JAVAN OCONNER, individually and on behalf of all others similarly situated, RAMIN PENA, individually and on behalf of all others similarly situated, JONATHAN CEPADA, individually and on behalf of all others similarly situated, SHAWN GRIFFITH, EARL RASHADD, KHAZAIZALT MCGANN, OBAS CLAUDENY, individually and on behalf of all others similarly situated, GONZALES ONADI, individually and on behalf of all others similarly situated, JANICE HAMILTON, individually and on behalf of all others similarly situated, OSMAN MATAMOROS, individually and on behalf of all others similarly situated, MICHAEL TAM, individually and on behalf of all others similarly situated, RAMON VELAZQUEZ, individually and on behalf of all others similarly situated, JOSHUA PAUL DAVIS, individually and on behalf of all others similarly situated, MUSTAFA LAMB, individually and on behalf of all others similarly situated, ALPHA MAMADOU LY, individually and on behalf of all others similarly situated, RASHISH PAUL, individually and on behalf of all others similarly situated, L‘SHANDAR JONES, individually and on behalf of all others similarly situated, RICARDO CARVAJAL, individually and on behalf of all others similarly situated, and SALVADOR J MASSA, individually and on behalf of all others similarly situated, Plaintiffs, v. AGILANT SOLUTIONS, INC., doing business as ASI System Integration, Inc., Defendant.
1:18-cv-6937-GHW
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
March 12, 2020
GREGORY H. WOODS, United States District Judge
USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED: 3/12/2020
GREGORY H. WOODS, United States District Judge:
After Lead Plaintiffs in this action filed a complaint seeking certification of a collective under the
Lead Plaintiffs were employed as Field Technicians (“FTs“) either directly or indirectly by ASI. Lead Plaintiffs filed a complaint alleging breaches of
On August 22, 2019—after Plaintiffs filed their motion for conditional certification but before the Court granted it—Defendant “roll[ed] out a new policy whereby new and existing employees would be asked to sign a document titled ‘Statute of Limitations Agreement’ and ‘Arbitration Agreement‘” (collectively, the “Arbitration Agreement“). Stipulation of Uncontested Facts (“Stipulation“), Ex. C to the Declaration of Christopher Q. Davis (“Davis Decl.“), Dkt. No. 75-3, ¶ 2. The Arbitration Agreement states:
In consideration of my employment with the Company . . . I agree that any and all controversies, claims, or disputes . . . arising out of, relating to, or resulting from my assignment or employment with the company . . . shall be subject to binding arbitration under the
Federal Arbitration Act and pursuant to New York Law. Disputes which I agree to arbitrate, and thereby agree to waive any right to a trial by jury, include . . . claims arising under . . . [the]Fair Labor Standards Act .
Arbitration Agreement, Ex. A to Davis Decl., Dkt. No. 75-1, at 3. The Arbitration Agreement does not mention the pendency of this litigation.
FTs were required to sign the Arbitration Agreements as a condition of continued employment with ASI. The Statute of Limitations Agreement states that ASI “is requiring as a condition of employment that any claim or lawsuit relating to your service or application or service with the Company must be filed no more than twelve (12) months after the date of the employment action that is the subject of the claim or lawsuit.” Id. (emphasis added). Likewise, the Arbitration Agreement states that ”[i]n consideration of my employment with the Company . . . I agree that any and all controversies, claims, or disputes with anyone (including the Company and any employee . . .[)] shall be subject to binding arbitration.” Id. (emphasis added). FTs understood that refusing to sign the Arbitration Agreement could have a negative impact on their employment relationship with ASI. See Affidavit of Javan O‘Connor (“O‘Connor Aff.“), Ex. E to Davis Decl., Dkt No. 75-5, ¶ 5.
Defendant‘s counsel in this litigation, Ira Sturm, was intimately involved in the rollout of the Arbitration Agreements. Sturm apparently drafted the Arbitration Agreement and sent it to Sonny Bindra, ASI‘s Vice President and General Counsel. See Emails, Ex. B to Davis Decl., Dkt No. 75-2, at 145-62 (redacted emails exchanging drafts of the Arbitration Agreement). Bindra then emailed the Arbitration Agreement to Joe Roman, an Executive Director at ASI, and had a phone call with him on
None of ASI‘s employees explained to FTs that they would forfeit their right to participate in this pending litigation by signing the Arbitration Agreement. Stipulation ¶ 15. On the call during which Roman explained to managers that they were responsible for procuring FT signatures on the Arbitration Agreements, he did not mention that this litigation was pending. See Deposition of LeVar Chambers (“Chambers Dep.“), Dkt No. 75-6, at 18:17-23. Indeed, Roman himself was unaware that the Arbitration Agreement might foreclose Plaintiffs from participating in this litigation. Roman Dep. at 114:19-115:25. Roman testified that the purpose of the call was to “prepare to distribute the document” and explain to managers that the document represented a “new policy that was going into effect.” Id. at 46:8-22; 48:20-49:22. Managers were not instructed to tell FTs that they were not required to sign the Arbitration Agreement as a condition of employment. Id. at 90:8-12.
Leadership at ASI insisted that the Arbitration Agreements be returned quickly. On his call with ASI managers, Roman asked that the managers ensure that the documents were “signed at their meetings.” Roman Dep. 50:20-25. This call took place on Thursday, August 22, 2019, and Roman asked that the managers procure signed Arbitration Agreements by the following Monday, August 26, 2019. Id. at 73:4-74:9. Roman then emailed a copy of the Arbitration Agreement to the managers for distribution to FTs. Stipulation ¶¶ 5-6; Roman Dep. at 60:20-62:8; Emails at 13. Subsequently, the managers distributed the Arbitration Agreements to FTs on late Thursday afternoon or Friday morning. Stipulation at ¶¶ 13-14; Roman Dep. at 50:20-25; see also Emails at 127. Twenty-four hours after Roman provided the Arbitration Agreements to managers for distribution and execution, Bindra wrote in an email to Roman that Sturm sought “feedback on the document the techs are being asked to sign.” Emails at 163. In response, Roman joked that if there was “any resistance” to signing the Arbitration Agreement, he would “give them Ira[‘s] home number and address.” Id.
Contemporaneous email evidence strongly suggests that ASI management intended the Arbitration Agreements to preclude FTs from participating in this litigation. On August 26, 2019, Roman reported to Bindra that “we are almost done getting all the signatures,” although “[t]here were a few in [Brooklyn] who [were] hesitant to sign.” Emails at 169. Roman noted that this “might be a sign” that the holdouts were “waiting to join” this litigation. Id. Two days later, on Wednesday, August 28, 2019, Roman emailed Bindra that “[a]ll of the techs have signed including the few that were hesitant in [Brooklyn]. One was on vacation and [FT] Norman [Henry] still wants time.” Id. at 53. Roman noted that “these are the only 2 that did not sign.” Id. When Henry requested thirty days to allow a lawyer to review and respond to the Arbitration Agreement, Roman wrote in an email to Bindra “I don‘t want to give him 30 days. We could say he can‘t work until it‘s signed?” Emails at 39. The next day, Roman asked Bindra how he “suggest[ed he] handle Norman?” Id. at 64. Bindra responded that Roman should “wait a bit” so that they could discuss with Sturm. Id. at 71. Bindra wondered if “Norman is in touch with the same attorneys as the others,”
After the Court held a telephone conference regarding Defense counsel‘s communications with putative class members on September 12, 2019—during which the Court authorized Plaintiffs to take expedited discovery related to ASI‘s communications with putative class members, see Dkt No. 61—ASI management abruptly changed its position and began stating that signing the Arbitration Agreement was not a condition of continued employment with ASI. Shortly after the September 12, 2019 telephone conference, Bindra asked a manager, LeVar Chambers, to “send Norman an email saying that he should only sign the document if he is comfortable and that he is not required to sign it.” Emails at 101. Bindra then specifically directed that this email be provided to him “as part of the production” of documents that ASI had been directed to turn over related to its communications with ASI. Id. Henry still felt pressure to sign the agreement and did so on September 17, 2019. Id. at 32-38. Hence, by September 17, 2019, all but two of Defendant‘s employees had signed the Arbitration Agreement. Stipulation ¶ 18.2
On December 14, 2019, Plaintiffs filed this motion to invalidate the Arbitration Agreement and seeking a protective order enjoining ASI from further communications with putative plaintiffs. Dkt. No. 74-76. Defendants subsequently filed an opposition, Dkt. No. 79, and Plaintiffs filed a reply. Dkt. No. 80.
II. LEGAL STANDARD
A. District Court‘s Authority Over Notice-Giving Process
Courts have “discretionary authority to oversee the notice-giving process” in an
“The same principles that govern communications with putative class members in a class action under
A district court‘s “supervisory authority exists even before a class is certified.” Agerbrink v. Model Serv. LLC, No. 14 CIV. 7841 JPO JCF, 2015 WL 6473005, at *3 (S.D.N.Y. Oct. 27, 2015) (collecting cases). “Indeed, the need for a district court to ensure that all parties act fairly is especially great during the early stages of
Among the Court‘s managerial responsibilities in collective action cases is “the protection of class members from ‘misleading communications from the parties or their counsel.‘” In re Currency Conversion, 361 F. Supp. 2d at 252 (quoting Erhardt v. Prudential Group, 629 F.2d 843, 846 (2d Cir. 1980)). This duty extends to communications that threaten the “choice of remedies” available to putative plaintiffs, including collective action waivers. Id.; see also Billingsley, 560 F. App‘x at 922 (holding that a district court did not abuse its discretion in allowing “putative collective action members to join the lawsuit notwithstanding their coerced signing of the arbitration agreements“); Balasanyan v. Nordstrom, Inc., No. 11-cv-2609, 2012 WL 760566, at *4 (S.D. Cal. Mar. 8, 2012) (invalidating post-litigation arbitration agreements as to putative class members).
District courts can exercise their discretionary authority over the notice-giving process in collective actions to “prevent confusion and unfairness by prohibiting and correcting communication that is inaccurate, unbalanced, misleading, or coercive, or which improperly attempts to encourage class members not to join the suit.” Agerbrink, 2015 WL 6473005, at *3 (collecting cases). “Whether a communication is misleading or coercive—and therefore warrants judicial intervention—often depends not on one particular assertion, but rather the overall message or impression left by the communication.” Id. at *10 (citations omitted). “A court therefore must examine the context in which the communications were made and the effect of the communications’ in determining whether, and how much, communication should be restricted.” Id. (quotation omitted); cf. In re Currency Conversion, 361 F. Supp. 2d at 253 (“[W]hen a defendant contacts putative class members for the purpose of altering the status of a pending
B. Unconscionability
“[A]rbitration is a matter of contract[.]” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (quotation omitted). Thus, “[t]he threshold question of whether the parties . . . agreed to arbitrate is determined by state contract law principles.” Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016) (quotation omitted). Accordingly, courts must “remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds for the revocation of any contract.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627 (1985) (quotation omitted). Courts “apply ordinary state-law principles that govern the formation of contracts” to contractual defenses such as unconscionability. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
“When consumers are not advised of the rights they are forfeiting, enforceability of arbitration clauses may be restricted.” In re Currency Conversion, 361 F. Supp. 2d at 250 (citing Brookhaven Hous. Coal. v. Solomon, 583 F.2d 584, 593 (2d Cir. 1978); Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n.14 (1974) (“[A]n arbitration or forum-selection clause in a contract is not enforceable if the inclusion of that clause in the contract was the product of fraud or coercion.“)). “This is particularly true of an adhesion contract.” Id. “[A] contract of adhesion is a contract formed as a product of a gross inequality of bargaining power between parties.” JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004) (quotation omitted). “A court will find adhesion only when the party seeking to rescind the contract establishes that the other party used high pressure tactics, or deceptive language, or that the contract is unconscionable.” Id. “Adhesion contracts tainted by unconscionability are unenforceable.” In re Currency Conversion, 361 F. Supp. 2d at 250 (citing Brennan v. Bally Total Fitness, 153 F. Supp. 2d 408, 416 (S.D.N.Y. 2001); Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003); David L. Threlkeld & Co. v. Metallgesellschaft Ltd. (London), 923 F.2d 245, 249 (2d Cir. 1991)).
“A court may find unconscionability where a non-drafting party has no way of knowing a material fact.” Id. at 251
III. DISCUSSION
A. Enforceability of the Arbitration Agreement as to Putative Plaintiffs in this Litigation
Defendant‘s communications with putative plaintiffs were improper and misleading. The Arbitration Agreement did not disclose that by signing the Arbitration Agreements, putative plaintiffs would lose their right to participate in this lawsuit. ASI management made no effort to communicate this fact to its employees. And ASI management asked FTs to return the Arbitration Agreements within two business days of when they were sent to employees. Taken together, the effect of ASI‘s communications with its employees regarding the Arbitration Agreements was misleading and coercive. Moreover, Defense counsel in this litigation was intimately involved in the rollout of the Arbitration Agreement. That fact, and the email evidence summarized above, supports the conclusion that that ASI‘s management instituted its novel arbitration policy for the purpose of foreclosing plaintiffs from participating in this litigation. This evidence also suggests that ASI management instituted the new policy in bad faith, although the Court need not (and does not) make a factual finding on this issue.
The Arbitration Agreements cannot be enforced to preclude putative plaintiffs from participating in this lawsuit in these circumstances. The Court may exercise its supervisory authority to prevent the enforcement of the Arbitration Agreements to putative plaintiffs in this lawsuit. See Agerbrink, 2015 WL 6473005, at *10; In re Currency Conversion, 361 F. Supp. 2d at 253; Balasanyan, 2012 WL 760566, at *4; Billingsley, 560 F. App‘x at 922. Moreover, because ASI management asked FTs to sign the Arbitration Agreements without disclosing the pendency of this litigation, the Arbitration Agreements are unenforceable as unconscionable. See In re Currency Conversion, 361 F. Supp. 2d at 253.
ASI‘s arguments to the contrary are unpersuasive. ASI first argues that the Supreme Court‘s decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) requires that the Court enforce the Arbitration Agreements. However, Epic Systems does not stand for the proposition that arbitration agreements must be enforced in all circumstances, even if they have been procured in an unconscionable manner. Epic Systems held that, as a general matter, arbitration agreements between employers and employees must be enforced. Id. at 1619. However, the Supreme Court expressly noted that the employees in Epic Systems did not “suggest that their arbitration agreements were extracted, say, by an act of fraud or duress or in some other unconscionable way that would render any contract unenforceable.” Id. at 1622; see also id. (“The [FAA‘s savings clause] permits agreements to arbitrate to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability.“) (quotation omitted); id. (“The [Supreme Court has] readily acknowledged that the defense [of unconscionability] formally applied in both the litigation and the arbitration context.“) (citation omitted).
Thus, Epic Systems does not preclude an employee from arguing that the application of an arbitration agreement would be unconscionable. And that is precisely what Plaintiffs argue in this litigation. Consequently, Epic Systems does not displace
At least one district court concurs in this conclusion. In Astarita v. Menard, Inc., No. 5:17-06151-CV-RK, 2019 U.S. Dist. LEXIS 194337 (W.D. Mo. Nov. 8, 2019), a defendant cited Epic Systems to argue that it was not required to inform putative plaintiffs of the pendency of an
ASI next argues that the question of the enforceability of arbitration clauses falls within the exclusive jurisdiction of the National Labor Relations Board (“NLRB“). ASI‘s argument seems to be that because this case involves a dispute about the terms of FTs’ employment, it falls within the terms of the
ASI‘s argument is ill conceived. As an initial matter, “the
Moreover, the NLRB does not have exclusive jurisdiction over
Cordúa does not support ASI‘s “exclusive jurisdiction” argument. In Cordúa, the NLRB held that the
Moreover, nothing in the Board‘s decision disturbs the principle that, in
ASI further argues that the “preemption doctrine precludes the Court from addressing any claims as to the lawfulness or enforceability of the arbitration agreements which are the subject of this motion.” Memorandum of Law in Opposition to Motion for Protective Order (“Def. Mem.“), Dkt No. 79, at 15. This argument is nonsensical. “The federal preemption doctrine stems from the Supremacy Clause,
ASI‘s “exclusive jurisdiction” and “preemption” arguments would have radical consequences if accepted. If any dispute between an employer and employee falls within the exclusive jurisdiction of the NLRB, then federal courts lack jurisdiction to adjudicate such disputes under other federal laws, such as Title VII of the 1964 Civil Rights Act or the Equal Pay Act. Similarly, if ASI‘s arguments are correct, the same logic would suggest that these well-established federal laws are preempted by the
ASI also argues that Plaintiffs are barred from seeking equitable relief because
Defendant‘s remaining arguments are likewise without merit. Defendant argues that Plaintiffs lack standing to seek equitable relief because, according to Defendant, that power is reserved to the exclusive authority of the Secretary of Labor. But Plaintiffs are not seeking injunctive relief under the
Accordingly, the Court holds that the Arbitration Agreement is not enforceable against putative plaintiffs in this action. The Court‘s holding is narrow. The Court does not rule on the Arbitration Agreement‘s viability as to Defendant‘s other employees, nor on its preclusive effect upon other potential collective actions. The Court‘s ruling is limited to putative members of this
B. Protective Order
In addition to their request that the Arbitration Agreement be held unenforceable against putative plaintiffs in this action, Plaintiffs seek a protective order “to enjoin all future communications with putative class and collective members.” Pl. Mem. at 20. Orders restricting communications must be “based on a clear record and specific findings that reflect a weighing of the need for a limitation and the potential interference with the rights of the parties.” Gulf Oil Co., 452 U.S. at 101. A court “must examine the context in which the communications were made and the effect of the communications
Though Defendant‘s communications with putative collective action members warrant correction, Plaintiffs’ proposed relief is not the narrowest possible relief that will protect the parties. At least some of the putative collective action members at issue are employed by ASI, making an outright prohibition on communication unrealistic and unnecessary. Moreover, Defendant‘s improper communications with putative collective action members were limited to the Arbitration Agreement, which the Court has ruled cannot be enforced against putative plaintiffs in this action. Given that holding, the Court finds it unnecessary to enter a protective order at this time. See Agerbrink, 2015 WL 6473005 at *11 (declining to enter a protective order preventing all future communications with putative collective members as “overly broad and overreaching“).
IV. CONCLUSION
The Arbitration Agreement is unenforceable against putative plaintiffs to preclude their participation in this litigation. However, the Court will not issue a protective order enjoining all future communications with putative collective action members. Accordingly, Plaintiffs’ motion GRANTED in part and DENIED in part.
The Court will hold a telephone conference to discuss Plaintiffs’ proposed corrective notice on March 16, 2020 at 4 p.m. The parties are directed to call Chambers (212-805-0296) at that time with all parties on the line.
The Clerk of Court is directed to terminate the motion pending at Dkt. No. 74.
SO ORDERED.
Dated: March 12, 2020
New York, New York
GREGORY H. WOODS
United States District Judge