Cunningham v. CVS Health Corporation

Background

Regina Cunningham and Stacey Wellington were store managers at CVS Pharmacy Store 1959 in the Village of Pelham Manor. They alleged that they regularly reported suspected shoplifting to the Pelham Manor Village Police Department. According to the complaint, Police Chief Jeffrey Carpenter complained to CVS officials about their reports and referred to the women using gendered terms, including “girls,” “women,” and “ladies.” The plaintiffs alleged that CVS investigated and ultimately terminated them because of their sex and because of pressure from the police department.

The complaint asserted sex-discrimination claims against CVS under Title VII of the Civil Rights Act of 1964 and the New York State Human Rights Law; civil-rights claims under 42 U.S.C. § 1983 against the Village and Carpenter; First and Fourteenth Amendment claims against the Village Defendants; and negligent infliction of emotional distress claims against all defendants.

CVS Defendants’ Motion to Compel Arbitration

The CVS Defendants asked the court to require arbitration of the plaintiffs’ claims, dismiss the action, and award attorney’s fees and costs. The court declined to consider statements in an improperly verified declaration submitted by Robert Bailey, but it considered the arbitration materials attached to that declaration and to another declaration because the plaintiffs did not dispute that those materials were the operative documents.

The arbitration policy stated that CVS and covered employees would resolve covered employment disputes through final and binding arbitration rather than in court. The policy covered claims arising from employment or termination, including discrimination, retaliation, and termination claims. Employees accepted the policy by continuing to work after learning about it, and the accompanying guide provided a 30-day procedure for opting out. The record showed that Cunningham and Wellington completed the related training courses and did not opt out within the required period.

The plaintiffs argued that the agreement was invalid because of a prior National Labor Relations Board decision, unequal bargaining power, pressure to complete the training, lack of understanding, and allegedly one-sided terms. The court rejected those arguments. It concluded that the NLRB decision invalidated a class-action waiver rather than the entire arbitration policy, and that the policy’s severability clause allowed the remainder to remain enforceable. The court also found no sufficient procedural unconscionability because the plaintiffs had notice of the policy and a meaningful opportunity to opt out, and no substantive unconscionability because the policy applied to both sides, permitted discovery and representation by counsel, and required CVS to pay arbitration administration and arbitrator costs.

The court further held that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act did not apply because the plaintiffs’ claims accrued before that law was enacted on March 3, 2022. The court concluded that the arbitration agreement was valid and covered the plaintiffs’ claims, and it granted the CVS Defendants’ motion to compel arbitration. It declined to decide the CVS Defendants’ request to dismiss the negligent-infliction-of-emotional-distress claim because the claims against CVS were being sent to arbitration. The court denied CVS’s request for attorney’s fees and costs, finding that the plaintiffs had offered some legal and factual support and had acted sincerely even though their arguments were unsuccessful.

Village Defendants’ Motions to Dismiss

The plaintiffs alleged that Carpenter’s complaints to CVS and the Village’s hiring, retention, and supervision of Carpenter violated their rights under 42 U.S.C. § 1983. For a claim under that statute, the challenged conduct must be attributable to someone acting under state law and must cause a violation of a federal right. A claim against a municipality also requires allegations that an official municipal policy or custom caused the violation.

The court found that the plaintiffs had not adequately alleged either a municipal policy or a causal connection between the Village Defendants’ conduct and CVS’s decision to terminate them. The complaint did not allege that the Village Defendants controlled or directed CVS’s personnel decisions. The court also found that the allegations about three phone calls from Carpenter did not show that he used his authority as police chief to coerce, threaten, or encourage CVS to terminate the plaintiffs. The court therefore dismissed the plaintiffs’ Section 1983 claims against the Village Defendants.

The court also dismissed the negligent-infliction-of-emotional-distress claim against the Village Defendants. Under New York law, the plaintiffs needed to allege, among other things, a duty owed to them. The court concluded that they had not alleged a special duty owed specifically to them.

Disposition and Leave to Amend

The court granted the CVS Defendants’ motion to compel arbitration and denied their motion for attorney’s fees and costs. Cunningham and Wellington and the CVS Defendants were directed to pursue arbitration and notify the court and the Village Defendants when it concluded.

The court granted the Village Defendants’ motions to dismiss and dismissed the plaintiffs’ claims against those defendants without prejudice. The court granted the plaintiffs leave to file an amended complaint by July 5, 2024. The order stated that claims dismissed without prejudice would be deemed dismissed with prejudice if the plaintiffs did not file an amended complaint within the allowed time.