United States District Court, D. Connecticut
Andrew Davis, on behalf of himself and all others similarly situated, Plaintiff,
Macy's Retail Holdings, Inc., a/k/a Macy's Inc., Defendant.
RULING ON DEFENDANT'S MOTION TO STAY PROCEEDINGS
AND COMPEL INDIVIDUAL ARBITRATION
Bond Arterton, U.S.D.J.
Andrew Davis brings suit against his former employer
Macy's Retail Holdings, Inc. individually and as a
collective action under the Fair Labor Standards Act, 29
U.S.C. § 216(b), alleging failure to properly compensate
Plaintiff and other similarly situated employees for hours
worked in excess of 40 hours per week (Count One), and as a
class action pursuant to Fed.R.Civ.P. 23(a) and (b)(3)
alleging unlawful classification of Plaintiff and the members
of the Class as exempt employees and failure to pay proper
overtime compensation under the Connecticut Minimum Wage Act,
Conn. Gen. Stat. §§ 31-58 (Count Two). Defendant
moves [Doc. # 11] to stay all claims and compel individual
arbitration based on an arbitration agreement to which
Plaintiff and Defendant are parties. Plaintiff opposes [Doc.
# 26], maintaining that the arbitration agreement is not
valid or enforceable and that any assent to it was induced by
fraudulent misrepresentations by Defendant. For the reasons
that follow, Defendant's motion is granted.
uses a four-step employment dispute resolution program called
"Solutions InSTORE." (Ex. 1 (Ripak Decl.) to
Def.'s Mot. to Compel Arbitration [Doc. # 12-1] ¶
9.) The first three steps are internal, but the fourth step
is binding arbitration administered by the American
Arbitration Association ("AAA"). (Id.)
Within thirty days of hire, employees must choose whether
they wish to participate in the arbitration step in any
future employment disputes. (Id.) If employees want
to retain their right to litigate in court, they must
complete an election form provided by Defendant and mail it
to Solutions InSTORE, postmarked within thirty days of hire.
employees agree to resolve any future disputes by arbitration
under the InSTORE program and relinquish their right to
litigate those disputes in court, the employee simply
refrains from completing and returning the election form
within the thirty-day period. (Id.) At the time of
hire, employees electronically sign an acknowledgement form
recognizing the parameters and implications of their choice:
"I understand that if I do not wish to be covered by
Step 4, Arbitration, the only way to notify the Company about
my choice is by postmarking my election form within 30 days
of hire and mailing it to the Office of Solutions
InSTORE." (Ex. B (Acknowledgment Form) to id.)
Employees are also provided with materials explaining the
arbitration step, including a poster, a training video, a
program brochure containing the election form (by which
employees make their choice), and the Plan Document, which
outlines the rules and procedures of the arbitration step.
(Ripak Decl. ¶ 20.)
electronically signed the acknowledgement form when he was
hired, (Ex. 2 (Veeraraghavan Decl.) to Def.'s Mot. to
Compel Arbitration [Doc. # 12-1] ¶ 13; Ex. G to
Veeraraghavan Decl), but subsequently did not return a
completed election form opting out of the arbitration step,
(Ripak Decl. ¶ 28).
analyzing whether a contract requires arbitration,
"'the court applies a standard similar to that
applicable for a motion for summary judgment.'"
Schnabel v. Trilegiant Corp., 697 F.3d 110, 113 (2d
Cir. 2012) (quoting Bensadoun v. }obe-Riat, 316 F.3d
171, 175 (2d Cir. 2003) (alteration omitted)). It is
therefore "proper (and in fact necessary) to consider
extrinsic evidence when faced with a motion to compel
arbitration ... and if the party seeking arbitration has
substantiated the entitlement by a showing of evidentiary
facts, the party opposing may not rest on a denial but must
submit evidentiary facts showing that there is a dispute of
fact to be tried." Philippe v. Red Lobster
Restaurants LLC, No. 15-CV-2080, 2015 WL 4617247, at *2
(S.D.N.Y. Aug. 3, 2015) (internal citations and quotation
Federal Arbitration Act ("FAA") states, in relevant
A written provision in any . . . contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or
transaction . . . 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 (1947). A court may not deny arbitration
where there is a valid arbitration agreement that covers the
asserted claims. Id.; see also Dean Witter Reynolds, Inc.
v. Byrd, 470 U.S. 213, 218 (1985) ("By its terms,
the Act leaves no place for the exercise of discretion by a
district court, but instead mandates that district courts
shall direct the parties to proceed to
arbitration" (emphasis in original)). The FAA was
designed to "overrule the judiciary's longstanding
refusal to enforce agreements to arbitrate" and to
"place an arbitration agreement upon the same footing as
other contracts, where it belongs." Dean Witter
Reynolds, 470 U.S. at 220 (internal quotation marks
omitted). The Act articulates a "national policy
favoring arbitration," preempting any contradictory
state judicial or legislative policy, Perry v.
Thomas, 482 U.S. 483, 489 (1987) (quoting Southland
Corp. v. Keating, 465 U.S. 1, 10 (1984)), to which due
regard must be given by the court in resolving any
ambiguities respecting the enforceability or scope of an
arbitration agreement, Volt Info. Scis., Inc. v. Bd. of
Trs. of Leland Stanford Junior Univ., 489 U.S. 468,
475-76 (1989). Congress articulated this federal policy
"to ensure the enforceability, according to their terms,
of private agreements to arbitrate." Id. at
maintains that the Court should compel arbitration because
the InSTORE program materials constitute a valid agreement to
arbitrate employment disputes which covers the FLSA and
Connecticut Minimum Wage Act claims asserted by
Plaintiff. Plaintiff maintains that the purported
arbitration agreement is not an enforceable contract and that
there exist "such grounds  at law or in equity for the
revocation" of the agreement under the savings clause of
the FAA. Specifically, Plaintiff argues that any assent to
the agreement was induced by Defendant's fraudulent
misrepresentations. Plaintiff does not dispute that the
agreement covers the asserted claims. The Court considers
each of Plaintiff s arguments in turn.
Validity of the arbitration agreement
validity of an arbitration agreement is governed by state
contract law principles, First Options of Chi. v.
Kaplan, 514 U.S. 938, 944 (1995). "The essential
terms of a valid contract are an offer, acceptance of that
offer, and consideration." Chiulli v. Chiulli,
127 A.3d 1146, 1151 (Conn. App. Ct. 2015) (internal
argues that the program materials do not constitute a valid
offer and are not enforceable because they are confusing,
ambiguous, and misleading. (Pl.'s Opp'n to Def.'s
Motion [Doc. # 26] at 5-9, 14-17.) Specifically, Plaintiff
claims that these program materials are ambiguous as to
whether the arbitration step is the automatic conferment of a
benefit, exercisable voluntarily by the employee at any time,
or an offer of mandatory future arbitration at the
irrevocable expense of the employee's ability to bring an
action in court. Plaintiff contends that the materials'
choice-driven language conflicts with the narrowly prescribed
window to preserve legal rights to court proceedings, after
which those rights are permanently waived. Plaintiff
maintains that the description of the irrevocable waiver of
legal rights as an automatic "benefit" misleads the
employee as to the nature and consequences of the arbitration
step. Plaintiff also argues that this ambiguity should be
construed against the drafter, Defendant. See Hartford
Elec. Applicators of Thermalux, Inc. v. Alden, 169 Conn.
177, 182 (1975) ("Where there is ambiguity, we must
construe contractual terms against the drafter.").
urges the Court to depart from the voluminous case law
enforcing the Macy's arbitration program and instead
adhere to Weiss v. Macy's Retail Holdings, Inc.,
in which the District Court for the Southern District of New
York declined to compel arbitration. 265 F.Supp.3d 358, 363
(S.D.N.Y. 2017). That court reasoned that the election form
by which the employee may opt out was "counterintuitive,
ambiguous, and misleading" and conveys the false
impression that by signing the form the employee sacrifices a
pre-existing right to arbitration and changes the status quo,
when in fact by signing the form the employee preserves a
pre-existing right to litigate in court and maintains the
status quo. Id.
the parties in this case submitted their briefing and after
oral argument on the instant motion, the Second Circuit
vacated the District Court's holding that the Macy's
arbitration agreement was invalid. Weiss v. Macy's
Retail Holdings, Inc., No. 17-2219, 2018 WL 3409143 (2d
Cir. July 12, 2018). The Second Circuit reasoned that
"[a]lthough the somewhat disingenuous references to the
'benefits' of arbitration might better have been
avoided, and Macy's would do well to remove the word
'benefits' in the future, neither this unfortunate
choice of words nor the remainder of the form renders its
meaning incapable of being readily understood."
Id. at *2.
as in Weiss and the many cases enforcing similar
arbitration agreements,  the InSTORE program materials are
consistent and clear with regard to: the time sensitivity of
the offer,  how to opt out of the arbitration step if
the employee so desires,  and the resulting permanent
relinquishment of legal rights. See, e.g., Tillman's v.
Macy's Retail Holdings, Inc., 735 F.3d 453, 459 (6th
Cir. 2013) (the InSTORE materials "clearly inform
employees of the nature of the agreement"); Allen v.
Bloomingdales, Inc., 225 F.Supp.3d 254, 258 (D.N.J.
2016) ("The Court disagrees with Plaintiffs'
characterization of the documents as confusing and deceiving.
To the contrary, Defendants' documents plainly state the
terms of the [InSTORE] Program"). Although the InSTORE
program materials emphasize the benefits of arbitration while
minimizing the consequences in a manner somewhat akin to an
advertisement, and although certain phrases in those
materials "might better have been avoide d,"
Weiss, 2018 WL 3409143 at *2, those rhetorical
choices do not render the materials so incomprehensible or
ambiguous that they constitute an invalid offer.