de Jesus v. Gregorys Coffee Mgmt.

MEMORANDUM & ORDER

MARGO K. BRODIE United States District Judge

Plaintiff Amador De Jesus, on behalf of himself and others similarly situated, commenced the above-captioned class and collective action against Defendants Gregorys Coffee Management, LLC (“Gregorys Coffee”), and Gregory Zamfotis on December 29, 2020, alleging violations of the Fair Labor Standards Act and the New York Labor Law. (Compl., Docket Entry No. 1.) On September 17, 2021, Defendants moved to compel arbitration, asserting that Plaintiff must arbitrate his employment claims, and Plaintiff opposed the motion.^[1]

For the reasons set forth below, the Court orders a hearing on the validity and unconscionability of the arbitration agreements signed by Plaintiff in 2018 and 2019.

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I. Background

a. Plaintiff's claims

Gregorys Coffee operates a chain of coffee shops.^[2] Defendants' warehouse supplier (the “Warehouse”) prepares all of the pastries and baked goods sold at Gregorys Coffee shops. (Compl. ¶ 6.)

In January of 2014, Defendants employed Plaintiff to work as a cook and baker at the Warehouse, which is located in Long Island City, New York. (Id. ¶ 23.) From the beginning of his employment until in or about January of 2017, Plaintiff worked sixty hours per week: ten hours per day, from 6:00 AM to 4:00 PM, for six days a week. (Id.) From in or about January of 2017 until the end of his employment with Defendants on March 17, 2020, Plaintiff regularly worked fifty-four hours per week: nine hours per day, from 6:00 AM to 3:00 PM, six days per week. (Id.) Throughout Plaintiff's employment, Defendants required Plaintiff to work through his thirty-minute meal break at least twice a week even though Plaintiff clocked out for his break. (Id. ¶ 25.) Defendants did not pay Plaintiff for this time. (Id.) In addition, Defendants required Plaintiff to clock out at the end of his shift but also required him to keep working without pay for approximately thirty minutes, three times a week. (Id. ¶ 26.) Defendants never paid Plaintiff the spread of hours premium for each workday exceeding ten hours and Plaintiff

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did not receive a notice of pay rate. (Id. ¶¶ 27-28.) From the beginning of his employment until in or about January of 2017, Defendants paid Plaintiff a fixed salary of $550.00 per week regardless of hours worked. (Id. ¶ 23.) From in or about January of 2017 until in or about January of 2020, Defendants paid Plaintiff $15.00 per hour. (Id.) From January of 2020 until March 17, 2020, when Defendants terminated Plaintiff's employment, Defendants paid Plaintiff $15.50 per hour. (Id.) Defendants paid Plaintiff in a combination of checks and cash. (Id.) Based on Plaintiff's direct observations and conversations, other non-exempt employees are and have been similarly situated. (Id. ¶ 12.)

i. 2018 and 2019 Arbitration Agreements

Plaintiff signed two arbitration agreements during his employment. The first was signed on January 15, 2018, and reads:

You agree as a condition and in consideration for new or continued employment that any dispute or claim that arises out of or that relates to your employment, or that arises out of or that is based upon the employment relationship (including but not limited to any wage claim, FLSA or NYLL claim, any claim for wrongful termination, or any claim based upon any statue [sic], regulation, or law, including those dealing with employment discrimination, sexual harassment civil rights, age, or disabilities), shall be resolved by arbitration in accordance with the then effective arbitration rules of the State of New York. The arbitration is of no cost to you and will be resolved on a case by case basis to be overseen by an independent and impartial arbitrator. You will have the opportunity to select one arbitrator from a list to be provided. Accordingly, you are hereby notified that you will be unable to seek class certification or class action status via the filing [of] any lawsuit regarding the above-mentioned claims. The decision of the arbitrator will be final and will wholly resolve the aforementioned dispute

(Arbitration Agreement dated Jan. 15, 2018 (“2018 Arbitration Agreement”), annexed to Defs.' Mem. as Ex. A, Docket Entry No. 34-1.) Plaintiff signed a second agreement on January 18, 2019, which is substantially identical to the 2018 Arbitration Agreement. (Arbitration Agreement dated Jan. 18, 2019 (“2019 Arbitration Agreement”), annexed to Defs.' Mem. as Ex.

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B, Docket Entry No. 34-2.)

When presented with the 2018 Arbitration Agreement and the 2019 Arbitration Agreement (collectively, the “Arbitration Agreements”), which were written in English, Defendants told Plaintiff that he “had to sign the [Arbitration Agreements] to continue working for Defendants, ” which he did. (Pl.'s Decl. ¶ 3.) Plaintiff's primary language is Spanish, and he is incapable of reading English. (Id. ¶ 2.)

In August of 2021, Gary Barnes, Chief of Staff of Gregorys Coffee, learned that Plaintiff and other Gregorys Coffee employees had signed the Arbitration Agreements. (Barnes Decl. ¶ 3.) Barnes immediately provided copies to Plaintiff's counsel. (Id.) Barnes later learned that a manager had utilized arbitration agreements in the “commissary, ” where Plaintiff worked, for a period of time several years ago, and that no other Gregorys Coffee employees were ever required to sign them. (Id. ¶ 4.) The Arbitration Agreements were also signed by George Zamfotis, a non-party to this action, who was the manager of the commissary for Gregorys Coffee at the time that the agreements were executed. (Id. ¶ 5.) Zamfotis stepped away from day-to-day management in March of 2020 and took on other roles within Gregorys Coffee. (Id. ¶ 6.) From approximately March until September of 2020, Matt Delaney oversaw the commissary and rearranged numerous items and files in the commissary and destroyed other documents, including personnel files. (Id. ¶ 7.) In May of 2020, Gregorys Coffee moved its main offices and many files and records were “boxed up, ” while others were “misplaced and lost in the move.” (Id. ¶ 11.) In September of 2020, Defendants fired Delaney. (Id. ¶ 7.) Following Delaney's termination, Zamfotis returned to his role in overseeing the commissary. (Id. ¶ 8.) During this time, there were numerous records that he could not locate due to Delaney's actions. (Id.) While searching for records relevant to this case, Zamfotis found the files with the

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Arbitration Agreements executed by Plaintiff. (Id.)

b. Procedural background

Plaintiff filed a Complaint on December 29, 2020. (Compl.) Plaintiff seeks to represent all non-exempt employees employed by Defendants on or after the date that is six years before the filing of the Complaint, (the “FLSA Collective Plaintiffs”). (Id. ¶ 11.) Plaintiff also alleges that he seeks to represent all such persons in a class action lawsuit under Federal Rule of Civil Procedure 23, (the “Class”). (Id. ¶ 14.)

On January 4, 2021, Magistrate Judge Peggy Kuo ordered the parties to engage in discovery and engage in early settlement discussions, or else be referred to formal mediation. (Order dated Jan. 4, 2021, Docket Entry No. 9.) On June 9, 2021, Plaintiff moved for conditional certification of his FLSA claim as a representative collective action pursuant to 29 U.S.C. § 216(b).^[3] Defendants opposed the motion.^[4] On August 10, 2021, Defendants filed a motion for a pre-motion conference, seeking permission to file a motion requesting dismissal of the Complaint and to enforce arbitration. (Mot. dated Aug. 10, 2021, Docket Entry No. 25.)

II. Discussion

a. Standard of review

The Federal Arbitration Act (the “FAA”) requires courts to compel arbitration of claims that the parties have agreed to arbitrate. See AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). Courts consider four factors in order to determine whether an action should be

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stayed in favor of arbitration: “(1) whether the parties agreed to arbitrate; (2) the scope [of] the arbitration agreement; (3) whether, if federal statutory claims are asserted, Congress intended those claims to be nonarbitrable; and (4) whether, if some but not all of the claims in the case are arbitrable, the case should be stayed pending arbitration.” McAllister v. Conn. Renaissance Inc., 496 Fed.Appx. 104, 106 (2d Cir. 2012) (citing JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004)); Garcia v. Golden Abacus Inc., No. 16-CV-6252, 2017 WL 2560007, at *2 (S.D.N.Y. June 13, 2017) (same).

Generally, “as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983); see also Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. BMC Stock Holdings, Inc., 796 Fed.Appx. 45, 48 (2d Cir. 2019) (quoting same). When an agreement is clear, “it is the language of the contract that defines the scope of disputes subject to arbitration.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 289 (2002); see also Abdullayeva v. Attending Homecare Servs. LLC, 928 F.3d 218, 222 (2d Cir. 2019) (“In answering the first question - whether the parties agreed to arbitrate - we look to ‘state contract law principles.'” (quoting Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016))). An employee's right to pursue statutory claims may only be waived by a Collective Bargaining Agreement (CBA) if that waiver is “clear[] and unmistakable[].” 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 274 (2009); see also Lawrence v. Sol G. Atlas Realty Co., Inc., 841 F.3d 81, 83-84 (2d Cir. 2016) (refusing to...