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Binienda v. Atwells Realty Corp.

United States District Court, D. Rhode Island

March 9, 2018

SAMANTHA BINIENDA, on behalf of herself and all others similarly situated, Plaintiff,
v.
ATWELLS REALTY CORP. and THE ONE, INC., all d/b/a CLUB DESIRE and LUST VIP, Defendants.

          MEMORANDUM AND ORDER

          WILLIAM E. SMITH, CHIEF JUDGE

         Defendants Atwells Realty Corp. and The One, Inc. (collectively, “Defendants”) moved to dismiss this action and compel arbitration (ECF No. 83), and to stay the action and amend the pre-trial scheduling order (ECF No. 85). For the reasons that follow, both motions are DENIED. I. Background The facts as they relate to Defendants' motions are simple and undisputed. Plaintiff Samantha Binienda (“Plaintiff”) began performing as an exotic dancer at Defendants' club in November 2013. On June 20, 2015, Plaintiff brought this putative class action, alleging, inter alia, that Defendants misclassified exotic dancers as independent contractors instead of employees, which resulted in violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., and Rhode Island state law. Both parties participated in the litigation, engaging in discovery and filing pre-trial motions.

         During discovery, both parties discussed whether Plaintiff had ever signed Defendants' standard Entertainers Independent Contractor Agreement. Gerard DiSanto II (“DiSanto”), Defendants' general manager, testified that he did not know whether all of the dancers at the club had signed such a contract, and that many signed contracts had gone missing in the disorderly records room. Defs.' Mot. To Compel 2 (ECF No. 83-1). During Plaintiff's deposition on March 31, 2017, she was asked if she ever signed the standard contract, to which she replied, “No, I never did. I can specifically remember the first day I worked there, and I never signed a contract.” Id.

         After discovery closed, both parties filed cross-motions for summary judgment and cross-motions for class certification. At some point in June or July of 2017, DiSanto located the Entertainers Independent Contractor Agreement, which had been signed by Plaintiff on November 5, 2013 (“Binienda Contract”). On July 20, 2017, twenty-five months after Plaintiff filed the Complaint, Defendants filed the instant motion to compel arbitration pursuant to an arbitration provision within the Binienda Contract.[1] In response, Plaintiffs contend that Defendants waived their arbitration rights under the contract by waiting more than two years to move to compel arbitration.

         II. Discussion

         A. Threshold Matter

         The parties dispute whether this Court or an arbitrator should decide the issue of waiver. For the reasons that follow, this decision remains with the Court.

         The Supreme Court in BG Group PLC v. Republic of Argentina explained that this threshold question - whether this Court or an arbitrator should decide the waiver issue - is guided by a set of presumptions. 134 S.Ct. 1198 (2014). First, “courts presume that the parties intend courts, not arbitrators, to decide what we have called disputes about ‘arbitrability' . . . such as ‘whether the parties are bound by a given arbitration clause.'” Id. at 1206. However, “courts presume that the parties intend arbitrators, not courts, to decide disputes about the meaning and application of particular procedural preconditions for the use of arbitration, ” such as “waiver, delay, or a like defense to arbitrability.” Id. at 1207.

         Although the Court in BG Group included “waiver” among the issues that arbitrators are presumed to decide, a review of prior Supreme Court and First Circuit precedent convinces this Court that the “waiver” contemplated in BG Group is not the litigation-conduct waiver that Plaintiffs allege in the instant case.

         Traditionally, litigation-conduct waiver has been decided by the court, not an arbitrator. Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 14 (1st Cir. 2005). The First Circuit was presented with this very issue in Marie, which predates the BG Group decision. The Marie court grappled with two earlier Supreme Court decisions: Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, (2002), and Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003) (plurality opinion).

         In Howsam, the arbitration provision provided that a dispute was not eligible for arbitration if more than six years had elapsed since the event giving rise to the dispute. 537 U.S. at 82. The Court held that “condition[s] precedent to arbitrability” and procedural questions such as “waiver, delay, or a like defense to arbitrability . . . are presumptively not for the judge, but for an arbitrator, to decide.” Id. at 84-85. The Court held that the six-year time limit was a procedural condition precedent to arbitrability, and therefore, a matter for the arbitrator to decide. Id. at 84-85. In Green Tree, the parties disputed whether their arbitration agreement permitted class arbitration. 539 U.S. at 452. The Court held that “[a]rbitrators are well situated to answer that question” because it “does not concern . . . judicial procedures, ” but rather, it “concerns contract interpretation and arbitration procedures.” Id. at 452-53.

         “The Court in both Howsam and Green Tree . . . stressed issues of comparative expertise. In the face of contractual silence, courts should presume that parties intend to give their disputes to the most able decisionmaker on a given issue, both for contractual and public policy reasons.” Marie, 402 F.3d at 10. The Marie court also noted that “the Howsam and Green Tree rules exist partly ‘to avoid . . . delay.'” Id. at 14 (quoting Shaw's Supermarkets, Inc. v. United Food & Commercial Workers Union, Local 791, 321 F.3d 251, 255 (1st Cir. 2003)). Finding that the district court was in the best position to decide issues of litigation-conduct waiver, the Marie court held “that the Supreme Court in Howsam and Green Tree did not intend to disturb the traditional rule that waiver by conduct, at least where due to litigation-related activity, is presumptively an issue for the court.” Marie, 402 F.3d at 14.

         Contrary to Defendants' argument, BG Group simply restates the Howsam and Green Tree rules. Compare BG Group, 134 S.Ct. at 1207 (holding that arbitrators presumptively decide “waiver, delay, or a like defense to arbitrability”) with Howsam, 537 U.S. at 84 (holding that “conditions precedent to arbitrability” and procedural questions such as “waiver, delay, or a like defense to arbitrability” are presumptively for an arbitrator to decide) and Green Tree, 539 U.S. at 453 (holding that arbitrators are well-suited to answer questions of arbitration procedures). Nothing in BG Group undercuts the holding in Marie, that the Supreme Court did not intend to alter traditional rule that courts presumptively decide issues of litigation-conduct waiver. See Vine v. PLS Fin. Servs., Inc., 689 Fed.Appx. 800, 803 (5th Cir. 2017) (noting that “a majority of the [circuit court] decisions addressing litigation-conduct waiver pre-date BG Group, but the logic of those decisions interpreting Howsam is equally applicable to BG Group”).

         For the foregoing reasons, the Court will decide the merits of Plaintiff's ...


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