196 A.3d 996
N.J. Super. Ct. App. Div.2018Background
- Plaintiff (82) worked 26 years for defendant; after reductions in hours she was terminated and sued under the NJLAD for age discrimination and related claims.
- In 2011 (20 years after hire) plaintiff signed an employment document containing a broad arbitration agreement waiving jury trial for "any and all claims" arising from employment; the clause referenced payment of a "Superior Court of California filing fee" but did not identify any arbitral institution or clear forum-selection process.
- Defendant moved to compel arbitration; the trial judge compelled arbitration and (over plaintiff's objection) allowed plaintiff to choose the arbitral body, effectively supplying a forum after the fact.
- Plaintiff appealed, arguing the arbitration clause lacked mutual assent (no meeting of the minds about what forum/process replaced the jury trial) and that the clause was unconscionable.
- The appellate court reviewed enforceability de novo and focused on whether the agreement clearly and unambiguously communicated the rights that replaced judicial adjudication.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration clause is enforceable absent any designated forum or selection process | The clause fails for lack of mutual assent because it does not identify the arbitral forum or process; plaintiff couldn’t understand what rights she waived | Arbitration should be enforced; any gaps (e.g., naming an arbitrator) can be remedied by court appointment under applicable statutes | Reversed: absent some agreement about the arbitral forum/process there was no meeting of the minds and the clause is invalid |
| Whether court may supply or appoint a forum when parties omitted forum selection | Plaintiff: court cannot rewrite agreement to create a forum; doing so negates mutual assent | Defendant: court can fill gaps (appoint arbitrator or select forum) and enforce arbitration | Court: statute permitting appointment of arbitrator (state and FAA §5) applies to appointing arbitrators, not to supplying an unagreed forum; court should not rewrite agreement to create a forum |
| Whether failure to name a specific arbitrator alone invalidates clause | Plaintiff: omission of any forum/process makes waiver unclear; more than a mere failure to name an arbitrator | Defendant: naming an arbitrator is ancillary; court can appoint under N.J.S.A. 2A:23B-11(a) or FAA §5 | Court: mere failure to name an arbitrator would not necessarily invalidate clause, but here parties never agreed on a forum at all, so clause is invalid |
| Whether unconscionability needed resolution | Plaintiff pleaded unconscionability but primary contention is lack of mutual assent | Defendant invoked arbitration enforceability under FAA/state policy favoring arbitration | Court did not decide unconscionability because lack of mutual assent was dispositive |
Key Cases Cited
- Atalese v. United States Legal Servs. Grp., L.P., 219 N.J. 430 (clear mutual assent required to waive statutory rights)
- Morgan v. Sanford Brown Inst., 225 N.J. 289 (de novo review of arbitration clause enforceability)
- Leodori v. CIGNA Corp., 175 N.J. 293 (waiver of statutory rights must be clear and unambiguous)
- Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124 (ambiguity in arbitration clause can invalidate waiver)
- Kleine v. Emeritus at Emerson, 445 N.J. Super. 545 (arbitration clause invalid where designated forum was unavailable and no alternative agreed forum existed)
- Khan v. Dell Inc., 669 F.3d 350 (interpreting FAA §5 and whether an arbitrator designation is integral or ancillary)
- Jackson v. Payday Fin., LLC, 764 F.3d 765 (court may not always save arbitration by substituting an arbitrator)
- Covenant Health & Rehabilitation of Picayune v. Moulds, 14 So.3d 695 (court refused to select a forum not anticipated by parties)
- Oasis Health & Rehabilitation of Yazoo City, LLC v. Smith, 42 F. Supp. 3d 821 (clause valid where parties provided an agreed fallback process for selecting an alternate ADR provider)