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MANOS v. GEISSLER

June 14, 2004.

PATTI MANOS, Plaintiff,
v.
MAURICE GEISSLER, BRG AUTOMOTIVE ENTERPRISES, LLC d/b/a MIDAS AUTO SERVICE EXPERTS and MIDAS INTERNATIONAL CORPORATION, Defendants.



The opinion of the court was delivered by: WILLIAM CONNER, Senior District Judge

OPINION AND ORDER

Plaintiff Patti Manos brought this action against defendants Maurice Geissler, BRG Automotive Enterprises, LLC d/b/a Midas Auto Service Experts ("BRG") and Midas International Corp. ("Midas") (collectively "defendants") alleging claims under Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000 et seq., and New York Human Rights Law ("NYHRL"), N.Y. EXEC. LAW § 290 et seq. Plaintiff also asserts claims against Geissler and BRG for breach of a settlement agreement entered into between the parties. Defendants move to compel arbitration and stay this action. In the alternative, defendants move pursuant to FED. R. CIV. P. 56 for summary judgment dismissing plaintiff's Complaint. For the reasons stated herein, defendants' motion to compel is denied. Defendants' motion for summary judgment is granted in part and denied in part.

BACKGROUND

  Unless otherwise noted, the following facts are undisputed. BRG owns and operates several Midas repair shops located in Orange and Rockland counties. In May 2000, BRG hired plaintiff as a shop manager. Sometime thereafter, plaintiff informed Geissler and BRG that she was pregnant. She was fired within a few days after her announcement. On March 26, 2001, plaintiff filed a complaint with the Equal Employment Opportunity Commission ("EEOC") (the "2001 EEOC complaint") alleging that BRG discriminated against her on the basis of gender in violation of Title VII. On May 7, 2001, plaintiff, and BRG through Geissler, executed a Settlement Agreement (the "Settlement Agreement") wherein BRG agreed to rehire plaintiff as a manager and pay plaintiff's attorney's fees. (Rosenstein Aff., Ex. B.) BRG also agreed not to terminate the plaintiff in the absence of just cause as defined by the Settlement Agreement and not to discriminate against plaintiff or retaliate for the filing of her 2001 EEOC complaint. In exchange, plaintiff released the claims raised in that complaint. The Settlement Agreement included the following Arbitration Clause:
In the event BRG terminates [plaintiff within two years from the execution of the Agreement] and she claims that such termination was the result of a termination for other than "just cause" as defined [by the Settlement Agreement] . . . the parties agree to resolve the issue of whether termination was for just cause by submitting it to arbitration before a single arbitrator. . . . If the arbitrator determines that the termination was not for just cause, BRG will pay [plaintiff] liquidated damages in the amount of $35,000.
(Rosenstein Aff., Ex. B ¶ 8(c).) Plaintiff returned to work in June 2001. On July 29, 2002, plaintiff filed a complaint with the EEOC (the "2002 EEOC complaint") alleging that BRG continued to discriminate against her in violation of Title VII subsequent to the execution of the Settlement Agreement. (DiStephan Aff., Ex. C-1.) She contended that BRG's discriminatory conduct after June 2001 caused her to suffer severe anxiety and depression that forced her to stop reporting to work in August 2002. On September 11, 2002, the EEOC issued plaintiff a right to sue letter in connection with her 2002 EEOC complaint (the "September 2002 right to sue letter"). (Id., Ex. D.) On October 29, 2002, Geissler contacted plaintiff by letter and informed her that BRG was treating her continuing absence as a resignation.

  On December 9, 2002, plaintiff filed this suit alleging claims under Title VII and NYHRL against Geissler, BRG and Midas. During an initial conference, this Court scheduled trial for January 12, 2004. During a pre-trial conference held in December 2003, the parties sought to adjourn the trial date. They requested the adjournment because: (1) plaintiff's counsel was ill for a protracted period during 2003 and was unable to conduct discovery during that period; and (2) defendants needed time to complete discovery and file a motion for summary judgment. A new trial date was set for February 23, 2004, and defendants were granted leave to file a motion for summary judgment to be served on February 5, 2004. On February 4, 2004, counsel for defendants contacted the Court to explain that defendants could not file their motion for summary judgment because discovery was not yet complete. Counsel requested an extension on consent of the discovery cut-off date set by the Court and an adjournment of the trial date. A new trial date was set for July 19, 2004. On March 9, 2004, counsel for defendants contacted the Court by letter wherein he objected to plaintiff's discovery requests on the ground that they were overbroad. The Court convened a conference to settle this discovery dispute and narrowed several of the plaintiff's requests for documents. During this conference, the Court set a briefing schedule for the defendants' motion for summary judgment.

  Eleven days prior to the date that this Court set for the filing of defendants' motion for summary judgment, defendants filed a motion to stay this action and compel arbitration and a motion for summary judgment.*fn1 Although defendants lump their arguments for dismissal in their Memorandum of Law together with their arguments supporting their motion to compel, we cannot reach the merits of this action if the dispute is referable to arbitration as defendants contend. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002); Sherrill v. Grayco Builders, Inc., 64 N.Y.2d 261, 272, 475 N.E.2d 772, 776, 486 N.Y.S.2d 159, 163 (1985). Accordingly, we will first consider defendants' motion to compel because if that motion is granted, defendants' motion for summary judgment would be moot.

  DISCUSSION

  I. Defendants' Motion to Compel Arbitration

  The parties appear to agree that the Settlement Agreement is not a contract affecting interstate commerce and that the Federal Arbitration Act ("FAA") is therefore inapplicable. See Oldroyd v. Elmira Sav. Bank, 134 F.3d 72, 75 (2d Cir. 1998). However, the result is the same in the present case whether New York law or the FAA is applied.*fn2 Cf. In re A/S J. Ludwig Mowwinckels Rederi, 25 N.Y.2d 576, 581, 255 N.E.2d 774, 307 N.Y.S.2d 660 (1970) (noting that the CPLR allows a party to avoid arbitration but the FAA does not). In both jurisdictions, agreements to arbitrate are routinely enforced. See, e.g., 9 U.S.C. § 2; Egol v. Egol, 68 N.Y.2d 893, 895-96, 501 N.E.2d 584, 585, 508 N.Y.S.2d 935, 936 (1986). A court determining whether a dispute is arbitrable must answer two questions: (1) whether the parties agreed to arbitrate; and (2) whether the particular dispute falls within the scope of that agreement. See Hartford Accident & Indem. Co. v. Swiss Reinsurance America Corp., 246 F.3d 219, 226 (2d Cir. 2001); see also Egol, 68 N.Y.2d at 895-96, 501 N.E.2d at 585, 508 N.Y.S.2d at 936.

  The existence of a valid agreement to arbitrate is not contested in the present case. Instead, plaintiff argues that the scope of the Arbitration Clause in the Settlement Agreement does not encompass her claims for discrimination and that, even if it did, defendants waived any right they might have to arbitration. We conclude that plaintiff's claims for discrimination in Counts I, II and IV of the Complaint are not within the scope of the Arbitration Clause in the Settlement Agreement. Plaintiff's claim in Count III for breach of the Settlement Agreement is within the scope of the arbitration clause. However, defendants have waived their right to compel arbitration of Count III of the Complaint.

  A. The Scope of the Agreement to Arbitrate

  A party cannot be compelled to arbitrate a dispute that she did not agree to submit to arbitration. See Volt Info. Sciences, Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 478 (1989) ("The FAA does not require parties to arbitrate when they have not agreed to do so."); Sherrill, 64 N.Y.2d at 272, 475 N.E.2d at 776, 486 N.Y.S.2d at 163. The Second Circuit has articulated the following approach for determining whether a particular dispute is within the scope of an agreement to arbitrate: (1) the district court must first determine whether the arbitration clause at issue is broad or narrow; (2) if the clause is narrow, the court must determine whether the particular dispute involves a matter that "is on its face within the purview of the clause" or a "collateral matter"; and (3) if the court determines that the arbitration clause is narrow and the particular dispute involves a "collateral matter," the court should not compel arbitration of that dispute. See Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir. 2001); see also In re Belding Heminway Co., 295 N.Y. 541, 543, 68 N.E.2d 681 (1946). If the arbitration clause at issue is broad, the court should compel arbitration of the entire dispute, including collateral matters. See Louis Dreyfus Negoce, 252 F.3d at 224.

  "`Broad' clauses purport to refer all disputes to arbitration; `narrow clauses' limit arbitration to specific types of disputes." Camferdam v. Ernst & Young Int'l, Inc., No. 02 Civ 10100, 2004 U.S. Dist. LEXIS 9092, at *5 (S.D.N.Y. May 19, 2004). The Arbitration Clause in the present case provides:
In the event BRG terminates [plaintiff within two years from the execution of the Agreement] and she claims that such termination was the result of a termination for other than "just cause" as defined [by the Settlement Agreement] . . . the parties agree to resolve the issue of whether termination was for just cause by submitting it to arbitration before a single arbitrator.
(Rosenstein Aff., Ex. B ¶ 8(c).) This Arbitration Clause is narrow because the parties agreed only to submit to arbitration "the issue of whether termination was for just cause." (Id.) Indeed, the Arbitration Clause does not purport to encompass all disputes that arise under the Settlement Agreement. It applies only to a single issue — whether plaintiff was terminated for just cause.*fn3 Count I, Count II and Count IV of the Complaint allege claims for gender discrimination in violation of Title VII and NYHRL. Although evidence that plaintiff was terminated in violation of the Settlement Agreement, if it exists, may be relevant to those claims, it does not form the basis for those claims. Thus, it is a "collateral matter" and not on its face "within the purview of the clause." Louis Dreyfus Negoce, 252 F.3d at 224. Because the Arbitration Clause in the present case is a narrow one, we will not compel arbitration of plaintiff's claims in Count I, Count II and Count IV of the Complaint.

  In Count III of the Complaint, plaintiff alleges that Geissler and BRG breached the Settlement Agreement by terminating plaintiff for other than just cause as defined by the Settlement Agreement. (Complt. ¶ 78.) This wrongful termination claim is "on its face within the purview" of the Arbitration Clause. Accordingly, we must consider whether ...


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