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United States District Court, S.D. New York

July 27, 2004.


The opinion of the court was delivered by: GEORGE DANIELS, District Judge


Plaintiff brings this action against her former employers, New York Law School ("NYLS") and Collegis, Inc. ("Collegis"), alleging violations of Title VII, New York State and City law, and the Fair Labor Standards Act.*fn1 Defendant Collegis moves to dismiss or alternatively to suspend the proceeding and compel arbitration pursuant to the Federal Arbitration Act ("FAA"). For the reasons stated below, defendant's motion to compel arbitration is granted, and plaintiff's claims are dismissed against Collegis.


  Plaintiff was hired by NYLS in April 1990 as a Coordinator of User Services to provide technical support to the NYLS community. Her responsibilities included the support of hardware and software as well as communication assistance for users at NYLS. In November 1997, the computer support function at NYLS was contracted out to Collegis, a higher education services company. In connection with the commencement of her employment with Collegis, plaintiff signed an employment agreement with Collegis that required any disputes "arising out of or concerning the interpretation or application of" the employment agreement to be resolved exclusively by arbitration under the Rules of the American Arbitration Association ("AAA").*fn2 Simmons Affidavit Ex.5 p. 4, ¶ 11.

  Plaintiff claims that during her employment she was "subjected to racially offensive comments and behavior" by the Executive Director of Collegis in violation of Title VII of the Civil Rights Act of 1964, the New York City Human Rights Law, and the New York State Human Rights Law. Complaint p. 7, ¶ 23. Plaintiff further alleges that in June 2002, during the course of working on a law professor's computer, she and a co-worker discovered a file of pornographic images of young girls. Plaintiff claims that this created a "hostile work environment" because the images were "perverse and degrading to women." Plaintiff alleges that she reported the child pornography to the Executive Director, but no legal action was taken against the professor until plaintiff personally visited the Federal Bureau of Investigation to discuss the matter. The professor was eventually investigated, arrested, and sentenced after he pled guilty to possessing child pornography.

  In June 2002, plaintiff was placed on employment "probation" and subsequently terminated in October 2002. In her complaint, plaintiff alleges that Collegis and NYLS subjected her to (1) race and color discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et. seq., the New York State Human Rights Law, N.Y. Executive Law § 290 et. seq., and the New York City Human Rights Law, N.Y. Admin. Code § 8-101, et. seq.; (2) retaliation in violation of these laws; and (3) violations of the Fair Labor Standards Act, 29 U.S.C. § 216, et. seq. and New York Labor Law by failing to pay her compensation for overtime.

  Plaintiff argues that Collegis and NYLS terminated her employment in retaliation for her opposition to their racial discrimination and her complaints about the child pornography in violation of Title VII of the Civil Rights Act of 1964 and the New York State Human Rights Law. Plaintiff further claims that although she was consistently required to work more than forty hours per week, she was never paid overtime compensation as required by the Fair Labor Standards Act and New York Labor Law.

  On October 21, 2003, plaintiff filed a complaint in New York Supreme Court, New York County, naming NYLS and Collegis as defendants. Collegis filed and served a demand for arbitration with the AAA on November 5, 2003. The AAA sent a letter to all parties on November 12, 2003, informing them that the defendants had properly paid their $375.00 filing fee and requesting that plaintiff remit her capped filing fee of $125.00. Plaintiff failed to do so by the deadline given by the AAA, and on November 24, 2003, the AAA sent a letter to all parties informing them that the filing requirements were incomplete, and AAA returned the original files. On November 20, 2003, NYLS and Collegis removed the case to the United States District Court for the Southern District of New York. Defendant Collegis filed the instant motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(3), and 12(b)(6), or alternatively to suspend these proceedings and to compel arbitration. DISCUSSION

  I. Motion to Compel Arbitration

  Under the FAA, a district court may stay proceedings if it finds a valid arbitration agreement and may compel arbitration when a party refuses to comply with that agreement. 9 U.S.C.S. §§ 3-4. When considering a motion to compel arbitration, there are four issues the Court must resolve. Lewis Tree Serv., Inc. v. Lucent Techs., Inc., 239 F. Supp.2d 332, 335 (S.D.N.Y. 2002). It must determine: first, whether the parties agreed to arbitrate; second, whether the issues raised fall within the scope of their agreement; third, whether Congress intended the plaintiff's claim to be non-arbitrable; and fourth, when some but not all of the claims are arbitrable, whether to stay the balance pending arbitration. Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 844 (2d Cir. 1987).

  Plaintiff does not deny that she entered into the employment agreement to arbitrate with Collegis, nor does she deny that the issues she has raised fall within the scope of that agreement.*fn3 The agreement states:

"The Corporation agrees to comply with all applicable laws, regulations, or ordinances governing this employment, including but not limited to Title VII of the Civil Rights Act . . . and [its] state or local counterpart . . ." "All disputes arising out of or concerning the interpretation or application of this Agreement, including without being limited to any claims that the application of this Agreement or the termination of the employment relationship established by this Agreement violates any federal, state, or local law, regulation, or ordinance (including but not limited to those set forth in paragraph 10 above), shall be resolved timely and exclusively by arbitration pursuant to the Rules of the American Arbitration Association (AAA) . . ."
Simmons Affidavit Ex.5 p. 4, ¶ 10, 11. Further, the Second Circuit has squarely held that Congress intended Title VII claims to be subject to arbitration. Desiderio v. NASD, 191 F.3d 198, 204-205 (2d Cir. 1999). See also Martens v. Smith Barney, 238 F. Supp.2d 596, 601 (S.D.N.Y. 2002); Zouras v. Goldman Sachs Group, Inc., 2003 U.S. Dist. LEXIS 14514 (S.D.N.Y. 2003). State and local discrimination claims are also arbitrable. See Fletcher v. Kidder, Peabody & Co., 81 N.Y.2d 623, 638 (N.Y. 1993); see also Martin v. SCI Mgmt. L.P., 296 F. Supp.2d 462, 467 (S.D.N.Y. 2003). FLSA claims are also arbitrable. See Martin, 296 F. Supp.2d at 467; see also Adkins v. Labor Ready, Inc., 303 F.3d 496, 506 (4th Cir. 2002). Having found that all claims at issue are subject to arbitration, there is no need to consider whether to stay any non-arbitrable claims against Collegis while the arbitration proceeds.

  a. Fee Sharing

  Plaintiff contends, however, that the arbitration agreement she signed is unenforceable because its fee sharing provision makes the cost of arbitration prohibitively high and prevents her from vindicating her statutory rights. Her argument, however, is without merit.

  The arbitration agreement states "[t]he parties shall share equally all costs of arbitration excepting their own attorneys fees." Simmons Affidavit Ex. 5 p. 4, ¶ 11. Plaintiff claims that under this provision, she will have to pay, in advance of arbitration, a fee of $11,750.00. In calculating this projected cost, plaintiff used the AAA fee schedule for disputes arising from "individually negotiated employment agreements."

  However, the dispute in this case arises not from an "individually negotiated employment agreement," but from an "employer-promulgated plan." This is made clear in the letter sent by the AAA to all parties on November 12, 2003: "[t]he Association has determined that this dispute arises from a plan . . ." Mancher Affirmation Ex. 1 [emphasis added]. The AAA rules provide that "[a]ny questions or disagreements about whether a matter arises out of an employer-promulgated plan or an individually-negotiated agreement shall be determined by the AAA and its determination shall be final." AAA National Rules for the Resolution of Employment Disputes, Mancher Affirmation Ex. 2 ("AAA Rules") p. 14. Thus, the proper fee schedule to consult in determining plaintiff's financial burden in this case is the fee schedule for employer-promulgated plans.

  According to the proper AAA fee schedule, the employee fee is capped at $125.00. AAA Rules p. 13. Although this is inconsistent with the provision in the arbitration agreement stating that all fees will be split equally, the AAA rules provide that when there is an adverse material inconsistency between the arbitration agreement and the AAA rules, the latter will apply. AAA Rules p. 5. Moreover, even if the arbitration agreement controlled, defendant Collegis has represented to the court that it "waives the requirement that the parties share the cost equally" Collegis Reply Memorandum of Law p. 4.

  A party who "seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive . . . bears the burden of showing the likelihood of incurring such costs." Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 92 (2000). Here, plaintiff has not shown that she will incur more than $125.00 for arbitration, nor has she shown that this capped fee will be prohibitively expensive for her. Courts in this circuit have held that where the plaintiff has not shown that she will incur more than $125.00, the burden of showing prohibitive costs has not been met. See Chamois v. Countrywide Home Loans, 2003 U.S. Dist. LEXIS 23202 (S.D.N.Y. 2003) (where the defendant has offered to pay all costs but the $125.00 filing fee, plaintiff has not met burden of showing prohibitive costs). In Gruber v. Louis Hornick & Co., 2003 U.S. Dist. LEXIS 8764 (S.D.N.Y. 2003), the court found it "clear that under the fee schedule for `employer-promulgated' [plans], plaintiff is not effectively precluded from vindicating her rights due to the fees of arbitrating." Thus, plaintiff has not met her burden for invalidating the arbitration agreement on the grounds of prohibitive costs.

  b. Timely Filing Requirements

  Plaintiff also contends that the arbitration agreement is unenforceable because defendant Collegis failed to timely complete the filing requirements for arbitration, and so defaulted on the opportunity to arbitrate. For the reasons stated below, this argument is also without merit.

  The arbitration agreement signed by parties provides that "[a]rbitration must be demanded within three hundred (300) calendar days of the time when the demanding party knows or should have known of the event or events giving rise to the claim." Simmons Affidavit Ex. 5 p. 4, ¶ 11. The parties agree that defendants should have first known about the events giving rise to the claim when plaintiff filed her previous claim in state court on January 9, 2003 (or a day later when service was effected on Collegis).*fn4 The deadline for demanding arbitration was therefore November 5 or 6, 2003. Defendant Collegis filed a demand for arbitration on November 5, 2003, and remitted its portion of the filing fee. The deadline for plaintiff to remit her portion of the filing fee of $125.00 was November 17, 2003.

  The AAA returned the filings on November 24, 2003 because plaintiff had failed to remit her filing fee, stating that it "cannot maintain files for incomplete cases." Perry Affidavit Ex. C. Plaintiff draws the conclusion that there was no proper demand for arbitration within the deadline specified by the arbitration agreement, and that defendants have therefore defaulted on the opportunity to arbitrate the case, "due to Collegis's failure to complete the filing requirements." Perry Affidavit, ¶ 10.

  Notwithstanding that it was plaintiff, not defendants, who failed to complete the filing requirements, this issue is not for the Court to decide and cannot defeat the motion to compel arbitration. The AAA rules provide, "[a]ny dispute over such issues shall be referred to the arbitrator." AAA Rules p. 6. The Supreme Court has held that in matters concerning the time limit rules involved in an arbitration dispute, courts should defer to the arbitrator. Thus, in Howsam v. Dean Witter Reynolds, 537 U.S. 79, 85 (2002), the Supreme Court found that "the applicability of the [National Association of Securities Dealers] time limit rule is a matter presumptively for the arbitrator, not for the judge."

  The Supreme Court has similarly held that any doubt concerning arbitrability "should be resolved in favor of arbitration, whether the problem at hand is the construction of contract language itself or an allegation of waiver, delay, or a like defense to arbitrability," Moses H. Cone Mem'l Hosp. V. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). See also Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 847 (2d Cir. 1987).

  c. Dismissal

  Plaintiff's arguments that the arbitration clause should not be enforced have no merit. All the claims she raises against the defendant Collegis are subject to arbitration. The FAA provides that a district court, upon determining that an action before it is subject to an enforceable arbitration provision, "shall . . . stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . ." 9 U.S.C. § 3. Because all of plaintiff's claims are subject to arbitration, no useful purpose will be served by granting a stay of plaintiff's claims against Collegis and thus its action against the defendant is dismissed. See Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992) (same); see also Mahant v. Lehman Bros., No. 99 Civ. 4421, 2000 WL 1738399, at *3-4 (S.D.N.Y. Nov. 22, 2000); E. Fish Co. v. South Pac. Shipping Co., Ltd., 105 F. Supp.2d 234, 241-42 & n. 10 (S.D.N.Y. 2000); Aerotel, 99 F. Supp.2d at 374; Berger v. Cantor Fitzgerald Secs., 967 F. Supp. 91, 96 (S.D.N.Y. 1997).

  Defendant Collegis' motion to compel arbitration is granted. Plaintiff's claims against defendant Collegis are dismissed.


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