You are on page 1of 18

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK


-----------------------------------------------------------x
MARCUS ISAIAH WASHINGTON,
Plaintiff,
-against-
WILLIAM MORRIS ENDEAVOR
ENTERTAINMENT, LLC, JEFF MEADE, and
SARAH WINIARSKI,
Defendants.
-----------------------------------------------------------x
P. KEVIN CASTEL, District Judge:
USDSSDNY
DOCUMENT
ELECfRONICALLY FILED
DOC#: _____________
DATE FILED: 7 -2D -I J
10 Civ. 9647 (PKC)(JCF)
MEMORANDUM
AND
ORDER
Plaintiff Marcus Isaiah Washington, proceeding pro se, brings this action against
defendants William Morris Endeavor Entertainment, LLC ("Wi11iam Morris Endeavor")
formerly known as William Morris Agency, Inc. ("William Morris Agency"), and two William
Morris Endeavor Human Resources employees, Jeff Meade and Sarah Winiarski (the "Individual
Defendants"). Plaintiff asserts claims of discrimination and retaliation under 42 U.S.c. 1981,
Title VII ofthe Civil Rights Act of 1964,42 U.S.C. 2000e-1 et seq., as well as New York
State Human Rights Law, N.Y. Exec. Law 296, and New York City Human Rights Law,
N.Y.C. Admin. Code 8-107. Defendants have moved to dismiss the Complaint or, in the
alternative, stay the action pending arbitration on the grounds that all claims asserted in the
Complaint fall within the scope of an arbitration agreement. Plaintiff opposes the motion,
arguing that the arbitration agreement and certain of its provisions are unenforceable.
Defendants assert that the issue of whether the arbitration agreement and certain of its provisions
are enforceable is an issue for an arbitrator to decide. For the reasons set forth below, the action
is stayed pending an award in arbitration.
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 1 of 18
SUMMARY OF FACTS ALLEGED IN THE COMPLAINT
Plaintiff started working for William Morris Agency, a talent agency that
represents actors, authors, musicians and public figures, as an "Agent Trainee" on September 2,
2008 in their New York City office. I (Compi. ~ ~ 5, 11, 14.) Plaintiff alleges that Meade and
Winiarski, two employees within the Human Resources Department at William Morris, were
constantly assigning him "dead-end assignments that involved working more with support staff
(mailroom, accounting, reception, business affairs, IT, etc.) or being an Assistant's Assistant,
than getting the opportunity to work with/for Agents." (Compi. ~ ~ 83, 87.) He alleges that
"[a]lthough Whites were also given similar assignments, the frequency in which [plaintiff! and
the other African American Agent Trainee were assigned these [dead-end] tasks exceeded that of
Whites significantly." (CompI. ~ 83.) According to plaintiff, this was a tactic designed "to
impair his interest in [William Morris] so that he would quit on his own accord or ... leave
involuntarily as a result of not being able to advance ...." (CompI. ~ 87.)
Shortly after plaintiff expressed his belief that he was being discriminated against,
plaintiff was informed "that because of [a] new [c ]ompany policy, Floaters and Trainees who
couldn't land a desk within three months would be asked to leave the [c ]ompany ...." (CompI.
~ ' 1 1 4 4 , 149.) Thereafter, plaintiff scheduled a meeting with Carole Katz, the head of Human
Resources, "to express his certainty that he was being set up to fail and [was being]
discriminated against ...." (CompI. ~ ~ 95, 150.) During the meeting, plaintiff delineated the
numerous incidents that "led him to believe ... he was being discriminated against." (CompI.,r
151.) He also told Ms. Katz, "I'm talking about this with you behind closed doors, but I can
I Plaintiff explains in his opposition memorandum that William Morris Agency merged with "Endeavor" in April
2010 to become William Morris Endeavor Entertainment, LLC, the defendant in this lawsuit. (Pl. Opp. Mem. 14.)
In the Complaint, plaintiff refers to both William Morris Agency and William .\10rris Endeavor Entertainment, LLC
as either the "Company" or "William Morris." I refer specifically to William Morris Ageney or William Morris
Endeavor where the faets permit a distinction.
- 2
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 2 of 18
make this a much bigger issue." (CompI. ~ 152.) Ms. Katz "immediately gave [plaintiff] the
option of either working for the next five months[,] or being paid with insurance benefits for the
next five months ... " and using the five months to look for another job. (CompI. '1153.) The
next day, April 9, 2010, plaintiff was given a check in an amount equivalent to five months pay.
(CompI. ,r 154.) This was plaintiffs last day as an employee of William Morris. (CompI. ~
156.)
THE ARBITRATION AGREEMENTS
The parties agree that plaintiff signed two arbitration agreements during the
course of his employment. (PI. Opp. Mem. l3; Defs. Mem. 3; Reply 4.) On the first day of
plaintiffs employment, he executed the first agreement with William Morris Agency (the "2008
Arbitration Agreement") as a condition of employment. (PI. Opp. Mem. 13.) He entered into a
second agreement with William Morris Endeavor on July 1,2009 (the "2009 Arbitration
Agreement") as a condition of remaining employed before William Morris Agency merged to
become William Morris Endeavor Entertainment, LLC in Apri12010. (PI. Opp. Mem. 14.)
The 2009 Arbitration Agreement provides in relevant part:
The parties agree that any claim, dispute, and/or controversy that either Employee
may have against the Company (as define above), or that the Company may have
against Employee, arising from, related to, or having any relationship or
connection whatsoever with Employee's seeking employment with, maintaining
employment by, or other association with the Company, shall be submitted to and
determined exclusively by binding arbitration under the [FAA] . . .. Included
within the scope of this Agreement are all disputes, whether based on tort,
contract, statute, including, but not limited to, any claims of discrimination,
harassment, or retaliation, whether based on city, state or federal law, claims for
wages or compensation, claims based in equity, or otherwise.
(2009 Arbitration Agreement at 1, attached as Carbone Dec!. Ex. B.) It also provides that "[tJhe
Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to
resolve any dispute relating to the interpretation, applicability, enforceability or formation of this
3
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 3 of 18
Agreement, including but not limited to any claim that all or any part of this Agreement is void
or voidable" (the HDelegation Provision,,).2 (2009 Arbitration Agreement at 2.) The 2009
Arbitration Agreement further provides that H[t]he arbitration will be conducted by the American
Arbitration Association ("AAA") in accordance with its then-current Employment Arbitration
Rules" and that H[t]he Arbitrator shall apply the substantive law of the State in which Employee
works or federal law, or both, as applicable to the claims and defenses asserted." (2009
Arbitration Agreement at 1-2.)
The parties do not dispute that the 2009 Arbitration Agreement was an agreement
to arbitrate, that plaintiff and William Morris Endeavor both executed the Agreement, or that its
scope includes within it the claims asserted in the Complaint. Rather, plaintiff argues that the
Court should not stay the litigation or dismiss the Complaint because the 2009 Arbitration
Agreement as a whole, as well as certain of its provisions, are unenforceable and thus he did not
waive his right to judicial resolution of his claims. Specifically, he argues that the 2009
Arbitration Agreement is unfair, one-sided and the product of undue influence and economic
duress because he sigued the Agreement as a condition of remaining employed, he had economic
pressure to sign the Agreement due to his student loan debt, he entered into the Agreement with
an entity that had superior bargaining power, and there was no negotiation as to its terms. (PI.
Opp. Mem. 9-10, 13-15.) He also asserts that the provision requiring that claims alleging
"discrimination" or "retaliation" must be submitted to arbitration is unconscionable because it is
in direct violation of the language of Section 1981 and Title VII. (PI. Opp. Mem. 9-10.) This is,
according to plaintiff, because William Morris "promote[ d] racist behavior in a systematic and
2 The William Morris Agency Policy Manual also states that "[i]t is the policy of the William Morris Agency, to
arbitrate any dispute which arises between WMA and the employee regarding any aspect of their employment
relationship, including disputes regarding compensation, benefits, duties or termination, before a single neutral
arbitrator aceeptable to both parties." (Carbone Decl. Ex. D at 1.)
- 4
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 4 of 18
subtle manner" and rather than correcting these problems, William Morris instead "compel [led]
minorities to waive their civil and human rights through mandatory arbitration agreements as
conditions for employment" (PI. Opp. Mem. 8.) Defendants respond that issues of
enforceability are for the arbitrator to decide and not the court, and even ifjudicial resolution of
these issues were appropriate, plaintiffhas not set forth facts sufficient to preclude enforcement
of the 2009 Arbitration Agreement. (Reply 3-4.)
DISCUSSION
1. Legal Standard
The Federal Arbitration Act (the "FAA"), 9 U.S.C. 1 et seq., "is an expression
of' a strong federal policy favoring arbitration as an alternative means of dispute resolution.' "
Ragone v. AtL Video at Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010) (quoting Hartford
Accident & Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219,226 (2d Cir. 2001)).
Section 2 of the FAA provides:
A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction, or the refusal to perform the whole or
any part thereof, or an agreement in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction, or refusal, shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.
9 U.S.C. 2.
The FAA also establishes procedures by which federal courts may implement
Section 2' s substantive rule. Section 3 of the FAA provides that "upon being satisfied that the
issue involved in [a] suit or proceeding [pending before it] is referable to arbitration under" an
arbitration agreement, the district court "shall on application of one of the parties stay the trial of
the action until such arbitration has been had in accordance with the terms of the agreement,
- 5
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 5 of 18
providing the applicant for the stay is not in default in proceeding with such arbitration." 9
U.S.c. 3.
A district court must resolve four inquiries to determine whether all or part of an
action is arbitrable:
[F]irst, it must determine whether the parties agreed to arbitrate;
second, it must determine the scope of that agreement; third, if
federal statutory claims are asserted, it must consider whether
Congress intended those claims to be nonarbitrable; and fourth, if
the court concludes that some, but not all, of the claims in the case
are arbitrable, it must then decide whether to stay the balance of
the proceedings pending arbitration.
JLM Indus. Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d CiL 2004) (quoting Oldroyd v.
Elmira Sav. Bank, FSB, 134 F.3d 72, 75-76 (2d CiL 1998) (alteration in original)).
The Supreme Court recently "reemphasize[ d] the proper framework for deciding
when disputes are arbitrable ...." Granite Rock Co. v. InCI Bhd. of Teamsters, l30 S.Ct 2847,
2856 (2010). It explained that "a court may order arbitration of a particular dispute only where
the court is satisfied that the parties agreed to arbitrate that dispute." (emphasis in original)
(citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,943 (1995); AT & T
Technologies, Inc. v. Commc'ns Workers, 475 U.S. 643, 648-49 (1986)). "To satisfy itself that
such agreement exists, the court must resolve any issue that calls into question the formation or
applicability of the specific arbitration clause that a party seeks to have the court enforce." Id.
(citing Rent-A-Center, West, Inc. v. Jackson, l30 S.Ct. 2772,2778-79 (2010)). "Where there is
no provision validly committing them to an arbitrator, see [Rent-A-Center, l30 S.Ct. at 2776
78], these issues typically concern the scope of the arbitration clause and its enforceability. In
addition, these issues always include whether the clause was agreed to, and may include when
that agreement was formed." Id.
- 6
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 6 of 18
When a party disputes the enforceability of an arbitration agreement, by arguing,
for example, that the agreement is void because it is unconscionable, this is a gateway matter that
is typically decided by the court. Rent-A-Center, 130 S.Ct. at 2777-78; see also Green Tree
Financial Corp. v. Bazzle, 539 U.S. 444, 452 (2003) (plurality opinion) (gateway matters include
"whether the parties have a valid arbitration agreement at all"). However, "parties can agree to
arbitrate 'gateway' questions of 'arbitrability,' such as whether the parties have agreed to
arbitrate or whether their agreement covers a particular controversy." Rent-A-Center, 130 S.Ct.
at 2777 (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,83-85 (2002); Bazzle, 539
U.S. at 452).
When the presenting issue is whether a court or an arbitrator should determine
arbitrability, "(t]he law (applies a] reverse[ ] ... presumption to favor judicial rather than arbitral
resolution." Shaw Group Inc. v. Triplefine Int'l Corp., 322 F.3d 115,120-21 (2d Cir. 2003)
(citing First Options, 514 U.S. at 944-45). This is a "reverse" presumption because in
determining the scope of arbitration clauses, courts generally apply a presumption in favor of
arbitrability. See Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218,
223 (2d Cir. 2001) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24-25 (1983)) ("It is familiar law that the (FAA] ... expresses 'a liberal federal policy favoring
arbitration agreements' and that 'any doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration.''') Under the reverse presumption, "( u ]nless the parties clearly
and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to
be decided by the court, not the arbitrator." AT & T Technologies, Inc., 475 U.S. at 649.
In Prima Paint, the Supreme Court recognized that agreements to arbitrate, which
are presumptively valid, are severable from a potentially invalid contract. Prima Paint Corp. v.
- 7
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 7 of 18
Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967); see also Buckeye Check Cashing, Inc.
v. Cardegna, 546 U.S. 440, 445-46 (2006) ("as a matter of substantive federal arbitration law, an
arbitration provision is severable from the remainder of the contract.") Thus, in detennining
arbitrability, a court considers whether a party is challenging the validity of the arbitration
agreement specifically, or whether the challenge is directed more generally to the contract within
which the arbitration clause is contained. Buckeye, 546 U.S. at 449. When a contract contains
an arbitration agreement and the challenge is directed against the contract as a whole, the dispute
is committed to the arbitrator to decide the general contract dispute. Id.
The Supreme Court, in Rent-A-Center, recently applied the Prima Paint concept
of severability to an agreement that was itself an agreement to arbitrate. See Rent-A-Center, 130
S.C1. at 2778-79. The underlying agreement at issue provided for arbitration of all " 'past,
present or future' disputes arising out of [respondent's] employment with Rent-A-Center,
including 'claims for discrimination' and 'claims for violation of any federal ... law.''' Id. at
2775. The parties disputed whether the underlying agreement was unconscionable. Id. at 2779.
Petitioner sought court enforcement of a "delegation provision" contained within the underlying
arbitration agreement which delegated the issue of enforceability to the arbitrator. Id. at 2777.
The provision in Rent-A-Center is similar to the provision contained within the 2009 Arbitration
Agreement and stated that "[t]he Arbitrator ... shall have exclusive authority to resolve any
dispute relating to the ... enforceability of this Agreement including, but not limited to any
claim that all or any part of this Agreement is void or voidable." Id. (alterations in original).
The Rent-A-Center Court concluded that because the respondent only challenged the
enforceability of the arbitration agreement as a whole, rather than the specific provision
- 8
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 8 of 18
petitioner sought to enforce-the delegation provision-the challenge was for the arbitrator to
decide. Id. at 2779-80.
Federal courts apply state law to detennine whether a contract defense may
invalidate an arbitration agreement. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681,
687 (1996); Rent-A-Center, 130 S.Ct. at 2780. But federal substantive law govems questions
conceming the interpretation and construction of arbitration agreements. Moses H.
Cone Memorial Hospital v. Mecury Construction Corp., 460 U.S. 1,25 (1983). The party
opposing arbitration has the burden to show that the agreement is unenforceable.
Financial v. Randolph, 531 U.S. 79,91-92 (2000).
II. Application
A. The Goveming Agreement
In seeking to dismiss the Complaint or stay the litigation pending arbitration,
defendants assume that the 2009 Arbitration Agreement, rather than the 2008 Arbitration
Agreement, is the goveming agreement for the purposes ofthis motion. (Defs. Mem. 3-5.)
Plaintiff does not specifically dispute this point; he argues that both Agreements are
unenforceable.
The 2009 Arbitration Agreement is the goveming agreement. First, the 2009
Arbitration Agreement includes in its scope disputes preexisting the execution of the 2009
Arbitration Agreement. The 2009 Arbitration Agreement includes within its scope "all disputes"
against William Morris Endeavor and it does not place a temporal limitation on arbitrable claims.
See United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83
(1960) ("An order to arbitrate the particular grievance should not be denied unless it may be said
with positive assurance that the arbitration clause is not susceptible of an interpretation that
- 9
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 9 of 18
covers the asserted dispute. Doubts should be resolved in favor of coverage.") Second, the 2009
Arbitration Agreement was executed last-in-time and provides that it "supersedes any and all
prior and contemporaneous agreements ...." (2009 Arbitration Agreement at 2.) Third,
plaintiff asserted his claims against "William Morris Endeavor Entertainment, LLC, formerly
known as the William Morris Agency, Inc." (CompI. at 1) (emphasis added.) William Morris
Endeavor is the entity plaintiff named in the Complaint and the entity with whom plaintiff
entered into the 2009 Arbitration Agreement.
B. The Parties Agreed to Arbitrate Issues of Arbitrability, Including Whether the
2009 Arbitration Agreement and Its Provisions Are Enforceable and the Scope of
the Agreement
Defendants assert that the dispute between the parties as to whether the 2009
Arbitration Agreement is voidable is an issue to be decided by an arbitrator and not this Court.
(Reply 3-4.) "[T]he issue of arbitrability may only be referred to the arbitrator ifthere is clear
and unmistakable evidence from the arbitration agreement, as construed by the relevant state
law, that the parties intended that the question of arbitrability shall be decided by the arbitrator."
Contec Corp. v. Remote Solution Co., Ltd., 398 F.3d 205,208 (2d Cir. 2005) (emphasis in
original) (quoting Bell v. Cendant Corp., 293 F.3d 563,566 (2d Cir. 2002)).
Construing the 2009 Arbitration Agreement under New York state law,3 I
conclude it clearly and unmistakably provides the arbitrator with the exclusive authority to
decide issues of arbitrability, including whether the 2009 Arbitration Agreement and any part
thereofis enforceable, as well as the scope of the arbitration agreement. First, the Delegation
3 Plaintiff assumes that New York law is the applicable state law. Defendants do not dispute this and cite to cases
applying New York law. (Reply 4.) I therefore apply New Yark state law in determining whether the Delegation
Provision is enforceable. In re Tehran-Berkeley Civil and Env't Eng'rs, 888 F.2d 239, 242 (2d Cir. 1989)
(explaining that "implied consent to use a forum's law is suffieient to establish choice-of-law ...."); Casarotto, 517
U.S. at 687 (explaining that federal courts apply state law to determine whether a contract defense may invalidate
an arbitration agreement).
- 10
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 10 of 18
Provision expressly provides that the arbitrator "shall have exclusive authority to resolve any
dispute relating to the interpretation, applicability, enforceability or formation ofthis Agreement,
including but not limited to any claim that all of any part of this Agreement is void or voidable."
(2009 Arbitration Agreement at 2.) Second, the parties incorporated by reference the "then
current" Employment Arbitration Rules of the AAA. (2009 Arbitration Agreement at 1.) Rule
6(a) of the AAA Employment Arbitration Rules provides that "[t]he arbitrator shall have the
power to rule on his or her own jurisdiction, including any objections with respect to the
existence, scope or validity of the arbitration agreement." AAA Employment Arbitration Rule
6(a). This language provides for the arbitrator to decide issues of arbitrability. The Second
Circuit, has "held that when ... parties explicitly incorporate rules that empower an arbitrator to
decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the
parties' intent to delegate such issues to an arbitrator." Contec Corp., 398 F.3d at 208
(construing the agreement under New York law) (citing Shaw Group Inc. v. Triplefine Int'l
Corp., 322 F.3d 115,122 (2d Cir. 2003); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1202 (2d
Cif. 1996.
C. The Delegation Provision is Enforceable
Under Rent-A-Center, a remaining inquiry is whether plaintiff contests the
validity of the Delegation Provision and if so, whether under the applicable state law, this
provision is enforceable.
4
See Rent-A-Center, 130 S.Ct. at 2778 (severing the specific
agreement to arbitrate arbitrability from the underlying arbitration contract and noting that "a
party's challenge to another provision of the contract, or to the contract as a whole, does not
4 Plaintiff does not dispute whether an agreement between the parties was ever concluded. "The issue of the
contract's validity is different from the issue whether any agreement between the alleged obligor and obligee was
ever concluded." Buckeye, 546 U.S. at 444 n. 1. The Court noted in dicta that these other contract formation issues
include, for example, "whether the alleged obligor ever signed the contract," "whether the signor lacked authority to
commit the alleged principal," "and whether the signor lacked the mental capacity to assent." ld.
- 11
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 11 of 18
prevent a court from enforcing a specific agreement to arbitrate"); Ragone, 595 F .3d at 121
(applying state law to determine whether the arbitration agreement was unconscionable); see also
Dedon GmbH v. Janus et Cie, 2010 WL 4227309, at *7 (S.D.N.Y. Oct. 19,2010) (citing Granite
Rock, 130 S.Ct. at 2858) ("whenever a party contests the existence or the enforceability of an
arbitration agreement, the court must resolve the disagreement.")
In opposing defendants' motion to compel arbitration, plaintiff specifically
mentions the Delegation Provision only once-to support his position that the 2009 Arbitration
Agreement is unfair, one sided, and the product of undue influence. (PI. Opp. Mem. 9-10.)
Plaintiff asserts that "[t]erms such as ... '[the Arbitrator ... shall have] exclusive authority to
resolve dispute[s] ... including but not limited to any claim that all or any part ofthis Agreement
is void or voidable' ... leaves no room for judicial review of the decision and negates the
[d]efendant's [sic] request for [a] 'stay pending arbitration.' " (PI. Opp. Mem. 10.) In
concluding his opposition memorandum, plaintiff requests "that the Court invalidate the[ ]
unconscionable provisions." (PI. Opp. Mem. 16.) Construing this argument liberally in light of
plaintiffs pro se status, I construe it as challenging the enforceability of the Delegation Provision
as unconscionable.
Under New York law, "[a] determination of unconscionability generally requires
a showing that the contract was both procedurally and substantively unconscionable when
made ...." Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10 (1988) (citation omitted).
"The procedural element of unconscionability concerns the contract formation process and the
alleged lack of meaningful choice; the substantive element looks to the content of the contract[,
per se]." Ragone, 595 F.3d at 121-22 (alterations in original) (quoting State v. Wolowitz, 468
N.Y.S.2d 131, ]45 (2d Dep't 1983)). "The concept of unconscionability must necessarily be
- 12
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 12 of 18
applied in a flexible manner depending upon all the facts and circumstances of a particular case."
Matter of Friedman, 407 N.Y.S.2d 999, 1008 (2d Dep't 1978). In determining whether an
agreement is procedurally unconscionable, New York courts analyze factors such as the setting
of the transaction, whether the party seeking to enforce the contract used high pressure tactics or
deceptive language in the contract, whether there is inequality of bargaining power between the
parties, and the experience and education of the party claiming unconscionability. Morris v.
Snappy Car Rental, Inc., 637 N.E.2d 253,256 (N.Y. 1994); Gillman, 73 N.Y.2d at 11. Although
a party must typically show that the agreement was both procedurally and substantively
unconscionable, "there have been exceptional cases where a provision of the contract is so
outrageous as to warrant holding it unenforceable on the ground of substantive unconscionability
alone." Gillman, 73 N.Y.2d at 11; see also Brower v. Gateway 2000, Inc., 676 N.Y.S.2d 569,
574 (1st Dep't 1998).
Plaintiff argues that the 2009 Arbitration Agreement was procedurally
unconscionable because it is the product of undue influence and economic duress, and there was
no negotiation as to its terms. (PI. Opp. Mem. 9-10; 13-15.) Specifically, he explains that he
was in an unequal bargaining position with William Morris Endeavor and "[i]n order to advance
my career, agreeing to the terms and conditions stated in the[ ] contract[ ] was not up for debate."
(PI. Opp. Mem. 13.) He states that "the only alternative [to signing the agreement] would have
been to re-enter the job market during a [r]ecession." (PI. Opp. Mem. 14.) He asserts that
remaining employed was "a necessity" because he needed health insurance and money to repay
his student loans. (PI. Opp. Mem. 15.) With respect to the Delegation Provision in particular, he
argues it is substantively unconscionable because it "leaves no room for judicial review of the
decision." (Pl. Opp. Mem. 10.)
- 13
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 13 of 18
The 2009 Arbitration Agreement was not signed under procedurally
unconscionable conditions. First, plaintiff has not asserted that he attempted to negotiate the
tenns of the Agreement. He assumes that the 2009 Arbitration Agreement was offered "on a
take-it-or-Ieave-it, non-negotiable basis." (PI. Opp. Mem. 10.) Second, even if William Morris
Endeavor offered the 2009 Arbitration Agreement on a "take-it-or-Ieave-it" basis and refused to
negotiate, this is not sufficient under New York law to render it procedurally unconscionable.
See Nayal v. HIP Network Servs. IPA, Inc., 620 F. Supp. 2d 566,571 (S.D.N.Y. 2009) (applying
New York law and concluding that a fonn contract offered on a take-it-or-Ieave-it basis does not
alone render a contract procedurally unconscionable); Sablosky v. Edward S. Gordon Co., Inc.,
535 N.E.2d 643, 647 (N.Y. ] 989) (finding that it was not procedurally unconscionable for a real
estate brokerage finn to include as a condition of employment an agreement to arbitrate claims).
Third, plaintiff is an educated individual with a bachelor's and master's degree who accepted the
temlS "to advance [his] career." (Compl. ~ 15; PI. Opp. Mem. 13.) There is no evidence that he
was precluded from reading the 2009 Arbitration Agreement or asking questions about its tenns
before signing it. See Morris, 637 N.E.2d at 256-57 (declining to find an agreement containing
an arbitration clause procedurally unconscionable where the plaintiff was a high school graduate
with some college education and plaintiff was not prevented from reading the agreement or
asking questions about it); Tsadilas v. Providian Nat'l Bank, 786 N.Y.S.2d 478,481 (1st Dep't
2004) (explaining that "[a]rbitration agreements are enforceable despite inequality in bargaining
power.")
Nor has plaintiff set forth a sound basis upon which this Court could conclude that
the Delegation Provision is substantively unconscionable, such that this alone could be a basis to
find the provision unenforceable. Plaintiff asserts that the language in the Delegation Provision
- 14
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 14 of 18
"leaves no room for judicial review ofthe decision," but this Court sees no grounds for such a
conclusion. The terms of the Delegation Provision do not preclude a court from vacating the
arbitration award if a proper showing is made. See 9 U.S.C. 10 (setting forth the grounds for
vacating an arbitration award). Because the Delegation Provision is enforceable and the
Agreement sets forth clear and unmistakable evidence of the parties intent to arbitrate issues of
arbitrability, plaintiff's other arguments are for the arbitrator to decide. See Rent-A-Center, 130
S.Ct. at 2779-80.
D. The Individual Defendants As Non-Signatories to the 2009 Arbitration
Agreement May Compel Enforcement ofthe Delegation Provision
Although arbitration agreements are broadly construed, "such agreements must
not be so broadly construed as to encompass claims and parties that were not intended by the
original contract." Thomson-CSF, S.A. v. American Arbitration Ass'n, 64 F.3d 773, 776 (2d
Cir. 1995). "[ J]ust because a signatory has agreed to arbitrate issues of arbitrability with another
party does not mean that it must arbitrate with any non-signatory." Contec, 398 F.3d at 209. But
where a court detennines that the "parties have a sufficient relationship to each other" and "when
the issues the non-signatory is seeking to resolve in arbitration are intertwined with the
agreement that the estopped party has signed" a signatory to a contract may be estopped from
avoiding arbitration. Id. (quoting Choctaw Generation Ltd. P'ship v. Am. Home Assurance Co.,
271 F.3d 403,404 (2d Cir. 2001). Factors to consider in making this determination include "the
relationship among the parties, the contracts they signed (or did not), and the issues that ha[ ve]
arisen." Id. (quoting Choctaw, 271 F.3d at 406).
Here, the Individual Defendants are non-signatories to the 2009 Arbitration
Agreement but seek an order dismissing the Complaint or staying the litigation. Defendants
argue that as employees of William Morris Endeavor, the Individual Defendants "are expressly
- 15
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 15 of 18
entitled to the benefits of and to enforce" the tetms of the 2009 Arbitration Agreement. (Defs.
Mem. 3 n. 2.) After analyzing the 2009 Arbitration Agreement and the relationship between the
parties, I conclude that the Individual Defendants may enforce the tetms of the Delegation
Provision. Thus, I need not reach the issue of whether plaintiff is estopped from avoiding
arbitration with the Individual Defendants because, pursuant to the Delegation Provision, this is a
matter for the arbitrator. See Contec, 398 F.3d at 209 (declining to reach the question of whether
the signatories were estopped from avoiding arbitration with a non-signatory where the
arbitration agreement indicated that "arbitration of the issue of arbitrability [was] appropriate"
and there was a sufficient relationship between the parties and the agreement).
First, the tetms of the 2009 Arbitration Agreement indicate that plaintiff agreed to
arbitrate claims asserted against William Morris Endeavor employees. The 2009 Arbitration
Agreement provides for arbitration of "any claim, dispute and/or controversy that either
Employee may have against the Company (as defined above) ...." (2009 Arbitration
Agreement at 1.) It defines "Company" to include its employees and agents, which would
therefore include the Individual Defendants. (2009 Arbitration Agreement at 1.) Second, the
Individual Defendants are employees of William Morris Endeavor and the actors who carry out
the company functions. The allegations against the Individual Defendants relate to the manner in
which they executed their duties as William Morris Endeavor employees. These factors
demonstrate that a sufficient relationship exists between the parties and the 2009 Arbitration
Agreement for this Court to stay the action against all the defendants pending arbitration.
Contec, 398 F.3d at 211 (concluding "that as a signatory to a contract containing an arbitration
clause and incorporating by reference the AAA Rules, [the plaintiff] cannot now disown its
agreed-to obligation to arbitrate all disputes, including the question of arbitrability" as against a
- 16
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 16 of 18
non-signatory when there is a sufficient relationship between the parties and the arbitration
agreement); Campaniello Imports, Ltd. v. Saporiti Italia S.p.A., 117 F.3d 655, 668 (2d Cir. 1997)
("Courts in this and other circuits consistently have held that employees or disclosed agents of an
entity that is a party to an arbitration agreement are protected by that agreement."); Ross v.
American Exp. Co., 547 F.3d 137, 146 (2d Cir. 2008) (noting that courts are more likely to apply
the estoppel principle to compel arbitration where there is "a relationship among the parties
which either supported the conclusion that [the party opposing arbitration] had consented to
extend its agreement to arbitrate to [the non-signatory], or, otherwise put, made it inequitable for
[the party opposing arbitration] to refuse to arbitrate on the ground that it had made no agreement
with [the non-signatory]" ); Cicchetti v. Davis Selected Advisors, 2003 WL 22723015, at *3
(S.D.N.Y. Nov. 17,2003) (concluding that a former employee who signed an arbitration
agreement with employer was estopped from avoiding arbitration as to claims asserted against a
supervisor who was not a signatory to the arbitration agreement).
E. Congressional Intent
The third arbitrability inquiry is whether Congress intended the Federal claims
asserted "to be nonarbitrable." JLM Indus., 387 F.3d at 169 (quoting Oldroyd, 134 F.3d at 75
76). Generally, "although all statutory claims may not be appropriate for arbitration, having
made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an
intention to preclude waiver ofjudiciaJ remedies for the statutory rights at issue." 14 Penn Plaza
LLC v. Pyett, 129 S.Ct. 1456, 1465 (2009) (quoting Gilmer v. Interstate/Johnson Lane Corp, 500
U.S. 20, 25 (1991)). "[T]he burden lies with the party attempting to avoid arbitration 'to show
that Congress intended to preclude a waiver of ajudicial forum' for his claims." Arciniaga v.
General Motors Corp., 460 F.3d 231, 235 (2d Cir. 2006) (quoting Gilmer, 500 U.S. at 26).
- 17
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 17 of 18
Plaintiff has not shown that Congress intended to preclude arbitration for claims
asserted under either Title VII or 42 U.S.c. 1981. Moreover, courts have concluded that
discrimination claims asserted under both provisions are arbitrable. S e e ~ , 14 Penn Plaza
LLC, 129 S.Ct. at 1470 n. 9 ("nothing in the text of Title VII ... precludes contractual
arbitration"); Arciniaga, 460 F.3d at 234, 238 (finding discrimination claim asserted under 42
U.S.c. 1981 arbitrable).
F. Discretion to Dismiss
"While Section 3 of the FAA requires a district court to stay proceedings where
an issue before it is arbitrable under an agreement, courts have the discretion to dismiss - rather
than stay ~ w an action when all of the issues in it must be arbitrated." Johnson v. Tishman Speyer
Properties, L.P., 2009 WL 3364038, at *4 (S.D.N.Y. Oct. 16,2009) (emphasis omitted). I
decline to exercise my discretion to dismiss the Complaint. The action is therefore stayed.
CONCLUSION
For the reasons stated above, defendants' motion (Docket # 12) is GRANTED
insofar as they seek an order staying the litigation. The Clerk of the Court is directed to
terminate this motion. This case is placed on the suspense docket. Counsel for defendants is
directed to provide plaintiff with copies of any unpublished opinions cited in this Memorandum
and Order.
SO ORDERED.
Dated: New York, New York
July 20,2011
- 18
Case 2:10-cv-09647-PKC -JCF Document 18 Filed 07/20/11 Page 18 of 18

You might also like