The opinion of the court was delivered by: John Gleeson, United States District Judge
Isaac Reid and 14 other named plaintiffs bring this putative class action under various state and federal employment laws. Defendants SuperShuttle International Inc., SuperShuttle Franchise Corporation, Veolia Transportation Services, Inc., and Shuttle Associates, LLC (collectively, "defendants") move under Federal Rule of Civil Procedure 12(b) to dismiss certain of plaintiffs' claims as subject to binding arbitration agreements, unexhausted, or time-barred. For the following reasons, the motions to compel arbitration and to dismiss are granted in part and denied in part.
Plaintiffs' complaint was filed on December 2, 2008, and amended on February 12, 2009. The following facts, except where indicated, are drawn from the plaintiffs' amended complaint and are assumed to be true for the purposes of this motion.
Defendants provide airport transportation service to customers in metropolitan areas throughout the United States. Plaintiffs drove the vehicles transporting defendants' customers pursuant to SuperShuttle Unit Franchise Agreements ("UFAs") executed with defendant Shuttle Associates. Some of the plaintiffs signed UFAs on or before December 2, 2002 ("pre-2002 plaintiffs"). In addition, five plaintiffs signed UFAs containing an arbitration clause. Those plaintiffs are referred to by the parties as the "post-2005 plaintiffs."
Although the plaintiffs' contracts with Shuttle Associates are styled as "franchise agreements" and state that the "Franchisee[s]" are "independent contractor[s]," Amended Compl. ¶ 52, the thrust of the complaint is that defendants' extensive control over the plaintiffs' day-to- day operations rendered plaintiffs employees of defendants. As a result, the plaintiffs bring eleven causes of action, alleging violations of New York State Labor Law, the federal Fair Labor Standards Act ("FLSA"), the Employment Retirement Income Security Act of 1974 ("ERISA") and common law. Specifically, the plaintiffs contend that in violation of the New York State Labor Law, the defendants: (i) illegally deducted from the plaintiffs' wages (First Cause of Action); (ii) illegally required the plaintiffs to make separate payments to cover unauthorized charges (Second Cause of Action); (iii) failed to pay plaintiffs the minimum wage (Seventh Cause of Action); (iv) failed to pay them overtime wages (Eighth Cause of Action); and (v) failed to pay them spread-of-hours pay (Ninth Cause of Action). In addition, the plaintiffs allege that the defendants failed to pay them the minimum wage (Tenth Cause of Action) and overtime wages (Eleventh Cause of Action) in violation of FLSA. The plaintiffs also allege that they are entitled to the defendants' ERISA benefit plans (Sixth Cause of Action), that the defendants intentionally misrepresented the plaintiffs' employment status (Third Cause of Action) and that the defendants were unjustly enriched as a result of this misrepresentation (Fourth Cause of Action). Finally, the plaintiffs contend that they are entitled to declaratory relief in this case (Fifth Cause of Action).
A. The Motion to Compel Arbitration
The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-14, reflects a Congressional policy in favor of enforcing arbitration clauses in contracts. See, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24-25 (1991) (noting that FAA provisions "manifest a liberal federal policy favoring arbitration agreements." (internal quotations omitted)). The FAA provides that arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The Second Circuit has established a two-part inquiry for determining the arbitrability of claims arising out of contracts not covered by other federal statutes: "(1) whether the parties agreed to arbitrate disputes at all; and (2) whether the dispute comes within the scope of the arbitration agreement." ACE Capital Re Overseas Ltd. v. Cent. United Life Ins. Co., 307 F.3d 24, 28 (2d Cir. 2002) (internal citation omitted).
The defendants move to compel arbitration of the claims brought by five of the 15 named plaintiffs, the ones referred to as the "post-2005" plaintiffs. Specifically, defendants rely on arbitration clauses in five specific UFAs: a June 10, 2008 agreement signed by Ibrahim Bah; a May 31, 2005 agreement signed by Marie Dasney; a September 28, 2005 agreement signed by Orville Harris; a May 16, 2007 agreement signed by Lionel Singh; and a May 26, 2005 agreement signed by Mamadou Wague. Cerasia Decl. Ex. D.
Plaintiffs do not dispute that these agreements were executed or that they contain both an agreement to arbitrate certain claims and an agreement that certain proceedings shall be resolved on an individual rather than a collective basis ("the class action waiver"). However, they argue that the class action waiver is unenforceable under the Second Circuit's decision in In re American Express Merchants' Litigation, 554 F.3d 300 (2d Cir. 2009). They also argue that the arbitration provision as a whole is unconscionable. As discussed below, these arguments are meritless.
1. The Class Action Waiver Is Valid
In American Express, the Second Circuit addressed for the first time the enforceability, "under the federal substantive law of arbitrability," of an "arbitration clause containing [a] class action waiver." Id. at 312. At the outset, the Court noted that "when 'a party seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs." Id. at 315 (quoting Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 92 (2000)). In concluding that the plaintiffs had met this burden, the court relied on the "essentially uncontested" opinion of an expert economist retained by the plaintiff demonstrating that an individual antitrust plaintiff bringing a single tying claim under the Clayton Act would incur hundreds of thousands of dollars in litigation expenses but recover less than $40,000 in trebled damages. Id. at 317.
Fourteen months after the decision in American Express, the contours of the plaintiff's burden of establishing unenforceability to defeat a motion to compel arbitration are not clear. The "evidence" marshaled by plaintiffs here is obviously far less than that found sufficient in American Express. In lieu of an expert opinion, the plaintiffs here simply assert that "the cost of litigating the claims asserted here will easily eclipse the $1 million mark," and that "Plaintiffs' counsel has specific experience in prosecuting driver misclassification actions and has spent in excess of $1 million in time and expenses to date in an action that has only reached the summary judgment phase." Pl. Mem. 4. They also assert that the potential recovery "for the claims brought under [New York Labor Law ("NYLL")] yields $300,000." Id. at 4 n.3.
Plaintiffs' first two assertions, even if credited, shed little light on the cost of an individual claim. The claims asserted here involve 15 plaintiffs and encompass not only New York Labor Law, but claims under ERISA, FLSA, and state common law as well. The nature of the other driver misclassification action alluded to are unknown. Thus, to the extent that these claims are prohibitively expensive to litigate, it is not clear whether this expense results from the inherent complexity of Labor Law claims or from the sheer number of individual plaintiffs and discreet claims involved. By contrast, the expert opinion in American Express persuasively reasoned that even a single tying claim under the Clayton Act would require an economic antitrust study that would cost "at least several hundred thousand dollars." 554 F.3d at 316. Thus, even if it is sufficient for a plaintiff to simply allege that an individual action would be cost-prohibitive, plaintiffs have failed to do so. Instead, they allege only that a 15-plaintiff suit containing 11 causes of action and spanning a period of over six years would cost well over $1 million, and that another action they are handling has also cost this amount.
The plaintiffs' assertions regarding the potential recovery are also unavailing. They are supported by "a true and correct copy of a 2008 annual Income Statement from a driver 'franchisee' of SuperShuttle." Overs Decl. Ex. A. This document suggests that during 2008, the driver in question reported $68,052 in revenue and paid SuperShuttle $56,322 in fees and other charges, for a net revenue of $11,730. It also estimates that the driver received $10,208 in tips. Plaintiffs apparently assume that this plaintiff's potential recovery under NYLL is approximately equal to the amount this plaintiff paid to SuperShuttle in 2008 ("approximately $50,000,") times the six years for which this amount is recoverable (due to the six-year limitations period governing this claim). Pl. Mem. 4 n.3. Aside from the fact that this estimate arbitrarily lops off 10% of plaintiff's payments, it also assumes, without justification, that 2008 was a representative year for this plaintiff, and that this individual is a representative plaintiff. Yet even if I were to credit these assertions, this plaintiff's potential recovery far outstrips the estimated recovery of the individual plaintiff in American Express. Furthermore, as discussed above, plaintiffs fail to allege what it would cost this prospective claimant to recover this amount.
Plaintiffs also suggest that this Income Statement demonstrates that prospective plaintiffs are unable to finance this litigation themselves. While that may be true, I do not regard it as especially probative. A plaintiff with a colorable $300,000 claim will undoubtedly find at least one lawyer willing to prosecute his case on a contingency basis, and plaintiffs have failed to demonstrate that it would be irrational for a lawyer to do so.
Although plaintiffs argue that their case is indistinguishable from American Express, they have failed to produce an expert opinion comparable to the one found compelling in that case. Indeed, they have failed to successfully allege, much less establish, that individual litigation of the claims at issue here would be cost-prohibitive. Furthermore, they have not requested a hearing on the matter or argued that they do not have control over the information necessary to make such a showing. Accordingly, I cannot conclude that enforcing the class action waiver in this case would grant defendants "de facto immunity" from liability under ERISA, New York Labor Law, or any other body of substantive law "by removing the plaintiffs' only reasonably feasible means of recovery." American Express, 320 F.3d at 320.
2. The Arbitration Clauses Are Not Unconscionable
Plaintiffs argue that "the arbitration clause should be rejected as unconscionable under § 2 of the FAA." Pl. Mem. 7. In New York,*fn1 [a] determination of unconscionability generally requires a showing that the contract was both procedurally and substantively unconscionable when made --i.e., some showing of an absence of meaningful choice on the part of one of ...