789 F. Supp. 2d 308
D. Conn.2011Background
- Plaintiffs D'Antuono, Cruz, and Vilnit performed as exotic dancers at the Gold Club and Gold Club Connection in Groton, CT.
- D'Antuono and Vilnit signed a four-page Entertainment Lease containing an arbitration clause; Cruz did not sign and allegedly did not see the Lease.
- Defendants sought to dismiss/stay, compel arbitration, and strike class/collective actions; Defendants concede two arbitration provisions will not be enforced.
- The Lease sets a landlord/tenant relationship, not employment, and includes an arbitration clause to be decided under the FAA; it also contains a severability clause.
- The Court must decide (i) whether there is an arbitration agreement to enforce with each Plaintiff, (ii) the formation and enforceability of the arbitration clause, and (iii) whether class/collective waivers and related provisions are enforceable given AT&T Mobility and related precedents.
- The Court ultimately grants in part and denies in part the motion: D'Antuono and Vilnit are compelled to arbitrate individually, Cruz is not compelled, and the class/collective claims for D'Antuono and Vilnit are stricken and stayed; Cruz’s claim remains in court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Formation of arbitration agreement whether binding on each dancer | D'Antuono and Vilnit formed an agreement; Cruz did not | All three dancers bound by Lease/arbitration terms though evidence on Cruz disputed | D'Antuono and Vilnit formed a valid arbitration agreement; Cruz did not. |
| Enforceability of arbitration clause under Connecticut law and FAA | Clauses including class waiver and cost-shifting are unconscionable/public-policy violations | Arbitration clause enforceable under FAA; two provisions later waived by defendants | Arbitration clause enforceable; two challenged provisions held not enforceable due to waiver by defendants. |
| Impact of AT&T Mobility on validity of the agreement | AT&T Mobility precludes enforcement of class/collective waivers | AT&T Mobility not controlling on Connecticut contract law in this context | AT&T Mobility acknowledged but did not compel invalidation; arbitration enforced with limitations. |
| Effect of cost, statute of limitations, and potential damages on enforceability | Costs and shortened statutes of limitations render arbitration prohibitive | Defendants concede not to enforce cost/fee-shifting and shortened statute provisions; costs feasible | With concessions, plaintiffs' likelihood to vindicate rights not foreclosed; arbitration allowed for D'Antuono and Vilnit. |
| Public policy unconscionability review of arbitration terms | Arbitration provisions are procedurally/substantively unconscionable | Arbitration clause not unconscionable under CT law; severability applies | Arbitration clause not procedurally or substantively unconscionable under CT law; severability preserved. |
Key Cases Cited
- Granite Rock Co. v. International Brotherhood of Teamsters, 130 S. Ct. 2847 (Supreme Court 2010) (whether parties agreed to arbitrate and severability principles under FAA)
- Rent-A-Center West, Inc. v. Jackson, 130 S. Ct. 2772 (Supreme Court 2010) (arbitration agreements enforced according to terms; cost considerations relevant under FAA)
- Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 130 S. Ct. 1758 (Supreme Court 2010) (class arbitration cannot be compelled absent contractual provision; severability context)
- American Express Merchants' Litigation (American Express II), 634 F.3d 187 (2d Cir. 2011) (federal common law of arbitrability; cost, class waiver, and limitations considerations)
- Ragone v. Atlantic Video at Manhattan Center, 595 F.3d 115 (2d Cir. 2010) (costs and statute of limitations provisions potentially diminish rights; waiver considerations)
- Fensterstock v. Education Finance Partners, 611 F.3d 124 (2d Cir. 2010) (arbitration class waiver in some contexts; severability questions post-Stolt-Nielsen)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (Supreme Court 2011) (preemption of state Discover Bank rule; FAA displaces state-law unconscionability as basis to void arbitration)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (Supreme Court 1985) (framework for determining congressional intent to preclude arbitration of statutory claims)
- Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (Supreme Court 2001) (arbitration costs may render vindication of statutory rights effectively impracticable)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (Supreme Court 2006) (arbitration clause severability; validity of contract formation)