Lead Opinion
The opinion of the Court was delivered by
This appeal addresses the enforceability of an arbitration agreement contained in an application for employment. The courts below concluded that the agreement to arbitrate executed by the parties was valid and enforceable notwithstanding its inclusion in an application for employment, and therefore held that plaintiff was bound to submit her claims against her former employer to arbitration. All of plaintiff’s claims were held to be encompassed by the arbitration agreement, including her statutory claims concerning family leave and those alleging discrimination. We agree and affirm the judgment of the Appellate Division.
I.
Plaintiff Maureen Martindale applied and was hired for the position of Benefits Administrator with defendant Sandvik, Inc. in 1994. When she applied, plaintiff had to complete and sign an “Application for Employment” that included an arbitration agreement that appeared on page four of the application. The arbitration agreement stated:
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 SANDVIK.
I UNDERSTAND THAT I AM WAIVING MY RIGHT TO A JURY TRIAL VOLUNTARILY AND KNOWINGLY, AND FREE FROM DURESS OR COERCION.
I UNDERSTAND THAT I HAVE A RIGHT TO CONSULT WITH A PERSON OF MY CHOOSING, INCLUDING AN ATTORNEY, BEFORE SIGNING THIS DOCUMENT.
I AGREE THAT ALL DISPUTES RELATING TO MY EMPLOYMENT WITH SANDVIK OR TERMINATION THEREOF SHALL BE DECIDED BY AN*82 ARBITRATOR THROUGH THE LABOR RELATIONS SECTION OF THE AMERICAN ARBITRATION ASSOCIATION.
Plaintiff also submitted a resume that set forth her educational background and extensive experience in the field of benefits administration.
It is undisputed that defendant provided her with the opportunity to ask questions about the application and the arbitration agreement and to consult a third party, including an attorney, before signing the documents. Although plaintiff asked questions about the position, she did not ask any questions about the application. According to plaintiff, defendant informed her that she was required to sign page four of the application; nonetheless, there is no claim that plaintiff was coerced into signing the arbitration agreement. Similarly, defendant’s Director of Human Resources, John Casciano, testified at a deposition that his practice, followed in respect of plaintiff, was to ask an applicant to read the Application for Employment, review the document with the applicant, and offer to answer any questions. He said that applicants were permitted to take the application home to complete it, and then return it at a later date.
In January 1996, plaintiff informed defendant that she was pregnant. Nearly two weeks before giving birth, plaintiff began to experience medical problems related to her pregnancy. Consequently, plaintiff obtained disability leave. After giving birth, plaintiff requested and defendant granted family and medical leave to commence at the termination of plaintiffs disability leave. However, prior to the termination of plaintiffs disability leave and the commencement of her family and medical leave, defendant notified plaintiff that her position was being eliminated due to a reorganization of defendant’s holding company and its financial department. Defendant ceased disability payments to plaintiff in November 1996.
Plaintiff filed a complaint against defendant alleging violation of the New Jersey Family Leave Act, N.J.S.A. 34:11B-1 to - 16(FLA). Defendant removed the matter to the United States
A remand to the Law Division ensued and thereafter plaintiff amended her complaint to add individual defendants and a claim under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49(LAD). Defendant then moved to stay the proceedings and compel arbitration. The trial court granted the motion and dismissed plaintiffs complaint without prejudice, but ordered a stay pending appeal.
On appeal, the Appellate Division affirmed the orders dismissing plaintiffs complaint and compelling arbitration. The panel held that the arbitration agreement contained in the Application for Employment was valid and enforceable, and rejected the contention that the agreement was a contract of adhesion. We granted plaintiffs petition for certification. 169 N.J. 610,
II.
The first step in considering plaintiffs challenge to enforcement of an arbitration requirement must be to determine whether a valid agreement exists. Determining whether plaintiff is contractually bound is the predicate to the question whether the specific contractual language requires arbitration of her FLA and LAD claims.
A.
We address the question whether plaintiff has entered into a binding agreement to arbitrate disputes with her employer against the backdrop that arbitration agreements may not be subjected to more burdensome contract formation requirements than that required for any other contractual topic. Pursuant to its substantive power to regulate interstate commerce, Congress en
In enacting section 2 of the FAA, “Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.” Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 858,
The New Jersey Legislature codified its endorsement of arbitration agreements in N.J.S.A. 2A:24-1 to -11. Moreover, New Jersey courts also have favored arbitration as a means of resolving disputes. See, e.g., Garfinkel v. Morristown Obstetrics
B.
Although it is firmly established that the FAA preempts state laws that invalidate arbitration agreements, the FAA specifically permits states to regulate contracts, including contracts containing arbitration agreements under general contract principles; therefore, an arbitration clause may be invalidated “upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. See generally, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924,
C.
Thus, the threshold issue is whether under state law the arbitration agreement constitutes a valid contract to arbitrate. Plaintiff contends that because the Application for Employment does not constitute an employment contract the arbitrаtion provision contained therein is unenforceable. We disagree.
The parties do not dispute that they executed a written agreement to arbitrate all claims against defendant. That agreement is complete in and of itself and need not be part of a larger employment contract. Courts in many other jurisdictions have held that an arbitration provision, contained in an application for employment and in the absence of a separate employment agreement, constituted a valid and enforceable contract. See generally,
Basic contract principles render a promise enforceable against the promisor if the promisee gave some consideration for the promise. We have explained the well-established rule of consideration аs follows:
The essential requirement of consideration is a bargained-for exchange of promises or performance that may consist of an act, a forbearance, or the creation, modification, or destruction of a legal relation. See Restatement (Second) of Contracts § 71 (1981). If the consideration requirement is met, there is no additional requirement of gain or benefit to the promisor, loss or detriment to the promisee, equivalence in the values exchanged, or mutuality of obligation. Restatement (Second) of Contracts § 79 (1979).
[Shebar v. Sanyo Bus. Sys. Corp., 111 N.J. 276, 289,544 A.2d 377 (1988).]
Put another way, “[a] very slight advantage to one party, or a trifling inconvenience to the other, is a sufficient consideration to
In all jurisdictions that have considered the question, courts have held that the creation of an employment relationship, which is achieved when the employer agrees to consider and/or agrees to hire the applicant fоr employment, is sufficient consideration to uphold an arbitration agreement contained in an employment application. See generally, Johnson v. Circuit City Stores,
Similarly, in New Jersey, continued employment has been found to constitute sufficient consideration to support certain employment-related agreements. See, e.g., Quigley v. KPMG Peat Marwick, LLP, 330 N.J.Super. 252, 265,
The arbitration agreement contained in the Application for Employment signed by plaintiff was supported by consideration in the form of defendant’s willingness to consider employment of plaintiff. The agreement provided that plaintiff would agree to waive her right to a jury trial and submit all disputes relating to her employment, including termination, to arbitration “as a condition of employment” with defendant. Although defendant was under no obligation to actually hire plaintiff, defendant’s consideration of plaintiff’s application, its extension of an offer and the commencement of employment, and thereafter the provision of compensation and on-going employment constituted sufficient consideration to support the parties’ agreement to arbitrate their disputes. That agreement is binding, as would be any other contractual term not contrary to public policy contained in a signed employment application that led, as here, to employment.
D.
Plaintiff contends in the alternative that the agreement to arbitrate her statutory claims against her employer constituted a contract of adhesion and that therefore it is not enforceable. A contract of adhesion, simply put, is a contract “presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity of the ‘adhering’ party to negotiate except perhaps оn a few particulars.” Rudbart v. North Jersey Dist. Water Supply Comm’n., 127 N.J. 344, 353,
Even if the Application for Employment in this case, including the arbitration provision, was found to constitute a contract of adhesion, that does not render the contract automatically void. The observation that a contract falls within the definition of a contract of adhesion is not dispositive of the issue of enforceability. Rudbart, supra, 127 N.J. at 354,
The United States Supreme Court in Gilmer declared that “[mjere inequality in bargaining power ... is not a sufficient reason to hold that arbitration agreements are never enforceable in the employment context.” Gilmer, supra, 500 U.S. at 33, 111 S.Ct. at 1655, 114 L.Ed.2d at 41. As the Appellate Division explained in Young v. Prudential Insurance Company of America, Incorporated, 297 N.J.Super. 605,
Turning to the arbitration agreement contained in plaintiffs Application for Employment, we do not find determinative the fact that plaintiff was required to sign an employment application containing an arbitration agreement in order to be considered for employment. The employment application was not offered on a take-it-or-leave-it basis. Defendant gave plaintiff an opportunity to ask questions about the application and to take it with her for further quiet review or, perhaps, consultation with family, friends, or a professional such as an attorney. Plaintiff herself was an educated person who was experienced in the field of human resources. Nothing in the record indicates that plaintiff asked to alter any terms of the application or that Sandvik would have refused to consider her for the position if she did not assent to the arbitration provision as presented. Accordingly, we are not persuaded that plaintiff was forced to sign an inflexible contract of adhesion in the circumstances of her completion of the Appliсation for Employment.
Nonetheless, even if the arbitration agreement could be so characterized, the agreement’s subject matter and the public interests affected lead to the conclusion that it should not be invalidated. Plaintiff has failed to demonstrate how the terms of the arbitration agreement were oppressive or unconscionable. As
We perceive no meaningful difference between including a requirement that an employee arbitrate all disputes relating to employment in an application for employment versus an employment contraсt or an employee handbook. The inclusion of an arbitration provision in an application for employment does not render the agreement any more a contract of adhesion than when it appears in an employment agreement or employee handbook. Indeed, by inserting an arbitration agreement in an application for employment, the prospective employee is put on notice before accepting an offer of employment that his or her claims against that employer will be submitted to an arbitral forum. In conclusion, we hold that the Application for Employment and, specifically, its accompanying arbitration agreement should not be invalidated as a contract of adhesion. The agreement is not rendered unenforceable by the circumstances surrounding the manner in which the contract was formed.
III.
Having found that a valid agreement to arbitrate exists, the scope of the agreement must next be determined. In thе interpretation of an agreement to arbitrate, the duty to arbitrate rests solely on the parties’ intentions as set forth in the writing. Cohen v. Allstate Ins. Co., 231 N.J.Super. 97, 101,
Preliminarily, it is well established that an employee may be bound by an agreement to waive his or her right to pursue a statutory claim in a judicial forum in favor of arbitration.
Here, having agreed to arbitrate, the parties should be bound to that agreement unless either the Legislature has evinced an intention to preclude a waiver of judicial remedies, or the statutory claim cannot be vindicated in an arbitral forum. Mitsubishi Motors, supra, 473 U.S. at 628, 105 S.Ct. at 3354-55,
Similarly, the FLA contains no legislative mandate that such claims be pursued solely in a judicial forum. Like the LAD, the FLA allows aggrieved persons to pursue their claims in an admin
B.
Concerning the scope of the arbitration agreement, the remaining question is whether by signing the application for employment plaintiff agreed to submit her statutory FLA and LAD claims to arbitration. Plaintiff contends that even if the agreement to arbitrate constitutes a valid and legal contract, the language in the agreement was too vague and ambiguous to convey that plaintiff intended to waive her right to a jury trial on statutory claims concerning her employment. She makes the argument notwithstanding that the arbitration agreement stated that she “agree[d] to waive [her] statutory right to a jury trial in any action or proceeding relating to [her] employment with Sandvik.”
In determining whether the arbitration agreement contained in the employment contract was sufficiently clear to constitute a waiver of the plaintiffs statutory causes of action, the Garfinkel Court cited approvingly to Alamo, supra. In Alamo, the Appellate Division considered the enforceability of an arbitration provision contained in an employee handbook that stated that claims that “ Alamo has violated this [employee handbook] ... shall be submitted to ... arbitration.’ ” 306 N.J.Super. at 387,
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 plaintiffs statutory causes of action. The arbitration agreement provides that plaintiff agreed to waive her right to a jury trial “in any action or proceeding relating to my employment with Sandvik” and that “all disputes relating to my employment with Sandvik or termination thereof’ shall be subject to аrbitration. Unlike the arbitration provisions contained in Garfinkel and Alamo, the arbitration provision here does not contain any limiting references. Its wording provided plaintiff with sufficient notice at the time she signed the agreement that all claims relating to employment with and termination from Sandvik would be resolved through arbitration. It also 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 arbitration. Thus, even though Garfinkel was decided after the parties executed the agreement to arbitrate in this matter and therefore does not control, the wording chosen here satisfied the spirit of that decision. Compelling arbitration under these circumstances is fair and equitable.
Finally, plaintiff claims that she did not knowingly and voluntarily waive her right to pursue her statutory claims in a judicial forum. Although plaintiffs level of sophistication is not central to our inquiry, see Garfinkel, supra, 168 N.J. at 136, 773
IV.
The judgment of the Appellate Division is affirmed in all respects.
Dissenting Opinion
dissenting.
The issue in this appеal is whether an employee should be bound by a mandatory arbitration agreement contained in an application form that she signed when she initially applied for a job with her employer. The majority has concluded that the arbitration agreement is enforceable. In my view, because of the vast disparity in bargaining power between an employer and a job applicant, a waiver of the right to jury trial and consent to arbitration contained in a job application form should be unenforceable as a matter of public policy.
I
When plaintiff Maureen Martindale applied for a job with defendant Sandvik, Inc. in 1994, she was required to complete and
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 SANDVIK.
I UNDERSTAND THAT I AM WAIVING MY RIGHT TO A JURY TRIAL VOLUNTARILY AND KNOWINGLY, AND FREE FROM DURESS OR COERCION.
I UNDERSTAND THAT I -HAVE A RIGHT TO CONSULT WITH A PERSON OF MY CHOOSING, INCLUDING AN ATTORNEY, BEFORE SIGNING THIS DOCUMENT.
I AGREE THAT ALL DISPUTES RELATING TO MY EMPLOYMENT WITH SANDVIK OR TERMINATION THEREOF SHALL BE DECIDED BY AN ARBITRATOR THROUGH THE LABOR RELATIONS SECTION OF THE AMERICAN ARBITRATION ASSOCIATION.
As written, the agreement does not appear to require defendant to arbitrate any dispute that arises with an employee. Although plaintiff does not dispute that she was given an opportunity to ask questions about the application and to take it home for further review if she so desired, she recalls being told that she was required to sign page four of the application, which included the arbitration agreement.
Plaintiff subsequently was hired by defendant and worked as a Benefits Administrator until she went on disability leave because of complications with a pregnancy. Although plaintiff was granted a family and medical leave of absence after giving birth, she was informed before her leave commenced that her position was being eliminated as a result of a change in the organization of defendant’s holding company. Plaintiff received her last disability payment in November 1996.
Subsequent to her termination, plaintiff filed claims under the New Jersey Family Leave Act, N.J.S.A 34:11B-1 to -16, and the New Jersey Law Against Discrimination, N.J.S.A 10:5-1 to -49. Defendant moved to stay the proceedings and to compel arbitration based on the arbitration agreement in the Application for Employment plaintiff signed prior tо being hired. The trial court granted the motions and dismissed plaintiffs complaint without prejudice, but the court granted a stay pending appeal. The
II
A
Our courts have been steadfast in declining to enforce contracts that violate the public policy of our State.
In Kuzmiak v. Brookchester, Inc., 33 N.J.Super. 575, 588,
The Landlord shall in no event and under no circumstances be or become liable for any loss or damage which may occur to the tenant, his family, servants or guests or the property of either or any of them, however such damage or loss may arise and whether such property be contained in the demised premises, in the storage room, or in any other portion of said building or any place appurtenant thereto.
[Id. at 579,111 A.2d 425 .]
The tеnant sued the landlord based on personal injuries she sustained when she fell down the apartment’s stairway, alleging that her fall resulted from the stairway’s negligent construction. The trial court granted summary judgment for the defendant based on the exculpatory provision. The Appellate Division reversed, acknowledging its authority to invalidate exculpatory provisions in landlord and tenant contracts on public policy grounds. Id. at 585,
In Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 386,
The conflicting interests of the buyer and seller must be evaluated realistically and justly, giving due weight to the social policy evinced by the Uniform Sales Act, the progressive decisions of the courts engaged in administering it ____[and] the bargaining position occupied by the ordinary consumer in such an economy. The history of the law shows that legal doctrines, as first expounded, often prove to be inadequate under the impact of later experience. In such case, the need for justice has stimulated the necessary qualifications or adjustments.
[Ibid, (citations omitted).]
Although we acknowledged the argument that the buyer had accepted the exclusion of liability for personal injuries in return for the replacement of defective parts, we determined that “[a]n instinctively felt sense of justice cries out against such a sharp bargain.” Id. at 388,
In Vasquez v. Glassboro Service Ass’n, Inc., 83 N.J. 86, 104-05,
The unconscionability of thе contract inheres not only in its failure to provide a worker with a reasonable opportunity to find alternative housing, but in its disregard for his welfare after termination of his employment. The inherent inequity of the contract arouses a sense of injustice and invokes the equitable powers of the courts.
[Id. at 104,415 A.2d 1156 .]
We also have addressed whether unconscionable provisions in contracts should be invalidated based on public policy concerns in several other contexts. See Ellsworth Dobbs, Inc. v. Johnson, 50 N.J. 528, 555,
B
The majority notes that many of the courts that “have considered the adhesive effect of arbitration provisions in employment applications or employment agreements ha[ve] upheld the arbitration provision contained therein despite potentially unequal bargaining power between employer and employee.” Ante at 90,
The Ninth Circuit invalidated a mandatory arbitration agreеment contained in an employment application in Circuit City Stores, Inc. v. Adams, 279 F.3d 889 (9th Cir.2002), cert. denied, — U.S.-, 122 S.Ct. 2329, 153 L.Ed.2d 160 (2002). The plaintiff signed the agreement when applying for a job as a sales clerk with Circuit City. The court determined that the arbitration agreement was unconscionable because it was a contract of adhesion:
Circuit City, which possesses considerably more bargaining power than nearly all of its employees or applicants, drafted the contract and uses it as its standard arbitration agreement for all of its new employees. The agreement is a prerequisite to employment, and job applicants are not permitted to modify the agreement’s terms they must take the contract or leave it.
[Id. at 893.]
The court also noted that the agreement, which required only the employees but not Circuit City to arbitrate their claims, lacked the “ ‘modicum of bilaterality’ ” required for contracts to be enforce
In Cooper v. MRM Investment Co.,
[t]his agreement is a form contract, drafted by KFC’s attorneys, offered to Plaintiff on a ‘‘take it or leave it” basis. Plaintiff had no choice. She either had to accept the job based on the terms outlined in the KFC Arbitration Agreement, or she had to find another job Especially in today’s economy, the choice to “leave it” often amounts to no choice at all. Indeed, if she “leaves it,” she probably forgoes the opportunity for employment.
[Cooper, supra,199 F.Supp.2d at 778 .]
The court further recognized that “[t]he pressure facing a prospective employee coupled with the uniform incongruity in bargaining positions between the employer and employee” distinguished the situation from other contexts in which arbitration agreements had been upheld. Ibid. Moreover, the court noted that the defendant employer “imposed [the agreement] on a
The agreements in Cooper and in the matter before us both provide that the American Arbitration Association’s (AAA) labor arbitration rules would govern any proceeding that arose because of a dispute between employer and employee. Although neither agreement specifically refers to the parties’ respective responsibilities for fees and costs, the court in Cooper pointed out that the AAA’s labor arbitration rules require the parties to pay certain fees and costs. Cooper, supra, 199 F.Supp.2d at 781. Each party must pay a $100 initial administrative fee. AAA Labor Arbitration Rule 43. Moreover, unless they agree otherwise, both parties are responsible for the arbitrator’s compensation. Ibid. As acknowledged by the court in Cooper, “[Requiring a party to pay fees and costs, over and above what that party would have to pay in a court, may deprive that party of the right to vindicate his or her rights.” Cooper, supra,
C
In enacting the Federal Arbitration Act (FAA), “Congress declared a national policy favoring arbitration” for dispute resolution and “withdrew the power of the states to require a judicial
Ill
The narrow question for the Court is whether we should allow employers to extract concessions in a job application form, such as a waiver of the right to a jury trial, from prospective employees. Contrary to the majority’s conclusion, I would hold that the standardized arbitration agreement that job applicants were required to sign as a prerequisite to consideration for employment with defendant is unenforceable as a matter of public policy.
Based on plaintiffs education and experience in human resources, as well as the fact that plaintiff was given an opportunity to review and ask questions about the application, the majority concludes that the application was not offered on a take-it-or-leave-it basis. Ante at 91,
On prior occasions we have determined that public policy demands invalidation of agreements resulting from inequitable bargaining positions. See Vasquez, supra, 83 N.J. at 104,
In concluding that the insertion of a mandatory arbitration agreement in an application for employment does not violate our state’s public policy, the majority asserts that we previously have held that national and state policies favor arbitration. Ante at 91-92,
IV
In my view, public policy requires this Court to invalidate a mandatory arbitration agreement, or any analogous agreement of consequence, that a prospective employee is forced to sign as a condition of being considered for a job. “Grossly unfair contractual obligations resulting from the use of such expertise or control by the one possessing it, which result in assumption by the other contracting party of a burden which is at odds with the common understanding of the ordinary and untrained member of the public, are considered unconscionable and therefore unenforceable.” Ellsworth Dobbs, supra, 50 N.J. at 554,
Justice LONG and Justice ZAZZALI join in this opinion.
For reversal — Justices STEIN, LONG and ZAZZALI — 3.
