Shaffer v. Consulting

Background

Keith Shaffer sued Fairdinkum Consulting, LLC, Fairdinkum Management Holdings LLC, David Hafke, and Michael Lianos. He asserted claims under the Americans with Disabilities Act, New York State Human Rights Law, New York City Human Rights Law, and common-law breach of contract.

Shaffer alleged that he began working for “Defendants” around 2005 and worked remotely beginning in March 2020. After Defendants adopted a COVID-19 vaccine mandate, he provided a doctor’s note stating that he was being treated for angioedema and acute pericarditis and recommending that he not receive the vaccine. He alleged that Defendants initially allowed him to continue working remotely but removed that accommodation and suspended his employment in December 2021. David Hafke allegedly sent him an email terminating his employment in January 2022.

Shaffer’s first three causes of action alleged disability discrimination under federal, New York State, and New York City law. His fourth cause of action alleged that Fairdinkum failed to pay distributions and other amounts connected to his claimed 9.722% membership interest in Fairdinkum Management Holdings LLC. The complaint did not identify the contract supporting that claim. Fairdinkum Management Holdings LLC relied on a September 17, 2021 LLC Agreement that Shaffer had signed. That agreement addressed membership interests and distributions and contained a broad arbitration clause covering disputes between members and the company concerning the agreement or members’ rights and liabilities.

After the deadline for amending pleadings had passed, and after briefing on the motion had concluded, Shaffer moved to file a second amended complaint. He sought to identify a February 25, 2022 email as the basis for his contract claim and to add claims for fraud in the inducement, breach of fiduciary duty, misappropriation and self-dealing, constructive trust, and unjust enrichment. He also sought to add Josh Christensen as a defendant in connection with the employment-discrimination allegations.

Rulings on Arbitration

The court construed Fairdinkum Management Holdings LLC’s motion to dismiss as a motion to compel arbitration because the motion’s only argument concerned arbitration.

The court granted the motion as to Count Four, the breach-of-contract claim. It concluded that the claim concerned distributions allegedly owed to Shaffer because of his membership interest and therefore fell within the LLC Agreement’s arbitration clause. The court rejected Shaffer’s argument that the claim arose from some other unidentified agreement. It found no evidence that a later agreement superseded the LLC Agreement or directly conflicted with, or revoked, its arbitration provision.

The court denied the motion as to Counts One, Two, and Three, the employment-discrimination claims. It reasoned that the LLC Agreement’s arbitration clause addressed membership-related matters and did not mention employment or discrimination claims. The court also relied on Shaffer’s allegation that his employment and accommodation arrangement began before the LLC Agreement was signed. Whether Shaffer was actually employed by Defendants was identified as an issue of fact for later determination by a court, not an arbitrator.

Motion to Amend

The court denied Shaffer’s motion for leave to file a second amended complaint. First, it found the motion untimely because Shaffer filed it after the January 3, 2025 deadline and did not establish good cause for the delay. The court noted that Shaffer possessed the February 2022 email and had executed the member purchase agreement before the amendment deadline.

Second, the court found the proposed contract-related claims futile because they also fell within the LLC Agreement’s arbitration clause. The court concluded that the proposed claims involved Shaffer’s relationship with the company as a member and the sale of his membership interests. It also rejected reliance on a venue provision in a purported loan agreement because Shaffer did not allege that he was a party to that loan agreement or had standing to sue under it.

The court separately denied the proposed amendment concerning the discrimination claims. It found the request untimely and concluded that the existing complaint already pleaded enough facts to survive a motion to dismiss. The court also found that adding Josh Christensen would be futile. It stated that Shaffer did not allege facts showing that Christensen was an employer or had the required ownership or decision-making authority for individual liability under the New York State law claim. For the New York City law claim, the court found that Shaffer did not allege that Christensen actually participated in the alleged discriminatory termination.

Disposition

The court granted the motion to compel arbitration as to Count Four and denied it as to Counts One, Two, and Three. It granted Shaffer’s request for a stay as to Count Four and stayed litigation on that claim pending the conclusion of arbitration or further order. The court did not stay the employment-discrimination claims. It denied Shaffer’s motion for leave to file a second amended complaint. The parties were directed to submit a case-management plan or request a conference within 30 days.