Appellate Division Further Erodes Arbitration Clauses In New Jersey Law Against Discrimination Cases
In Flanzman v. Jenny Craig (A-2580-17T1, October 17, 2018),the New Jersey Appellate Division rendered a decision that further erodes the enforceability of arbitration clauses involving employment law claims filed in the State of New Jersey. This is an important decision for employees in the State of New Jersey given that it provides them with further protections against companies attempting to impose arbitration provisions upon them (that preclude them to the right to a jury trial trail in court).
Specifically, the appeal at issue required the court to decide whether to invalidate an arbitration agreement because the parties failed to identify any arbitration forum and/or any process for conducting the arbitration. The company sought to compel arbitration of the former employee’s age discrimination and harassment claims under the New Jersey Law Against Discrimination(“LAD”). The trial court enforced the arbitration agreement; however, on appeal, the Appellate Division reversed and thus, invalidated the arbitration provision.
The arbitration provision at issue provided as follows: “Any and all claims or controversies arising out of relating to [plaintiff’s employment], the termination thereof, or otherwise arising between [plaintiff] and [defendant] shall, in lieu of a jury or other civil trial, be settled by final and binding arbitration. This agreement to arbitrate includes all claims whether arising in tort or contract and whether arising under statute or common law, including, but not limited to,any claim or breach of contract, discrimination or harassment of any kind.”
In analyzing the arbitration provision, the Appellate Division held “that the parties lacked a ‘meeting of the minds’ because they did not understand the rights under the arbitration agreement that ostensibly foreclosed plaintiff’s right to a jury trial” and therefore, there was no mutual assent to arbitrate the dispute. The main deficiency with the arbitration provision was that it did not identify the process and/or forum for the arbitration, such as designating an arbitral institution (e.g. the American Arbitration Association or the Judicial Arbitration and Mediation Services) and/or providing a general method for selecting a different arbitration setting.