968 F. Supp. 2d 564
S.D.N.Y.2013Background
- Plaintiff Michael Isaacs worked for defendant Océ Business Services, Inc. (OBS) from 2004 until his termination in 2012 and alleges unpaid overtime under the FLSA and NYLL.
- Isaacs signed OBS’s 2004 Dispute Resolution Policy (an arbitration agreement) as a condition of employment; the Policy covered statutory wage claims and required arbitration under the AAA within one year and imposed filing fees on the claimant.
- OBS issued a Revised Policy (2011) in its employee handbook that (1) added JAMS as an alternative forum, (2) replaced the 1-year claim window with the applicable statute of limitations, and (3) provided that OBS would pay arbitrator fees.
- Isaacs filed suit in federal court in 2013 for overtime; OBS moved to compel arbitration under the Federal Arbitration Act (FAA), arguing the original and revised policies bind Isaacs.
- The court applied New York contract law (per the Policy’s choice-of-law clause) to decide whether a valid arbitration agreement exists and whether Isaacs is bound by the 2004 Policy and the 2011 Revised Policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2004 arbitration Policy is enforceable | Isaacs contends the Policy is unenforceable (citing unconscionability) | OBS argues the signed 2004 Policy is binding and covers wage claims | Court held the 2004 Policy is enforceable; not procedurally or substantively unconscionable |
| Whether the 2011 Revised Policy in the employee handbook is binding | Isaacs argues handbook revisions and disclaimers make the Revised Policy nonbinding | OBS argues notice plus continued employment after notice binds Isaacs to the Revised Policy | Court held the Revised Policy is binding because Isaacs received notice and continued working; the Dispute Resolution Policy is distinct and mandatory |
| Whether arbitration covers the plaintiff’s FLSA/NYLL claims | Isaacs did not dispute scope but argued enforceability problems | OBS asserted the policies expressly cover statutory wage claims | Court held wage claims are within the scope of the arbitration policies and thus arbitrable |
| Relief appropriate when all claims are arbitrable | Isaacs sought to proceed in court | OBS sought dismissal or stay and an order to arbitrate | Court dismissed the complaint without prejudice and directed arbitration (dismissal rather than stay is permissible) |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (arbitration is a matter of contract; parties are bound only to what they agreed)
- Shaw Group Inc. v. Triplefine Int’l Corp., 322 F.3d 115 (2d Cir. 2003) (FAA inquiry limited to existence of agreement and failure to arbitrate)
- Schnabel v. Trilegiant Corp., 697 F.3d 110 (2d Cir. 2012) (FAA preempts state law that treats arbitration agreements differently)
- T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329 (2d Cir. 2010) (apply ordinary state-law contract principles to determine formation)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (U.S. 1991) (arbitration of statutory claims is enforceable under certain circumstances)
- Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144 (2d Cir. 2004) (signing a written contract creates presumption of knowledge and assent)