge Merkl issued a

Report and Recommendation recommending that the Court find that the Arbitration Agreements

are valid and neither procedurally nor substantively unconscionable (the “R&R”). (R&R dated

June 9, 2022, Docket Entry No. 51.)

For the reasons explained below, the Court adopts the R&R and grants Defendants’

motion to compel arbitration.

I. Background

a. Plaintiff’s claims

Gregorys Coffee operates a chain of coffee shops.2 Defendants’ warehouse supplier (the

“Warehouse”) prepares all of the pastries and baked goods sold at Gregorys Coffee shops.

(Compl. ¶ 6.)

In January of 2014, Defendants employed Plaintiff to work as a cook and baker at the

Warehouse, which is located in Long Island City, New York. (Id. ¶ 23.) From the beginning of

his employment until in or about January of 2017, Plaintiff worked sixty hours per week: ten

hours per day, from 6:00 AM to 4:00 PM, for six days a week. (Id.) From in or about January of

2 The Court assumes the truth of the factual allegations in the Complaint for the purposes

of this Memorandum and Order. In addition to the Complaint, the facts are taken from the

Declaration of Amador De Jesus, (“Pl.’s Decl.”), Docket Entry No. 38; the Declaration of Gary

Barnes, Chief of Staff of Gregorys Coffee, (“Barnes Decl.”), Docket Entry No. 44; the exhibits

attached to the parties’ papers; and the transcript of the Hearing before Judge Merkl on January

13, 2022, (“Hr’g Tr.”), Docket Entry No. 48. A court may consider documents outside of the

pleadings for the purposes of determining the arbitrability of a dispute. Murphy v. Canadian

Imperial Bank of Com., 709 F. Supp. 2d 242, 244 n.2 (S.D.N.Y. 2010) (first citing Sphere Drake

Ins. Ltd. v. Clarendon Nat’l Ins. Co., 263 F.3d 26, 32–33 (2d Cir. 2001); and then citing BS Sun

Shipping Monrovia v. Citgo Petrol. Corp., No. 06-CV-839, 2006 WL 2265041, at *3 (S.D.N.Y.

Aug. 8, 2006)).

2017 until the end of his employment with Defendants on March 17, 2020, Plaintiff regularly

worked fifty-four hours per week: nine hours per day, from 6:00 AM to 3:00 PM, six days per

week. (Id.) Throughout Plaintiff’s employment, Defendants required Plaintiff to work through

his thirty-minute meal break at least twice a week even though Plaintiff clocked out for his

break. (Id. ¶ 25.) Defendants did not pay Plaintiff for this time. (Id.) In addition, Defendants

required Plaintiff to clock out at the end of his shift but also required him to keep working

without pay for approximately thirty minutes, three times a week. (Id. ¶ 26.) Defendants never

paid Plaintiff the spread of hours premium for each workday exceeding ten hours and Plaintiff

did not receive a notice of pay rate. (Id. ¶¶ 27–28.) From the beginning of his employment until

in or about January of 2017, Defendants paid Plaintiff a fixed salary of $550.00 per week

regardless of hours worked. (Id. ¶ 23.) From in or about January of 2017 until in or about

January of 2020, Defendants paid Plaintiff $15.00 per hour. (Id.) From January of 2020 until

March 17, 2020, when Defendants terminated Plaintiff’s employment, Defendants paid Plaintiff

$15.50 per hour. (Id.) Defendants paid Plaintiff in a combination of checks and cash. (Id.)

Based on Plaintiff’s direct observations and conversations, other non-exempt employees are and

have been similarly situated. (Id. ¶ 12.)

i. 2018 and 2019 Arbitration Agreements

Plaintiff signed two arbitration agreements during his employment. The first was

signed on January 15, 2018, and reads:

You agree as a condition and in consideration for new or continued

employment that any dispute or claim that arises out of or that relates

to your employment, or that arises out of or that is based upon the

employment relationship (including but not limited to any wage

claim, FLSA or NYLL claim, any claim for wrongful termination,

or any claim based upon any statue [sic], regulation, or law,

including those dealing with employment discrimination, sexual

harassment, civil rights, age, or disabilities), shall be resolved by

arbitration in accordance with the then effective arbitration rules of

the State of New York. The arbitration is of no cost to you and will

be resolved on a case by case basis to be overseen by an independent

and impartial arbitrator. You will have the opportunity to select one

arbitrator from a list to be provided. Accordingly, you are hereby

notified that you will be unable to seek class certification or class

action status via the filing [of] any lawsuit regarding the above-

mentioned claims. The decision of the arbitrator will be final and

will wholly resolve the aforementioned dispute.

(Arbitration Agreement dated Jan. 15, 2018 (“2018 Arbitration Agreement”), annexed to Defs.’

Mem. as Ex. A, Docket Entry No. 34-1.) Plaintiff signed a second agreement on January 18,

2019, which is substantially identical to the 2018 Arbitration Agreement. (Arbitration

Agreement dated Jan. 18, 2019 (“2019 Arbitration Agreement”), annexed to Defs.’ Mem. as Ex.

B, Docket Entry No. 34-2.)

When presented with the Arbitration Agreements, which were written in English,

Defendants told Plaintiff that he “had to sign the[m] to continue working for Defendants,” which

he did. (Pl.’s Decl. ¶ 3.) Plaintiff’s primary language is Spanish and he is incapable of reading

English. (Id. ¶ 2.)

In August of 2021, Gary Barnes, Chief of Staff of Gregorys Coffee, learned that Plaintiff

and other Gregorys Coffee employees had signed the Arbitration Agreements. (Barnes Decl.

¶ 3.) Barnes immediately provided copies to Plaintiff’s counsel. (Id.) Barnes later learned that a

manager had utilized arbitration agreements in the “commissary,” where Plaintiff worked, for a

period of time several years ago, and that no other Gregorys Coffee employees were ever

required to sign them. (Id. ¶ 4.) The Arbitration Agreements were also signed by George

Zamfotis, a non-party to this action, who was the manager of the commissary for Gregorys

Coffee at the time that the agreements were executed. (Id. ¶ 5.) Zamfotis stepped away from

day-to-day management in March of 2020 and took on other roles within Gregorys Coffee. (Id. ¶

6.) From approximately March until September of 2020, Matt Delaney oversaw the commissary

and rearranged numerous items and files in the commissary and destroyed other documents,

including personnel files. (Id. ¶ 7.) In May of 2020, Gregorys Coffee moved its main offices

and many files and records were “boxed up,” while others were “misplaced and lost in the

move.” (Id. ¶ 11.) In September of 2020, Defendants fired Delaney. (Id. ¶ 7.) Following

Delaney’s termination, Zamfotis returned to his role in managing the commissary. (Id. ¶ 8.)

During this time, there were numerous records that he could not locate due to Delaney’s actions.

(Id.) While searching for records relevant to this case, Zamfotis found the files with the

Arbitration Agreements executed by Plaintiff. (Id.)

b. Procedural background

Plaintiff filed a Complaint on December 29, 2020. (Compl.) Plaintiff seeks to represent

all non-exempt employees employed by Defendants on or after the date that is six years before

the filing of the Complaint, (the “FLSA Collective Plaintiffs”). (Id. ¶ 11.) Plaintiff also seeks to

represent all such persons in a class action lawsuit under Federal Rule of Civil Procedure 23, (the

“Class”). (Id. ¶ 14.)

On January 4, 2021, Magistrate Judge Peggy Kuo ordered the parties to engage in

discovery and engage in early settlement discussions, or else be referred to formal mediation.

(Order dated Jan. 4, 2021, Docket Entry No. 9.) On June 9, 2021, Plaintiff moved for

conditional certification of his FLSA claim as a representative collective action pursuant to 29

U.S.C. § 216(b).3 Defendants opposed the motion.4

On August 10, 2021, Defendants filed a motion for a pre-motion conference, seeking to

file a motion to dismiss the Complaint and to enforce arbitration. (Mot. dated Aug. 10, 2021,

Docket Entry No. 25.) On November 29, 2021, the Court ordered the Hearing on the validity

and unconscionability of the Arbitration Agreements and deferred ruling on all other arguments

presented by the parties. (See November 2021 Order.) The Court directed Judge Merkl to

conduct a Hearing “to determine whether the Arbitration Agreements are procedurally and/or

substantively unconscionable.” (November 2021 Order 15.)

Judge Merkl conducted the Hearing on January 13, 2022. (Min. Entry dated Jan. 13,

2022). On June 9, 2022, Judge Merkl issued the R&R, recommending that the Court find that

the Arbitration Agreements are valid and neither procedurally nor substantively unconscionable.

(See R&R 22.) Plaintiff subsequently submitted a letter confirming that he would not be

objecting to the R&R and requesting that the Court rule on Defendants’ outstanding motion to

compel arbitration and Plaintiff’s cross-motion for sanctions. (Pl.’s Letter dated June 13, 2022,

Docket Entry No. 52.)

3 (Pl.’s Mot. for Conditional Collective Certification, Docket Entry No. 20; Pl.’s Mem. in

Supp. of Pl.’s Mot. for Conditional Collective Certification, Docket Entry No. 21; Pl.’s Reply in

Supp. of Pl.’s Mot. for Conditional Collective Certification, Docket Entry No. 23.) On March

31, 2022, the Court deferred ruling on Plaintiff’s motion to certify an FLSA collective action

until after the motion to compel arbitration is decided. (Order dated Mar. 31, 2022.)

4 (Defs.’ Opp’n to Pl.’s Mot. for Conditional Certification, Docket Entry No. 22; Defs.’

Reply in Supp. of Defs.’ Opp’n. to Pl.’s Mot. for Conditional Certification, Docket Entry No.

43.)

c. The Hearing

On January 13, 2022, Judge Merkl presided over the Hearing to determine whether the

Arbitration Agreements are valid. (Evid. Hr’g Tr. dated Jan. 13, 2022 (“Hr’g Tr.”), Docket

Entry No. 48.)

i. Testimony by George Zamfotis

Non-party George Zamfotis first testified that he was hired at Gregorys Coffee as a

manager for the commissary “[a]bout fifteen years ago” and was one of the founders of the

company. (Hr’g Tr. 12–13, 22.) Zamfotis had received arbitration agreements from his

accountant, gave the forms to Alberto Vasquez, who “runs [t]he [c]ommissary,” and Vasquez

distributed them to the people who worked at the commissary. (Id. at 15–16, 23, 34.) Zamfotis’

accountant sent him the arbitration agreements because one of his other clients had an “issue”

where he did not have these documents. (Id. at 21–22.) Zamfotis testified that they did not make

a Spanish version available because they only distributed the agreements that Zamfotis’

accountant had given to him. (Id. at 29.) When Zamfotis gave Vasquez the forms, he told

Vasquez to “make sure [the employees] unders[tood]” what the agreements meant. (Id. at 16.)

He also told Vasquez to “give them the forms,” but if the employees said that they did not want

to sign them, “they didn’t have to sign.” (Id. at 28.) After the employees signed, Vasquez gave

Zamfotis a copy of each agreement, Zamfotis signed the agreements and made copies, and then

Zamfotis returned the agreements to Vasquez, who gave the originals back to the employees.

(Id. at 37.) If employees had questions about the content of the agreements, they could ask

Vasquez, who would then ask Zamfotis, and Zamfotis testified that he “made [the arbitration

agreements] very simple.” (Id. at 17.) Employees could have also spoken to him directly about

the agreements but they “never did.” (Id. at 26.)

Plaintiff did not come to Zamfotis at any point to express any concerns about the

Arbitration Agreements or to speak about the Arbitration Agreements more generally. (Id. at 27,

39, 41.) Zamfotis never informed Plaintiff that he needed to sign them to continue to work for

Gregorys Coffee. (Id. at 38.) Zamfotis understood that if there was any dispute, an “unbiased

arbitrator . . . would decide” rather than a court. (Id. at 18.) If there had to be an arbitrator,

Zamfotis testified that management would do research, get in touch with a lawyer, and find out

the rules and how to pick an arbitrator. (Id. at 20.) Zamfotis was not sure how many employees

signed the agreements and was not sure how many people worked at the commissary at the time

that Plaintiff signed his Arbitration Agreements. (Id. at 22.) To his knowledge, the employees at

the commissary were not required to sign the arbitration agreements to continue their

employment. (Id. at 23.) The arbitration agreements did not inform employees that they did not

have to sign the forms to continue their jobs. (Id.)

Zamfotis was unaware that Plaintiff did not speak English. (Id. at 24.) Plaintiff was a

baker and Zamfotis gave Plaintiff recipes that had fifteen to twenty ingredients that he would

follow in English. (Id.) “There were no interpreters” where Plaintiff worked and there was no

Spanish writing in the commissary, therefore, Zamfotis thought that Plaintiff spoke English.

(Id. at 31.) When presented with one of Plaintiff’s wage notices in Spanish, Zamfotis stated that

he could have given Plaintiff a Spanish form even if he spoke English as well because “the

primary language could be Spanish.” (Id. at 25.) Zamfotis became aware of the instant lawsuit

in March or April of 2021. (Id. at 30.)

ii. Testimony by Gary Barnes

Gary Barnes is the chief of staff at Gregorys Coffee. (Id. at 45.) As chief of staff, he

oversees build-outs, technology and innovation, and “new and ongoing projects within the

company.” (Id. at 46.) He managed payroll “for quite a while” and also used to handle hiring

and on-boarding but no longer does. (Id. at 47.) He is involved in some of the litigation for

Gregorys Coffee. (Id.)

Barnes became aware of the instant lawsuit sometime between April and June of 2021

but has never worked with Plaintiff. (Id. at 48, 53.) Barnes was “asked to gather information

regarding [Plaintiff’s] claims” at the Gregorys Coffee offices and in his own electronic records.

(Id. at 49.) Zamfotis provided documents that included one of the Arbitration Agreements

around August of 2021 and Barnes gave it to Zamfotis and his team. (Id. at 50.) Prior to this,

Barnes did not know that the Arbitration Agreements existed. (Id. at 51.) He never distributed

the agreements and never had attorneys give them to him to provide to other employees.

(Id. at 53–54.)

iii. Testimony by Alberto Vasquez

Vasquez is a manager at the commissary and has worked for Gregorys Coffee for seven

years. (Id. at 56–57.) Zamfotis is his boss and delegates tasks to him. (Id. at 57.) Vasquez

worked directly at the commissary with Plaintiff and spoke with him exclusively in Spanish.

(Id. at 59.) All of the recipes that Vasquez provided to Plaintiff were in English and he stated

that Plaintiff “speaks a little bit of working English.” (Id. at 60.) He does not believe Plaintiff is

fluent in English. (Id.)

Vasquez gave Plaintiff the 2018 Arbitration Agreement after Zamfotis asked him to have

all employees sign the agreements. (Id. at 60–61.) Vasquez gave arbitration agreements out

every year and all employees signed them. (Id. at 61.) Zamfotis had designated Vasquez as the

person to answer employees’ questions about the agreements. (Id.) Vasquez called everybody

“one by one” into his office to explain the agreements. (Id. at 62.) When he called Plaintiff into

his office, he also gave him a form discussing his salary, which Vasquez did not explain because

it was in Spanish. (Id. at 64–65.) Vasquez explained to Plaintiff that if Plaintiff had any dispute

with the company, “no to the lawyers, no to the court, it’s [going] to be arbitration.” (Id. at 61.)

Plaintiff agreed to sign the Arbitration Agreements in 2018 and 2019. (Id.) Vasquez did not tell

Plaintiff that he had to sign the Arbitration Agreements in order to continue to work at Gregorys.

(Id. at 65.) He also “never told him he could sign or not sign.” (Id. at 67.)

iv. Plaintiff’s testimony

Plaintiff, through an interpreter, testified that he does not speak English and that most of

the employees at the commissary did not speak English either. (Id. at 73, 75.) He would read

English-language recipes at Gregorys Coffee by giving them to another employee, who would

explain them, or by having Vasquez explain the recipes to him. (Id. at 75.) Plaintiff never spoke

with Zamfotis during his employment and exclusively communicated with Vasquez. (Id. at 78.)

Plaintiff remembered signing the 2018 Arbitration Agreement provided by Vasquez and

noted that the bottom, where the employer was supposed to sign, was not filled out when he

signed the document.5 (Id. at 72–73.) He also signed the 2019 Arbitration Agreement provided

by Vasquez. (Id. at 74.) He recalled that Vasquez handed the Arbitration Agreements to all of

the workers in the kitchen rather than in an office and that they all signed them the same day.

(Id. at 78, 81.) Vasquez told him to “sign those papers so [he] could keep on working for

[Gregorys].” (Id. at 74.) Vasquez said that if Plaintiff did not sign the papers, then he had to

stop working. (Id. at 81–82.) Vasquez did not explain what the papers were even though

5 As Judge Merkl notes in the R&R, Plaintiff’s declaration submitted prior to the Hearing

asserted that he “d[id] not have any recollection of an [A]rbitration [A]greement being provided

by Defendants” and that the first he “recall[ed] hearing of this [A]greement was from [his]

attorneys.” (R&R 3 (quoting Pl.’s Decl. ¶ 4).)

Plaintiff asked him what the documents were both times Plaintiff was asked to sign them. (Id.)

In addition, Vasquez never provided Plaintiff with fully executed copies of the Arbitration

Agreements after Zamfotis signed them and he never had the documents translated or asked for

translated copies. (Id. at 79–80, 82.)

d. The R&R

Judge Merkl noted in her recommendation that while Plaintiff is not fluent in English and

only “speak[s] and understand[s] some English,” the Arbitration Agreements are not

procedurally unconscionable because an inability to understand the English language alone is

insufficient to void a contract under New York law. (R&R 18.) Further, Judge Merkl found that

Plaintiff has not established that (1) “Defendants used misleading or high-pressure tactics to

secure [his] signature [on the Arbitration Agreements],” (2) “Plaintiff was affirmatively misled

about the contents,” or (3) Plaintiff “was denied an opportunity to review and ask questions

about them.” (Id. at 19.) Judge Merkl also found that courts in this Circuit have determined that

including an arbitration agreement as a condition of employment does not render it procedurally

unconscionable. (Id. at 20.) Judge Merkl recommended that the Court find that the Arbitration

Agreements are not substantively unconscionable because Gregorys “is required to pay for the

costs of the arbitration” and both parties “are bound to the [A]rbitration [A]greements.” (Id. at

21.) Accordingly, the Arbitration Agreements are valid. (Id. at 22.)

No objections to the R&R have been filed and the time for doing so has passed. As noted

above, Plaintiff has indicated that he does not intend to oppose Judge Merkl’s recommendation.

(See Pl.’s Letter dated June 13, 2022.)

II. Discussion

a. Standards of review

i. R&R

A district court reviewing a magistrate judge’s recommended ruling “may accept, reject,

or modify, in whole or in part, the findings or recommendations made by the magistrate judge.”

28 U.S.C. § 636(b)(1)(C). “Where parties receive clear notice of the consequences, failure to

timely object to a magistrate’s report and recommendation operates as a waiver of further

judicial review of the magistrate’s decision.” Smith v. Campbell, 782 F.3d 93, 102 (2d Cir.

2015) (quoting Mario v. P & C Food Mkts., Inc., 313 F.3d 758, 766 (2d Cir. 2002)); see also

Phillips v. Long Island R.R. Co., 832 F. App’x 99, 100 (2d Cir. 2021) (same); Almonte v. Suffolk

County, 531 F. App’x 107, 109 (2d Cir. 2013) (“As a rule, a party’s failure to object to any

purported error or omission in a magistrate judge’s report waives further judicial review of the

point.” (quoting Cephas v. Nash, 328 F.3d 98, 107 (2d Cir. 2003))); Sepe v. N.Y. State Ins. Fund,

466 F. App’x 49, 50 (2d Cir. 2012) (“Failure to object to a magistrate judge’s report and

recommendation within the prescribed time limit ‘may operate as a waiver of any further judicial

review of the decision, as long as the parties receive clear notice of the consequences of their

failure to object.’” (first quoting United States v. Male Juv., 121 F.3d 34, 38 (2d Cir. 1997); and

then citing Thomas v. Arn, 474 U.S. 140, 155 (1985))); Wagner & Wagner, LLP v. Atkinson,

Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010) (“[A] party

waives appellate review of a decision in a magistrate judge’s [r]eport and [r]ecommendation if

the party fails to file timely objections designating the particular issue.” (first citing Cephas, 328

F.3d at 107; and then citing Mario, 313 F.3d at 766)).

ii. The Federal Arbitration Act

The Federal Arbitration Act (the “FAA”) requires courts to compel arbitration of claims

that the parties have agreed to arbitrate. See AT&T Mobility LLC v. Concepcion, 563 U.S. 333,

339 (2011). “Courts consider two factors when deciding if a dispute is arbitrable: ‘(1) whether

the parties agreed to arbitrate, and, if so, (2) whether the scope of that agreement encompasses

the claims at issue.’” Cooper v. Ruane Cunniff & Goldfarb Inc., 990 F.3d 173, 179 (2d Cir.

2021) (quoting Holick v. Cellular Sales of N.Y., LLC, 802 F.3d 391, 394 (2d Cir. 2015)); see

Doctor’s Assocs., Inc. v. Alemayehu, 934 F.3d 245, 250 (2d Cir. 2019) (“The threshold question

facing any court considering a motion to compel arbitration is . . . whether the parties have

indeed agreed to arbitrate.” (quoting Schnabel v. Trilegiant Corp., 697 F.3d 110, 118 (2d Cir.

2012))).

Generally, “as a matter of federal law, any doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24–25 (1983); see also Nat’l Union Fire Ins. Co. of Pittsburgh, PA v.

BMC Stock Holdings, Inc., 796 F. App’x 45, 48 (2d Cir. 2019) (same). When an agreement is

clear, “it is the language of the contract that defines the scope of disputes subject to

arbitration.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 289 (2002); see also Abdullayeva v.

Attending Homecare Servs. LLC, 928 F.3d 218, 222 (2d Cir. 2019) (“In answering the first

question — whether the parties agreed to arbitrate — we look to ‘state contract law principles.’”

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

In deciding a motion to compel arbitration, courts apply a similar standard to that applied

to a motion for summary judgment and “draw all reasonable inferences in favor of the

non-moving party.” Nicosia, 834 F.3d at 229 (citing Wachovia Bank, Nat’l Ass’n v. VCG

Special Opportunities Master Fund, Ltd., 661 F.3d 164, 171–72 (2d Cir. 2011); Soliman v.

Subway Franchisee Advert. Fund Tr., Ltd., 999 F.3d 828, 833–34 (2d Cir. 2021) (first quoting

Nicosia, 834 F.3d at 229; and then quoting Meyer v. Uber Techs., Inc., 868 F.3d 66, 74 (2d Cir.

2017)). The party “seeking to avoid arbitration generally bears the burden of showing the

agreement to be inapplicable or invalid.” Harrington v. Atl. Sounding Co., Inc., 602 F.3d 113,

124 (2d Cir. 2010) (citing Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91–92 (2000)).

In addition, “[a] district court must stay proceedings once it is ‘satisfied that the parties have

agreed in writing to arbitrate an issue or issues underlying the district court

proceeding.’” Nicosia, 834 F.3d at 229 (quoting WorldCrisa Corp. v. Armstrong, 129 F.3d 71,

74 (2d Cir. 1997)); see also Katz v. Cellco P’ship, 794 F.3d 341, 345 (2d Cir. 2015) (“[A] stay of

proceedings [is] necessary after all claims have been referred to arbitration and a stay

requested.”).

b. Unopposed R&R

The Court has reviewed the unopposed R&R and, finding no clear error, adopts the R&R

pursuant to 28 U.S.C. § 636(b)(1). Consistent with Judge Merkl’s decision in the R&R, the

Court finds that the Arbitration Agreements are valid and neither procedurally nor substantively

unconscionable.

The Court decides the other issues raised in the parties’ briefing: (1) whether Defendants

waived their right to arbitration, (2) whether Defendants acted with unclean hands, and (3)

whether the Court should impose sanctions on Defendants.

c. Waiver of right to arbitrate claims

Defendants argue that Plaintiff must arbitrate his employment claims, (Defs.’ Mem. 3–6),

and that they have not waived their right to arbitrate, (Defs.’ Reply 2–5).

Plaintiff argues that Defendants’ prosecution of this action waives any contractual right to

arbitrate Plaintiff’s claims. (Pl.’s Opp’n 3–8.) Plaintiff also argues that a recent Supreme Court

case, Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022), supports his argument that Defendants

waived the right to arbitrate. (Pl.’s Letter dated May 25, 2022, Docket Entry No. 50.)

Federal policy strongly favors arbitration, and waiver of the right to arbitrate “is not to be

lightly inferred.” Nicosia, 815 F. App’x at 614 (quoting Thyssen, Inc. v. Calypso Shipping

Corp., S.A., 310 F.3d 102, 104–05 (2d Cir. 2002) (per curiam)). Indeed, “the rule preferring

arbitration, when agreed upon, ha[s] led to its corollary that any doubts concerning whether there

has been a waiver are resolved in favor of arbitration.” Louis Dreyfus Negoce S.A. v. Blystad

Shipping & Trading, Inc., 252 F.3d 218, 228 (2d Cir. 2001) (alteration in original) (quoting

Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20, 25 (2d Cir. 1995)).

Nevertheless, a party waives its right to arbitration “when it engages in protracted litigation.”

Tech. in P’ship, Inc. v. Rudin, 538 F. App’x 38, 39 (2d Cir. 2013) (quoting Crysen/Montenay

Energy Co. v. Shell Oil Co. (In re Crysen/Montenay Energy Co.), 226 F.3d 160, 162 (2d Cir.

2000)).

To determine whether a party has waived its right to arbitration, a court considers “(1) the

time elapsed from when litigation was commenced until the request for arbitration” and “(2) the

amount of litigation to date, including motion practice and discovery.”6 LifeTree Trading Pte.,

6 Until the Supreme Court’s decision in Morgan, the Second Circuit also considered a

third factor — whether there was prejudice to the party that did not move to compel arbitration.

See LifeTree Trading Pte., Ltd. v. Washakie Renewable Energy, LLC, 764 F. App’x 105, 107 (2d

Cir. 2019). Morgan discussed the Eighth Circuit’s two-pronged test for waiver, which

considered whether (1) a party acted inconsistently with its right to arbitration and (2) whether it

prejudiced the other party by its inconsistent actions. Morgan v. Sundance, Inc., 142 S. Ct. 1708,

1712 (2022). The Supreme Court determined that a waiver analysis in the arbitration context

cannot consider prejudice and remanded to the Eighth Circuit to determine whether the

Ltd. v. Washakie Renewable Energy, LLC, 764 F. App’x 105, 107 (2d Cir. 2019) (quoting La.

Stadium & Expo. Dist. v. Merrill Lynch, Pierce, Fenner & Smith Inc., 626 F.3d 156, 159 (2d Cir.

2010)); Johnson v. Ensite USA, Inc., No. 21-CV-4437, 2022 WL 463381, at *4 (S.D.N.Y. Feb.

15, 2022) (“In determining whether [the] [d]efendant has waived its right to arbitration, the

[c]ourt considers such factors as ‘(1) the time elapsed from the commencement of litigation to

the request for arbitration [and] (2) the amount of litigation (including any substantive motions

and discovery)[.]’”). “There is no rigid formula or bright-line rule for identifying when a party

has waived its right to arbitration; rather, the above factors must be applied to the specific

context of each particular case.” La. Stadium & Expo. Dist., 626 F.3d at 159. The Court

considers whether Defendants “knowingly relinquish[ed] the right to arbitrate by acting

inconsistently with that right” by considering the time elapsed and the amount of litigation to

date. Morgan, 142 S.Ct. at 1712.

1. Time elapsed

Defendants contend that a delay of seven-and-a-half months between the filing of the

Complaint and the request for arbitration, even when rounding up, “is not even the outer limit of

what a court will permit without finding waiver.” (Def.’s Reply 3–5.)

Plaintiff argues that the approximately eight-month period between the filing of the

Complaint and Defendants’ motion to compel arbitration favors waiver. (Pl.’s Opp’n 4–5.)

It is well established that delay alone cannot support a finding of waiver in the context of

arbitration. See, e.g., Thyssen, Inc., 310 F.3d at 105 (collecting cases and noting that “[t]his

defendant had “knowingly relinquish[ed] the right to arbitrate by acting inconsistently with that

right,” focusing on the other prong of the Eighth Circuit’s traditional waiver test. Id. at 1714.

Following Morgan, the Second Circuit has not ruled on whether a new standard applies to

motions to compel arbitration. Accordingly, the Court considers the other two elements

traditionally used by the Second Circuit. See LifeTree, 764 F. App’x at 107.

Circuit has refused to find waiver . . . where delay in trial proceedings was not accompanied by

substantial motion practice or discovery”); Rush v. Oppenheimer & Co., 779 F.2d 885, 887 (2d

Cir. 1985) (“It is beyond question that defendants’ delay in seeking arbitration during

approximately eight months of pretrial proceedings is insufficient by itself to constitute a waiver

of the right to arbitrate.” (citing Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.

1968))); Chehebar v. Oak Fin. Grp., Inc., No. 14-CV-2982, 2017 WL 946292, at *2 (E.D.N.Y.

Mar. 7, 2017) (collecting cases finding no waiver despite delays from four months to three

years).

The eight-month period between the filing of the Complaint and Defendants’ efforts in

seeking arbitration, by itself, is insufficient to support a finding of waiver. See Rush, 779 F.2d at

887; In re Generali Covid-10 Travel Ins. Litig., --- F. Supp. 3d ---, ---, 2021 WL 6052127, at *8

(S.D.N.Y. 2021) (“Courts have found delays longer than a year . . . not to constitute waiver.”);

Besara v. Hom, No. 20-CV-3862, 2021 WL 2703351, at *4 (E.D.N.Y. July 1, 2021) (“Here, [the

defendants] waited more than seven months to file a motion to compel arbitration, but ‘[i]t is

beyond question that defendants’ delay in seeking arbitration during approximately eight months

of pretrial proceedings is insufficient by itself to constitute a waiver of the right to arbitrate.’”

(quoting Rush, 779 F.2d at 887)); cf. Leadertex, 67 F.3d at 26 (finding seven months an undue

delay where the party seeking arbitration had submitted several answers containing defenses,

participated in discovery, and was preparing for an imminent trial); Com-Tech Assocs. v.

Computer Assoc., 938 F.2d 1574, 1576–77 (2d Cir. 1991) (finding waiver where a party sought

to compel arbitration after filing a motion for summary judgment eighteen months after

answering the complaint and after participating in discovery); GateGuard, Inc. v. Goldenberg, ---

F. Supp. 3d ---, ---, 2022 WL 452637, at *3 (S.D.N.Y. 2022) (finding that twenty-two months

was a “significant length of time” for purposes of waiving arbitration). In addition, all of the

delay is attributable to Defendants being unaware of the existence of the Arbitration Agreements.

See McCants v. Team Electric, Inc., No. 19-CV-9565, 2021 WL 653122, at *5 (S.D.N.Y. Feb.

19, 2021) (“While approximately a year passed between commencement of the action and [the

defendant’s] assertion of the [a]rbitration [a]greement, that is only because [the defendant] did

not learn of the agreement until reviewing documents it obtained . . . to produce to [the plaintiff].

. . . As noted, this is not a case where the defendant laid in wait, only to spring on the plaintiff an

arbitration agreement about which the defendant knew from the outset.”).

The length of time elapsed does not weigh in favor of waiver.

2. Amount of litigation to date

Defendants argue that the parties have “not exchanged extensive discovery,” Plaintiff has

only produced eight documents, and there have not been any substantive settlement discussions.

(Defs.’ Reply 4.) Defendants also argue that Plaintiff’s motion for conditional certification, the

only briefing prior to the arbitration briefings, does not go to the merits of the litigation.

(Id. at 5.)

Plaintiff contends that the parties have exchanged “considerable” discovery, engaged in

court-ordered settlement negotiations, and fully briefed a motion for collective certification.

(Pl.’s Opp’n 5.) Plaintiff further contends that in order to comply with the mandated settlement

negotiations, the parties exchanged all relevant employment documents. (Id.)

In assessing the amount of litigation for purposes of a waiver analysis, courts consider,

inter alia, any motion practice engaged in by the parties and the extent of discovery that the

parties have exchanged. See, e.g., Tech. in P’ship, Inc., 538 F. App’x at 39 (affirming district

court’s finding of waiver where the party asserting waiver “had to defend two substantive

motions to dismiss, then produce its witness for deposition, comply with an extensive document

request, and participate in extended discovery disputes”); S & R Co. of Kingston v. Latona

Trucking, Inc., 159 F.3d 80, 83 (2d Cir. 1998) (observing that the waiver analysis includes

consideration of “the amount of litigation (including exchanges of pleadings, any substantive

motions, and discovery)”). A party need not have made dispositive motions on the merits in

order to be deemed to have waived arbitration. Id. at 84.

The extent of discovery and other litigation activity prior to Defendant’s pre-motion

conference letter raising the issue of arbitration does not weigh in favor of a finding of waiver.

There has not been “litigation of substantial issues going to the merits” of Plaintiff’s claims, even

considering the motion for conditional collective certification, as the motion does not implicate

the merits of Plaintiff’s claims. Com-Tech Assocs. v. Computer Assocs. Int’l, Inc., 938 F.2d

1574, 1576 (2d Cir. 1991) (quoting Sweater Bee v. Manhattan Industries, Inc., 754 F.2d 457, 461

(2d Cir. 1985)); see DeSimone v. TIAA Bank, FSB, No. 20-CV-6492, 2021 WL 4198274, at *6

(S.D.N.Y. Sept. 14, 2021) (“[The] [p]laintiffs have not shown that they expended significant

resources on discovery or otherwise litigating the claims at issue during this time.”); Chen-Oster

v. Goldman, Sachs & Co., 449 F. Supp. 3d 216, 236 (S.D.N.Y. 2020) (finding that even the

forty-four briefed motions, one hundred letters, twenty-six court appearances, and “hundreds of

thousands of pages of discovery production” did not disfavor arbitration and did not support

finding waiver). Since Plaintiff filed the Complaint, Defendant has filed an Answer (Answer,

Docket Entry No. 14), Plaintiff filed a motion for conditional collective certification, and the

parties have been ordered to engage in “early settlement discussions,” but there have not been

any settlement conferences with the Court or Court mediators,7 (Order dated Jan. 4, 2021). In

addition, the parties have not deposed anyone, (Defs.’ Reply 4 (citing Pl.’s Counsel Bills,

annexed to Pl.’s Opp’n as Ex. C, Docket Entry No. 36-3)), and it is unclear how many

documents have been produced or the extent of production. While Defendants claim that eight

documents have been produced, Plaintiff contends that the parties have “exchanged considerable

discovery.”8 (Pl.’s Opp’n 5.) Nevertheless, accepting Plaintiff’s arguments that the parties have

exchanged considerable discovery, it does not establish waiver since engaging in pretrial

discovery, by itself, is insufficient to establish waiver. See McClain v. Rochdale Village, No. 18-

CV-3781, 2021 WL 3023087, at *5 (E.D.N.Y. July 16, 2021) (“Thus, while [d]efendants first

raised the prospect of arbitration in their [a]nswer, 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 [c]ourt struggles to understand why

[d]efendants waited so long to pursue arbitration, this alone does not establish waiver.” (citing

Rush, 779 F.2d at 891)); Tr. of Loc. 531 Pension Fund v. Al Turi Landfill, Inc., No. 08-CV-1272,

2010 WL 11627389, at *4 (E.D.N.Y. Sept. 20, 2010) (finding no waiver of arbitration where “no

7 See Satcom Int’l Grp. PLC v. Orbcomm Int’l Partners, L.P., 49 F. Supp. 2d 331, 340

(S.D.N.Y. 1999) (considering settlement conference in assessing amount of litigation), aff’d, 205

F.3d 1324 (2d Cir. 1999); see also NV Petrus SA v. LPG Trading Corp., No. 14-CV-3138, 2017

WL 1831096, at *3 (E.D.N.Y. May 4, 2017) (considering, inter alia, the parties’ participation in

court-sponsored mediation and concluding that the defendants “actively engaged in ‘protracted

litigation’”); cf. S & R Co. of Kingston v. Latona Trucking, Inc., 159 F.3d 80, 84 (2d Cir. 1998)

(affirming district court’s finding of waiver based on, inter alia, “extensive discovery requests”

and “two settlement conferences”).

8 Other than through viewing the bills for Plaintiff’s counsel, the Court cannot determine

from the information in the record which documents have been exchanged, or the extent of

discovery, (Pl.’s Ex. C), but Plaintiff’s legal bills do not support a conclusion that substantive

discovery has taken place.

depositions have occurred, and no substantive motions were filed” until after defendant’s motion

to compel arbitration).

Viewing the facts in the light most favorable to Plaintiff, and mindful that “[w]aiver is

not to be lightly inferred,” Nicosia, 815 F. App’x at 614 (quoting Thyssen, Inc., 310 F.3d at 104–

05), the amount of litigation does not weigh in favor of waiver.

Thus, neither the length of time elapsed nor the amount of litigation favors waiver and the

Court therefore grants Defendants’ motion to compel arbitration.

d. Unclean hands

Plaintiff argues that Defendants’ hands have been sullied, as they have known about the

Arbitration Agreements since the start of the lawsuit, “can proffer no argument of good faith for

this late production,” and have improperly coerced employees into signing agreements without

proper knowledge. (Pl.’s Opp’n 12–13.)

Defendants argue that Plaintiff has not showed that Defendants had unclean hands, as the

Arbitration Agreements were only used in the commissary and were not distributed

companywide, and Gregorys Coffee did not delay in handing over these agreements. (Defs.’

Reply 14–15.)

It is well established that “he who comes into equity must come with clean

hands.” Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945);

Hermes Int’l v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 107 (2d Cir. 2000) (same).

“Courts apply the maxim requiring clean hands where the party asking for the invocation of an

equitable doctrine has committed some unconscionable act that is directly related to the subject

matter in litigation and has injured the party attempting to invoke the doctrine.” Alonso Vazquez

v. Azoulay, 834 F. App’x 653, 655 (2d Cir. 2021) (quoting PenneCom B.V. v. Merrill Lynch &

Co., 372 F.3d 488, 493 (2d Cir. 2004)). The doctrine of “unclean hands” is premised on the

maxim that a party “who has acted fraudulently, or who by deceit or any unfair means has gained

an advantage” is not entitled to “obtain equitable relief.” PenneCom, 372 F.3d at 493; Genger v.

Genger, 76 F. Supp. 3d 488, 502 (S.D.N.Y. 2015) (“‘The doctrine of unclean hands applies when

the complaining party shows that the offending party is guilty of immoral, unconscionable

conduct and even then only when the conduct relied on is directly related to the subject matter in

litigation and the party seeking to invoke the doctrine was injured by such conduct.’”

(quoting Kopsidas v. Krokos, 742 N.Y.S.2d 342, 344 (2002))); see also Nat’l Distillers & Chem.

Corp. v. Seyopp Corp., 17 N.Y.2d 12, 15–16 (1966) (“[The unclean hands doctrine] is never used

unless the plaintiff is guilty of immoral, unconscionable conduct and even then only when the

conduct relied on is directly related to the subject matter in litigation and the party seeking to

invoke the doctrine was injured by such conduct.” (internal quotation marks omitted)).

The record does not support Plaintiff’s claim of unclean hands. Defendants submitted a

signed and sworn declaration describing the reasons why they did not find the Arbitration

Agreements until August of 2021. (See Barnes Decl. ¶¶ 6–11.) During the Hearing, Barnes

further testified that Zamfotis provided documents that included the Arbitration Agreements

around August of 2021 and he gave them to Zamfotis and his team. (Hr’g Tr. at 50.) Prior to

this, Barnes did not know that the Arbitration Agreements existed. (Id. at 51.) These facts do

not support any inference that Defendants acted with unclean hands. See CBF Industria de Gusa

S/A v. AMCI Holdings, Inc., 850 F.3d 58, 78 (2d Cir. 2017) (finding that a finding of unclean

hands exerts the equitable powers of the Court “[o]n behalf of one who has acted fraudulently, or

who by deceit or any unfair means has gained an advantage” (quoting PenneCom, 372 F.3d at

493) (internal quotation marks, brackets, and citations omitted)).

e. Attorneys’ Fees

Plaintiff claims that because Defendants “make no excuse and provide no reason for their

delayed production of this agreement,” Defendants must cover the costs of litigation and the

Court should impose sanctions on Defendants through Rule 11 or the inherent powers of the

Court. (Pl.’s Opp’n 14.) Plaintiff also argues that Defendants’ affidavit never claims that

Plaintiff’s documents were lost, that the documents were searched for prior to August of 2021,

that Plaintiff’s documents were difficult to locate, or that the Arbitration Agreements were not

known to the former and current manager of the Warehouse. (See Pl.’s Reply 6.)

Defendants argue that immediately after Plaintiff raised the issue of waiver, Defendants

provided the Court with an “affidavit explaining why the [Arbitration] [A]greements were not

immediately known to Gregorys . . . and its attorneys.” (Defs.’ Reply 16–17.)

Rule 11 provides that a court may impose sanctions either by motion or by its own

initiative when (1) a pleading, written motion, or other paper is “presented for any improper

purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;”

(2) the claims, defenses, and other legal contentions raised are not “warranted by existing law or

by a nonfrivolous argument for extending, modifying, or reversing existing law or for

establishing new law;” (3) the factual contentions do not have any evidentiary support or are

unlikely to have any evidentiary support after a reasonable opportunity for further investigation

or discovery; or (4) the denials of factual contentions are not warranted on the evidence or are

not “reasonably based on belief or a lack of information.” Fed. R. Civ. P. 11(b)–(c); see

also Goldman v. Barrett, 825 F. App’x 35, 39 (2d Cir. 2020) (“If a party violates Rule 11, the

district court ‘may impose an appropriate sanction.’” (quoting Fed. R. Civ. P. 11(c)(1))); Ipcon

Collections LLC v. Costco Wholesale Corp., 698 F.3d 58, 63 (2d Cir. 2012) (“Sanctions may be

— but need not be — imposed when court filings are used for an ‘improper purpose,’ or when

claims are not supported by existing law, lack evidentiary support, or are otherwise frivolous.”

(quoting Fed. R. Civ. P. 11(b)–(c))). “[E]ven when a district court finds a violation of Rule 11,

‘the decision whether to impose a sanction for a Rule 11(b) violation is . . . committed to the

district court’s discretion.’” Ipcon Collections, 698 F.3d at 63 (quoting Perez v. Posse

Comitatus, 373 F.3d 321, 325 (2d Cir. 2004)); see also Cartwright v. D’Alleva, 782 F. App’x 77,

78 (2d Cir. 2019) (concluding that a district court did not abuse its discretion in affording

deference to the plaintiff’s pro se status in denying the motion for sanctions). Enforcing

Rule 11 requires “notice and a reasonable opportunity to respond,” and “[a] motion for sanctions

must be made separately from any other motion and must describe the specific conduct that

allegedly violates Rule 11(b).” Fed. R. Civ. P. 11(c).

In addition, a court has the inherent power to sanction a party “for conduct which abuses

the judicial process.” Chambers v. NASCO, Inc., 501 U.S. 32, 44–45 (1991); Ceglia v.

Zuckerberg, 600 F. App’x 34, 36 (2d Cir. 2015) (“A court has ‘inherent power’ to ‘fashion an

appropriate sanction for conduct which abuses the judicial process.’” (quoting Chambers, 501

U.S. at 44–45)). “Because of their very potency, inherent powers must be exercised with

restraint and discretion.” Chambers, 501 U.S. at 44 (citing Roadway Exp., Inc. v. Piper, 447

U.S. 752, 764 (1980)); United States v. HSBC Bank USA, N.A., 863 F.3d 125, 136 (2d Cir. 2017)

(quoting Chambers, 501 U.S. at 44). “Sanctionable conduct must be proven by clear and

convincing evidence and the district court must make a specific finding of bad faith.”

Amerisource Corp. v. RX USA Int’l Inc., No. 02-CV-2514, 2010 WL 2730748, at *5 (E.D.N.Y.

July 6, 2010) (citing DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 136 (2d Cir.

1998)), aff’d 432 F. App’x 25 (2d Cir. 2011); see also Yukos Cap. S.A.R.L. v. Feldman, 977 F.3d

216, 235 (2d Cir. 2020) (“[C]lear and convincing evidence of bad faith is a prerequisite to an

award of sanctions under the court's inherent power.”). “Moreover, inherent-power sanctions are

appropriate only if there is clear evidence that the conduct at issue is (1) entirely without color

and (2) motivated by improper purposes.” Wolters Kluwer Fin. Servs. Inc. v. Scivantage, 564

F.3d 110, 114 (2d Cir. 2009); Huebner v. Midland Credit Mgmt., Inc., 897 F.3d 42, 56 (2d Cir.

2018) (quoting Wolters Kluwer Fin. Servs. Inc., 564 F.3d at 114). “Clear and convincing

evidence is evidence that makes the fact to be proved ‘highly probable.’” RKI Constr., LLC v.

WDF Inc., No. 14-CV-1803, 2020 WL 6545915, at *21 (E.D.N.Y. Nov. 6, 2020) (quoting

Abernathy-Thomas Eng’g Co. v. Pall Corp., 103 F. Supp. 2d 582, 595–96 (E.D.N.Y. 2000)). “A

finding of bad faith, and a finding that conduct is without color or for an improper purpose, must

be supported by a high degree of specificity in the factual findings.” Wolters Kluwer Fin. Servs.

Inc., 564 F.3d at 114.

Defendants’ conduct does not merit sanctions. Barnes stated that while searching for

time records relevant to this case, Zamfotis found files that included the Arbitration Agreements.

(Barnes Decl. ¶ 8.) Barnes also provides in his declaration an explanation of why numerous

records could not be located, namely a change in staffing and actions taken by one employee to

rearrange documents prior to his departure from the company. (Id. ¶¶ 7–8.) Plaintiff’s assertions

that Defendants were either “negligen[t] or malic[ious],” (Pl.’s Reply 8), by failing to locate this

information before filing an Answer, are not supported by the record. While Plaintiff claims that

Zamfotis must have known about the Arbitration Agreements previously, as he oversees them,

(Pl.’s Opp’n 15), Defendants have clarified that the agreements were signed by non-party George

Zamfotis, who testified at the Hearing, (Defs.’ Reply 17). The fact that Defendants’ Answer

“fails to even admit that Plaintiff was Defendants’ employee” does not demonstrate that there

was no inquiry into Plaintiff’s claim, as Plaintiff speculates, much less imply that there was

harassment or frivolity that would warrant the Court’s imposition of sanctions. (Pl.’s Reply 8.)

Defendants’ conduct “has some legal and factual support, considered in light of the reasonable

beliefs of the attorney whose conduct is at issue,” Wolters Kluwer Fin. Servs. Inc., 564 F.3d at

114, and there is no “clear showing of bad faith,” Oliveri v. Thompson, 803 F. 2d 1265, 1273 (2d

Cir. 1986). There is no indication that Defendants engaged in “conduct which abuse[d] the

judicial process,” Chambers, 501 U.S. at 44–45, and there is no clear and convincing evidence of

Defendants’ bad faith, see Yukos Cap., 977 F.3d at 235. Further, Defendants’ conduct did not

fall into the four-pronged test set forth by Rule 11. See Goldman, 825 F. App’x at 39 (describing

factors for determining when Rule 11 applies); Levine v. N.Y.S. Police, No. 21-CV-1181, 2022

WL 1987845, at *8 (N.D.N.Y. June 6, 2022) (“Therefore,[the defendant’s] motion to compel is

not frivolous, and the [c]ourt denies [p]laintiff’s request for punitive damages and sanctions.”).

Accordingly, the Court denies Plaintiff’s cross-motion for sanctions.

III. Conclusion

For the foregoing reasons, the Court grants Defendants’ motion to compel arbitration and

denies Plaintiff’s cross-motion for sanctions. The Court stays this proceeding. The parties are

directed to provide the Court with monthly status updates.

Dated: August 4, 2022

Brooklyn, New York

SO ORDERED:

s/ MKB

MARGO K. BRODIE

United States District Judge