ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Thursday, May 13, 2021

NY Case Law Roundup

@NY_Contracts provides an embarrassment of riches.  We summarize some of the cases below:

Kings County Supreme Ct
Ajay Suresh from New York, NY, USA, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons

In M.G. v. J.G., the Supreme Court, King's County, found that a woman violated her divorce settlement agreement by failing to maintain the couple's child's health insurance that she received through her employer or to replace it with substantially similar coverage.  The woman changed jobs and so lost her health insurance.  She found substitute insurance, but her child's healthcare providers were not in the new network.  The court faulted her for not continuing with her former insurance coverage through COBRA and for failing to elect to remain with her former insurer through her new employer.  She was ordered to pay attorney's fees and to restore her child's prior health insurance coverage within 30 days.

I find this shocking.  How can anybody guarantee continuity of healthcare coverage when insurers constantly change their roster of providers included within their networks and employers change insurers more regularly than I change my Brita water filters?

App Div  1st dept
Beyond My KenCategory:Architectural sculptures, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

Top Grade Excavating N.Y. Inc. v. HDMI Holdings, LLC  provides a nice, quick example of why extrinsic evidence might be useful to resolve a contractual ambiguity.  The contract provided that plaintiff was to break up rock at a rate of $500 per cubic yard, but it did not specify how that quantify was to be measured -- was it "the volume of the rock in its compacted, unbroken, undisturbed state or the size of the containers it filled after being excavated and broken"?  The trial court allowed in parol and extrinsic evidence to clarify that issue.  Defendant did not preserve its objection to the admission of that evidence, but the Appellate Division also found that the evidence was properly admitted.

In Keller v. About, Inc., the defendant corporation sought to compel arbitration of plaintiff's federal and state statutory claims pursuant to an arbitration provision in plaintiff's employment agreement.  Plaintiff alleged that the arbitration agreement was unconscionable because it limited the statute of limitations on her claims to six months.  Defendant agreed to waive the statute of limitations as to plaintiff's federal Equal Pay Act claims as well as certain fee-shifting provisions that plaintiff alleged would have prevented her from recovering statutorily authorized damages.  The Southern District proceeded to assess whether the arbitration clause remained unconscionable in light of the shortened statute of limitations with respect to plaintiff's remaining claims.

SDNYThe court found no unconscionability.  Noting that plaintiff is "an accomplished and well-educated executive," the court found no procedural unconscionability.  Plaintiff cited to no high-pressure tactics, and the entire employment agreement was only three pages long, so there could be no claim of terms buried in the fine print.  On the contrary,  language pertaining to the arbitration clause was in BOLD AND ALLCAPS, for whatever that's worth, which isn't much.  The shorted statute of limitations might have been one-sided, but the court concluded that the arbitration clause was not "so outrageous as to warrant holding it unenforceable on the ground of substantive unconscionability alone."  Two question, if the plaintiff's sophistication negated the gross inequality in bargaining power here, why did the defendant have to waive some of the more obviously unconscionable aspects of its arbitration provision?  Hasn't defendant conceded that some of the terms were unconscionable, and shouldn't that concession preclude defendant from denying that there was procedural unconscionability here?

Plaintiff attempted to argue that the shortened statute of limitations prevented effective vindication of her statutory rights, a court-created exception to the general policy favoring arbitration under the Federal Arbitration Act.  But the Supreme Court basically read the effective vindication doctrine out of existence in Italian Colors.  Did a corporation take advantage of the Supreme Court's white-hot love affair with forced arbitration and impose on you, on a take-it-or-leave-it basis, arbitration terms that strip you of statutory rights created through democratic processes and intended to protect people exactly like you in exactly this situation?  Justice Kagan nicely summarized the consequences of the Italian Colors majority in her dissent.  "Too darn bad."  The SDNY concurs in the majority opinion.

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