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Appeal Offs Arbitration Agreement Added After Initiation of Employment: Milloul vs. Knight Capital Group, Inc.
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By David C. Franceski, Jr.

In order to constitute an enforceable waiver of the right to try statutory employment claims in court, an agreement to arbitrate must (1) identify in clear and unmistakable language at least the type of statutory claims involved and (2) state in some express fashion that the right to sue is being sacrificed.

Milloul vs. Knight Capital Group, Inc., No. A-1953-13T2 (N.J. App. Div., 9/1/15).

In the Trial Court

Plaintiff, a former employee of defendant, appealed the trial court’s grant of defendant’s motion compelling arbitration of plaintiff’s statutory employment, discrimination and retaliation claims pursuant to, inter alia, New Jersey’s Law Against Discrimination (“LAD”), N. J .S. A. 10:5-1 to -49. The lower court had compelled arbitration, based on a “Dispute Resolution Agreement” (DRA) signed by plaintiff as a condition of employment following defendant’s acquisition of his previous employer. Plaintiff challenged the ruling on the grounds, inter alia, (1) that the agreement did not contain a clear and unmistakable waiver of his jury trial rights, (2) that any such waiver violated New Jersey’s LAD anti-waiver provisions, and (3) that the agreement did not adequately explain that plaintiff was surrendering his right to bring claims in court.

Sight Unseen

The Appellate Court agrees and reverses. As the Court first notes, the DRA was not included in the documents first given to plaintiff after the acquisition. That letter agreement, setting forth the written offer of continued employment and specifically stating that it constituted “the entire agreement between the parties,” did not contain an arbitration clause. Rather, as part of a later new hire orientation session, he was provided and immediately filled out a packet of W-4 and other payroll forms containing the dispute resolution agreement which he claimed he did not review, was not given an opportunity to read and was never told it related to arbitration or a waiver of a right to sue in court. Though readily acknowledging that the law favors arbitration and does not, as a matter of public policy, preclude arbitration of statutory discrimination claims, the Court emphasizes that it is the language of the parties’ agreement which determines whether plaintiff intended to waive his right to proceed in court.

And Insufficiently Clear, Too

The Court further holds that, while statutory discrimination claims such as New Jersey’s LAD may be waived without listing every statute by name, under the New Jersey Supreme Court’s recent decision in Atalese v. U.S. Legal Services Group, L.P., in consumer contracts, the agreement must identify in “simple, clear, understandable and easily readable language” the types of statutory claims being waived. The waiver of such a statutory right must be “clear and unmistakable,” and an employee must, at the very least, know that rights to a court trial are being waived. Here, according to the Court, because the DRA does not even mention a waiver of a right to trial, it cannot be enforced.

(D. Franceski: Given that the packet containing the DRA was not provided until after plaintiff signed his written offer of continued employment, it is surprising that the Court did not find the DRA unenforceable for lack of sufficient additional consideration, but apparently that is not a requirement under the law of New Jersey.)

(SLC Ref. No. 2015-42-01)

NOTICE: The court decision synopsis published above represents an abbreviated description of the actual decision and is re-printed here for its educational value. The author's effort is to report concisely the substance of the decision or a selected portion of the decision; commentary or analysis is generally reserved for the italicized section at the bottom of the summary. Subscribers to SAC's Online Litigation Alert (SOLA)from which this synopsis is excerpted, have immediate access to the full decision, in addition to the synopsis.

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