Marilyn Flanzman v. Jenny Craig, Inc.(082207)(Bergen County & Statewide)
244 N.J. 119
| N.J. | 2020Background
- Plaintiff Marilyn Flanzman worked for Jenny Craig/JC USA and signed an Employment "Arbitration Agreement" in 2011 that called for "final and binding arbitration" but did not name an arbitrator, an arbitral institution, a selection process, or a choice-of-law/forum clause (aside from a provision requiring payment of a then-current California Superior Court filing fee toward arbitration costs).
- In 2017 Flanzman, then 82, alleged age discrimination, constructive discharge, discriminatory discharge, and harassment under New Jersey’s Law Against Discrimination (LAD) after substantial reductions to her work hours; she sued in court.
- Defendants moved to dismiss and compel arbitration; the trial court granted the motion, concluded California law and forum applied, and ordered arbitration (with Flanzman allowed to choose the arbitral body).
- The Appellate Division reversed, holding an arbitration agreement is invalid unless it designates an arbitral institution (e.g., AAA or JAMS) or describes a general process to select an arbitral mechanism.
- The New Jersey Supreme Court granted certification and reversed the Appellate Division: it held the NJ Arbitration Act (NJAA) supplies default procedures (including judicial appointment of an arbitrator) so an agreement need not name an arbitrator or an arbitral institution to be enforceable; it vacated the trial court’s designation of California law/forum and left those issues to the arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability when agreement omits a named arbitrator, arbitral institution, or selection process | Flanzman: omission prevents mutual assent because parties don’t know what will replace court proceedings; agreement therefore invalid | JC USA: NJAA (and FAA) permit enforcement; default statutory procedures and judicial appointment fill gaps | Held: Agreement enforceable; NJAA provides default selection and administration rules, so omission does not invalidate arbitration clause |
| Effect of FAA/NJAA on state-law rules that single out arbitration | Flanzman: statutory/default rules don’t excuse parties from specifying forum/organization; Atalese requires clear description of what rights are waived | JC USA: FAA/NJAA preempt state rules that discriminate against arbitration; FAA §5 and NJAA permit court-appointed arbitrator | Held: FAA/NJAA policies favor arbitration; NJAA mirrors FAA and authorizes court appointment when parties omit selection methods; state law cannot impose arbitration-specific invalidation |
| Whether the Agreement met New Jersey’s "clear and unmistakable" waiver standard (Atalese) | Flanzman: because arbitration procedures were unspecified, waiver was not sufficiently clear | JC USA: agreement expressly replaced "a jury or other civil trial" with "final and binding arbitration," meeting Atalese | Held: Agreement satisfies Atalese — it clearly and unmistakably informs the parties they waive judicial forum/jury rights |
| Whether a filing-fee reference to California made California law and forum controlling | Flanzman: forum and law unclear; could be unconscionable to force LAD claims to California | JC USA: trial court correctly assumed California governed based on fee clause | Held: The filing-fee clause is not a choice-of-law or forum-selection clause; Agreement is silent on governing law/forum and those matters are for the arbitrator to decide |
Key Cases Cited
- Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430 (N.J. 2014) (New Jersey standard requiring arbitration waivers be clear and unmistakable)
- Kindred Nursing Ctrs. Ltd. P'ship v. Clark, 137 S. Ct. 1421 (U.S. 2017) (FAA preempts state rules that single out arbitration for disfavored treatment)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (federal policy favors enforcement of arbitration agreements on equal footing with other contracts)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (federal policy favoring arbitration under the FAA)
- Kernahan v. Home Warranty Adm'r of Fla., Inc., 236 N.J. 301 (N.J. 2019) (standard of review and contractual principles applied to arbitration clauses)
- Kleine v. Emeritus at Emerson, 445 N.J. Super. 545 (App. Div. 2016) (contrast case where a chosen arbitral institution became unavailable and agreement was invalidated)