New Jersey Appellate Court Provides Loophole For Employees Looking to Avoid Arbitration Agreements

By Kara Miller

In Flanzman, the plaintiff was given an arbitration agreement by her employer that stated the following:

Any and all claims or controversies arising out of or relating to [plaintiff's] employment, the termination thereof, or otherwise arising between [plaintiff] and [defendant] shall, in lieu of a jury or other civil trial, be settled by final and binding arbitration. This agreement to arbitrate includes all claims whether arising in tort or contract and whether arising under statute or common law including, but not limited to, any claim of breach of contract, discrimination or harassment of any kind

The trial court found this language sufficient and compelled arbitration of plaintiffs’ claims.

On appeal, the Appellate Division reversed. Following the progeny of Kleine v. Emeritus at Emerson, 445 N.J. Super. 545, 552-53, 139 A.3d 148 (App. Div. 2016), Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 99 A.3d 306 (2014), Leodori v. Cigna Corp., 175 N.J. 293, 814 A.2d 1098 (2003), and Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 773 A.2d 665 (2001), which all invalidated arbitration agreements, the Appellate Division took issue with the omission of language it considered essential for there to be a “meeting of the minds.”

Here, that essential language was information about the “process for selecting an arbitration forum, such as designating in the contract an arbitral institution itself or otherwise identifying a general method for selecting an arbitration forum.” Without this knowledge, an employee is unable to understand the ramifications of the agreement and would have “no realistic idea about the rights that replaced judicial adjudication because not all arbitration forums, mechanisms, or settings are alike.”

The takeaway – do not assume all arbitration agreements are created equal. This area of law is still developing.

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