364 F. Supp. 3d 787
S.D. Ohio2019Background
- Plaintiff Stephanie De Angelis alleges she worked as a dancer at Kahoots (ICON Entertainment) and that dancers were misclassified as independent contractors and not paid wages; tips were pooled and the club took a cut.
- De Angelis signed a "Dancer Performance Lease" with a broad arbitration clause (FAA) requiring arbitration in New York and a delegation clause assigning questions of validity/enforceability to the arbitrator; the contract also provides for prevailing-party attorney fees for enforcement of arbitration.
- De Angelis filed an FLSA collective action and Ohio wage-law and unjust enrichment claims; defendants moved to dismiss or stay and compel arbitration and sought fees.
- The parties agree Ohio contract law governs formation; defendants point to Paragraph 21(A) as a delegation clause; plaintiff raises multiple defenses to arbitration (unconscionability, lack of mutual assent/consideration, effective vindication, nonsignatory enforcement, statutory prohibitions, etc.).
- The court analyzed whether the delegation clause is "clear and unmistakable," whether various challenges must be decided by court or arbitrator, and whether to stay or dismiss; it stayed the case pending arbitration and denied the fee request without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of delegation clause | Delegation clause is not "clear and unmistakable" | Paragraph 21(A) clearly delegates arbitrability/validity questions to arbitrator | Delegation clause is clear and unmistakable; arbitrator decides validity/enforceability |
| Scope of arbitration (including state constitutional wage claims) | Ohio constitutional minimum-wage claims and other challenges are outside arbitration | Arbitration clause covers disputes arising out of the lease; delegation covers enforceability | Challenges as to enforceability/coverage (including Ohio claims) must be submitted to arbitrator |
| Effective-vindication / prohibitive-costs defense | Arbitration would effectively waive statutory rights or be prohibitively expensive | Delegation clause requires arbitrator to address such defenses | Effective-vindication challenge is a challenge to enforceability and must be raised first in arbitration |
| Fees for bringing enforcement action | FLSA bars award of fees; effective-vindication argument also used | Contract authorizes prevailing-party fees for enforcement of arbitration | Fee motion denied without prejudice pending outcome of arbitration (cannot award fees before arbitrator decides validity) |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (state-law governs contract formation and a presumption exists regarding who decides arbitrability)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (delegation clauses are severable; parties can agree that arbitrator decides gateway arbitrability questions)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (if delegation clause is valid, courts lack power to decide arbitrability, even if claim is frivolous)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (ambiguities as to scope of arbitrable issues are resolved in favor of arbitration)
- Cook v. All State Home Mortgage, [citation="329 F. App'x 584"] (contractual fee-shifting provisions tied to enforcement of arbitration can be enforceable)