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HOFFMAN v. AARON KAMHI

March 22, 1996

JEROLD R. HOFFMAN, Plaintiff, against AARON KAMHI, INC. and TURN ON, INC., Defendants.


The opinion of the court was delivered by: CHIN

 CHIN, D.J.

 In this employment discrimination case, defendants Turn On, Inc. ("Turn On") and Aaron Kamhi, Inc. ("AKI") move to compel arbitration and to dismiss the complaint or stay these proceedings pending arbitration. Although the parties raise a host of issues, only two need be addressed: (1) whether the arbitration clause in plaintiff's employment contract is enforceable, and (2) if so, whether the scope of that agreement encompasses his discrimination claims.

 Defendants' motion is denied. Although the courts have held that employment discrimination claims are arbitrable, the arbitration clause in plaintiff's employment contract is ambiguously phrased and fails to make specific reference to discrimination claims. Moreover, the statutes on which plaintiff now sues did not even exist at the time he entered into the contract, and plaintiff could not have intended to waive his rights under laws that were not yet in existence. Hence, I hold that the arbitration clause does not cover plaintiff's claims.

 BACKGROUND

 Turn On employed plaintiff Jerold Hoffman ("Hoffman" or "plaintiff") from March 1986 until January 3, 1994. At the time he was hired, Hoffman signed an employment contract that contained the following arbitration clause:

 
Any claim or controversy arising among or between the parties hereto pertaining to the Corporations and any claim or controversy arising out of or respecting any matter contained in this Agreement of any difference as to the interpretation of any of the provisions of this Agreement shall be settled by arbitration . . . . The award of the arbitrators shall be final and binding and judgment may be entered thereon in any Court of competent jurisdiction.

 Hoffman now sues Turn On and AKI as Turn On's principal alleging that defendants violated the Americans with Disabilities Act (the "ADA"), 42 U.S.C. § 12101 et seq., and the Family and Medical Leave Act (the "FMLA"), 29 U.S.C. § 2601 et seq.

 DISCUSSION

 The Federal Arbitration Act (the "Act") establishes a federal policy favoring arbitration. Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225-26, 96 L. Ed. 2d 185, 107 S. Ct. 2332 (1987); Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11, 41 L. Ed. 2d 270, 94 S. Ct. 2449 (1974). The Act requires the federal courts to enforce arbitration agreements with the same vigor that the courts enforce other contracts. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219, 84 L. Ed. 2d 158, 105 S. Ct. 1238 (1983). Once a court is satisfied that an arbitration agreement is valid and the claim before it is arbitrable, it must stay further judicial proceedings and order the parties to proceed to arbitration. Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42, 45 (2d Cir. 1993), citing Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 844 (2d Cir. 1987). Moreover, the court must enforce an arbitration agreement even if the party opposing arbitration raises a claim based on a federal statutory right, assuming that party has in fact agreed to arbitrate such claims. McMahon, 482 U.S. at 226; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-27, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985).

 Here, Hoffman agreed to arbitrate with Turn On when he signed the employment contract. Accordingly, I must determine (1) whether that agreement is enforceable; and (2) if so, whether its scope encompasses Hoffman's employment discrimination claims under the ADA and the FMLA. Genesco, 815 F.2d at 844; Maye v. Smith Barney, Inc., 897 F. Supp. 100, 105-06 (S.D.N.Y. 1995). I conclude that while the arbitration agreement is enforceable, it does not encompass Hoffman's discrimination claims. *fn1"

 1. Enforceability of the Arbitration Clause

 Plaintiff argues that Turn On and AKI cannot enforce the arbitration agreement because (1) the agreement is void as a matter of contract law; (2) defendant AKI is not a party to the agreement; and (3) the agreement no longer binds the parties. I find that none of these allegations is a basis to refuse to enforce this arbitration agreement.

 Under New York law, a contract is unenforceable if its terms are grossly unreasonable or unconscionable "'in light of the mores and business practices of the time and place it is made.'" Sablosky v. Gordon Co., Inc., 73 N.Y.2d 133, 138, 538 N.Y.S.2d 513, 517, 535 N.E.2d 643 (1989) (citing Gillman v. Chase Manhattan Bank, 73 N.Y.2d 1, 10, 537 N.Y.S.2d 787, 791, 534 N.E.2d 824 (1988)). In Sablosky, the New York Court of Appeals rejected the contention that an arbitration clause in an employment agreement was unconscionable simply because the employer drafted it. Sablosky, 73 N.Y.2d at 138-39, 538 N.Y.S.2d at 517. The court found that such a clause was a reasonable means by which an employer could seek to protect itself from protracted litigation. Id. The fact that the employer prepared ...


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