THOMAS v. MATHIEU (2007)

Appeal from an order of the Civil Court of the City of New York, Kings County (Kathryn E. Freed, J.), entered April 4, 2006.   The order granted defendants' motion to dismiss the action.

Order modified by providing that defendants' motion is granted to the extent of staying the action pending arbitration;  as so modified, affirmed without costs.

 Plaintiff commenced this action to recover wages and damages for, inter alia, “embezzlement,” “involuntary servitude” and “discrimination.”   Plaintiff's present claims, although slightly different from those interposed in his prior action against his former employer, and defendants' current employer, Bally's Total Fitness Corp. (Bally's) (Thomas v. Bally's Total Fitness Corp., 12 Misc.3d 131(A), 2006 N.Y. Slip Op. 51053[U], 2006 WL 1541408 [App.Term, 2d & 11th Jud. Dists.] ) are all related to alleged acts of Bally's employees in the course and scope of their employment and, therefore, fall within the ambit of Bally's Employee Dispute Resolution Procedures (EDRP).   The EDRP provides for arbitration when any dispute arises between an employee against the employer Bally's.   The EDRP further provides, inter alia, that the term “Employer” therein “is understood to include each of the Employer's subsidiary and/or affiliated entities ․ and all of their respective owners, stockholders, directors, officers, employees and pension or benefit plans and their fiduciaries” (emphasis added).   Plaintiff did not attempt below, and does not attempt on appeal, to show how his present claims fall outside the scope of the EDRP.   It should be noted that the only issue presented to this court upon plaintiff's appeal in his prior action against Bally's was whether the EDRP was procedurally or substantively unconscionable;  we found that it was neither (id.;   see also Gillman v. Chase Manhattan Bank, 73 N.Y.2d 1, 537 N.Y.S.2d 787, 534 N.E.2d 824 [1988] ).

 The order of the court below must be modified, for although arbitration and award is a ground for dismissal (CPLR 3211[a][5] ), there was no arbitration and award in this case, and the mere existence of an arbitration agreement effective between the parties does not deprive the court of subject matter jurisdiction.   The only permissible remedy in this case is to stay the action pending such arbitration, pursuant to CPLR 7503 (see Allied Bldg. Inspectors Int. Union of Operating Engrs., Local Union No. 211, AFL-CIO v. Office of Labor Relations of City of N.Y., 45 N.Y.2d 735, 738, 408 N.Y.S.2d 476, 380 N.E.2d 303 [1978] ).   We note that in the case of Thomas v. Bally's Total Fitness Corp., 12 Misc.3d 131(A), 2006 N.Y. Slip Op. 51053 [U], supra, we agreed with the sole finding of the Civil Court that the arbitration clause contained in Bally's EDRP was enforceable and affirmed the court's dismissal of the action concluding, erroneously, that the existence of an arbitration clause warrants dismissal of the action.   In the instant appeal we reaffirm our prior decision to the extent that we find that the arbitration clause is enforceable.   While the court below in dismissing the action followed the prior holding of the Civil Court, which order was subsequently affirmed by this Court in Thomas v. Bally's Total Fitness Corp., id., we no longer adhere to the ultimate disposition of the prior appeal and, unlike the dissent, will not perpetuate such error by dismissing the instant action.   We further note in this regard that this Court's dismissal of the complaint in the case of Thomas v. Bally's Total Fitness Corp., id. was not on the merits and did not preclude plaintiff from seeking arbitration of his claim.   While the dissent seemingly acknowledges this fact, in arguing to affirm the lower court's dismissal of the instant action it nevertheless apparently gives the prior dismissal some collateral estoppel effect to the underlying merits of plaintiff's claim.   In view of the foregoing, the order is modified by granting defendant's motion to the extent of staying the action pending arbitration.

While I agree with the majority that plaintiff's claims fall within the scope of the arbitration provision of Bally's Employee Dispute Resolution Procedures, I disagree with the majority's decision to stay this action pending arbitration.   In my view, the dismissal of plaintiff's action was not based on the existence of an arbitration agreement, but rather on plaintiff's re-litigation of issues that were already decided in a prior Civil Court order.   Thus, I vote to affirm.

A party is collaterally estopped from relitigating an issue, where the issue is identical to that litigated in a prior action and where the party against whom the issue was decided had a full and fair opportunity to be heard (see Kaufman v. Eli Lilly & Co., 65 N.Y.2d 449, 455, 492 N.Y.S.2d 584, 482 N.E.2d 63 [1985];  Taylor v. Ashby, 134 A.D.2d 248, 250, 520 N.Y.S.2d 587 [1987] ).   As in the prior action brought by him, plaintiff below did nothing more than challenge the arbitration provision as unconscionable.   Since the validity of that provision was previously upheld by this Court, plaintiff is barred from relitigating the issue here.   Thus, in my opinion, the court below properly dismissed plaintiff's action on the ground that it raised claims that were identical to the prior action.

By voting to affirm the dismissal here, I do not, as the majority suggests, wish to perpetuate any error made by this Court on plaintiff's appeal from the prior Civil Court order (see Thomas v. Bally's Total Fitness Corp., 12 Misc.3d 131(A), 2006 N.Y. Slip Op. 51053[U], 2006 WL 1541408 [App.Term, 2d & 11th Jud. Dists.] ).   To the contrary, I agree with the majority that it was erroneous to uphold the dismissal of the first action where the dismissal was based exclusively on the existence of an arbitration agreement, and not on the merits of plaintiff's complaint (see Allied Building Inspectors Int'l Union of Operating Engineers v. Office of Labor Relations of the City of New York, 45 N.Y.2d 735, 738, 408 N.Y.S.2d 476, 380 N.E.2d 303 [1978] ).   Here, however, the court below dismissed the action solely on the ground that it was identical to the first action, and not on the existence of an arbitration agreement.   Moreover, a dismissal does not preclude plaintiff from arbitrating his claims, nor does it preclude him from subsequently bringing an action confirming or challenging the arbitrator's award.

Accordingly, I would affirm the order below.

PESCE, P.J., and BELEN, J., concur. WESTON PATTERSON, J., concurs in part and dissents in part in a separate memorandum.