Galli v. PriceWaterhouseCoopers LLP

Background

Susan J. Galli brought thirteen claims against PricewaterhouseCoopers LLP and the other defendants. The claims sought to reform provisions of her employment agreement and invalidate the arbitration agreement, and asserted fraudulent inducement, breach of fiduciary duty, fraud, breach of contract, tortious interference with contract, promissory estoppel, age discrimination under state and federal law, and gender discrimination under Title VII and New York law.

On June 11, 2014, Galli signed an Employment Agreement with PricewaterhouseCoopers LLP that incorporated an Arbitration Agreement. The Arbitration Agreement required both sides to resolve covered disputes through final and binding arbitration, made arbitration a condition of employment, and stated that it survived termination of employment. It defined covered claims broadly to include disputes relating to or arising from Galli’s employment agreement, employment application, offer of employment, prospective employment, employment, or separation from employment. It also included claims based on acts or omissions occurring before, on, or after the agreement’s effective date, including breach-of-fiduciary-duty claims.

The defendants moved to compel arbitration of all claims. The opinion states that the motion concerned the remaining claims. The court separately noted that the Title VII claims fell within the arbitration agreement and that Galli did not argue otherwise.

Galli’s Arguments

Galli did not dispute that she signed the Employment Agreement and Arbitration Agreement. She argued instead that the agreements were obtained through fraud, making them invalid under the Federal Arbitration Act’s exception for contracts affected by fraud. She also argued that claims involving fraudulent inducement, fraud by concealment, and an independent-duty theory arose before the agreements were signed or were part of the agreements themselves, and therefore were not subject to arbitration.

Court’s Analysis

The court applied a standard similar to the standard used for summary judgment. It considered the relevant admissible evidence and drew reasonable inferences for the party opposing arbitration. Under the Federal Arbitration Act, the court considered whether the parties agreed to arbitrate and whether the agreement covered the claims at issue.

The court rejected Galli’s fraud argument. It relied on its reasoning in a prior related proceeding, where it concluded that a challenge to the Employment Agreement and Arbitration Agreement generally—not a challenge specifically directed at the arbitration clause—must be decided by an arbitrator because the arbitration clause is severable from the rest of the contract. The court applied the same reasoning here.

The court also rejected Galli’s argument that claims arising before execution of the Arbitration Agreement were excluded. It stated that Second Circuit precedent permits broad arbitration provisions without an express time limit to cover claims arising before the agreement was signed. The court further found that this agreement expressly covered claims based on acts or omissions occurring before the effective date, including claims related to Galli’s employment and allegations that the defendants fraudulently induced her to sign the agreements or violated fiduciary duties.

The court emphasized the federal policy favoring arbitration and held that the broad clause created a presumption that the disputes were arbitrable. It found that the clause could not reasonably be interpreted to exclude the disputes at issue.

Disposition

The defendants’ motion to compel arbitration of the remaining claims was GRANTED. Galli’s request to extend discovery at Docket No. 40 was DENIED as moot. The Clerk of Court was directed to close the motions at Docket Nos. 16 and 40.