Stone v. Exos Human Capital, LLC
1:24-cv-03548
| S.D.N.Y. | Jul 9, 2025Background
- Phillip Stone worked as a health fitness specialist for EXOS Human Capital, LLC, and MediFit Community Services LLC in New York City between 2016 and 2023.
- Stone alleges that his employers violated the New York Labor Law (NYLL) by failing to pay timely wages, causing monetary harm.
- Stone's employment agreement included an arbitration clause requiring disputes to be settled by binding arbitration in Phoenix, Arizona, and included a New Jersey choice-of-law provision.
- Stone filed a class action for late wage payments under NYLL against Exos and MediFit; defendants moved to compel arbitration or dismiss claims.
- Stone argued the arbitration clause was unenforceable under New Jersey law due to lack of a required "explanatory comment" per Atalese v. U.S. Legal Services Group, and that the Arizona venue was unconscionable.
- The court was tasked to decide enforceability of the arbitration agreement, whether the FAA preempts New Jersey law, unconscionability, and who should decide arbitrability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of Arbitration Clause under NJ Law | Arbitration clause invalid for lacking required explanatory comment | FAA preempts NJ's "explanatory comment" requirement | FAA preempts Atalese; arbitration clause enforceable |
| Substantive Unconscionability of Arbitration Venue | Phoenix venue imposes undue, speculative costs, thus unconscionable | No evidence of prohibitive expense; venue provision standard | Not unconscionable; venue does not invalidate agreement |
| Scope of Arbitration Agreement (NYLL Claims) | NYLL statutory claim falls outside arbitration agreement’s scope | Claim scope is for arbitrator to decide because parties incorporated AAA | Arbitrator, not court, decides scope/arbitrability |
| Stay or Dismissal Pending Arbitration | If compelled, case should be stayed pending arbitration outcome | Maintain stay of proceedings pending arbitration | Case stayed pending arbitration outcome |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (FAA preempts state laws hostile to arbitration and requires rigorous enforcement of arbitration agreements)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (arbitration agreements must be enforced on equal terms as other contracts)
- Epic Sys. Corp. v. Lewis, 584 U.S. 497 (federal policy favors arbitration and restricts judicial hostility)
- Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 581 U.S. 246 (states cannot single out arbitration agreements for disfavored treatment)
- Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468 (courts must enforce arbitration agreements according to their terms)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (if parties delegate arbitrability questions to the arbitrator, courts must enforce that agreement)
- Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (party challenging arbitration on cost must show likely prohibitive expenses)