SERGIO RODRIGUEZ, Plаintiff-Appellant, v. RAYMOURS FURNITURE COMPANY, INC., a corporation, t/a RAYMOUR & FLANIGAN, Defendant-Respondent.
DOCKET NO. A-4329-12T3
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
June 19, 2014
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION. APPROVED FOR PUBLICATION June 19, 2014 APPELLATE DIVISION.
Before Judges Messano, Rothstadt and Lisa.
On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1922-11.
Alan L. Krumholz argued the cause for appellant (Krumholz Dillon, P.A., attorneys; Mr. Krumholz, on the briefs).
Edward T. Groh argued the cause for respondent.
The opinion of the court was delivered by
LISA, J.A.D. (retired and temporarily assigned on recall).
The primary issue in this appeal is whether a contractual provision, contained in an employment application, by which the employee waives the two-year statute of limitations applicable to claims against the employer and shortens the period for such
Because plaintiff filed his complaint nine months after his alleged wrongful termination by defendant, the court granted defendant‘s summary judgment motion and dismissed the complaint as time-barred. On appeal, plaintiff makes the same arguments before us as he made in the trial court. We agree with the trial court‘s analysis and conclusions, and we affirm.
I.
In August 2007, plaintiff approached defendant, a retail furniture company, seeking employment. The customer delivery
Plaintiff completed the application form at home with the assistance of a close friend who was fluent in English and who translated the application from English to Spanish. According to plaintiff, his friend translated “[o]nly the places where I had to fill out.” Plaintiff acknowledged that as his friend was assisting him he had no questions about the application. The next day, plaintiff returned the completed and signed form to defendant, handing it to thе same person from whom he had received it. Plaintiff acknowledged that when he returned the form he did not have any questions about it.
The application form is two pages in length. Toward the bottom of the second page, immediately above the signature line, there is an “Applicant‘s Statement” in the following form:
Applicant‘s Statement - READ CAREFULLY BEFORE SIGNING - IF YOU ARE HIRED, THE FOLLOWING BECOMES PART OF YOUR OFFICIAL EMPLOYMENT RECORD AND PERSONNEL FILE.
I understand this employment application is not a promise of an offer of employment. I further understand that should I receive and accept an offer of employment, my employment does not constitute any form of contract, implied or expressed, and such employment will be terminable at will either by myself or Raymour & Flanigan upon notice of one party to the other. My continued employment would be dependent on satisfactory performance and continued need for my services as determined by Raymour & Flanigan.
I authorize investigation of all statements contained in this application. I understand that misrepresentation or omission of facts called for are grounds for a refusal to offer employment or a cause of dismissal if hired.
I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH RAYMOUR & FLANIGAN MUST BE FILED NO MORE THAN SIX (6) MONTHS AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF THE CLAIM OR LAWSUIT. I WAIVE ANY STATUTE OF LIMITATIONS TO THE CONTRARY.
I WAIVE TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF, OR RELATING TO, MY EMPLOYMENT WITH RAYMOUR & FLANIGAN, INCLUDING CLAIMS OF WRONGFUL OR RETALIATORY DISCIPLINE OR DISCHARGE; CLAIMS OF AGE, SEXUAL, SEXUAL ORIENTATION, RELIGIOUS, PREGNANCY OR RACIAL DISCRIMINATION; CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT, TITLE IX, AMERICANS WITH DISABILITIES ACT, AGE DISCRIMINATION IN EMPLOYMENT ACT, EMPLOYEE RETIREMENT INCOME SECURITY ACT,
FAIR LABOR STANDARDS ACT, AND ALL OTHER APPLICABLE NON-DISCRIMINATION, EMPLOYMENT OR WAGE AND HOUR STATUTES.
Plaintiff affixed his signature and inserted the date immediately below this statement. As depicted above, the prefatory language is in bold-faced large print, and the final two paragraphs, containing the shortened limitation period and jury trial waiver, are completely capitalized.
About one week after submitting the application, a representative of defendant contacted plaintiff and asked him to submit to a drug screen. Plaintiff successfully completed it and was hired as a helper2 in mid-September 2007. The two-page application form was the only document plaintiff completed in connection with his hiring.
In 2010, defendant promoted plaintiff to the position of driver,3 in which he would be the leader of a team making furniture deliveries. Plaintiff acknowledged in his deposition that in the new position he would be responsible for the team‘s performance, he would be required to read the delivery manifests, which were written in English, and he would need to cоmmunicate with customers primarily in English.
On April 5, 2010, while delivering furniture to a customer‘s home, plaintiff injured his knee. He was diagnosed with a torn meniscus, necessitating a temporary absence from work. The injury was surgically repaired on July 21, 2010. Plaintiff was permitted to return to light-duty work on September 14, 2010, and then to unrestricted work on September 28, 2010.
Three days later, on October 1, 2010, defendant instituted a company-wide reduction in force (RIF), laying off a total of 102 workers, including plaintiff. According to defendant, plaintiff was selected for the RIF because of sub-standard job performance. According to plaintiff, in the complaint he filed on July 5, 2011, he was terminated in retaliation for having filed a workers’ compensation claim and was discriminated against based upon disability, in violation of the Law Against Discrimination (LAD),
In ruling on the motion, the court concluded that the waiver provision in the initial application “is clear” and “is clearly brought to the attention of anybody reading the document because of the capital letters and large print.” Citing Mirra v. Holland America Line, 331 N.J. Super. 86 (App. Div. 2000), the court stated that parties can validly enter into agreements to limit the time within which lawsuits can be brought “provided that it‘s a reasonable limitation, [and] does not violate public policy.” The court found no basis for a finding “that six months is against any public policy or is an unreasonable time within which to bring a claim about which one would know immediately upon the event happening.”
The court also rejected plaintiff‘s novation argument regаrding the driver‘s application. Citing Sixteenth Ward Building and Loan Association v. Reliable Loan, 125 N.J. Eq. 340 (E. & A. 1939), the court noted the well-settled principle that a novation is never presumed. The court then concluded that there was nothing in either of the agreements and no evidence in
Accordingly, summary judgment was entered dismissing plaintiff‘s complaint. This appeal followed.
II.
A.
The standard of review by which we must analyze the issues before us is well-settled. Trial courts must grant summary judgment “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no gеnuine issue as to any material fact challenged and that the moving party is entitled to a judgment . . . as a matter of law.”
B.
Plaintiff contends that the shortened limitation period in the initial application is unconscionable and therefore unenforceable. Generally, “[a] contract is unenforceable if its terms are manifestly unfair or oppressive and are dictated by a dominant party.” Howard v. Diolosa, 241 N.J. Super. 222, 230 (App. Div.) (citing Kuzmiac v. Brookchester, 33 N.J. Super. 575 (App. Div. 1955)), certif. denied, 122 N.J. 414 (1990). A party raising a claim of unconscionability has the burden of showing “some over-reaching or imposition resulting from a bargaining disparity between the parties, or such patent unfairness in the terms of the contract that no reasonable [person] not acting
Unconscionability analysis requires consideration of two factors - procedural unconscionability and substantive unconscionability. The former arises out of defects in the process by which the contract was formed, and “‘can include a variety of inadequacies, such as age, literacy, lack of sophistication, hidden or unduly complex contract terms, bargaining tactics, and the particular setting existing during the contract formation process.‘” Muhammad v. Cnty. Bank of Rehoboth Beach, 189 N.J. 1, 15 (2006) (quoting Sitogum Holdings, Inc. v. Ropes, 352 N.J. Super. 555, 564-66 (Ch. Div. 2002)), cert. denied, 549 U.S. 1338, 127 S. Ct. 2032, 167 L. Ed. 2d 763 (2007). The latter “generally involves harsh or unfair one-sided terms.” Ibid. Stated differently, substantive unconscionability “simply suggests the exchange of obligations so one-sided as to shock
Generally, a “sliding scale” analysis is utilized in tandem, considering the respective degrees of procedural and substantive unconscionability found to exist. Muhammad, supra, 189 N.J. at 16 n.3 (citing Sitogum Holdings, supra, 352 N.J. Super. at 565-66). Under this approach, overall unconscionability may be found if there is a gross level in one category but only a lesser level in the other. Sitogum Holdings, supra, 352 N.J. Super. at 565-66.
In support of his unconscionability argument, plaintiff first relies on the contention that the six-month limitation period is embodied in a contract of adhesion. Although he can point to no specific record evidence to support that this was a take-it-or-leave-it form contract in which he had no ability to negotiate any terms, plaintiff argues that it is obvious that prospective employees for low-level jobs such as a furniture delivery helper were indeed in that position.
Defendant argues that because plaintiff never asked any questions about the application or attempted to negotiate the disputed term (or any terms) he has failed to establish that the terms were non-negotiable. Defendant relies on a case in which a highly educated individual, experienced in the field of human
We find defendant‘s argument unpersuasive. The case before us is more akin to the circumstances in Muhammad, supra, 189 N.J. at 18-19, in which the court recognized that “the gross disparity in the relative bargaining positions of the parties [was] self-evident from the nature of the payday loan contract between a consumer and a financial entity.” This led the court to conclude that the agreement was “clearly a contract of adhesion.” Id. at 18. The circumstances in this case likewise reflect a self-evident non-negotiable employment application form. We accordingly deem this a contract of adhesion.
Plaintiff next argues that because the courts of this State have determined that the appropriate statute of limitations for LAD claims and for common law claims of retaliatory discharge for filing a workers’ compensation claim is two years, see Montells v. Haynes, 133 N.J. 282, 286 (1993); Labree v. Mobile Oil Corp., 300 N.J. Super. 234, 242 (App. Div. 1997), the two year limitation period provided by
it is well established that, in the absence of a controlling statute to the contrary, a provision in a contract may validly limit, between the parties, the time for bringing an action on such a contract to a period less than that prescribed in the general statute of limitations, provided that the
shorter period itself shall be a reasonable period.
New Jersey courts have followed this principle. See, e.g., Eagle Fire Prot. Corp. v. First Indem. of Am. Ins. Co., 145 N.J. 345, 354-63 (1996) (upholding a one-year limitation period in a surety bond, which modified the six-year limitation period provided by statute); Mirra, supra, 331 N.J. Super. at 90 (rejecting the plaintiff‘s argument that the parties could not contract for a limited filing period under the New Jersey Consumer Fraud Act (CFA),
Plaintiff refines his argument on this point, urging us to judicially impose a prohibition on agreements shortening limitation periods specifically in employment contracts. He points to various legislative enactments in New Jersey, such as the LAD, the Conscientious Employee Protection Act (CEPA),
This argument asks us to intrude upon the prerogative of the Legislature. None of these enactments impose a ban on contractually reducing a limitation period. The Legislature is presumably aware of the long-established case law allowing contractual reductions that are reasonable and not contrary to public policy, where not statutorily prohibited. Yet, it has not acted.
Our role is to determine whether, considering the factual circumstances in a particular case, the shortened limitation period is reasonable and does not contravene public policy. Indeed, our Legislature has set different limitation periods for different employеe actions. See, e.g., the one-year statute of limitations for CEPA claims,
These limitation periods are traditionally legislative determinations. The judicial role involves such functions as interpretation of which statutory limitation provision applies in cases of ambiguity, the development and apрlication of principles and doctrines to avoid injustices, such as equitable tolling, the discovery rule, estoppel, and the continuing violation doctrine, as well as a determination of whether any contractual modification is reasonable and not contrary to public policy.
We therefore decline plaintiff‘s invitation to impose a judicial ban on the shortening of limitation periods for claims by workers against their employers. Plaintiff‘s arguments in this regard are better directed to the Legislature, which could
Plaintiff further argues that because the statutory right being waived eliminates any forum in which to seek a remedy if the contractual limitation period is missed, this case is materially distinguishable from those allowing waivers of jury trials and requiring arbitration proceedings in lieu of actions in the courts. In the latter circumstances, рlaintiff argues, although a worker is limited as to the forum, he or she is nevertheless left with a forum in which a fair adjudication can be made.
This argument presupposes that an individual signing an agreement is not aware of what is in it and therefore would not know when his or her filing deadline would occur. We reject this premise. An individual who signs an agreement is assumed to have read it and understood its legal effect. Rudbart, supra,
Plaintiff also contends that allowing a six-month limitation period for a LAD lawsuit would tend to have an adverse impact on the alternate route legislatively allowed in the LAD by
Plaintiff argues that an individual who files a discrimination complaint with the DCR within the 180 day statutory limitation periоd might be lulled into thinking there is no hurry to see how the investigation and discussions in that
We reject this argument. Again, it assumes that a claimant is aware of the two-year statutory limitation period, but is not aware of the shortened period to which he or she contractually agreed. The parties are charged with knowledge of the law and with knowledge of contracts into which they have entered. Further, we do not see how the statutory scheme allowing the election of remedies would be impaired. It is the claimant‘s choice whether to pursue either the more streamlined and less expensive administrative route, or a civil lawsuit.
Plaintiff also contends that language in the “Applicant‘s Statement,” which states that, if employed, plaintiff‘s “employment does not constitute any form of contract, implied or expressed,” either creates a fatal ambiguity in the contract or should serve to estop defendant from attempting to enforce the provision limiting the time within which a claim must be filed. According to plaintiff, defendant cannot assert a contractual right with respect to the shоrtened limitation provision while
We find this argument unpersuasive. The text creates no ambiguity. It is clear from the full text of the sentence in which the “does not constitute any form of contract” language appears that the language pertains only to the fact that, if hired, plaintiff‘s “employment will be terminable at will either by [him] or [defendant] upon notice of one party to the other.” These are two distinct terms, each dealing with a different subject. One defines the applicant‘s at-will status if hired. The other addresses the time frame within which the applicant, if hired, must initiate claims or lawsuits against his employer.
We now address the relevant unconscionability factors. Contracts of adhesion “invariably evidence some characteristics of procedural unconscionability,” and therefore “require[] a careful fact-sensitive examination into substantive unconscionability.” Muhammad, supra, 189 N.J. at 16. In Muhammad, the Court further noted that where a contract of adhesion involves “overwhelming” procedural unconscionability, those procedural factors must be analyzed further in a “sliding scale” analysis along with the degree of any substantive unconscionability. Id. at 16 n.3.
In the context of arbitration provisions in employment contracts, the United States Supreme Court has held that “[m]ere inequality in bargaining power . . . is not a sufficient reason to hоld that [such] agreements are never enforceable in the employment context.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33, 111 S. Ct. 1647, 1655, 114 L. Ed. 2d 26, 41 (1991). Referring to Gilmer, we have held that “the Supreme Court obviously contemplated avoidance of the arbitration clause only upon circumstances substantially more egregious than the ordinary economic pressure faced by every employee who needs the job.” Young v. Prudential Ins. Co. of Am., Inc., 297 N.J. Super. 605, 621 (App. Div. 1997). And, our Supreme Court has observed:
Virtually every court that has considered the adhesive effect of arbitration provisions in employment applications or employment agreements has upheld the arbitration provision contained therein despite potentially unequal bargaining power between employer and employee. See gеnerally, Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 17 (1st Cir. 1999) (holding that absent showing of fraud or oppressive conduct, arbitration of plaintiff‘s age and gender discrimination claims pursuant to arbitration provision contained in Form U-4 was permissible); Seus v. John Nuveen & Co., 146 F.3d 175, 184 (3d Cir. 1998), cert. denied, 525 U.S. 1139, 119 S. Ct. 1028, 143 L. Ed. 2d 38 (1999) (rejecting argument that disparity in bargaining power resulted in contract of adhesion); Koveleskie [v. SBC Capital Mkts., Inc., 167 F.3d 361, 367 (7th Cir. 1999)] (upholding employee‘s agreement to arbitrate Title VII claim, noting that state law does not void contracts based on unequal bargaining power or contracts made on “take-it-or-leave-it” basis); Nur v. KFC, USA, Inc., 142 F. Supp. 2d 48, 51-52 (D.D.C. 2001) (rejecting argument that arbitration agreement contained in employment application of restaurant‘s assistant manager was unenforceable contract of adhesion, where agreеment was not unduly burdensome, did not favor one party over other, and provided that American Arbitration Association and [Federal Arbitration Act] rules apply to arbitration proceeding).
Overall, the level of procedural unconscionability attendant to the formation of this contract was minimal. Therefore, the focus must be on whether the agreement is
As we have pointed out, in the absence of a statute to the contrary, parties are free to contractually limit the time within which an action may be brought, as long as the contractual time is reasonable and does not violate public policy. Although no New Jersey court has addressed this issue in the employment context in a published opinion, courts that have considered the issue have given widespread approval to shortened periods comparable to the one in this case. Indeed, the New York intermediate appellate court has approved the very same waiver provision that is involved in this case, which was contained in defendant‘s employment application completed by an employee in New York. Hunt v. Raymour & Flanigan, 963 N.Y.S.2d 722, 723-24 (App. Div. 2013).
Therefore, for federal claims which are subject to initial filing with the EEOC, courts have held that a six-month contractual limitation period to file suit is unenforceable because it would have the effect of abrogating a claimant‘s ability to bring a claim and would therefore be contrary to the public policy established for federal claims subject to EEOC jurisdiction. Ibid.; see also Salisbury v. Art Van Furniture, 938 F. Supp. 435, 437-38 (W.D. Mich. 1996) (“With respect to the [Americans with Disabilities Act, (ADA)] claim, the contractual limitation certainly effected a ‘practical abrogation’ of the right to file an ADA claim and is, therefore unreasonable[.]“); Scott v. Guardsmark Sec., 874 F. Supp. 117, 121 (D.S.C. 1995) (rejecting a six-month contractual limitation period in an ADA case becаuse it was “abhorrent to public policy,” “required an employee to waive his or her federal protections,” and “reduce[d] the time limits to assert a federal cause of action“).
However, where administrative exhaustion requirements are not present, as in the case before us, courts have upheld six-month contractual provisions in employment contracts, deeming them reasonable. See, e.g., Thurman v. DaimlerChrysler, Inc., 397 F.3d 352, 358-59 (6th Cir. 2004) (affirming dismissal of the plaintiff‘s state law claims and
We agree with the reasoning and conclusions reached in these opinions. Plaintiff has cited no published opinion to the contrary. As we have pointed out, six months is the statutory time frame for filing an administrative claim for a LAD violation. Such a filing represents a choice of remedies under New Jersey‘s scheme. Because the Legislature has set six months for this alternative route, we are hard pressed to judicially declare that six months is an unreasonable, conscience-shocking time period in which a claimant must choose the other available route, a civil lawsuit. And, following the distinction we have
Applying the four Rudbart factors, we conclude, as to the first, that the subject matter of the contract in dispute, the shortened limitation period, is a valid and legitimate subject to be included in an employment contract, and has been judicially recognized as such. As to the second factor, although defendant was in a superior bargaining position, it did not hold a monopoly on jobs of the type for which plaintiff was applying. Plaintiff was under no compulsion to pursue the application if he was dissatisfied with any of the terms of employment, including the shortened limitation period. Rudbart, supra, 127 N.J. at 356-57. This analysis also applies to the third factor, the degree of economic compulsion motivating plaintiff. As we have pointed out, anyone who needs a job is under some level of economic compulsion, but plaintiff has presented no evidence to suggest that his circumstances were any
As to the fourth factor, the public interests affected by the contract, for the reasons we have stated, we find no adverse effect on public policy or public interests. We recognize that New Jersey has a strong public policy, as evidenced by various statutory enactments protecting the rights of workers and prohibiting discrimination in the workplace. That public policy is not harmed by a contractually agreed-upon shortened limitation provision within which a worker can make a claim against his or her employer if that shortened period is reasonable. For the reasons we have discussed, six months is reasonable in the circumstances presented. Accordingly, plaintiff‘s suit against defendant was time-barred by the six month provision.
C.
We summarily reject plaintiff‘s alternative argument that the application he filed for his promotion to driver constituted a novation that overrode and voided the initial application. To constitute a novation, a new contact must exhibit a clear and definite intention on the part of all parties that its purpose is to supersede and eliminate a prior contact. Sixteenth Ward Bldg. & Loan Ass‘n, supra, 125 N.J. Eq. at 342-43. A novation
Applying the Brill standard, the motion record is devoid of any evidence that would support a “clear and definite” showing that the parties intended to extinguish the provisions of the initial application. The initial application was for a new hire, specifying certain terms of employment if hired, including his or her at-will status and the shortened limitation period. The second application was merely a means of obtaining further information from plaintiff relevant to the new position to which he was being promoted, a driver. It sought information about his driving experience and driving reсord. His employment with defendant was uninterrupted by this promotion.
Under these circumstances, the record is sufficiently “one-sided” that a reasonable fact-finder could not find by clear and definite evidence that both parties intended to create a new contract. See Brill, supra, 142 N.J. at 529, 532.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION