The opinion of the court was delivered by: John G. Koeltl, District Judge
Pursuant to 9 U.S.C. §§ 3 and 4, the defendants, Atlantic Video, Inc. ("AVI") and ESPN, Inc. ("ESPN") (collectively the "defendants") move to dismiss the Complaint and to compel arbitration of the plaintiff's sexual harassment and retaliation claims brought under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e-2(a), and the New York State and New York City Human Rights Laws.*fn1 The defendants rely on an arbitration agreement purportedly signed by the plaintiff on February 22, 2005, which contains language agreeing to submit to the American Arbitration Association ("AAA") for trial and binding arbitration under the AAA's Employment Arbitration Rules (as modified) "any and all claims and controversies arising out of my employment or its termination including, but not limited to, . . . claims of sexual harassment; and claims for violation of any federal, state, or local government law . . . ." (AV-3, or "Arbitration Agreement".)
The plaintiff opposes the motion to dismiss and compel arbitration on three grounds. First, she disputes that the Arbitration Agreement is genuine, and she maintains the signature on the agreement is a forgery. (Aff. of Rita Ragone, dated Oct. 20, 2007 ("Ragone Aff.") ¶ 13.) Second, the plaintiff argues that the Arbitration Agreement is unenforceable because it is substantively and procedurally unconscionable. Finally, the plaintiff alleges that the Arbitration Agreement cannot be enforced by ESPN because ESPN did not sign the arbitration agreement.
Because there were factual issues as to whether the plaintiff in fact signed the Arbitration Agreement, the Court, with the agreement of the parties, held an expedited non-jury trial on July 15 and 21, 2008 to resolve the factual issues. At the hearing, Ms. Ragone and Edward ("Ted") Nelson, a technical producer for Atlantic Video, testified. Peter Tytell, a handwriting expert, also testified. The Court now makes the following findings of fact and reaches the following conclusions of law.
For ten years the plaintiff has been a celebrity makeup and hair artist in television, photo shoots, and private jobs. She is also a beautician and cosmetologist. (Tr. 5.) The plaintiff auditioned with AVI for a job as a makeup artist. After working as a freelancer, she was offered and accepted a position as a Makeup Artist reporting to Ted Nelson. (Tr. 5, 117.) On February 22, 2005, Ms. Ragone was interviewed by Ted Nelson, General Manager of ATV. Ms. Ragone testified that the entire session took about twenty minutes while Mr. Nelson testified more credibly that it took about an hour. (Tr. 8, 117.) In any event, the session was a reasonably substantial meeting. There were only slight negotiations on the amount of money to be paid.
In the course of the meeting Ms. Ragone agreed to accept the offer of employment and Mr. Nelson presented Ms. Ragone with documents to be signed. Ms. Ragone had the opportunity to take the documents home to read them, but chose not to do so. (Tr. 121.) Ms. Ragone signed a letter accepting the offer of employment. (Tr. 120; AV-2.) The document specifically refers to an Attachment, which is an "Arbitration Agreement." Ms. Ragone also signed the Arbitration Agreement, AV-3. (Tr. 121-22.) The Arbitration Agreement reflects that Ms. Ragone signed the document, dated it and also spelled out her name on the document. The Arbitration Agreement contains the broad arbitration clause recited at the beginning of this Opinion.
Mr. Nelson testified credibly that he saw Ms. Ragone sign the Arbitration Agreement and fill out the other information in the Agreement. The signature does appear to be Ms. Ragone's. Mr. Nelson's testimony was also supported by the testimony of the handwriting expert Mr. Tytell that the person who signed the Arbitration Agreement was the same person who signed numerous other documents that Ms. Ragone admitted to having written. (Tr. 71.) While the document contains three notations in the upper right corner, those markings show changes from a prior draft and do not affect in any way the substance of the document (Tr. 122-23; 140-42.)
Ms. Ragone testified that she did not recall signing the Arbitration Agreement and that it did not look like her signature, and that she did not believe she signed it, but avoided categorically denying that she signed the document.
(Tr. 22-27.) The credible testimony establishes that Ms. Ragone did in fact sign the Arbitration Agreement, although she may not now recall doing so.
There is no dispute that AVI hired the plaintiff as a makeup artist and assigned her to provide make-up services to one of AVI's major clients, ESPN. (Compl. ¶¶ 11, 13.) The plaintiff worked on the set of "Cold Pizza," a television morning sports program. (Compl. ¶¶ 13-14.) During the course of her employment, the plaintiff alleges she was subjected to pervasive sexual harassment and that she was forced to work in a hostile environment. (Compl. ¶¶ 18-19, 21-23.) She alleges that she was discharged in April 2005 for reporting the sexual harassment to managers at AVI and ESPN. (Compl. ¶¶ 69, 84, 91.)
The first matter to be resolved is whether the Federal Arbitration Act ("FAA") or New York state law must be applied to each of the plaintiff's defenses. "Section 2 of the FAA ensures that courts enforce arbitration clauses incorporated in contracts involving interstate commerce, thereby 'creat[ing] a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act'."
Sec. Ins. Co. of Hartford v. TIG Ins. Co., 360 F.3d 322, 325 (2d Cir. 2004) (quotations omitted). However, the arbitration agreement contains a choice-of-law provision, which states, "I further understand, acknowledge, and agree that this Agreement shall be construed and enforced in accordance with the laws of the state of New York, without regard to principles of conflicts of law." (Arbitration Agreement ¶ 2.)
The plaintiff's first two defenses should be analyzed under New York law. The question of whether a valid arbitration agreement exists at all is an issue of state law. "When contract formation is at issue in an FAA case, we generally apply state law principles." Adams v. Suozzi, 433 F.3d 220, 227 (2d Cir. 2005); see also Colorado-Arkansas-Texas Distrib., L.L.C. v. Am. Eagle Food Prod., Inc., 525 F. Supp. 2d 428, 433 (S.D.N.Y. 2007). Furthermore, "[i]t is clear that questions of contractual validity relating to the unconscionability of the underlying arbitration agreement must be resolved first, as a matter of state law, before compelling arbitration pursuant to the FAA." Cap Gemini Ernst & Young, U.S., L.L.C. v. Nackel, 346 F.3d 360, 365 (2d Cir. 2003); see also Dumanis v. Citibank (South Dakota), N.A., No. 07 Civ. 6070, 2007 WL 3253975, at *2 (W.D.N.Y. Nov. 2, 2007); Anonymous v. JP Morgan Chase & Co., No. 05 Civ. 2442, 2005 WL 2861589, at *5 (S.D.N.Y. Oct. 31, 2005) ("In determining whether a generally applicable contract defense may invalidate an arbitration agreement, a court looks to state law.") (citation omitted).
Because the plaintiff's argument that she did not sign the arbitration agreement goes to whether a valid arbitration agreement was formed, New York law governs the plaintiff's first defense. Because the plaintiff's argument that the arbitration agreement is unconscionable goes to whether the agreement is contractually valid, New York law also governs her second defense.
The Court of Appeals for the Second Circuit has apparently looked to the federal substantive law of arbitrability to determine whether a non-signatory to an arbitration agreement can compel a signatory to that agreement to arbitrate a dispute. Thomson-CSF, S.A. v. Am. Arbitration Ass'n, 64 F.3d 773, 779 (2d Cir. 1995). As the Court of Appeals explained: "[s]everal courts of appeal have recognized an alternative estoppel theory requiring arbitration between a signatory and a non-signatory . . . . In these cases, a signatory was bound to arbitrate with a non-signatory at the non-signatory's insistence because of the close relationship between the entities involved, as well as the relationship of the alleged wrongs to the non-signatory's obligations and duties in the contract . . ...