308 F. Supp. 3d 366
D.C. Cir.2018Background
- Princess Sakyi enrolled at BBI's Aveda Institute campus in D.C. and signed an Enrollment Agreement and an Arbitration Agreement (incorporating AAA Consumer Rules and a class-action waiver).
- Sakyi alleges cosmetology students performed unpaid, supervised salon work (excess hours, retail sales, product promotion), were not paid wages, and received insufficient coursework — asserting D.C. consumer-protection, minimum-wage, and wage-payment claims on behalf of a putative class.
- Defendants removed to federal court; plaintiff amended to add Aveda Corp. and BBI; BBI and later ELC/Aveda moved to compel arbitration under the signed Arbitration Agreement.
- The Agreement: broad arbitration clause covering “any dispute” with the Institute or its parents/subsidiaries, incorporation of AAA rules (delegating arbitrability), a class-action waiver, choice of D.C. law, and a severability clause.
- The court had to decide (1) whether gateway arbitrability questions (including enforceability of the class waiver and whether plaintiff is an “employee” under NLRA/NLA) were for the court or arbitrator, and (2) whether nonsignatory defendants (ELC and Aveda) could compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether gateway arbitrability questions (e.g., class-waiver enforceability) are for the court or arbitrator | Sakyi: class waiver unlawful under NLRA/NLA; court should rule on its enforceability | Defendants: Agreement delegates gateway questions to arbitrator (broad clause + AAA rules) | Court: Delegation is clear and unmistakable; arbitrator decides arbitrability (including class-waiver enforceability) |
| Whether availability of class arbitration is a question of arbitrability | Sakyi: waiver invalid; should be adjudicated by court | Defendants: Parties agreed to arbitrate scope, including class issues | Court: Availability of class arbitration is a gateway arbitrability question; here parties clearly delegated it to arbitrator |
| Whether Sakyi is an “employee” (impacting NLRA/NLA protections) | Sakyi: students functioned as employees and thus enjoy NLRA/NLA protections that may invalidate class waiver | Defendants: employment status is disputed and affects arbitrability; arbitration clause covers such threshold questions | Court: Whether Sakyi is an employee is a gateway question delegated to arbitrator |
| Whether nonsignatory defendants (ELC, Aveda) can compel arbitration | Sakyi: ELC/Aveda not signatories and haven’t shown intent to benefit; defendants waived forum objections | Defendants: equitable estoppel and related doctrines permit nonsignatories to enforce arbitration because claims are intertwined; they promptly moved after learning of Agreement | Court: ELC and Aveda are not third-party beneficiaries on the record, but equitable estoppel applies because claims are identical/intertwined; they may compel arbitration |
Key Cases Cited
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (FAA places arbitration agreements on same footing as other contracts)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (liberal federal policy favoring arbitration)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clause enforceable; courts decide delegation only if delegation clause itself is challenged)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (parties must clearly and unmistakably delegate arbitrability to arbitrator)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983) (doubts about scope favor arbitration)
- Aliron International, Inc. v. Cherokee Nation Industries, Inc., 531 F.3d 863 (D.C. Cir. 2008) (validity of an unambiguous arbitration agreement is a question of law; summary disposition appropriate)
- Contec Corp. v. Remote Solutions Co., 398 F.3d 205 (2d Cir. 2005) (incorporation of AAA rules shows intent to arbitrate arbitrability)
- Awuah v. Coverall North America, Inc., 554 F.3d 7 (1st Cir. 2009) (incorporation of AAA rules is clear and unmistakable evidence delegating arbitrability)