Published on:

NEW JERSEY APPELLATE DIVISION REJECTS A FORCED ARBITRATION AGREEMENT

Forced arbitration is bad for employees. It is bad because it requires employees to waive their right to sue in court and in doing so denies employees the opportunity to have legal disputes with their employer resolved by a jury. This means that laws prohibiting workplace discrimination and retaliation are not enforceable in a court of law where forced arbitration exists. Rather, forced arbitration requires employees to submit their disputes to a privately-retained arbitrator, a person who often earns their living in whole or in part from handling claims brought against employers. This means that employers are their repeat customers. Furthermore, arbitrators aren’t required to take the law and legal precedent into account in making their decisions. There is no appeal or public review of decisions to ensure the arbitrator made a correct decision. Moreover, employers like arbitration because arbitrators tend to either rule in their favor or render awards favoring employees at monetary values typically much lower than an employee is likely obtain from a jury.

Although our New Jersey Supreme Court has declared that courts must treat and enforce arbitration agreements like all other contracts, to be enforceable it must be shown that the employee who entered into an arbitration agreement understood they were agreeing to waive their statutory right to sue for discrimination and retaliation in court of law. Atalese v. United States Legal Services Group, L.P., 219 N.J. 430, 441 (2011). Because arbitration results in a waiver of the right of an employee to pursue their claims in court, “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.” Atalese, 219 N.J. at 442-43. The Appellate Division of the New Jersey Superior Court recently rejected the validity of an arbitration agreement in Flanzman v. Jenny Craig, Inc., 2018 N.J. Super. LEXIS 156 * (App. Div. decided Nov. 13, 2018), because the employee there did not understand she was waiving her right to a jury trial by signing the agreement.

At the time her employment was terminated, the Plaintiff in Flanzman was 82 years old and had worked for Jenny Craig as a weight loss consultant for some 26 years. Jenny Craig gradually reduced the Plaintiff’s work hours to only three hours per week eventually resulting in her job termination. The Plaintiff filed a lawsuit alleging, among others, age discrimination. Jenny Craig responded by filing a motion to compel arbitration relying on an arbitration agreement allegedly signed by the Plaintiff in 2011, twenty years after she was hired. The appeal required the Appellate Division to decide whether to invalidate the arbitration agreement because it failed to identify any arbitration forum and any process for conducting the arbitration. As the appellate court explained:

“In general, a forum is the mechanism — or setting — that parties use to arbitrate their dispute. They could have designated an arbitral institution (like the American Arbitration Association (AAA) or the Judicial Arbitration and Mediation Services (JAMS)), or they could have communicated a general method for selecting a different arbitration setting. The mechanism or setting for the proceeding is important because the rights associated with arbitration forums may differ depending on which forum the parties choose, or on how they define the arbitral process. Here, the agreement ignored the subject altogether.
*1-*2.

The court went on to explain that selecting an arbitral institution informs the parties, at a minimum, about that institution’s general arbitration rules and procedures. Without knowing this basic information, parties to an arbitration agreement will be unfamiliar with the rights that replaced judicial adjudication. That is, the parties will not reach a “meeting of the minds.” *17. Because the Plaintiff was able to demonstrate that she did not understand what her rights were under the terms of the arbitration agreement, the appellate court held the parties lacked mutual consent because they, “did not understand the rights under the arbitration agreement that ostensibly foreclosed plaintiff’s right to a jury trial.”, and therefore, reversed the order of the trial court compelling arbitration. *2.

Wherever and whenever possible the attorneys at Mashel Law fight forced arbitration agreements because they deprive employees of their right to have their legal claims decided at trial by a jury of their peers. If you have a legal dispute with your employer and believe you signed a forced arbitration agreement, do not hesitate to call us at (732) 536-6161 or fill out the contact form on this page so that we can review the agreement and evaluate its enforceability. Mashel Law located in Marlboro, New Jersey are dedicated to exclusively protecting the rights of employees.