MALAVE v. TATA CONSULTANCY SERVICES LIMITED, 2:23-cv-22529

Background

Plaintiff Rockwell Malave, a New Jersey resident, was terminated from his employment at Tata Consultancy Services (TCS) in Edison, New Jersey in September 2023.
Malave alleges his termination violated the New Jersey WARN Act due to insufficient notice and severance, seeking to represent a class of similarly situated former employees.
TCS discovered during discovery a separation agreement signed by Malave, containing a general release and a “Dispute Resolution” provision mandating binding arbitration.
TCS moved to compel arbitration and stay the federal action, citing the Federal Arbitration Act (FAA) and the agreement's arbitration clause.
Plaintiff opposed, arguing the arbitration provision was unenforceable under New Jersey law and improper notice of waiver of court rights.
The court denied TCS's motion, ultimately finding New Jersey law applied and that the arbitration clause did not meet state requirements for a knowing waiver of the right to litigate.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Choice of Law	New Jersey law applies; TCS waived New York law argument by not raising it initially; New Jersey has a greater interest and applying NY law would violate NJ public policy.	New York law should apply as per the agreement’s choice-of-law provision; NY has a substantial relationship via executives and a subsidiary; No violation of NJ policy.	NJ law applies: TCS did not waive the right to raise choice-of-law, but NJ has a materially greater interest and applying NY law would violate NJ policy.
Validity of Arbitration Clause	Under NJ law, arbitration provisions must clearly advise the employee they are giving up the right to sue in court or to a jury trial; the agreement here lacks such language.	The agreement is valid: offer, acceptance, and consideration present; broad language covers plaintiff’s claim; even under NJ law, not a contract of adhesion.	Arbitration provision unenforceable; it lacks clear, unambiguous language required by NJ law to signal waiver of litigation rights.
Enforcement Given Federal Policy Favoring Arbitration	NJ law controls contract interpretation; strong NJ policy protects court access and jury trial rights for employees.	FAA policy favors arbitration and preempts contrary state law; the agreement’s terms are broad and should cover statutory claims.	FAA does not override NJ’s fundamental policy when specific state waiver requirements unmet in employment context.
Waiver of Right to Compel Arbitration	TCS delayed 11 months in seeking to compel arbitration, which constitutes waiver.	No waiver; TCS asserted arbitration as a defense and acted promptly upon discovering relevant agreement.	Court did not reach this issue, denying the motion on enforceability grounds instead.

Key Cases Cited

Hertz Corp. v. Friend, 559 U.S. 77 (defining corporate principal place of business for jurisdiction)
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (establishing strong federal policy favoring arbitration)
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (arbitration agreements on equal footing with contracts)
First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (questions of arbitrability are presumptively for courts)
James v. Glob. TelLink Corp., 852 F.3d 262 (mutual assent to arbitrate under NJ law)
Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392 (party asserting federal jurisdiction bears the burden throughout)
Atalese v. U.S. Legal Servs. Grp., L.P., 99 A.3d 306 (NJ law requires clear language in arbitration clauses to waive legal rights)
Skuse v. Pfizer, Inc., 236 A.3d 939 (application of Atalese requirements in employment arbitration context)
Leodori v. CIGNA Corp., 814 A.2d 1098 (concrete manifestation of intent to waive court rights needed in employment contracts)
Instructional Sys., Inc. v. Comput. Curriculum Corp., 614 A.2d 124 (NJ Restatement contract choice-of-law standard)
In re Remicade (Direct Purchaser) Antitrust Litig., 938 F.3d 515 (NJ courts require concrete manifestation of intent to waive trial rights in employment contexts)
Marino v. Indus. Crating Co., 358 F.3d 241 (summary judgment standard for arbitration disputes)