New York Federal Court Holds Questions of Arbitrability to Be Resolved by Arbitrator in Labor Dispute

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In a recent decision, a New York federal magistrate judge considered whether threshold questions of arbitrability were to be decided by the court or by an arbitrator in a labor dispute between a Jewish religious organization and its former employees.

Upon leaving employment at the Kabbalah Centre, the plaintiffs signed separation agreements, which included arbitration clauses providing that any disputes related to employment or to the separation agreement itself were to be decided in arbitration. The plaintiffs nonetheless brought an action against the Kabbalah Centre in federal court, arguing that the separation agreements and their arbitration clauses were the products of improper, coercive tactics by their former employer and were therefore unenforceable. The Kabbalah Centre moved to compel arbitration under the terms of the separation agreements.

As an initial matter, the court distinguished between challenges to an arbitration clause in a contract, and challenges to the contract as a whole. Citing Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), the court noted that the former type of challenge must be decided by the court, while the latter type of challenge was within the purview of the arbitrator.

In granting the Kabbalah Centre’s motion to compel arbitration, the court found that the plaintiffs did not challenge the facial validity of the separation agreements’ arbitration provisions but rather asserted that the contract as a whole should be deemed void. As such, the court looked to the arbitration provisions themselves to determine whether they addressed threshold issues of arbitrability. The court concluded in the affirmative, noting that the separation agreements delegated questions of arbitrability to the arbitrator by incorporating the rules of the American Arbitration Association and JAMS. The court rejected the plaintiffs’ additional arguments and granted the Kabbalah Centre’s motion to compel arbitration accordingly.

 Greene v. Kabbalah Centre International, Inc., No. 1:19-cv-04304 (E.D.N.Y. Sept. 1, 2022).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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