86 F. Supp. 3d 277
S.D.N.Y.2015Background
- Plaintiff model Ginta Lapina and Gingin Management (owner of Lapina’s image rights) sued multiple defendants alleging unauthorized worldwide licensing/use of Lapina’s image, trademark dilution, right of publicity, breach of contract and fiduciary duties arising from a 2013 exclusive management agreement.
- The 2013 Agreement (between Lapina and Women Management Inc.) contains a broad arbitration clause incorporating the AAA Commercial Rules and designates New York arbitration. Women NY (a related non-signatory employer/manager entity) moved to compel arbitration.
- Plaintiffs argued arbitration should be denied because Women NY was not a signatory, the contract was fraudulently induced (signatories allegedly dissolved in 2011), and the agreement was illegal under New York General Business Law Article 11 (fee cap for employment agencies).
- Women NY asserted equitable estoppel and delegation via incorporation of AAA rules; it also contended Plaintiffs had sued based on the contract and accepted its benefits.
- The court treated the arbitration clause as delegating arbitrability to the arbitrator, found Plaintiffs’ claims intertwined with the contract, and ruled that equitable estoppel and delegation principles permit Women NY (and Gingin) to compel arbitration. The action was dismissed subject to renewal after arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration applies when defendant is a non-signatory | Women: Women NY is not a signatory; thus cannot compel arbitration | Women NY: equitable estoppel and plaintiffs’ claims are intertwined with the agreement; non-signatory may compel arbitration | Court: Non-signatory may compel arbitration under equitable estoppel; plaintiffs estopped |
| Who decides arbitrability | Plaintiffs: court should decide threshold arbitrability issues including alleged fraud/illegality | Women NY: arbitration clause incorporates AAA rules delegating arbitrability to arbitrator | Court: incorporation of AAA rules is clear delegation; arbitrator decides arbitrability |
| Challenge to contract validity (fraud/illegality) | Plaintiffs: contract invalid because signatories were dissolved and fees violate NY law; fraudulently concealed | Women NY: such attacks go to the contract as a whole and must be resolved in arbitration | Court: challenges to the contract as a whole must be sent to arbitrator; not a discrete attack on arbitration clause |
| Arbitrability of federal statutory claims (Lanham Act) | Plaintiffs: Lanham Act claims should not be compelled | Women NY: federal statutory claims are arbitrable absent contrary congressional intent | Court: Lanham Act and related state claims are arbitrable; pendent state claims also arbitrable |
Key Cases Cited
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983) (federal policy favors arbitration and doubts resolve for arbitration)
- Contec Corp. v. Remote Solution Co., Ltd., 398 F.3d 205 (2d Cir. 2005) (incorporation of AAA rules is clear delegation of arbitrability to arbitrator)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (challenges to contract validity as whole go to arbitrator)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (court decides validity of arbitration clause only when challenge is specific to that clause)
- Preston v. Ferrer, 552 U.S. 346 (2008) (disputes concerning contract validity belong to arbitrator when claim attacks contract as whole)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) (district courts must compel arbitration where parties agreed)
- Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840 (2d Cir. 1987) (framework for determining whether disputes are arbitrable)
- Choctaw Generation Ltd. P’ship v. American Home Assurance Co., 271 F.3d 403 (2d Cir. 2001) (equitable estoppel can bind signatory to arbitrate with non-signatory)
- Ragone v. Atlantic Video at Manhattan Center, 595 F.3d 115 (2d Cir. 2010) (non-signatory enforcement of arbitration under estoppel where claims intertwined)
- Oldroyd v. Elmira Savings Bank, FSB, 134 F.3d 72 (2d Cir. 1998) (arbitrability framework and arbitrability of statutory claims)