MORANDO v. NETWRIX CORPORATION
2:11-cv-05075
D.N.J.Apr 24, 2012Background
- Morando, employed by NetWrix during 2009–2011, signed the 2009 Employment Agreement containing an arbitration clause.
- Morando later rejoined NetWrix in 2011 and signed a new Employment Agreement with an identical arbitration clause.
- The 2011 agreement included a waiver of litigation rights and an acknowledgment that Morando read and understood its terms.
- Morando was terminated on July 7, 2011 and filed suit under FLSA and NJLAD alleging overtime and discrimination/retaliation related to disability accommodation.
- Defendants move to dismiss and compel arbitration under FAA/NJ arbitration act, arguing claims fall within the arbitration agreement and the agreement is enforceable.
- Morando contends the arbitration clause is procedurally and substantively unconscionable, alleging adhesion, lack of opportunity to read/consult, and term unfairness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of arbitration agreement | Arbitration clause is procedurally unconscionable as adhesion. | Agreement is valid; not procedurally unconscionable. | Arbitration agreement found valid; not procedurally unconscionable. |
| Scope of arbitration clause | Disputes fall outside the arbitration clause and litigation is improper. | Claims fall within the broad arbitration clause governing any dispute related to the agreements. | Plaintiff's claims are within the scope of the Arbitration Agreement. |
| Unconscionability under state law | Arbitration clause substantively unconscionable, limiting rights and favoring employer. | Clause is not substantively unconscionable; differences with FLSA/NJLAD fees and punitive damages are permissible. | Arbitration clause not unconscionable; enforceable. |
Key Cases Cited
- Delta Funding Corp. v. Harris, 189 N.J. 28 (N.J. 2006) (Rudbart factors guide adhesion challenges in NJ)
- Martindale v. Sandvik, Inc., 173 N.J. 76 (N.J. 2002) (adhesion contract considerations; enforceability in employment)
- Rudbart v. North Jersey Dist. Water Supply Comm'n., 127 N.J. 344 (N.J. 1992) (four Rudbart factors for adhesion contracts)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (U.S. 1991) (arbitration in employment context not categorically prohibited)
- Concepcion v. AT&T Mobility LLC, 563 U.S. 333 (S. Ct. 2011) (FAA saving clause allows contract defenses; unconscionability apply)
- Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51 (3d Cir. 1980) (summary judgment standard in arbitration context)
- Nino v. Jewelry Exchange, Inc., 609 F.3d 191 (3d Cir. 2010) (state-law unconscionability principles applied to arbitration)
- Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124 (N.J. 2001) (contracting and waiver of statutory rights in NJ context)