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Salzano v. Lace Entertainment Inc.

United States District Court, S.D. New York

July 18, 2014

BENJAMIN SALZANO, individually and on behalf of all other persons similarly situated, Plaintiff,
LACE ENTERTAINMENT INC., et al., Defendants.


LORNA G. SCHOFIELD, District Judge.

Plaintiff Benjamin Salzano brings this case against Defendants Lace Entertainment Inc. ("LEI") and Glen Orecchio for unpaid wages, liquidated damages, and attorneys' fees and costs, claiming violations of the Federal Labor and Standards Act ("FLSA") and the New York Labor Law ("NYLL"). Defendants moved to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Alternatively, Defendants seek an order to compel arbitration and a stay of this action, pursuant to an agreement to arbitrate between Plaintiff and Defendant LEI. For the following reasons, the motion to dismiss is denied, and the motion to compel arbitration and stay this action is granted.


The facts below are taken from the Complaint and the "Non-Exclusive Lease of Dee Jay Equipment & Entertainment Facilities." From 2008 to 2012, Plaintiff Salzano worked as a disc jockey at Lace Gentlemen's Club, which Defendants own. Defendant Orecchio "exercised substantial control over the functions of the employees of [LEI], including the plaintiff..." and was Plaintiff's co-employer, along with Defendant LEI. Defendants allegedly did not compensate Plaintiff for his work at Lace Gentlemen's Club from 2008 until around July 2012, after which Defendants compensated Plaintiff at the rate of $30.00 per shift, which lasted about eight to ten hours.

In each of the years 2010, 2011 and 2012, Plaintiff signed a one-year contract with LEI. The contract was in substance the same each year, and is referred to below, individually or collectively, as the "Contract." The Contract discusses the terms of a purported lease, the Plaintiff's obligations and compensation, LEI's obligations and the relationship of the parties.

The Contract contains an arbitration clause that provides in bold and all capital letters: "All disputes arising from this lease shall be exclusively decided by binding arbitration in accordance with rules of the American Arbitration Association and as may be modified by any state arbitration act. All fees shall be paid by non-prevailing party." The Contract also provides in bold and all capital letters:

Disc Jockey agrees that all claims between he/she and club will be litigated individually and that they will not consolidate or seek class treatment for any claim. Disc Jockey further agrees not to commence any action, suit or arbitration proceedings relating in any manner whatsoever to this lease or to his/her performing at the premises of club more than six months after he/she last performed at the premises and further agrees to waive any statute of limitations to the contrary....

On December 17, 2013, Defendants spoke to Plaintiff by telephone and waived the both the statute of limitations and fee-shifting provisions in the Contract.


Defendants have moved to dismiss the case for lack of subject matter jurisdiction or, in the alternative, compel Plaintiff to arbitrate the claims pursuant to Section 3 of the Federal Arbitration Act and stay the case. No "case in this Circuit has held that mandatory arbitration clauses of the type at issue here deprive courts of subject matter jurisdiction of claims sounding in federal law." Acevedo v. Tishman Speyer Props. L.P., 12 Civ. 1624, 2013 WL 1234953, at *2 (S.D.N.Y. Mar. 26, 2013) (citing 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009)). Accordingly, the Court treats the pending motion as a motion to compel arbitration and stay the case pending outcome of the arbitration.


The Court compels Plaintiff to arbitrate his FLSA and NYLL claims because he agreed to arbitrate, the arbitration clause covers Plaintiff's claims, and FLSA and NYLL claims were not intended by the respective legislatures to be nonarbitrable. See JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004) (compelling arbitration when the parties agreed to an arbitration clause that covered the statutory claims, which were not intended by the respective legislatures to be nonarbitrable). Moreover, the Contract is not unconscionable because Defendants have waived the provisions that otherwise would have made the agreement substantively unconscionable. See Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 124 (2d Cir. 2010) (compelling arbitration after the defendants waived substantively unconscionable provisions). Furthermore, Defendant Orecchio may compel arbitration because, even though he is not a signatory to the arbitration agreement, he has a close relationship to Plaintiff, the signatory, and the issues Orecchio seeks to resolve are factually intertwined with the agreement between Plaintiff and LEI. See id. at 127-28 (holding that a non-signatory can compel arbitration under such circumstances). Therefore, Plaintiff is compelled to arbitrate his FLSA and NYLL claims against both Defendants.

In order to determine whether to compel arbitration, a court must decide: (1) whether the parties agreed to arbitrate; (2) the scope of the arbitration clause; and (3) where statutory claims are asserted, whether the relevant legislature intended those claims to be nonarbitrable. Stolt-Nielsen SA, 387 F.3d at 169. "[A]ny doubts concerning the scope of arbitrable issues [should be resolved] in favor of arbitration, [even if] the problem at hand is the construction of the contract language itself. ..." Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 393 (2d Cir. 2011) (emphasis added) (internal quotation marks and citation omitted). Where an arbitration clause is broad, there is a presumption of arbitrability that may only be overcome if "it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that [it] covers the asserted dispute." Anderson v. Am. Express Co. ( In re Am. Exp. Fin. Advisors Sec. Litig. ), 672 F.3d 113, 128 (2d Cir. 2011) (internal quotation marks and citation omitted).

In this case, the parties signed an agreement that contained an arbitration clause and agreed to arbitrate any dispute arising from that agreement. The clause was a "clear, explicit and unequivocal agreement to arbitrate.'" Dixon v. NBC Universal Media, 947 F.Supp.2d 390, 399 (S.D.N.Y. 2013) (quoting Fiveco, Inc. v. Haber, 893 N.E.2d 807, 809 (N.Y. 2008)). Furthermore, the arbitration clause here is broad because it specifies that " all disputes arising from this lease shall be... decided by... arbitration...." See McDonnell Douglas Fin. Corp. v. Penn. Power & Light Co., 858 F.2d 825, 832 (2d Cir. 1988) ("[A] broad clause [is one] in ...

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