United States District Court, S.D. New York
July 27, 2004.
DOROTHEA PERRY, Plaintiff,
NEW YORK LAW SCHOOL and COLLEGIS, INC., Defendants.
The opinion of the court was delivered by: GEORGE DANIELS, District Judge
MEMORANDUM OPINION & ORDER
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
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
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
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).
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.