510 F.Supp.3d 8
W.D.N.Y.2021Background
- In Oct. 2017 Derfert received a conditional offer from Charter and signed a mutual Arbitration Agreement requiring arbitration of employment/discrimination claims.
- Charter rescinded the offer in Nov. 2017 after a background-check report; Derfert filed a NYSDHR discrimination complaint on June 11, 2018.
- NYSDHR issued a probable-cause determination and scheduled a public hearing before an ALJ; Charter notified NYSDHR that the claim was subject to arbitration.
- Charter filed a petition in federal court (July 17, 2020) to compel arbitration under the FAA and to enjoin Derfert from pursuing claims outside arbitration; NYSDHR intervened and moved to dismiss Charter’s injunction claim.
- The court issued a TRO pausing the NYSDHR proceeding, held argument, and ultimately granted NYSDHR’s motion to dismiss the injunctive-relief claim and denied Charter’s motion insofar as it sought to halt the NYSDHR proceeding; relief was left open if Derfert later intervenes or files suit.
Issues
| Issue | Charter's Argument | NYSDHR / Derfert's Argument | Held |
|---|---|---|---|
| Standing to oppose injunction | NYSDHR lacks Article III standing to oppose because Charter seeks relief against Derfert, not NYSDHR | NYSDHR is proper intervenor and has a direct prosecutorial interest to defend NY public-interest enforcement | Court rejected Charter’s standing challenge; NYSDHR may oppose (permissive intervention context) |
| Whether FAA/preemption allows enjoining NYSDHR proceeding (Enjoin Claim) | Preston controls: FAA supersedes state rules lodging primary jurisdiction in administrative forum; Charter likely to succeed and is entitled to injunction to enforce arbitration clause exclusively | NYSDHR likened to EEOC in Waffle House: it acts prosecutorially to vindicate public interest; FAA does not bar agency enforcement actions or an administrative public hearing | Court held NYSDHR acts both prosecutorially and adjudicatively; this case is more like Waffle House than Preston—Charter failed to show likelihood of success; injunction denied as to halting NYSDHR proceeding |
| Whether court should compel Derfert to arbitrate or move NYSDHR proceeding into arbitration (Compel Claim under 9 U.S.C. §4) | Charter seeks an order compelling arbitration and preventing non-arbitral adjudication | NYSDHR takes no position on whether arbitration would succeed; argues it may proceed to investigate and hold public hearing | Court held NYSDHR hearing does not constitute refusal to arbitrate by Derfert; court will not compel arbitration or displace NYSDHR proceedings now; claim denied without prejudice if Derfert later intervenes or sues |
Key Cases Cited
- Waffle House, Inc. v. EEOC, 534 U.S. 279 (2002) (agency enforcement suits to vindicate public interest are not precluded by private arbitration agreements)
- Preston v. Ferrer, 552 U.S. 346 (2008) (FAA preempts state laws that vest primary adjudicative authority in administrative forums when agency acts as adjudicator, but does not displace agency prosecutorial authority)
- Joulé, Inc. v. Simmons, 944 N.E.2d 143 (Mass. 2011) (state commission may proceed with investigation/hearing despite arbitration clause; complainant may be barred from being a party but may testify)