Costello v. Paramount Global, Inc.

Background

Sue Costello, proceeding without a lawyer, sued Paramount Global, Inc., formerly known as CBS Corporation. The complaint asserted claims for breach of contract, breach of the duty of good faith and fair dealing, tortious interference with a business relationship, constructive fraud, fraudulent inducement, malicious intent to cause emotional and financial distress, and sex discrimination.

Costello alleged that she discussed an idea for a television-series pilot with CBS executives during 2017. On June 22, 2018, Paramount emailed her a proposed agreement that incorporated CBS Studios’ standard General Provisions. The General Provisions included a clause requiring final and binding arbitration of “any and all controversies, claims or disputes arising out of or related to” the agreement, including alleged violations of state or federal law. The parties entered into the agreement on June 29, 2018. Costello received the first payment but never delivered a script. The relationship later deteriorated, and the complaint connected the fallout to a sexual-harassment scandal involving CBS’s then-chief executive, Les Moonves.

Court’s Analysis

The court first determined that it had subject-matter jurisdiction based on diversity of citizenship. It concluded that the complaint alleged enough damages to satisfy the amount-in-controversy requirement.

The court applied a two-part test for deciding whether claims must be arbitrated: whether the parties agreed to arbitrate, and whether the dispute falls within the agreement’s scope. Both parties agreed that they entered into the agreement, and Costello’s complaint called it a valid and enforceable contract. Because the agreement incorporated the General Provisions, the court found that the parties had agreed to arbitration.

The court also found that all of Costello’s claims were within the arbitration clause’s broad scope. The claims either concerned Paramount’s alleged obligations under the agreement or allegedly improper conduct during the agreement’s formation and performance.

Costello argued that she was not bound because Paramount allegedly intimidated, deceived, or coerced her into signing the agreement. The court held that these allegations challenged the agreement as a whole rather than the arbitration clause specifically. Under the arbitration clause, those issues themselves had to be decided in arbitration.

The court rejected Costello’s argument that the arbitration provision was unconscionable, meaning unfairly imposed and unreasonably favorable to one side. It found no absence of meaningful choice because Costello could have consulted a lawyer and instead chose to negotiate the deal herself. It also found nothing grossly unreasonable or outrageous about requiring both parties to resolve disputes through arbitration.

The court further held that the Ending Forced Arbitration Act did not apply because the events occurred before March 3, 2022, the statute’s enactment date. The court added that, even if the law applied, the complaint did not plead a viable sexual-harassment or sexual-assault claim. The court also rejected Costello’s reliance on proposed legislation that had not become law.

Disposition

The court GRANTED Paramount’s motion to compel arbitration. The case was STAYED, and the parties were ordered to submit a joint letter about the arbitration every 60 days, with the first letter due April 2, 2024. The opinion did not decide the underlying merits of Costello’s claims.