266 F. Supp. 3d 691
S.D.N.Y.2017Background
- Plaintiffs (former Le Pain Quotidien servers/baristas) sued defendants for alleged FLSA and NYLL wage-and-hour violations as a putative class/collective action.
- In Dec. 2014 Defendants entered a co-employment arrangement with TriNet; employees used TriNet’s online Passport portal for onboarding and payroll.
- Passport presented TriNet’s Terms and Conditions Agreement (TCA) and Dispute Resolution Protocol (DRP); first-time users had to enter an email and click “I Accept” before proceeding.
- TriNet later issued a Revised TCA/DRP in 2015; users had to re-accept to access Passport. Most plaintiffs clicked “I Accept” (documentary evidence and confirmation emails).
- Defendants moved to compel arbitration under the Federal Arbitration Act and to dismiss; plaintiffs moved to amend to create pre-/post-TCA subclasses.
- The Court found each plaintiff assented to arbitration, the arbitration agreements were valid and covered the wage claims (including retroactive application), granted the motion to compel arbitration, denied leave to amend as futile, and dismissed the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs agreed to arbitrate | Some plaintiffs say they do not recall accepting or reading the TCA/DRP; one claims pressure at orientation | Plaintiffs were required to accept TCA/DRP to use Passport and to remain employed; TriNet records and confirmation emails show acceptance | Court: Plaintiffs entered into valid agreements to arbitrate; memory or failure-to-read claims do not create a triable issue |
| Conspicuousness and enforceability of the online arbitration clause | Clause not properly presented or read; pressured acceptance undermines consent | DRP and Revised DRP were presented on initial Passport screen, visible acknowledgements, full text shown (not hidden link) | Court: Terms were reasonably conspicuous and enforceable; failure to read does not excuse assent |
| Scope and retroactivity of the DRP (do wage claims fall within it; do pre-acceptance claims get covered) | DRP does not explicitly reference worksite employer in original; DRP should not apply retroactively to claims predating acceptance | Revised DRP expressly covers disputes arising out of employment with worksite employer; DRP §9(f) contemplates enforcement vis-à-vis worksite employer; neither DRP contains temporal limits | Court: FLSA/NYLL claims fall within the DRP’s scope; broad arbitration provisions without temporal limits apply retroactively; pre-/post-TCA subclassing would be futile |
| Whether leave to amend should be allowed to carve subclasses | Amend to bifurcate claims into pre-/post-TCA subclasses to avoid arbitration for pre-TCA claims | Amendment is futile because both pre- and post-acceptance claims are subject to the DRP and Revised DRP | Court: Motion to amend denied as futile; proposed claims remain arbitrable |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (arbitration agreements are generally enforceable under the FAA)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (courts must ensure arbitration agreement formation and applicability before compelling arbitration)
- JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163 (framework for assessing agreement, scope, and arbitrability of statutory claims)
- Nicosia v. Amazon.com, Inc., 834 F.3d 220 (standards for conspicuousness and online assent to terms)
- Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144 (party who accepts contract is presumed to know its contents; failure to read not a defense)
- Sutherland v. Ernst & Young, LLP, 726 F.3d 290 (FLSA claims are arbitrable)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (arbitration clauses are contracts governed by ordinary contract law)
- Lawrence v. Sol G. Atlas Realty Co., 841 F.3d 81 (dismissal while arbitration proceeds judicially appropriate when no stay requested)
- Katz v. Cellco P’ship, 794 F.3d 341 (procedural guidance on stays and arbitration)