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June 9, 2003


The opinion of the court was delivered by: Laura Taylor Swain, District Judge

On April 1, 2003, Magistrate Judge Henry Pitman issued a Report and Recommendation ("Report") recommending that the Court reject defendant New York Life Insurance Company's contention that it is no longer a party to this action and that the cross-claims of defendants New York Life Insurance Company and Kelly Services, Inc. be stayed pending arbitration. No objections to the Report have been filed.

In reviewing the Report and Recommendation, the Court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C.A. § 636(b)(1)(C) (West 2002). "To accept the report and recommendation of a magistrate to which no timely objection has been made, a district court need only satisfy itself that there is no clear error on the record." Nelson v. Smith, 618 F. Supp. 1186, 1189 (S.D.N.Y. 1985) (citations omitted); see also Pizarro v. Bartlet, 776 F. Supp. 815, 817 (S.D.N.Y. 1991 (court may accept report if it is "not facially erroneous"). The Court is required to make a de novo determination as to the aspects of the Report to which objections are made. United States v. Male Juvenile, 121 F.3d 34, 38 (2d Cir. 1997).

The Court has thoroughly reviewed Magistrate Judge Pitman's comprehensive and well-reasoned Report and has determined that there is no clear error on the face of the record.

The Court adopts the Report for the reasons stated therein.

Magistrate Judge Pitman's Report follows.


I. Introduction

Defendants New York Life Insurance Co., Inc. ("NY Life") and Kelly Services, Inc. ("Kelly") have raised an issue concerning whether N.Y. Life is still a party in this action and, if so whether the action should be stayed as to N.Y. Life pending arbitration. For the reasons set forth below, I respectfully recommend that the your Honor find that N.Y. Life is still a party in this action, but that the cross-claims of both defendants be stayed pending arbitration. Because the issue of N.Y. Life's status is potentially dispositive, I believe that the dispute is most appropriately resolved by way of Report and Recommendation.

II. Facts

Although the merits of plaintiff's claims are hotly contested, the facts that give rise to the current dispute concerning N.Y. Life's current status are undisputed.

On March 22, 1999, Kelly entered into a contract (the "Contract") with NYLTEMPS, Inc. ("NYLTEMPS") under which Kelly was to provide temporary personnel services to NYLTEMPS and to manage such temporary personnel for NYLTEMPS. According to the Contract, NYLTEMPS was in the business of providing temporary personnel services to N.Y. Life, its subsidiaries and affiliates.

In paragraph 4(b) of the Contract, Kelly agreed "not to discriminate against any employee or applicant for employment because of race, sex, religion, color, national origin, age, disability, status as a qualified disabled veteran or veteran of the Vietnam era." In paragraph 5(b), NYLTEMPS made similar promises, agreeing that "[i]n connection with the performance of this Agreement, NYLTEMPS will comply with all applicable laws, regulations and orders, including, but not limited to, equal opportunity employment and occupational safety and health laws and regulations." In paragraph 16 of the Contract, Kelly agreed to indemnify NYLTEMPS for certain potential losses. In paragraph 17, NYLTEMPS agreed to indemnify Kelly for certain potential losses. Specifically, paragraph 17 provided:

NYLTEMPS will indemnify, defend and hold harmless Kelly and its directors, officers, employees and agents from and against all Damages imposed upon or incurred by Kelly . . . to the extent arising out of any of the following:
(i) NYLTEMPS' failure to comply with applicable laws, regulations or orders;
(iii) Breach of any obligation of NYLTEMPS contained in this Agreement;
NYLTEMPS' obligation to indemnify, defend and hold harmless will not apply (i) to indirect, special or consequential Damages or (ii) to an amount equal to the proportionate liability for any negligence or willful misconduct of Kelly, its officers, employees or agents, as determined by a court of law or by arbitration as provided for herein.
Finally, paragraph 24 of the Contract contained an arbitration clause that provided, in pertinent part:
Except for any controversy or claim under Sections 4(b), 4(h), 15, 21, 23 and 25, controversies or claims arising out of or relating to this Agreement, or the breach thereof shall be resolved by arbitration administered by the American Arbitration Association ("AAA") under its commercial Arbitration Rules, to the extent such rules are not inconsistent with the provisions of this Agreement, and judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. . . .
Plaintiff commenced this action on January 1, 2002. In pertinent part, plaintiff alleges in her amended complaint that she and Kelly entered into an employment agreement in November 1999 pursuant to which she was placed as a secretary in N.Y. Life's Licensing Department (Amended Complaint ("Am. Compl.") ¶ 28). This was a temporary position and was expected to end in November 2000 (Am. Compl. ¶ 29). At some point prior to November 2000, plaintiff learned that a permanent position was available in N.Y. Life's Annuity Department and expressed an interest in the position to N.Y. ...

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