Employment Discrimination and Retaliation Claims Subject to (Unsigned-by-Employer) Arbitration Agreement

In Cephus v. Normakamali, Inc., No. 156176/2020, 2021 WL 1345362 (N.Y. Sup Ct, New York County Apr. 08, 2021), an employment discrimination and retaliation case, the court granted defendant’s motion to compel arbitration.

From the decision:

In this case, Cephus’ proposed employment discrimination and retaliation claims are subject to arbitration because the provision at issue broadly and unambiguously covers “… any dispute or controversy between the Company and Undersigned relating to or arising out of the employment or engagement of Undersigned, including any dispute relating to or arising out of this Undertaking and Inducement…” (see Tong v. S.A.C. Capital Management, LLC, 52 AD3d 386, 387 [1st Dept. 2008]). The Company may also invoke the arbitration provision because the proposed claims relate to her behavior as agent of the Company (see Hirschfield Prods. v. Mirvish, 88 NY2d 1054, 1056 [1996]; DiBello v. Salkowitz, 4 AD3d 230, 231 [1st Dept. 2004]).

*2 In opposition, Cephus argues that the subject arbitration agreement is invalid because the Company failed to sign the Agreement and it created a requirement to witness its prospective employees signing the Agreement by providing a signature block for a witness to sign the Agreement. Cephus also argues that the Company cannot compel arbitration because it is not a signatory to the dispute resolution agreement.

In general, only signatories to a contract are bound by and entitled to enforce a contract’s arbitration clause (Sokol Holdings, Inc. v. BNB Munai Inc., 542 F.3d 354, 358 [2d Cir. 2008]). However, under principles of estoppel, a non-signatory to an arbitration agreement may compel a signatory to arbitrate a dispute where the relationship between the parties, the contracts they signed and the issues raised among them demonstrates that the issues that the non-signatory is seeking to resolve in arbitration are intertwined with the agreement (Sokol Holdings, Inc. v. BNB Munai Inc. supra at 358). The relationship between the parties must indicate that the signatory either intended the agreement to apply to the non-signatory or that it would be inequitable for the signatory to refuse to arbitrate on the ground that it did not have an agreement to arbitrate with the non-signatory (Id. at 361).

As discussed above, the dispute that the Company seeks to resolve is clearly related to and covered by the dispute resolution agreement. While the dispute resolution agreement was executed by Cephus, it is clearly based on the employment contract with the Company, which is designated in the Agreement.

The court concluded that “[u]nder these circumstances, it would be inequitable to allow Cephus to avoid arbitrating her employment related claims against the Company simply because they are not signatories to the dispute resolution agreement.”

Share This: