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Armstead v. Starbucks Corp.

United States District Court, S.D. New York

November 17, 2017



          P. Kevin Castel United States District Judge.

         Plaintiff Ebony Armstead alleges that defendant Starbucks Corporation (“Starbucks”) had a policy of “time shaving” employee hours, in violation of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”), and the New York Labor Law (“NYLL”). According to Armstead, while employed by Starbucks as a barista, she was required to clock out at a fixed time but to continue working without compensation. She alleges that Starbucks required her to work approximately 9.5 uncompensated hours each week.

         Starbucks moves to stay proceedings and compel arbitration. According to Starbucks, during the hiring process, Armstead electronically signed an arbitration agreement (the “Arbitration Agreement”) that requires her claims to be decided by an arbitrator. Starbucks moves to compel arbitration and stay proceedings pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq. It also seeks to dismiss Armstead's allegations in support of a collective or class action for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), Fed. R. Civ. P.

         For the reasons that will be explained, the motion to compel arbitration and stay this proceeding is granted. The motion to dismiss plaintiffs' allegations related to her putative class action and collective action claims is denied without prejudice. BACKGROUND.

         A. Armstead's Claims.

         Armstead alleges that in or about May 2015, Starbucks hired her to work as a barista at its branch on Waverly Place and Sixth Avenue in Greenwich Village. (Amended Complaint (the “Complaint”) ¶ 22.) She occasionally was assigned to shifts at other Starbucks locations in the nearby Chelsea neighborhood. (Compl't ¶ 23.)

         According to Armstead, she worked from approximately 4 p.m. to 2 a.m. five days a week, and from 4 p.m. until 12:30 a.m. two days per week. (Compl't ¶ 24.) Armstead asserts that management required employees to clock out of work at 11:30 p.m., but to continue working off the clock until the shift ended. (Compl't ¶ 25.) Armstead alleges that she worked approximately 9.5 uncompensated hours every work week, and that Starbucks failed to pay overtime for hours worked in excess of 40 per week. (Compl't ¶¶ 25-26.) The Complaint includes allegations in support of collective action certification under the FLSA and class action certification for Armstead's NYLL claims. (Agrm't ¶¶ 11-21.)

         B. The Starbucks Arbitration Agreement.

         Starbucks moves to compel arbitration, stay this action, and dismiss Armstead's allegations in support of a class action and collective action. (Docket # 27.) Starbucks annexes a copy of the Arbitration Agreement that it contends governs Armstead's claims. (Kennedy Dec. Ex. G.) The Agreement states in part:

Mutual Agreement to Arbitrate. Starbucks and I agree to use binding individual arbitration to resolve any “Covered Claims” that arise between me and Starbucks, its subsidiaries and related companies . . . . “Covered Claims” are those brought under any statute, local ordinance, or common law relating to my employment, including those concerning any element of compensation, harassment, discrimination, retaliation, recovery of bonus or relocation benefits, leaves of absence, accommodations, or termination of employment.
Except as provided herein, I understand and agree that arbitration is the only forum for resolving Covered claims, and that both Starbucks and I waive the right to a trial before a judge or jury in federal or state court. . . .
Except as provided below, Starbucks and I agree that the Arbitrator - and not a court or agency - shall have exclusive authority to resolve any dispute regarding the formation, interpretation, applicability, enforceability, or implementation of this Agreement, including any claim that all or part of this Agreement is void or voidable.

(Kennedy Dec. Ex. G; emphasis in original.)

         The Agreement also waives a plaintiff's ability to bring claims in a class or collective action. (Kennedy Dec. Ex. G.) It excludes certain categories of claims from arbitration, including those involving workers' compensation or unemployment benefits, charges with the Equal Employment Opportunity Commission and similar agencies, or actions to enforce or vacate an arbitration award. (Kennedy Dec. Ex. G.) It also sets forth procedures to be used during arbitration and for the selection of an arbitrator. (Kennedy Dec. Ex. G.)


         “Under the [FAA] ‘[a] written provision in . . . a contract . . . to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable.'” Meyer v. Uber Techs., Inc., 868 F.3d 66, 73 (2d Cir. 2017) (quoting 9 U.S.C. § 2). “[P]arties can petition the district court for an order directing that ‘arbitration proceed in the manner provided for in such agreement.'” Nicosia v., Inc., 834 F.3d 220, 229 (2d Cir. 2016) (quoting 9 U.S.C. § 4). “The district court must stay proceedings once it is ‘satisfied that the parties have agreed in writing to arbitrate an issue or issues underlying the district court proceeding.'” Nicosia, 834 F.3d at 229 (citing WorldCrisa Corp. v. Armstrong, 129 F.3d 71, 74 (2d Cir. 1997)).

         “[B]efore an agreement to arbitrate can be enforced, the district court must first determine whether such agreement exists between the parties. This question is determined by state contract law.” Meyer, 868 F.3d at 73-74 (citing Nicosia, 834 F.3d at 229; see also PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198 (2d Cir. 1996) (“in interpreting an arbitration ...

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