Daniels v. Aaron's Inc.

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NEW YORK

__________________________________________

DAVID G. DANIELS,

Plaintiff, DECISION AND ORDER

-vs-

19-CV-6421 (CJS)

AARON’S, INC.,

Defendant.

__________________________________________

INTRODUCTION

This is an action brought by pro se Plaintiff David G. Daniels (“Daniels”) against

his former employer, Defendant Aaron’s, Inc. (“Aaron’s”), for discrimination in

employment pursuant to the Age Discrimination in Employment Act of 1967 (“ADEA”),

codified at 29 U.S.C. § 621–634. The matter is presently before the Court on Defendant’s

motion to stay the action and compel arbitration. Mot., Dec. 23, 2019, ECF No. 7. For

the reasons that follow, Defendant Aaron’s, Inc.’s motion [ECF No. 7] is granted and the

matter is stayed pending the outcome of arbitration proceedings.

BACKGROUND

The following facts are taken from Daniels’ complaint (“Compl.”), the sworn

declaration of Vicki Winston, Director of Human Resources and acting Records Custodian

for Aaron’s (“Winston Decl.”), and three documents attached as exhibits to Winston’s

declaration: Aaron’s “Agreement to Arbitrate,” Daniels’ consent to utilize Aaron’s

electronic signature system, and an “Arbitration Agreement Acknowledgment” with

Daniels’ electronic signature. The facts drawn from Daniels’ complaint are not findings

of fact by the Court, but rather assumed to be true for the purpose of deciding this motion

and construed in the light most favorable to Daniels, the non-moving party. See Nicosia

v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016). Further, as Daniels is a pro se

litigant, the Court reads his papers liberally, interpreting them to raise the strongest

arguments that they suggest. Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994).

Born in June 1961, Daniels was hired as a manager in training by SEI Aaron’s1 in

August 2015, when he was 54 years old. Am. Compl., ¶ 3, Jul. 19, 2019, ECF No. 4. Prior

to joining SEI Aaron’s, Daniels had over thirty years of management experience. Am.

Compl. at ¶ 16. Daniels was promoted to customer accounts manager at the Elmira store

in July 2016, and then further promoted to general manager of the Hornell store in

January 2017. Am. Compl. at ¶ 4. Daniels alleges that he was the subject of age

discrimination beginning in March 2017, when he had a heated after-hours exchange

with his district manager, James DeLaurentis. Am. Compl. at ¶ 6. After denying

Daniels’ request for time-off, DeLaurentis told Daniels that the work was a “young man’s

game,” and that if DeLaurentis had been district manager at the time, he never would

have hired Daniels in the first place. Id. In May 2017, Daniels left the general manager

position at the Hornell store and returned to his position as a customer accounts manager

at the Elmira store. Am. Compl. at ¶ 3.

In August of 2017, Aaron’s, Inc. acquired the assets of SEI Aaron’s, and took over

all personnel matters. Winston Decl., ¶ 5, Dec. 23, 2019, ECF No. 7-1. As a new employee

of Aaron’s, Inc. – as were all former SEI Aaron’s employees – Daniels completed an on-

line employment application and executed several documents in the Aaron’s “Onboarding

portal.” Winston Decl. at ¶ 7–9, 15. According to Winston, Daniels electronically signed

1 “SEI Aaron’s” is not the defendant in this action. “SEI Aaron’s” is the name of a distinct entity that

was purchased by Aaron’s, Inc. in August of 2017. Am. Compl. at ¶ 3.

an “Electronic Signature Acknowledgment” and “Arbitration Agreement

Acknowledgment” on August 28, 2017. Winston Decl. at ¶ 15. Section 1 of the

Arbitration Agreement, entitled “Duty to Arbitrate,” provided that “[b]y signing this

Agreement, [the employee] and the Company each agree that all Claims between [the

employee] and the Company will be exclusively decided by arbitration governed by the

Federal Arbitration Act before one neutral arbitrator . . . .” Winston Decl. (Ex. 1), § 1.

Further, Section 4 of the agreement specified that “covered claims” include:

all disputes between [the employee] and the Company, including but not

limited to . . . . any claim arising under federal, state or local law, under a

statue such as . . . the Age Discrimination in Employment Act . . . .

Winston Decl. (Ex. 1), § 4.

Should an employee object to the terms of the Arbitration Agreement, Section 17

provided the “Right to Opt-Out.” That section reads, in pertinent part:

If you do not wish to be bound by the terms of this Agreement, you must

opt out by notifying the Company in writing, using the Company’s

designated opt-out form . . . [Y]ou must fully complete and submit the opt-

out form within thirty (30) days of the date on which the Company

published this Agreement to you electronically (the “Opt-Out Period”) . . . .

Should you choose to opt out as provided in this paragraph, you will not be

subject to any adverse employment action as a consequence of that decision

and you may pursue available legal remedies without regard to this

Agreement.

Winston Decl. (Ex. 1), § 17. It is undisputed that Daniels did not complete or submit an

opt-out form.

On December 7, 2017, Daniels called the Aaron’s Associate Care Hotline to report

his concerns about age discrimination, and several days later spoke directly with a

company representative. Am. Compl. at ¶ 12. He followed up with a written statement

on January 2, 2018. Id. On January 24, 2018, Daniels also submitted his first inquiry

with the Equal Employment Opportunity Commission. Am. Compl. at ¶ 15.

On March 12, 2018, Daniels contacted the Aaron’s regional manager and the vice

president in charge of the New England region about his discrimination concerns. Am.

Compl. at ¶ 16. A company representative was assigned to investigate the matter, and

on April 5, 2018, the representative contacted Daniels to inform him that his allegations

could not be corroborated. Id. On April 6, 2018, Daniels met with DeLaurentis and the

regional manager about his age discrimination concerns. Id. During that meeting,

Daniels also inquired why he was not informed of, or considered for, a general manager

position that had recently been filled. Id. He was told that he would not be considered

for such a position because he did not have what it takes to be a successful general

manager. Id.

The stress of his situation caused Daniels several serious health issues that led

him to take medical leave from April 10, 2018 to June 4, 2018. Am. Compl. at ¶ 17.

Daniels again went out on medical leave from September 10, 2018 to November 12, 2018.

Am. Compl. at ¶ 3. Daniels resigned his position with Aaron’s on November 13, 2018.

Id.

Daniels received his “right to sue” notification from the Equal Employment

Opportunity Commission on March 12, 2019. Am. Compl. at ¶ 22. In June 2019, he filed

the present age discrimination action. He alleges that Aaron’s discriminated against him

by passing him over for promotion seven times, and in six of those seven times, hiring

candidates under forty years of age and with lesser qualifications. Am. Compl. at ¶ 20.

Daniels also alleges that he was subjected to retaliation after formally complaining of age

discrimination through company channels in December 2017. Am. Compl. at ¶ 21.

Aaron’s moves this Court to stay Daniels’ action and to compel arbitration. Mot.,

ECF No. 7. Aaron’s argues that Daniels “signed a valid, binding agreement to arbitrate

all claims against Aaron’s and should be compelled to comply with that agreement.” Id.

LEGAL STANDARD

The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., reflects a liberal policy

favoring enforcement of arbitration agreements and grants district courts authority to

compel arbitration where the parties have agreed to arbitrate. See 9 U.S.C. § 4; see also

Garten v. Kurth, 265 F.3d 136, 142 (2d Cir. 2001) (“It is well-settled that the FAA

generally requires that courts resolve issues of arbitrability in favor of arbitration.”) The

FAA also grants authority to district courts to stay an action commenced in federal court

pending the outcome of arbitration. See 9 U.S.C. § 3.

In determining whether to compel arbitration, the Second Circuit has directed

district courts to consider four factors: (1) whether there has been an agreement to

arbitrate; (2) whether the scope of the arbitration agreement covers the dispute at issue;

(3) if federal statutory claims exist, whether Congress intended those claims to be non-

arbitrable; and (4) if only some of the claims are subject to arbitration, whether the court

should stay the remaining claims pending arbitration. JLM Indus. v. Stolt–Nielsen SA,

387 F.3d 163, 169 (2d Cir. 2004).

Three of the Second Circuit’s four factors are not in dispute. First, the arbitration

agreement, provided that it is binding, expressly incorporates claims under the ADEA.

Winston decl. (Ex. 1) at § 4. Second, the United States Supreme Court has found that

Congress did not intend federal statutory claims under the Age Discrimination in

Employment Act to be non-arbitrable. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.

20, 35 (1991). Third, should the Court compel arbitration of Daniels’ age discrimination

claims, there are no “remaining claims” to stay pending arbitration. Hence, the Court is

left to explore only one of the Second Circuit’s four factors: whether the parties entered

into a contractually binding arbitration agreement. 9 U.S.C. § 4; Whitehaven S.F., LLC

v. Spangler, 633 Fed. Appx. 544, 545–46 (2d Cir. 2015) (citing Cap Gemini Ernst & Young,

U.S., L.L.C. v. Nackel, 346 F.3d 360, 365 (2d Cir. 2003)).

“The standard this [c]ourt must apply when reviewing a motion to compel

arbitration is essentially the same standard that the Court applies when it reviews a

motion for summary judgment.” D'Antuono v. Serv. Rd. Corp., 789 F. Supp.2d 308, 319

(2d Cir. 2011) (citing Bensadoun v. Jobe–Riat, 316 F.3d 171, 175 (2d Cir. 2003)). The

party moving for an order to compel arbitration must substantiate its entitlement to

arbitration by a showing of evidentiary facts that support its claim that the other party

agreed to arbitration. Oppenheimer & Co., Inc. v. Neidhardt, 56 F.3d 352, 358 (2d

Cir.1995). Where the moving party succeeds in substantiating its claim, the non-moving

party “may not rest on a denial but must submit evidentiary facts showing that there is

a dispute of fact to be tried.” Molina v. Coca-Cola Enterprises, Inc., No. 08-CV-6370, 2009

WL 1606433, at *5 (W.D.N.Y. June 8, 2009) (quoting Oppenheimer & Co., Inc., 56 F.3d

at 358) (internal quotation marks omitted). “Only when there is no genuine issue of fact

concerning the formation of the agreement should the court decide as a matter of law

that the parties did or did not enter into such an agreement.” D'Antuono, 789 F. Supp.2d

at 320 (citation omitted).

ANALYSIS

Daniels opposes Aaron’s motion to compel arbitration on three grounds: (1) he does

not recall or admit to having signed the arbitration agreement, (2) he claims the

arbitration agreement was part of an “unconscionable contract,” and (3) his papers

suggest that Aaron’s waived the right to compel arbitration by failing to assert that right

both during the internal investigation conducted by the company into discrimination, and

during the EEOC investigation. Resp., 1–2, Jan. 24, 2020, ECF No. 10. The Court finds

no merit in any of Daniels’ three arguments.

The evidence demonstrates a valid arbitration agreement.

The Court’s inquiry into whether the parties entered into an arbitration

agreement is controlled by state contract law. First Options of Chicago, Inc. v. Kaplan,

514 U.S. 938, 944 (1995). Under contract law in New York,2 the party seeking to compel

arbitration bears the burden of proving the existence of a valid arbitration agreement by

a preponderance of the evidence. Progressive Cas. Ins. Co. v. C.A. Reaseguradora

Nacional de Venezuela, 991 F.2d 42, 46 (2d Cir. 1993). Once the moving party has met

that burden, the party challenging the existence of an agreement must make “an

unequivocal denial that the agreement had been made . . . and some evidence should [be]

produced to substantiate the denial.” Interocean Shipping Co. v. Nat'l Shipping &

Trading Corp., 462 F.2d 673, 676 (2d Cir. 1972) (citation omitted). See also, Barrows v.

Brinker Rest. Corp., No. 519CV144GLSATB, 2020 WL 1511077, at *2 (N.D.N.Y. Mar. 30,

2020) (citing, inter alia, Denney v. BDO Seidman, L.L.P., 412 F.3d 58, 67–68 (2d Cir.

2005)).

2 The Arbitration Agreement does not appear to have a choice of law provision. Thus, the controlling

law would be the contract’s “center of gravity,” which typically is the place of contracting or

performance. See, e.g., TCA Television Corp. v. McCollum, 839 F.3d 168, 188 (2d Cir. 2016). In this

case, the contract was executed in New York. The controlling law is not disputed by either party, and

Aaron’s briefs cite New York law.

In the present case, Aaron’s has shown by a preponderance of the evidence that

the parties entered into a binding arbitration agreement. As indicated above, Aaron’s

motion is accompanied by a sworn declaration of its human resources manager, Vicki

Winston, who provided a thorough explanation of the on-boarding process and documents

bearing Daniels’ electronic signature. According to Winston, it is standard practice that

once an employee enters his or her “Onboarding portal,” the employee must complete an

Electronic Signature Acknowledgment agreeing to enter into agreements electronically.

Winston Decl. at ¶ 11. Winston provided a copy of Daniels’ executed Electronic Signature

Acknowledgment, dated August 28, 2017. Winston Decl. (Ex. 2).

Winston further stated that once an employee has completed the Electronic

Signature Acknowledgment, that employee will then be “offered” the task of completing

the Arbitration Agreement Acknowledgement. Winston Decl. at ¶ 12. That task consists

of clicking a link to the “Aaron’s Arbitration Agreement” and viewing the full agreement

to arbitrate, which the employee can download or print. Id. After reading the agreement,

the employee can then type his or her e-signature to indicate agreement, or opt-out by

clicking the link to the opt out form. Winston Decl. at ¶ 12–13. Winston provided a copy

of Daniels’ executed Arbitration Agreement Acknowledgment, dated August 28, 2017.

Winston Decl. (Ex. 3).

For his part, Daniels states that he “does [not] recall and admit” signing the

Arbitration Agreement. Resp. at 1. He notes that as a graduate of LeMoyne College with

a degree in Labor Relations, he is familiar with the arbitration process and would have

utilized it if he had realized it was an option. Id. Daniels admits to participating in a

“one-on-one” hiring session on August 28, 2017, but states the company’s “main concern

[at the session] was to quickly disseminate information about the acquisition, and have

the portal set up so that the application could be completed plus sign off on information

about benefits, and trainings.” Id. Finally, Daniels observes that at no time during its

internal investigation of his complaints or of the investigation by the EEOC did Aaron’s

ever mention an arbitration process. Resp. at 2. Daniels suggests this is evidence the

arbitration agreement did not exist. Id.

The Court finds that Daniels’ arguments lack merit. To begin with, under New

York law, Daniels’ failure to recall signing the arbitration agreement does not absolve

him from his contractual obligations, or necessarily create a triable issue of fact. Kutluca

v. PQ New York Inc., 266 F. Supp.3d 691, 701–02 (S.D.N.Y. 2017) (citing Vardanyan v.

Close–Up Int'l, Inc., 315 Fed. Appx. 315, 317–18 (2d Cir. 2009)). Moreover, Aaron’s

attached Daniel’s executed “Arbitration Agreement Acknowledgment,” which clearly

carries his electronic signature. Winston Decl. (Ex. 3). There is nothing in the record,

other than Daniels’ bald assertions, that suggests this document is anything other than

it appears to be. Gonder v. Dollar Tree Stores, Inc., 144 F. Supp.3d 522, 527–28 (S.D.N.Y.

2015). Daniels’ suggestions that Aaron’s failed to mention the arbitration in earlier

proceedings because the document did not exist is a mere theory unsupported by

evidence. See, e.g., Rodriguez v. Hahn, 209 F. Supp.2d 344, 348 (S.D.N.Y. 2002) (stating

that, under the summary judgment standard, “a pro se party’s bald assertions

unsupported by evidence, are insufficient to overcome” substantiated claims by the

moving party).

Accordingly, the Court finds the parties are subject to a binding arbitration

agreement.

The arbitration agreement was not unconscionable.

In the alternative, Daniels argues that arbitration cannot be enforced because his

employment contract with Aaron’s was an unconscionable contract. Resp., ECF No. 10

at 2. He notes that “[i]f a court finds that the employment agreement is an

unconscionable contract, the court can refuse to enforce the arbitration clause,” and cites

three cases3 for the proposition that a contract is unconscionable if there is no real

bargaining power, no real negotiation and an absence of meaningful choice.

As a preliminary matter, it should be noted that Daniels' characterization of the

arbitration agreement as an employment contract is inaccurate. The agreement attached

to Winston's declaration is a stand-alone contract, and does not include any of the terms

standard to an employment contract such as compensation, duration, termination, etc.

Winston Decl. (Ex. 1). In fact, Section 17 of the agreement specifically contemplates

continued employment in the event that an employee does not consent to the arbitration

agreement. Winston Decl. (Ex. 1) at § 17 (providing a detailed procedure for opting out).

More to the point, Daniels fails to show that the arbitration agreement is

procedurally unconscionable.4 As the Second Circuit recently observed, it is well-settled

under New York law that:

the procedural element of unconscionability requires an examination of the

contract formation process and the alleged lack of meaningful choice. The

focus is on such matters as the size and commercial setting of the

transaction, whether deceptive or high-pressured tactics were employed,

the use of fine print in the contract, the experience and education of the

3 Though his citations were not complete, it appears Daniels was citing to Ellis v. McKinnon Broad.

Co., 23 Cal. Rptr.2d 80 (Cal Ct. App. 1993) Am. Software, Inc. v. Ali, 54 Cal. Rptr.2d 477 ( Cal. Ct. App.

1996); and Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001). The former two cases were

applications of California state law, and the Supreme Court case held that only the employment

contracts of transportation workers identified in § 1 of the FAA are exempt from the FAA’s provisions.

4 There is also a substantive component to unconscionability, but Daniels does not allege that the

agreement is “unreasonably favorable” to Aaron’s. See Sablosky v. Edward S. Gordon Co., 535 N.E.2d

643, 647 (N.Y. 1989).

party claiming unconscionability, and whether there was disparity in

bargaining power.

Am. Family Life Assurance Co. of New York v. Baker, 778 F. App'x 24, 26–28 (2d Cir.

2019) (quoting Gillman v. Chase Manhattan Bank, N.A., 534 N.E.2d 824, 828 (N.Y. 1988)

(internal citations omitted)).

Applying the above standard, the Court concludes that Daniels has failed to

supply sufficient evidence of procedural unconscionability. The agreement attached to

Ms. Winston's declaration is not a “take-or-leave-it” agreement, but rather provides a

clear process for opting out that does not subject the employee to any penalty. Further,

there is no evidence of “high-pressure tactics” in the execution of the agreement, or of

deceit, undue ambiguity, or tricky "fine print" in its construction. The evidence indicates

that just above the link to the agreement in the "Onboarding portal" there is a note, in

all capital letters, stating, "PLEASE CLICK ON THE LINK AND CAREFULLY READ

BEFORE SIGNING," and the agreement remains on the portal after execution for the

employee to review, download or print at any time. Winston Decl. at ¶ 12, 14. Lastly,

Daniels admits to a college degree in Labor Relations and over thirty years of

management experience, so he cannot claim a lack of education.

Aaron’s did not waive the agreement.

Finally, as evidence that the arbitration agreement did not exist, Daniels points

to Aaron’s failure to bring the arbitration agreement to his attention during EEOC

investigations and the internal investigations the company conducted into his

complaints. However, as noted above, the Court finds that the parties are subject to a

binding arbitration agreement. Nevertheless, because the Court must construe Daniels’

papers to present the strongest arguments they suggest, this Court will also consider

whether Aaron’s conduct constitutes a waiver of Aaron’s right to compel arbitration

under the agreement.

The Second Circuit has directed district courts to consider three factors to

determine whether a party has waived its right to arbitration: (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.

Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 229 (2d Cir.

2001). With respect to the first and second factors, just slightly more than three weeks

elapsed between the time that Daniels served Aaron’s (Nov. 30, 2019), and Aaron’s

motion to compel. See Summons, Dec. 4, 2019, ECF No. 6; Mot., Dec. 23, 2019, ECF No.

7. There was no additional motion practice, and no discovery. Id.

Most importantly, despite Aaron’s failure to raise the possibility of arbitration

during prior internal investigations and EEOC proceedings, there is no indication that

Daniels suffered any prejudice. Ordinarily, courts only find waiver “when the party

against whom waiver is asserted has engaged in substantial litigation activity resulting

in prejudice to the party asserting waiver.” Brownstone Inv. Group v. Levey, 514

F.Supp.2d 536, 550 (S.D.N.Y.2007). With regards to “prejudice,” the Second Circuit has

determined that the term, “refers to the inherent unfairness—in terms of delay, expense,

or damage to a party's legal position—that occurs when the party's opponent forces it to

litigate an issue and later seeks to arbitrate that same issue . . . .” PPG Indus., Inc. v.

Webster Auto Parts, Inc., 128 F.3d 103, 107 (2d Cir. 1997) (internal citations omitted).

None of that occurred here. Indeed, there is nothing in the record to suggest that

the Company’s internal investigation was anything more than an inquiry into the truth

of Daniels’ claims. Further, the EEOC proceedings were initiated by Daniels, not

Aaron’s. An “employer’s failure to initiate arbitration during the pendency of [EEOC]

proceedings [against it] merely reflects a desire to avoid inefficiency and is not action

inconsistent with a desire to arbitrate.” Santos v. GE Capital, 397 F. Supp.2d 350, 356

(D. Conn. 2005) (quoting Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 16 (1st Cir.

2005)). See also Brown v. Coca-Cola Enterp., Inc., 08-CV-3231 (JFB)(ETB), 2009 WL

1146441 at *12 (E.D.N.Y. Apr. 28, 2009) (collecting cases).

Consequently, the Court finds that Aaron’s did not waive its rights to compel

arbitration under the arbitration agreement.

CONCLUSION

Defendant Aaron’s, Inc. having substantiated its entitlement to arbitration, and

Plaintiff Daniels having failed to identify or introduce any evidence raising a dispute of

material fact, it is hereby

ORDERED that Defendant Aaron’s, Inc.’s motion to compel arbitration [ECF No.

7] is granted, and it is further

ORDERED that this matter is stayed pending the outcome of arbitration.

SO ORDERED.

Dated: September 30, 2020

Rochester, New York

/s/ Charles J. Siragusa

CHARLES J. SIRAGUSA

United States District Judge