MORE SUPPORT FOR THE "BEIS DIN SYSTEM": NEW JERSEY APPELLATE AFFIRMS ARBITRATION PROVISION

Once again, the New Jersey Appellate Division has given a strong boost of support to the Beis Din system.

Prior to entering into a business deal, a rental lease, or a divorce proceeding, many members of our community enter into agreements which set forth the terms of their transactions and contain arbitration clauses that in case of a dispute a Beis Din will decide the dispute.

Such arbitration provisions are now commonplace in consumer contracts at large, but especially in the frum community.

In order for these provisions to be enforceable in court, established case law requires the agreement to expressly state that in choosing arbitration, consumers waive their right to sue in court.

A case ruling released just today reinforces that it is imperative for parties to commercial contracts to closely review precise terms of arbitration clauses with experienced Toanim and Lawyers to ensure; a) that there are no confusions as to what is being agreed to; and b) that the agreement will be enforceable in court if necessary.

Hellana Pharr was hired by Lowe's Companies, Inc. (Lowe's) in Morris Plains in July 2019. She worked as a head cashier.

On February 13, 2022, a customer berated a cashier, who Pharr supervised. Pharr intervened and advised the customer to leave the store. The customer proceeded to direct racial slurs and other disparaging remarks at her, both in the store and as the customer drove away. The customer subsequently called Lowe's corporate offices to complain about Pharr.

Pharr's manager Anthony Palombi later advised her that she should have contacted a manager and not confronted the customer. Three weeks later Pharr was terminated.

On April 26, 2022, Pharr filed a civil lawsuit in New Jersey Superior Court in Morris County alleging violations of the New Jersey Law Against Discrimination (LAD), arguing - among other
theories - that Lowe's was obligated to protect her from customers who were abusive to her based on her race.

Lowe's filed a Motion to compel arbitration and dismiss the lawsuit.

The issue at hand is that in connection with her offer of employment, she signed an "Agreement to Arbitrate Disputes" (Agreement).

The Agreement, in pertinent part, provides:
In exchange for the mutual promises in this Agreement, Lowe's offer of employment, and your acceptance of employment by Lowe's . . . you and Lowe's agree that any controversy between you and Lowe's . . . arising out of your employment or the termination of your employment shall be settled by binding arbitration, (at the insistence of either you or Lowe's, conducted by a single arbitrator under the current applicable rules, procedures and protocols of JAMS Inc. ("JAMS") or the American Arbitration Association ("AAA"), as may be amended from time to time. . . .

 

THIS AGREEMENT TO ARBITRATE DISPUTES MEANS THAT, EXCEPT AS PROVIDED HEREIN, THERE WILL BE NO COURT OR JURY TRIAL OF DISPUTES BETWEEN YOU AND LOWE'S WHICH ARISE OUT OF YOUR EMPLOYMENT OR THE TERMINATION OF YOUR EMPLOYMENT. . . .

 

This [Agreement] is intended to be broad and to
cover, to the extent otherwise permitted by law, all such disputes between you and Lowe's including but not limited to those arising out of federal and state statutes and local ordinances, such as: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1866; the Sarbanes-Oxley Act of 2002; the Equal Pay Act; the Fair Labor Standards Act; the Pregnancy Discrimination Act; the Family Medical Leave Act; the Americans with Disabilities Act; the Fair Credit Reporting Act; and any similar federal, state and local laws . . . .

In response, Pharr did not dispute that she executed the Agreement, but contended she has "no recollection" of doing so.

On December 1, 2022, the trial court granted Lowe's motion to compel arbitration, finding that while the agreement did not express say that the parties were "waiving" their right to adjudicate disputes in court, the agreement "could not be clearer that there will be no court or jury trial regarding disputes between the parties which arise out of the employment."

Pharr filed an appeal to the Appellate Division, claiming that the Agreement is invalid because it fails to unambiguously explain what rights she relinquished and how arbitration differs from a court proceeding. Pharr further asserted the Agreement failed to state it applies to the LAD or statutory hostile work environment and retaliation claims. Lastly, Pharr argued that the Agreement lacked mutual assent because she did not knowingly waive her statutory right to redress her claims in court through a trial by jury.

In an unpublished ruling released today, Judges Enright and Marczyk were not persuaded.

In determining whether a valid agreement to arbitrate exists, we apply "state contract-law principles." Hojnowski.

Under those principles, "an arbitration agreement is valid only if the parties intended to arbitrate because parties are not required 'to arbitrate when they have not agreed to do so.'" Kernahan.

Thus, a key inquiry is whether the parties actually
and knowingly agreed to arbitrate their dispute. Ibid.; see also Atalese v. Legal Services Group.

That inquiry begins with the language of the arbitration clause itself. To reflect mutual assent to arbitrate, the terms must be "sufficiently clear to place an individual on notice that he or she is waiving a constitutional or statutory right... Although a waiver-of-rights provision need not 'list every imaginable statute by name to effectuate a knowing and voluntary waiver of rights,' employees should at least know that they have 'agreed to arbitrate all statutory claims arising out of the employment relationship or its termination... No particular form of words is necessary to accomplish a clear and unambiguous waiver of rights... If at least in some general and sufficiently broad way the language of the clause conveys that arbitration is a waiver of the right to bring suit in a judicial forum, the clause will be enforced. Id.

Stated differently, "no magical language is required to accomplish a waiver of rights in an arbitration agreement." Morgan v. Sanford Brown Inst.

Guided by these principles, we conclude the Agreement unambiguously signaled to plaintiff she was waiving her right to pursue her discrimination claims in court, and her execution of the Agreement demonstrated her assent to the terms.

Plaintiff argues the Agreement is deficient because it fails to clearly state plaintiff is "waiving her right" to file a lawsuit. The Atalese Court noted, "no particular form of words is necessary to accomplish a clear and unambiguous waiver of rights . . . . Arbitration clauses - and other contractual clauses - will pass muster when phrased in plain language that is understandable to the reasonable consumer." Although plaintiff correctly notes the Agreement does not contain the term "waiver" when discussing jury trials, it - nevertheless - does utilize straight-forward and less legalistic language. Instead of stating plaintiff waives her right to a jury trial, the Agreement states in simple understandable terms, "this agreement to arbitrate disputes means that...there will be no court or jury trial of disputes between the parties which arise out of your employment or the termination of your employment." Furthermore, the Agreement provides the parties "agree that any controversy between [them] . . . arising out of [plaintiff's] employment or the termination of [plaintiff's] employment" shall be resolved through binding arbitration.

 

Plaintiff attempts to distinguish Skuse and submits the "standard of clarity" is not met by the Agreement here. We disagree. There is no meaningful difference in the body of Pfizer's and Lowe's arbitration agreements because both agreements made clear there would be no jury trial to resolve any employment-related dispute and, instead, the parties would arbitrate such disputes. In short, we discern no ambiguity whereby plaintiff would not have understood the rights she was waiving by executing the Agreement.

We also find unavailing plaintiff's argument the Agreement is lacking because it does not indicate plaintiff was waiving "her right to be heard by a judge." The Agreement states, "there will be no court or jury trial of disputes" between the parties. Given that there will be no court, it logically follows there will be no judge to adjudicate a dispute.

Plaintiff next contends the Agreement did not explain what arbitration is and how it differs from a court proceeding. Atalese requires "the parties must know that there is a distinction between resolving a dispute in arbitration and in a judicial forum." The Agreement here explains in unmistakable terms there would be no court or jury trial to resolve disputes between the parties. Moreover, it notes disputes arising out of termination of plaintiff's employment would instead be resolved by an arbitrator at "binding arbitration." The Agreement identifies the arbitration organizations whose rules would govern the arbitration proceedings and further offers to provide plaintiff "hard copies of the JAMS and AAA rules upon request." Accordingly, we are
unpersuaded by plaintiff's contention and conclude the Agreement satisfies Atalese.

See also Martindale, 173 N.J. at 96 (enforcing an arbitration clause because it, in part, "addressed specifically a waiver of the right to a jury trial, augmenting the notice to all parties to the agreement that claims involving jury trials would be resolved instead through arbitration.")

 

Plaintiff next asserts the Agreement did not state it applied to LAD or other statutory hostile work environment and retaliatory claims and therefore should not be enforceable.

We are satisfied the Agreement here is sufficiently broad and unambiguous to encompass plaintiff's causes of action and satisfy Garfinkel as the Agreement specifically lists a variety of statutes including comparable federal anti-discrimination laws including Title VII of the Civil Rights Act of 1964 and the Pregnancy Discrimination Act.

Lastly, plaintiff argues the Agreement lacked mutual assent because she did not knowingly waive her statutory right to adjudicate her claims in court.

Plaintiff asserts she did not carefully read the documents or know she was signing an Agreement. She further argues no one from Lowe's explained to her what she was signing, that she could take home the documents she signed, or consult a lawyer before signing the Agreement. She also claims she did not recall signing the Agreement. Defendant counters plaintiff confuses the standard for reviewing arbitration agreements with the standard for a release of claims.

Plaintiff acknowledged she signed the Agreement. That she did not read the Agreement, obtain a copy of it, or recall signing it, is not dispositive. As
noted, generally, a party that failed to read a contract before signing it "cannot later relieve themselves of its burden," and it is the obligation of a plaintiff to obtain a copy of the executed contract to ascertain what rights were waived in the agreement. Skuse.

Equally unavailing is plaintiff's argument no one explained the Agreement to her. See Goffe, 238 N.J. at 212 ("The argument that a plaintiff did not
understand the import of the arbitration agreement and did not have it explained . . . is simply inadequate to avoid enforcement of the clear and conspicuous arbitration agreement . . . the plaintiff signed").

Lastly, plaintiff has not provided any controlling authority that required Lowe's - under these facts - to advise her to consult an attorney.

 

"In short, we discern no basis to disturb the trial court's order dismissing the complaint and compelling arbitration," the Appellate judges concluded.

The winning attorneys are Lauren J. Glozzy and John L. Lamb Esq. of Buchanan Ingersoll & Rooney LLP.

As previously reported here on FAA News, the New Jersey Supreme Court has recently agreed to review whether arbitration provisions require an explicit waiver of the right to seek relief in a court of law in order to be enforced, and whether there are exceptions to this established case law.

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