United States District Court, S.D. New York
MEMORANDUM & ORDER
ALISON J. NATHAN, District Judge.
This is a collective action for unpaid wages and overtime pay, brought under the Fair Labor Standards Act ("FLSA"), the New York Labor Law ("NYLL"), and New York common law. Defendants Subcontracting Concepts, LLC ("SCI") and Robert Slack (collectively, "SCI Defendants") have filed the instant motion to dismiss and compel arbitration as to Plaintiff Kenneth Chow ("Plaintiff'). Dkt. No. 70. Defendants A-1 International, Inc. ("A-1"), Ronald DeSena, John Rutigliano, and Javier Reyes (collectively, "A-1 Defendants") have filed an additional memorandum in support of that motion, which argues "that Plaintiffs claims against the A-1 Defendants must also be dismissed pursuant to this enforceable arbitration provision." A-1 Br. I. For the reasons that follow, the motion is GRANTED.
Plaintiff alleges that he "worked for defendants as a local delivery driver from approximately mid-June 2012 to late August, 2012, " during which time he was supervised by A-1 employee Javier Reyes and given assignments by other A-1 employees. Second Amended Complaint ("SAC") ¶¶ 74-77. Plaintiff's paychecks, however, "bore the SCI name and logo, " id. ¶ 86, and each of his legal claims are alleged against all "defendants" generally. See, e.g., id. ¶ 102 (alleging that "[d]efendants failed to compensate Plaintiffs" proper overtime wages).
On June 11, 2012, Plaintiff signed an Owner/Operator Agreement ("Agreement") with SCI, which is a "third party administrator for owner/operators in the courier and transportation business." Eder Decl. 3; Agreement, Eder Decl. Ex. 1; Eder Decl. Ex. 3 ¶ 2. In that capacity, "SCI contracts with courier and logistics companies, including [A-1], to offer payment processing and other back-office services to companies that use owner-operators." Eder Decl. Ex. 3 ¶ 2.
Among other things, the Agreement provides that "any dispute, claim, question, or disagreement arising from or relating to [the Agreement] or breach thereof" that exceeds the jurisdictional maximum for the local small claims court "shall be finally settled by arbitration in accordance with the Federal Arbitration Act." Agreement, Eder Decl. Ex. 1 ¶ 26. The arbitration provision within the Agreement further provides that: (1) "[t]he arbitrators will have authority to award actual monetary damages only, " expressly prohibiting the award of "punitive or equitable relief;" and (2) "[a]ll parties shall bear their own costs for arbitration, " expressly prohibiting the award of "attorney's fees or other costs... to either party." Id.
The SCI Defendants filed this motion on July 31, 2013, requesting "an Order dismissing Kenneth Chow's action and compelling [him] to arbitrate his claims that are the subject of this lawsuit." See Def. Br. 1.
The SCI Defendants argue that arbitration of Plaintiff's FLSA and NYLL claims is mandated by the arbitration provision of the Agreement, pursuant to the Federal Arbitration Act ("FAA"). Under the FAA, agreements to arbitrate are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract, " and must be "rigorously enforce[d]... according to their terms." American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304, 2309 (2013) (quoting 9 U.S.C. § 2; Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221 (1985)). In general, the FAA "reflects the overarching principle that arbitration is a matter of contract." Id. (citing Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772, 2776 (2010)). Accordingly, a court should order arbitration if it is satisfied that the agreement to arbitrate: (1) was validly formed; (2) is enforceable; and (3) applies to the dispute at issue. See In re A2P Antitrust Litig., ___ F.Supp.2d ___, 2013 WL 5202824, at *5 (S.D.N.Y. 2013) (quoting Granite Rock Co. v. Int'l Bhd. Of Teamsters, 130 S.Ct. 2847, 2858-59 (2010)). There being no dispute that the Agreement containing the arbitration agreement was validly formed, the Court focuses its attention on the applicability of the arbitration provision to the current dispute and its enforceability. See Pl. Opp. 2, 6. In addition, the Court must determine whether and to what extent the arbitration provision applies to the nonsignatory A-1 Defendants and Robert Slack. See Def. Br. 8; A-1 Br. 1.
A. Scope of Agreement to Arbitrate
As an initial matter, the Court addresses whether the arbitration agreement, by its own terms, applies to the current action, as arbitration may be compelled "only where [the court] is satisfied that the parties agreed to arbitrate that dispute." Granite Rock, 103 S.Ct. at 2856 (emphasis in original) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). In general, courts interpret arbitration provisions by "apply[ing] ordinary state-law principles that govern the formation of contracts." First Options, 514 U.S. at 944 (internal citations omitted). In doing so, however, courts must give "due regard... to the federal policy favoring arbitration" and resolve "ambiguities as to the scope of the arbitration clause itself... in favor of arbitration." Volt Info. Scis, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 475-76 (1989); see also Ciago v. Ameriquest Mortgage Co., 295 F.Supp.2d 324, 331 (S.D.N.Y. 2003) ("[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.") (alteration in original) (quoting Moses H. Cone Mem? Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).
The arbitration provision at issue in this case purportedly applies to "any dispute, claim, question, or disagreement arising from or relating to this agreement or the breach thereof" Agreement, Eder Decl. Ex. ¶ 26. The provision further provides that any such dispute, claim, or question that exceeds the jurisdictional maximum for the local small claims court "shall be finally settled by arbitration in accordance with the Federal Arbitration Act." Id. According to SCI, this provision requires Plaintiff to "arbitrate all claims related to SCI, Plaintiff's agreement with SCI, or any rights or obligations stemming from Plaintiff's relationship with A-1." Def. Br. 8. Because this action "involv[es] the rate of pay [Plaintiff] believes he was supposed to have received, " SCI contends that it is "squarely covered" by the arbitration provision. Def. Reply 3. In particular, SCI points to Paragraph Fifteen of the Agreement, which provides that "the Owner/Operator shall be paid a fee based on a schedule of rates negotiated by them." Def. Reply 3 (quoting Agreement, Eder Decl. Ex. 1 ¶ 15).
The Court agrees. Plaintiff's claims are essentially claims for unpaid wages, and particularly for unpaid wages allegedly owed him as an employee under FLSA and NYLL, see Compl. ¶¶ 102-141, and under the terms of their contract, see Compl. ¶¶ 142-47. These claims are therefore related to the Agreement, which addresses the rates at which he is to be paid, see Agreement, Eder Decl. Ex. 1 ¶ 15. Moreover, Plaintiff's relationship with SCI is, at the very least, related to the Agreement-without which it would not exist. See Agreement, Eder Decl. Ex. 1 ¶ 26. In light of the plain language of the provision and the "due regard" owed the federal policy favoring arbitration, Volt Info. Scis. Inc., 489 U.S. at 476, the Court finds that Plaintiff's claims fall within the scope of the arbitration provision of the Agreement.
The Court is not persuaded otherwise by Plaintiff's argument that "[his] employment claims cannot arise from [the Agreement]" when read in light of the entire Agreement, and particularly provisions expressly disclaiming the existence of an employer-employee relationship between the parties. See Pl. Opp. 4 ("[N]o employer/employee relationship is created as a result of th[e] Agreement.") (second alteration in original) (citing Agreement, Eder Decl. Ex. 1 ¶ 6). According to Plaintiff, this explicit rejection precludes application of the arbitration provision to the instant action, because "an employer - as a matter of common logic and equity - cannot simultaneously urge that the contract is not one of employment and that it was intended to cover employment claims." Pl. Opp. 4. But SCI's insistence that it is not an "employer" for purposes of FLSA and NYLL does not contradict its position that the instant employment claims are covered by the arbitration provision. Cf. Pl. Opp. 4-5 (characterizing this as a contradiction to "be avoided in construing and enforcing a contract") (citing Minerals Techs., Inc. v. Omya AG, 406 F.Supp.2d 335, 340 (S.D.N.Y. 2005)). As Plaintiff notes in his brief, whether the parties' relationship is properly characterized as an employment relationship under FLSA and NYLL is determined by "economic realities, not contractual labels." Pl. Opp. 4 (citing Barfield v. New York City Health & Hosps. Corp., 537 F.3d 132, ...