Alissa MOON; Yasmeen Davis, individually and on behalf of all others similarly situated v. BREATHLESS INC, a/k/a Vision Food & Spirits, d/b/a Breathless Men‘s Club Alissa Moon, Appellant
No. 16-3356
United States Court of Appeals, Third Circuit
August 17, 2017
Argued January 18, 2017
...
Ultimately, the role of the TSA in securing public safety is so significant that we ought not create a damages remedy in this context. The dangers associated with aircraft security are real and of high consequence. Cf. Chappell v. Wallace, 462 U.S. 296, 304 (1983) (refusing to imply a Bivens action where “the need for unhesitating and decisive action ... would be undermined by a judicially created remedy“). We, of course, do not suggest that TSA screeners should аct with disdain for passenger rights or that they can escape all the consequences of their bad behavior. Discipline by the government should be swift and certain, when its employees’ actions warrant it. But, when it comes to creating judicial remedies, there must be a balancing of priorities, and “[t]he proper balance is one for the Congress, not the Judiciary, to undertake.” Ziglar, 137 S.Ct. at 1863. Otherwise, in this context, there is reason to “fear that a general Bivens cure would be worse than the disease.” Wilkie, 551 U.S. at 561, 127 S.Ct. 2588. Accordingly, in the specific context of airport security screeners, special factors preclude us from implying a Bivens cause of action for First Amendment retaliation.
IV. CONCLUSION
For the foregoing reasons, we will reverse in part and remand to the District Court with an instruction to enter judgment for Kaiser on the First Amendment retaliation claim, and will decline to exercise jurisdiction over the remainder of the appeal.
Marc J. Gross, Esq. [ARGUED], Justin P. Kobenschlag, Esq., Greenbaum, Rowe, Smith & Davis LLP, 75 Livingston Avenue, Suite 301, Roseland, NJ 07068, Counsel for Appellee
Before: FISHER,* HARDIMAN, and GREENAWAY, JR., Circuit Judges
OPINION OF THE COURT
GREENAWAY, JR., Circuit Judge.
In this appeal, we must determine whether an arbitration clause in a signed contract covers Appellant‘s statutory claims. The United States District Court for the District of New Jersey answered this question in the affirmative. We disagree. We shall reverse and remand.
I. BACKGROUND
In 2013, Alissa Moon (“Moon“) began performing at the Breathlеss Men‘s Club (“Club“) in Rahway, New Jersey. In January of 2015, Moon agreed to rent performance space in the Club and signed an Independent Dancer Rental Agreement (“Contract“). The Contract contains an employment provision and an arbitration clause.
The employment provision provides:
Dancer understands and agrees that he/she is an independent contractor and not an employee of club. Dancer is renting the performance space for an agreеd
upon fee previously agreed to by Dancer and Club.
App. 41.
The arbitration clause reads:
In a dispute between Dancer and Club under this Agreement, either may request to resolve the dispute by binding arbitration. THIS MEANS THAT NEITHER PARTY SHALL HAVE THE RIGHT TO LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL—DISCOVERY AND APPEAL RIGHTS ARE LIMITED IN ARBITRATION. ARBITRATION MUST BE ON AN INDIVIDUAL BASIS. THIS MEANS NEITHER YOU NOR WE MAY JOIN OR CONSOLIDATE CLAIMS IN ARBITRATION, OR LITIGATE IN COURT OR ARBITRATE ANY CLAIMS AS A REPRESENTATIVE OR MEMBER OF A CLASS.
App. 42.
In August of 2015, Moon2 sued the Club pursuant to the Fair Labor Standards Act (“FLSA“),
II. JURISDICTION
Fоr her federal claims, Moon invoked the District Court‘s jurisdiction pursuant to
III. STANDARD OF REVIEW
On an appeal from a grant of summary judgment, our review is “plenary” and we “apply the same test the district court should have utilized initially.” Giles v. Kearney, 571 F.3d 318, 322 (3d Cir. 2009) (citation omitted). Summary judgment should be granted only when the record shows that “there is no genuine dispute as to any material fact and that the movant is entitlеd to judgment as a matter of law.”
IV. ANALYSIS
The parties debate an arbitration clause‘s scope. Pursuant to the precedent
The parties agree that New Jersey law applies to this controversy. See Appellant‘s Br. at 8 (“As a matter of contract interpretation, federal courts apply state contract law to detеrmine the scope of an arbitration clause.“); Appellee‘s Br. at 4 (“Federal courts ordinarily apply state contract law in determining the enforceability and scope of an arbitration clause.“).
Thus we must decide two questions under New Jersey law: First, should a court decide whether the parties should submit this issue to arbitration? Second, if the parties have contracted to allow a court to decide arbitrability, have the pаrties agreed to arbitrate the claims at issue here? We answer the first question in the affirmative and the second question in the negative.
A. A Court Should Decide Arbitrability
Under New Jersey law, “the law presumes that a court, not an arbitrator, decides any issue concerning arbitrability.” Morgan v. Sanford Brown Inst., 225 N.J. 289, 137 A.3d 1168, 1177 (2016). To overcome this presumption, an arbitration clause must contain “‘clea[r] and unmistakabl[e]’ evidence ‘that the parties agreed to arbitrate arbitrability.‘” Id. (alterations in original) (quoting First Options, 514 U.S. at 944). “Silence or ambiguity in an agreеment does not overcome the presumption that a court decides arbitrability.” Id. at 1178.
The Supreme Court of New Jersey applied these principles in Morgan v. Sanford Brown Institute. In that case, students sued a for-profit, post-secondary education institute under the New Jersey Consumer Fraud Act; and the institute moved to dismiss the complaint on the ground that the students signed the following arbitration agreement with the institute: “[A]ny objection to arbitrability or the existence, scope, validity, construction, or enforceability of this Arbitration Agreement shall be resolved pursuant to this paragraph (the ‘Arbitration Agreement‘).” Id. at 1182.
In Morgan, the court found that the arbitration clause did not strip the court of its authority to decide arbitrability. It supported its conclusion with two arguments. First, “[t]he paragraph does not explain that an arbitrator will decide whether the parties agreed to arbitrate legal claims, including statutory violations....” Id. at 1179. Second, the institute conceded the issue in the lower court: “Defendants did not argue tо the motion court that it lacked jurisdiction to decide whether the parties agreed to arbitration because that role was for the arbitrator alone.” Id.
For the same reasons, we find that the parties here did not agree to arbitrate arbitrability. First, the arbitration clause here falls below the standard set by Morgan. In Morgan, the arbitration clause referenced arbitrability but did not clearly delegate this issue to an arbitrator: “[A]ny objection to arbitrаbility or the existence, scope, validity, construction, or enforceability of this Arbitration Agreement shall be resolved pursuant to this paragraph (the ‘Arbitration Agreement‘).” Id. at 1182. Here, the arbitration clause fails to mention arbitrability, let alone the venue for deciding it:
In a dispute between Dancer and Club under this Agreement, either may request to resolve the dispute by binding
arbitration. THIS MEANS THAT NEITHER PARTY SHALL HAVE THE RIGHT TO LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL—DISCOVERY AND APPEAL RIGHTS ARE LIMITED IN ARBITRATION. ARBITRATION MUST BE ON AN INDIVIDUAL BASIS. THIS MEANS NEITHER YOU NOR WE MAY JOIN OR CONSOLIDATE CLAIMS IN ARBITRATION, OR LITIGATE IN COURT OR ARBITRATE ANY CLAIMS AS A REPRESENTATIVE OR MEMBER OF A CLASS.
App. 42.
Second, like in Morgan, the Defendant conceded in the trial court that courts must decide issuеs of arbitrability:
When confronted with a motion to stay or dismiss under the [Federal Arbitration Act], the Court engages in a limited review to determine whether: (1) there is a valid, enforceable agreement to arbitrate; (2) the claims at issue fall within the scope of the agreement to arbitrate; and, (3) the moving party has not waived arbitration.
9 U.S.C. § 3 ....
Motion to Dismiss in Favor of Arbitration or, in the Alternative, to Stay Pending Arbitration at 6, Alissa Moon et al. v. Breathless, Inc., No. 2:15-cv-06297-SDW-LDW (D.N.J. Sept. 24, 2015), ECF No. 12-2 (emphasis added). Having estаblished our power to decide the arbitration clause‘s scope, we now turn to this issue.
B. A Court Should Decide Moon‘s Wage-and-Hour Claims
To cover a statutory right under New Jersey law, an arbitration clause must do three things. First, it must identify the general substantive area that the arbitration clause covers: “To pass muster, however, a waiver-of-rights provision should at least provide that the employee agrees to arbitrate all statutory claims arising out of the employment relationship or its termination.” Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 773 A.2d 665, 672 (2001); see also Atalese v. U.S. Legal Servs. Grp., 219 N.J. 430, 99 A.3d 306, 315-16 (2014) (“But the clause, at least in some general and sufficiently broad way, must explain that the plaintiff is giving up her right to bring her claims in court or have a jury resolve the dispute.“); Martindale v. Sandvik, Inc., 173 N.J. 76, 800 A.2d 872, 883 (2002) (“In the circumstances of this case, the language in the arbitration agreement not only was clear and unambiguous, it was also sufficiently broad to encompass reasonably plaintiff‘s statutory causes of action.“).
Second, it must reference the types of claims waived by the provision: “It should also reflect the employee‘s general understanding of the type of claims included in the waiver, e.g., workplace discrimination claims.” Garfinkel, 773 A.2d at 672. It need not, however, mention the specific statutory rights at issue: “We do not suggest that the arbitration clause has to identify the specific constitutional or statutory right guaranteeing a citizen access to the courts that is waived by agreeing to arbitration.” Atalese, 99 A.3d at 315.
Third, it must explain the differеnce between arbitration and litigation: “The waiver-of-rights language, however, must be clear and unambiguous—that is, the parties must know that there is a distinction between resolving a dispute in arbitration and in a judicial forum.” Id. at 315; see also Martindale, 800 A.2d at 884 (enforcing an arbitration clause because it, inter alia, “addressed specifically a waiver of the right to a jury trial, augmenting the notice to all parties to the agreement that claims involving jury trials would be resolved instead through аrbitration“).
1. Garfinkel
In Garfinkel, a doctor employed by the Morristown Obstetrics and Gynecology Associates (“MOGA“) sued MOGA for breaching an employment contract, for perpetrating a tort, and for violating the New Jersey Law Against Discrimination (“LAD“). Garfinkel, 773 A.2d at 668. In response to the doctor‘s suit, MOGA invoked the following arbitration clause:
Except as otherwise expressly set forth in Paragraphs 14 or 15 hereof, any controversy or claim arising out of, or relating to, this Agreement or the breach thereof, shall be settled by arbitration in Morristown, New Jersey, in accordance with the rules then obtaining of the American Arbitration Association, and judgement [sic] upon any reward rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof.
The Supreme Court of New Jersey found that the arbitration clause did not cover the doсtor‘s statutory claims for three reasons. First, the clause did not reference statutory claims: “Moreover, the language does not mention, either expressly or by general reference, statutory claims redressable by the LAD.” Id. at 672. Second, the clause implicitly exempted all other statutory claims by explicitly exempting some: “As noted, paragraph eighteen excepts from its purview the two paragraphs of the agreement pertaining to post-termination restrictions and severance pay. Those exceptions further suggest that the parties intended disputes over the terms and conditions of the contract, not statutory claims, to be the subject of arbitration.” Id. Third, the clause mentioned contract disputes: “The clause states that ‘any controversy or claim’ that arises from the agreement or its breach shall be settled by arbitration. That language suggests that the parties intended to arbitrate only those disputes involving a contract term, a condition of employment, or some other element of the contract itself.” Id.
2. Atalese
In Atalese, a customer sued a debt-adjustment services company in New Jersey court for violating New Jersey‘s Consumer Fraud Act and the Truth-in-Consumer Contract, Warranty and Notice Act. The company responded by invoking the following arbitration clause of its service agreement:
In the evеnt of any claim or dispute between Client and the USLSG related to this Agreement or related to any performance of any services related to this Agreement, the claim or dispute shall be submitted to binding arbitration upon the request of either party upon the service of that request on the other party.
The Supreme Court of New Jersey found that the consumer had not waived her statutory rights by signing this arbitration provision because “the wording of the sеrvice agreement did not clearly and unambiguously signal to plaintiff that she
3. Martindale
In Martindale, an employee sued her employer under New Jersey‘s Family Leave Act and New Jersey‘s Law Against Discrimination. In response to suit, her employer invoked an arbitration clause contained in an employment application. The clause read as follows: “As a condition of my employment, I agree to waive my right to a jury trial in any action or proceeding related to my employment with [the Employer]. I understand that I am waiving my right to a jury trial voluntarily and knowingly, and free from duress or coercion.” Martindale, 800 A.2d at 875 (capitalization omitted).
The Supreme Court of New Jersey found that the arbitration clause covered the employee‘s claims for two reasons. First, the court found that the contract was sufficiently broad because, unlike in Garfinkel and other cases, it did not make a limiting reference to a contract: “Unlike the arbitration provisions contained in Garfinkel and Alamo, the arbitration provision here does not contain any limiting references.” Id. at 884. Second, the court held that the arbitration provision was appropriately clear because it specifically referenced the type of claims covered: “Its wording provided plaintiff with sufficient notice at the time she signed the agreement that all claims relating to employment with and termination from [the Employer] would be resolved through arbitration.” Id.
4. Applying Garfinkel, Atalese, and Martindale
Garfinkel and Atalese govern the case at bar. We reach this conclusion because the arbitration clause at issue here, like the arbitration clauses in Garfinkel and Atalese, references contract disputes—not statutory rights. In Garfinkel, the clause applied to “any controversy or claim arising out of, or relating to, this Agreement or the breach thereof....” Garfinkel, 773 A.2d at 668. In Atalese, the clause covered “any claim or dispute related to this Agreement or related to any performance of any services related to this Agreement...” Atalese, 99 A.3d at 310. Here, the clause likewise only includes “a dispute between Dancer and Club under this Agreement.” App. 42. The Club has not identified a significant difference between these three formulations which all point to disputes related to the agreement at issue.
In Atalese and Garfinkel, the Supreme Court of New Jersey found that the quoted language made the arbitration clauses applicable only to contract claims. Atalese, 99 A.3d at 315 (“Nor is it written in plain language that would be clear and understandable to the average consumer that she is waiving statutory rights.“); Garfinkel, 773 A.2d at 672 (“That language suggests that the parties intended to arbitrate only those disputes involving a contract term, a condition of employment, or some other element of the contract itself.“). Because the arbitration clause here resembles the arbitration clauses in Garfinkel and Atalese, and because the Supreme Court of New Jersey found that the arbitration clauses in Garfinkel and Atalese only applied to contract disputes, we hold that the arbitration clause here does not cover Moon‘s statutory claims.
Two issues prevent us from finding that Martindale governs the case at bar. First, Martindale held that the contract was sufficiently broad to cover statutory claims because it lacked a limiting principle, such as a reference to an agreement, unlike Garfinkel. Martindale, 800 A.2d at 884. Here, the contract contains a limiting term because it directly references the Con-
In its decision, the District Court focused on Moon‘s attempts to question the arbitration clause‘s validity. It devoted the final two pages of its decision to the issue presented here. In those final pages, the District Court cited Atalese in passing but it did not cite Morgan, Garfinkel, Martindale, and the principles that those cases support. Insofar as those decisions control, the District Court erred in omitting any reference to them.
On appeal, the Club responds to Garfinkel in two ways.3 First, it disputes the factual similarities and argues that Garfinkel does not govern the case before us because Garfinkel involved employees, whereas the case at bar involves, according to the Club, an independent сontractor: “None of the cases cited by Appellant involved a dispute as to whether the individual making statutory employment claims was an employee or independent contractor.” Appellee‘s Br. at 12. Second, it asserts that deciding the arbitration question would force the court to determine the case‘s merits and that the Supreme Court has prohibited this result: “If the Court were to find that Breathless should have specifically rеferenced an employment relationship or statutory employment claims in the arbitration provision, which it should not, the Court would effectively be ruling on the merits of Appellant‘s underlying claims....” Id. at 13.
Neither argument persuades. The first argument lacks merit because the Supreme Court of New Jersey has applied Garfinkel to cases outside of the employment context. See, e.g., Atalese, 99 A.3d at 314 (applying Garfinkel to a consumer contract).
The second argument also misses the mark because the case that it relies upon does not support its point. To substantiate this second argument, the Club quotes the following language from AT&T Technologies, Inc. v. Communications Workers of America: “[I]n deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims.” 475 U.S. 643, 649 (1986). This language establishes the two step process for deciding arbitration disputes and the requirement that courts may only resolve issues that fall outside of the arbitration clause. See id. at 651 (“If the court determines that the agrеement so provides, then it is for the arbitrator to determine the relative merits of the parties’ substantive interpretations of the agreement.“). It does not, as the Club asserts, prove the impossibility of distinguishing these two steps. Indeed, in AT&T Technologies, Inc., the Supreme Court remanded the case to the trial court to perform the first step of the inquiry. Id. at 648.
Furthermore, the Club‘s second argument fails because the District Court could find that the arbitration clause does not cover the plaintiff‘s wage-and-hour claims without deciding the claims’ merits. To answer the arbitrability question, the Court must decide what the arbitration provision says. See Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 71 A.3d 849, 857 (2013)
The Club presents one final counterargument—that Moon‘s claim that she should be treated as an employee actually arises “under the Agreement” because it refers to Moon as an “independent contractor.” Appellant‘s Br. at 10-11 (citing App. 41, 42). Despite the contract‘s employment provision, Moon‘s claims still arise under the FLSA and New Jersey statutes, not the agreement itself. In Bell v. Southeastern Pennsylvania Transportation Authority, 733 F.3d 490, 495-96 (3d Cir. 2013), we held that SEPTA employees’ wage-related claims under the FLSA did not arise under their Collective Bargaining Agreement (“CBA“) merely because they asked for more pay than agreed upon in the CBA. The employees did not argue that SEPTA failed to compensate them in the amount set forth in the CBA; they instead argued that the CBA in question failed to comply with the FLSA. Id. at 495. As such, resolution of the FLSA claims rеquired resolution not of a dispute under the terms of the CBA, but of a statutory claim that the CBA violated the law. Id. Thus, we held the arbitration clause governing disputes under the CBA in that case did not apply to their FLSA claims. Id. at 496. Similarly, Moon‘s claim here is that she should receive certain wages and benefits as an employee under the FLSA despite her agreement stating otherwise. Because she relies “solely on [her] statutory, rather than [her] contractual, rights tо recovery, ... [she] may proceed on [her] FLSA claims without first seeking arbitration.” Id.
Because the arbitration clause at bar resembles those at issue in Garfinkel and Atalese more than the one at issue in Martindale and because Moon‘s claims arise under statutes rather than the Contract, we find that the arbitration clause does not cover Moon‘s statutory wage-and-hour claims.
V. CONCLUSION
For the foregoing reasons, we will reverse the orders of the District Court and remand these matters.