Sexual Harassment Plaintiff Bound by Arbitration Agreement, Court Holds

In Mozzachio v. Schanzer, No. 2018-12385, 521309/17, 2020 N.Y. Slip Op. 06522, 2020 WL 6601906 (N.Y.A.D. 2 Dept., Nov. 12, 2020) – a sexual harassment case – the court, inter alia, held that an arbitration agreement was enforceable by the defendant.

In this case, the plaintiff alleges claims of sexual harassment and hostile work environment, gender discrimination, and unlawful retaliation in violation of the New York State Human Rights Law, N.Y. Executive Law § 296. Defendant moved to dismiss the complaint and compel arbitration of plaintiff’s claims, or in the alternative, to compel arbitration of the plaintiff’s claims and stay the action. the lower court granted defendant’s motion, finding that the arbitration clause in the Employment Agreement between plaintiff and her corporate employer (CRT).

The court summarized the pertinent law:

[O]n a motion to compel or stay arbitration, a court must determine, ‘in the first instance … whether parties have agreed to submit their disputes to arbitration and, if so, whether the disputes generally come within the scope of their arbitration agreement’ ” (Degraw Constr. Group, Inc. v. McGowan Bldrs., Inc., 152 A.D.3d 567, 569, 58 N.Y.S.3d 152, quoting Sisters of St. John the Baptist, Providence Rest Convent v. Geraghty Constructor, 67 N.Y.2d 997, 998, 502 N.Y.S.2d 997, 494 N.E.2d 102; see Brown v. Bussey, 245 A.D.2d 255, 255, 666 N.Y.S.2d 15). “When deciding whether the parties agreed to arbitrate a certain matter … courts generally … should apply ordinary state-law principles that govern the formation of contracts” (First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985; see Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 129 S.Ct. 1896, 173 L.Ed.2d 832; Degraw Constr. Group, Inc. v. McGowan Bldrs., Inc., 152 A.D.3d at 569, 58 N.Y.S.3d 152). “Arbitration is a matter of contract, ‘grounded in agreement of the parties’ ” (Matter of Belzberg v. Verus Invs. Holdings Inc., 21 N.Y.3d 626, 630, 977 N.Y.S.2d 685, 999 N.E.2d 1130 [citation omitted], quoting County of Sullivan v. Edward L. Nezelek, Inc., 42 N.Y.2d 123, 128, 397 N.Y.S.2d 371, 366 N.E.2d 72). “Inasmuch as an arbitration clause is a contractual right, ‘the general rule is that only a party to an arbitration agreement is bound by or may enforce the agreement’ ” (Degraw Constr. Group, Inc. v. McGowan Bldrs., Inc., 152 A.D.3d at 569, 58 N.Y.S.3d 152, quoting 1 Domke on Commercial Arbitration § 13:1; see Matter of Belzberg v. Verus Invs. Holdings Inc., 21 N.Y.3d at 630, 977 N.Y.S.2d 685, 999 N.E.2d 1130; Oxbow Calcining USA Inc. v. American Indus. Partners, 96 A.D.3d 646, 648–649, 948 N.Y.S.2d 24). However, “ ‘[a] nonsignatory to an arbitration clause may, in certain situations, compel a signatory to the clause to arbitrate the signatory’s claims against the nonsignatory despite the fact that the signatory and nonsignatory lack an agreement to arbitrate’ ” (Degraw Constr. Group, Inc. v. McGowan Bldrs., Inc., 152 A.D.3d at 569–570, 58 N.Y.S.3d 152, quoting 1 Domke on Commercial Arbitration § 13:1). “ ‘A non-party to an arbitration agreement may compel a party to arbitration if the relevant state contract law allows the non-party to enforce the arbitration agreement.

Applying the law, the court held that “the alleged misconduct attributed to the defendant in the amended complaint relates to his behavior as an officer and employee of CRT” and, therefore, “the defendant was entitled to enforce the arbitration clause contained in the employment agreement between CRT and the plaintiff.”

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