Opinion
Civil Action DOCKET NO.: BER-L-6040-18
11-15-2018
NAFISA ELSED, Plaintiff, v. Y INTERNATIONAL USA, INC. and SCOTT WEBER, Defendants.
Paul Castronovo, Esq. appearing on behalf of Plaintiff Nafisa Elsed (from Castronovo & McKinney LLC). Anna Maria Tejada, Esq. appearing on behalf of Defendants Y International USA, Inc. and Scott Webber (from Kaufman Dolowich & Voluck LLP).
PREPARED BY THE COURT
OPINION
Honorable Robert C. Wilson, J.S.C. Paul Castronovo, Esq. appearing on behalf of Plaintiff Nafisa Elsed (from Castronovo & McKinney LLC). Anna Maria Tejada, Esq. appearing on behalf of Defendants Y International USA, Inc. and Scott Webber (from Kaufman Dolowich & Voluck LLP).
INTRODUCTION
THIS MATTER has been brought before the Court motion by Defendant Y International USA, Inc. ("Defendant") seeking to dismiss Plaintiff Nafisa Elsed's ("Plaintiff") complaint for failure to state a claim upon which relief can be granted, and in the alternative, to stay the proceeding and compel arbitration of the matter. The Court, having considered the written submissions and oral arguments of the parties, declares that Defendant's motion is DENIED.
FACTUAL BACKGROUND
Plaintiff was employed by Defendant as a translator/document reviewer on or about October 17, 2016. Prior to beginning her employment with Defendant, Plaintiff executed hiring documents, which included an employment agreement ("Employment Agreement"). The Employment Agreement included an arbitration clause, set forth in section 9(a), as well as a clause regarding consent to personal jurisdiction and choice of law in New Jersey for matters concerning termination of employment. The Employment Agreement is attached to this Opinion as Exhibit A.
In addition to these clauses, the Employment Agreement contained an acknowledgment section to confirm that Plaintiff read the Employment Agreement in its entirety, that she understood it, and that Plaintiff took the necessary steps to review the Employment Agreement with an attorney before signing it.
On August 17, 2018, Plaintiff allegedly violated the Employment Agreement by filing a civil complaint against Defendants. Plaintiff commenced this action against Defendants claiming a violation of the New Jersey Law Against Discrimination ("NJLAD") based on sex, retaliation, and hostile work environment.
RULE OF LAW
I. Legal Standard for a Motion to Dismiss for Failure to State a Claim
Under the New Jersey Court Rules, a complaint may only be dismissed for failure to state a claim if, after an in-depth and liberal search of its allegations, a cause of action cannot be gleaned from even an obscure statement in the complaint, particularly if additional discovery is permitted. R. 4:6-2(e); Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746). Thus, a court must give the non-moving party every inference in evaluating whether to dismiss a complaint. NCP Litigation Trust v. KPMG, LLP, 187 N.J. 353, 365 (2006); Banco Popular No. America v. Gandi, 184 N.J. 161, 165-66 (2005); Fazilat v. Feldstein, 180 N.J. 74, 78 (2004). The "test for determining the adequacy of a pleading [is] whether a cause of action is suggested by the facts." Printing Mart, 116 N.J. at 746. However, "a court must dismiss the plaintiff's complaint if it has failed to articulate a legal basis entitling plaintiff to relief." Sickles v. Carbot Corp., 379 N.J. Super. 100, 106 (App. Div. 2005).
II. Enforceability of Arbitration Agreements Pursuant to New Jersey Law
An arbitration agreement, like any other agreement, "must be the product of mutual assent, as determined under the customary principles of contract law." Atalese v. U.S. Legal Services Group, 219 N.J. 430, 442 (2012). Specifically, "an effective waiver requires a party to have full knowledge of his legal rights and intent to surrender those rights." Id. Because arbitration involves a waiver of the right to pursue a case in a judicial forum, "courts take particular care in assuring the knowing assent of both parties to arbitrate, and a clear mutual understanding of the ramifications of that assent." Id. New Jersey courts have repeatedly stated that "[t]he point is to assure that the parties know that in electing arbitration as the exclusive remedy, they are waiving their time-honored right to sue." Garfinkel v. Morristown Obstetrics, 168 N.J. 124, 132 (2001) (citing Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993)).
In Atalese, the Court stated that "the waiver-of-rights language . . . must be clear and unambiguous - that is, the parties must know that there is a distinction between resolving a dispute in arbitration and in a judicial forum." Atalese, 219 N.J. at 445. An arbitration clause must also convey to the parties that they are giving up their right to bring claims in court or have a jury resolve their dispute in "at least some general and sufficiently broad way." Id. at 444. An arbitration clause that fails to "clearly and unambiguously signal" to the parties that they are surrendering their rights to pursue a judicial remedy renders such an agreement unenforceable. Id. at 447-48.
Although Atalese arose in the consumer context, its principles have been routinely applied in the employment context. Barr v. Bishop Rosen & Co., Inc., 442 N.J. Super. 599, 606-07 (App. Div. 2015) (applying the principles of Atalese to an employment contract between a stockbroker and a brokerage firm); Morgan v. Raymours Furniture Co., Inc., 443 N.J. Super. 338 (2016) (citing to Atalese in determining that the New Jersey Supreme Court has made clear that an employee must "clearly and unambiguously" agree to a waiver of the right to sue).
DECISION
I. The Arbitration Clause is Invalid Because it Fails to Specify Plaintiff is Waiving Her Right to a Jury Trial
The arbitration clause in the Employment Agreement fails to clearly and unambiguously set forth that Plaintiff is waiving her right to seek relief in court or by jury trial, The arbitration clause contained in paragraph 9(a) of the Employment Agreement does not contain any explanation that Plaintiff is waiving these rights. Furthermore, the clause does not explain what arbitration is, or how arbitration differs from a judicial proceeding.
On its face, the arbitration clause at issue also fails to include any language that "in some general and sufficiently broad way, [explains] that the plaintiff is giving up her right to bring her claims in court or have a jury resolve the dispute." Atalese, 219 N.J. at 447. Accordingly, the arbitration clause is deemed invalid.
II. The Arbitration Clause Fails to Unmistakably State it Applies to NJLAD or Other Statutory Discrimination or Retaliation Claims
The NJLAD confers rights upon employees that are essential to eradicating discrimination in the workplace. Garfinkel, 168 N.J. at 130. Considering the importance of these rights, New Jersey courts will not assume that an employee intends to waive those rights unless an agreement so provides in clear and unambiguous terms. Id. at 132. Therefore, any waiver-of-rights clause must specify that the employee agrees to arbitrate all statutory claims arising out of the employment relationship or its termination. Id. Any ambiguity in the agreement must be construed against the employer as the drafter. Id. at 133.
The court in Garfinkel recognized that the right to a trial by jury is "an integral feature" of the NJLAD. Id. at 131. Therefore, "a party's waiver of statutory rights must be clearly and unmistakably established, and contractual language alleged to constitute a waiver will not be read expansively. In the same vein, a court may not rewrite a contract to broaden the scope of arbitration." Id. at 132. Furthermore, the arbitration agreement "should also reflect the employee's general understanding of the type of claims included in the waiver, e.g. employment discrimination claims." Id. at 136.
In this matter, the Employment Agreement states only that Plaintiff "agrees that any dispute, claim, or controversy concerning [Plaintiff's] employment or the termination of [Plaintiff's] employment or any dispute, claim or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement shall be settled by arbitration . . ." Nowhere in the language of this clause is it specified that Plaintiff is waiving her right to a jury trial for NJLAD or other statutory, discrimination, or retaliation claims. The ambiguous nature of this clause invalidates it as to Plaintiff's three NJLAD claims, as a waiver of the right to bring NJLAD and other statutory claims is not specified. Therefore, the arbitration clause must be deemed unenforceable.
III. The Arbitration Agreement is Invalid Because Plaintiff did not Knowingly and Voluntarily Waive her Rights to Court or a Trial by Jury
The Federal Arbitration Act ("FAA") specifically permits states to regulate arbitration agreements under standard contract law. Martindale v. Sandvik, Inc., 173 N.J. 76, 85 (2002). New Jersey contract law states that a person must knowingly and voluntarily waive one's rights in order for such a waiver to be valid. Id. at 96. The Martindale court enumerated five factors that must be weighed in deciding whether an employee knowingly and voluntarily waived their rights to a court and jury trial. These factors include: (1) whether the employee read and understood the arbitration agreement; (2) whether the employee was permitted time to consider the agreement; (3) whether the employee was provided with the chance to ask the employer meaningful questions about the agreement; (4) whether the employee was allowed to take the agreement home to consult with another person or attorney before signing; and (5) the employee's degree of sophistication. Id.
In this case, the record supports a finding that Plaintiff's waiver was unknowing and involuntary when applying the facts to the Martindale factors. First, Defendant never notified Plaintiff that she was signing an arbitration agreement. Plaintiff also did not know that she had signed an arbitration agreement at the time she commenced employment with Defendant. Furthermore, Plaintiff did not understand what arbitration was until after she filed this action. Finally, Defendant never advised Plaintiff that she could or should consult with an attorney before signing the Employment Agreement.
The aforementioned facts on the record support a finding that Plaintiff did not knowingly and voluntarily waive her statutory rights to a jury trial proscribed by the NJLAD. Therefore, the arbitration agreement must fail.
For the reasons stated above, Defendants' motion to dismiss Plaintiffs' claims is hereby DENIED.
EXHIBIT A
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