Poletti v. Pepsi-Cola Bottling Company Of New York, Inc.

Background

The plaintiffs are current or former distributors of Pepsi-Cola products. Before delivering those products, each plaintiff signed a Distributor Agreement with Pepsi-Cola Bottling Company of New York, Inc. The defendants also included several individual defendants identified as owners and members of Pepsi-Cola’s upper management team.

Seventeen plaintiffs operated under agreements that took effect before January 4, 2021. Those agreements contained arbitration clauses covering disputes or disagreements concerning the interpretation or application of the agreement. The remaining eleven plaintiffs operated under agreements that took effect on January 4, 2021. Those agreements contained broader arbitration clauses covering disputes or claims arising out of or connected with the agreement or the parties’ relationship, including statutory claims and misclassification claims. The current agreements also barred class, collective, and consolidated arbitration or litigation.

The plaintiffs’ third amended complaint asserted claims under the Fair Labor Standards Act and New York Labor Law. The defendants filed two motions under the Federal Arbitration Act: one seeking arbitration for seventeen plaintiffs and another seeking arbitration for eleven plaintiffs.

Waiver of Arbitration

The plaintiffs argued that the defendants had waived arbitration by waiting about one year after the case began to seek it. The court explained that waiver can occur without proof that the delay harmed the opposing party. It considered the time that passed and the amount of litigation, including motion practice and discovery.

Judge Broderick found that the one-year delay did not establish waiver under the circumstances. The court noted that some of the delay resulted from the plaintiffs’ amendments to the complaint and that the parties had not begun discovery. The parties had engaged in motion practice involving a motion to dismiss and the motions to compel arbitration, but the court found that this was not substantial litigation. The defendants’ earlier motion to dismiss did not, by itself, waive their right to seek arbitration.

Scope of the Arbitration Clauses

The plaintiffs argued that the clauses were narrow and did not cover a misclassification case. The court disagreed. It held that both the earlier and current agreements used broad language covering disputes related to the agreements or the parties’ relationship. The court concluded that the arbitration provisions covered the dispute in this case.

Ruling

The court granted both defendants’ motions to compel arbitration. It referred the plaintiffs’ claims to arbitration and granted the defendants’ request to stay the case while arbitration takes place. The parties were directed to submit a joint status letter within 120 days of the opinion and order about the status of the arbitration proceedings.