Court Grants Motion to Compel Arbitration; Economic Duress Argument Rejected

In Abreu et al v. Fairway Market LLC et al, 17-cv-9532, 2018 WL 3579107 (S.D.N.Y. July 24, 2018), the court granted defendants’ motion to compel arbitration of plaintiffs’ employment discrimination claims under the  Federal Arbitration Act, 9 U.S.C. § 1 et seq.

In this case, plaintiffs alleged “that Fairway Market and its employees discriminated and retaliated against them on the basis of their Hispanic heritage and their requests for medically-necessary accommodations, and retaliated against them for reporting unsafe conditions.”

In granting the motion, the court explained:

Each of the Plaintiffs’ Arbitration Agreements provides for the arbitration of claims “based on statutorily prohibited sexual harassment or discrimination under any federal, state, or local law, including but not limited to, … the Human Rights laws of the State or City of New York.” Dkt. 8 Exs. 2-4, 6, 8; Dkt. 35 Exs. A, B. Plaintiffs appear to concede that the arbitration clauses apply on their face, Dkt. 29 at 1, but contend that the clauses are invalid because they are unconscionable or were signed under duress. Dkt. 29 at 13-16. Neither of these arguments is persuasive.

Plaintiffs contend that the Arbitration Agreements are unconscionable because they were provided to them along with a stack of other papers, without explanation of their meaning. Dkt. 29 at 13. But it is well established “that a ‘contractor must stand by the words of his contract; and, if he [does] not read what he signs, he alone is responsible for his omission.’ ” Butvin v. DoubleClick, Inc., No. 99-CV-4727 (JFK), 2001 WL 228121, at *8 n.13 (S.D.N.Y. Mar. 7, 2001), aff’d, 22 F. App’x 57 (2d Cir. 2001) (quoting Upton v. Tribilcock, 91 U.S. 45, 50 (1875)). None of the Plaintiffs disputes that he or she signed the Arbitration Agreement, and each employee’s subjective knowledge as to the meaning of the agreement to arbitrate is irrelevant. See Hart v. Canadian Imperial Bank of Commerce, 43 F. Supp. 2d 395, 400–01 (S.D.N.Y. 1999) (“[A]bsent a showing of fraud or other unlawful behavior, ‘plaintiff’s subjective knowledge of the scope of the arbitration clause is irrelevant and he is presumed to have agreed to all the terms of the contract.’ ” (quoting Rice v. Brown Bros. Harriman & Co., No. 96-CV-6326 (MBM), 1997 WL 129396, at *4 (S.D.N.Y. Mar. 21, 1997))). Nor is Plaintiffs’ purported lack of facility with English a basis to invalidate an otherwise valid contract. See Victorio v. Sammy’s Fishbox Realty Co., No. 14-CV-8678 (CM), 2015 WL 2152703, at *11 (S.D.N.Y. May 6, 2015); Maines Paper & Food Serv., Inc. v. Adel, 681 N.Y.S.2d 390, 391 (3d Dep’t 1998).

Alternatively, Plaintiffs contend that because signing the Arbitration Agreements was a condition of their employment, the agreements were made under economic duress and are therefore voidable. Dkt. 29 at 14-16. Economic duress, under New York law, requires: “(1) a threat, (2) which was unlawfully made, and (3) caused involuntary acceptance of contract terms, (4) because the circumstances permitted no other alternative.” Kamerman v. Steinberg, 891 F.2d 424, 431 (2d Cir. 1989) (quoting Gulf & W. Corp. v. Craftique Prods., Inc., 523 F. Supp. 603, 610 (S.D.N.Y. 1981)). Courts have held repeatedly that requiring an employee to sign an arbitration clause as a condition of employment does not constitute economic duress, despite the imbalance in bargaining power. See, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991); Williams v. Parkell Prods., Inc., 91 F. App’x 707, 708-09 (2d Cir. 2003). Additionally, economic duress is a defense to contract enforceability only if the party repudiates the agreement in a timely manner. VKK Corp. v. NFL, 244 F.3d 114, 123 (2d Cir. 2001) (a party under duress who “intentionally accept[s] benefits under the contract” by “acting upon it, performing under it, or affirmatively acknowledging it” cannot later repudiate the contract (quoting In re Boston Shipyard Corp., 886 F.2d 451, 455 (1st Cir. 1989))); Sci. Holding Co. v. Plessey, Inc., 510 F.2d 15, 23 (2d Cir. 1974) (duress waived because the party failed to repudiate in a timely manner). Each of the Plaintiffs continued his or her employment for years after signing the Arbitration Agreements thereby “intentionally accepting” the “benefits” of that contract. VKK Corp., 244 F.3d at 123; see Dkt. 8 Exs. 2-4. 6. 9, 10; Dkt. 35 Exs. A, B.

*3 In sum, the arbitration clause applies to the claims in this action and is enforceable. Accordingly, the motion to compel arbitration is granted.

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