291 F. Supp. 3d 378
S.D. Ill.2017Background
- Three former Hakkasan employees (Zhu, Leung, Moy) signed an employment Dispute Resolution/Arbitration Agreement as a condition of hiring; each says they do not read English and were asked by a Chinese‑speaking secretary to sign immediately without translation.
- Plaintiffs filed FLSA collective and NY state/city wage and discrimination claims (overtime, spread‑of‑hours, paystubs, race discrimination). Zhu filed the suit and Leung and Moy later filed FLSA consents.
- The Arbitration Agreement requires arbitration of "any and all claims" against the company, including unpaid wages and discrimination claims, with arbitration under AAA rules and contains confidentiality, severability, and a saving clause.
- Defendants moved to compel arbitration under the FAA and to require individual (not collective) arbitration. Plaintiffs opposed, arguing the agreement is unconscionable (procedurally due to lack of translation/coercion; substantively due to confidentiality clause violating Cheeks).
- The court stayed the litigation and decided whether the arbitration agreement is valid, whether it covers the claims, and who decides whether arbitration may proceed collectively.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of arbitration agreement (procedural unconscionability) | Plaintiffs: unable to read English, told to sign immediately without translation, so lacked meaningful choice | Defendants: Plaintiffs signed; no evidence of coercion or denial of opportunity to seek explanation; consideration exists | Court: Agreement not procedurally unconscionable—no proof of high‑pressure tactics and plaintiffs did not seek translation or explanation |
| Substantive unconscionability based on confidentiality clause (Cheeks) | Plaintiffs: confidentiality deters FLSA claims and conflicts with Cheeks public‑policy concerns, rendering agreement unenforceable | Defendants: Confidentiality applies to both parties; saving and severability clauses limit scope; confidentiality permissible | Court: Declined to decide validity of confidentiality clause—reserved that question to the arbitrator as a matter of contract interpretation |
| Scope — do arbitration terms cover Plaintiffs' FLSA, NYLL, NYSHRL, NYCHRL claims? | Plaintiffs: argue unconscionability and Cheeks may make agreement unenforceable; otherwise contend collective relief should be allowed | Defendants: Agreement covers all claims and requires arbitration of wage and discrimination claims | Court: Agreement broadly covers "any and all claims" including wage and discrimination claims; federal policy favors arbitration; therefore claims are arbitrable |
| Who decides availability of collective/representative arbitration? (question of arbitrability) | Plaintiffs: seek collective arbitration or that arbitrator decide collective availability | Defendants: ask court to order individual arbitration | Court: Availability of collective arbitration is not a narrow "question of arbitrability" for the court; reserved to arbitrator to decide in first instance |
Key Cases Cited
- Cheeks v. Freeport Pancake House, 796 F.3d 199 (2d Cir. 2015) (addressing settlement approval and public‑policy concerns under the FLSA)
- Howsam v. Dean Witter Reynolds, 537 U.S. 79 (U.S. 2002) (distinguishing narrow "questions of arbitrability" for courts from procedural matters for arbitrators)
- Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (U.S. 2003) (plurality) (arbitrator generally decides availability of class arbitration when agreement silent)
- Stolt‑Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (U.S. 2010) (party cannot be compelled to class arbitration absent contractual basis for class procedures)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA and federal policy favor enforcement of arbitration agreements)
- Ragone v. Atlantic Video at the Manhattan Ctr., 595 F.3d 115 (2d Cir. 2010) (language barriers alone do not excuse enforcement of arbitration agreements)
- Katz v. Cellco P'ship, 794 F.3d 341 (2d Cir. 2015) (staying litigation pending arbitration under Second Circuit precedent)