Court Opinion

ID: 9953993
Source: CourtListenerOpinion
Date Created: 2024-03-25 14:08:53.373791+00
Date Added: 2024-06-11T08:12:57.919873
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                APPROVAL OF THE APPELLATE DIVISION

                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-1703-22

ESTHER OGUNYEMI,

     Plaintiff-Appellant,
                                          APPROVED FOR PUBLICATION
v.
                                                    March 25, 2024

GARDEN STATE MEDICAL                             APPELLATE DIVISION
CENTER, CENTER FOR SPINE
AND JOINT PAIN RELIEF, and
DHARAM MANN,

     Defendants-Respondents.
_____________________________

           Argued October 11, 2023 – Decided March 25, 2024

           Before Judges Sumners, Rose and Smith (Judge Rose
           concurring).

           On appeal from the Superior Court of New Jersey,
           Law Division, Monmouth County, Docket No.
           L-1263-22.

           Nancy E. Smith argued the cause for appellant (Smith
           Mullin, PC, attorneys; Nancy E. Smith, of counsel and
           on the briefs).

           Joseph M. Vento (Seyfarth Shaw, LLP) argued the
           cause for respondents.

     The opinion of the court was delivered by

SMITH, J.A.D.
      Plaintiff, Dr. Esther Ogunyemi, appeals from a trial court order staying

all claims in her complaint pending arbitration, including her claim that

defendants violated the New Jersey Law Against Discrimination (LAD),

N.J.S.A. 10:5-1 to -50, by terminating her employment in retaliation for

reporting sexual harassment.

      On appeal, plaintiff contends that the arbitration clause in her

employment contract is ambiguous, and that certain other terms in her contract

are unconscionable.      As a result, she argues that the arbitration clause is

unenforceable. She also argues that to the extent the trial court found she

waived her right to bring her claims in a court of law, an amendment to the

LAD, N.J.S.A. 10:5-12.7, (Section 12.7) prohibits that waiver.

      Because we find the arbitration clause in plaintiff's employment contract

ambiguous, we conclude its terms are unenforceable. Having reached this

conclusion, we do not reach the unconscionability or statutory issues raised by

plaintiff. We reverse.

                                        I.

      Plaintiff applied for a job as a pain specialist with defendants in

February 2021. Defendants offered plaintiff a position and gave her a draft

employment contract to review.        After reviewing the draft contract and

suggesting some modifications not related to the issues before us, plaintiff

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                                        2
signed a ten-page employment agreement on March 29, 2021. We highlight

the relevant terms.

       Section 27, "VENUE, ARBITRATION AND ACCEPTANCE OF

SERVICE OF PROCESS," states in pertinent part:

                    Each party to this Agreement hereby agrees and
             consents that any legal action or proceedings with
             respect to this Agreement shall only be brought in the
             courts of the State of New Jersey in Ocean County.
             . . . [E]ach such party hereby (i) accepts the
             jurisdiction of the aforesaid courts . . . Except as set
             forth in Section 11 hereof ["Termination"], any claim,
             controversy or dispute between you and CSJPR [1]
             (including without limitation CSJPR's affiliates,
             shareholders, employees, representatives, or agents)
             arising out of or relating to your employment, the
             cessation of your employment, or any matter relating
             to the foregoing (any "Controversy"), shall be
             submitted to and settled by arbitration before a single
             arbitrator . . . The foregoing requirement to arbitrate
             Controversies applies to all claims or demands by you,
             including without limitation any rights or claims you
             may have under any employment law whatsoever,
             including, but not limited to . . . the New Jersey Law
             Against Discrimination ("LAD") . . . or any other
             federal, state or local laws or regulations pertaining to
             your employment, the termination of your
             employment or this Agreement. YOU UNDERSTAND
             AND AGREE THAT THIS ARBITRATION
             PROVISION WAIVES YOUR RIGHT TO A JURY
             TRIAL FOR ANY AND ALL CLAIMS, INCLUDING
             STATUTORY EMPLOYMENT CLAIMS.

1
    Co-defendant Center for Spine and Joint Pain Relief.

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                                        3
      Section 11, referenced by Section 27, is titled, "TERMINATION," and

states in pertinent part:

                  This Agreement may be terminated upon the
             happening of any of the following events:

                    ....

             (l) [Y]ou are unable to perform the essential functions
             of your position due to physical or mental illness,
             disability, or incapacity, with or without a reasonable
             accommodation it being recognized that your inability
             to perform your essential job functions for any
             prolonged period of time, usually twelve (12) weeks
             or more, will result in an undue hardship to the
             operations of CSJPR; or CSJPR is dissolved, ceases
             operations or files for bankruptcy.

      Plaintiff's first day of work was September 1, 2021. Shortly after she

began, on October 8, plaintiff alleged she was sexually assaulted at the home

of co-defendant, Dr. Dharam Mann, while attending a new doctors welcome

party. Plaintiff confronted Dr. Mann about the assault on October 19, and told

him the incident was causing her distress. CSJPR terminated plaintiff one

month after the incident, on November 9. 2

2
    The reason for plaintiff's termination is not found in the record, but
plaintiff's merits brief states that defendants informed her that her termination
was due to "ceased operations." The record shows discovery has not been
completed, but the particular facts underlying the LAD claim do not affect the
outcome on appeal.

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       On May 9, 2022, plaintiff filed a complaint against defendants alleging

violations of the LAD; sexual assault and battery; and intentional infliction of

emotional distress. Defendants moved to compel arbitration pursuant to the

contract.

       The trial court heard argument in August 2022, and issued an order

granting defendants' motion on January 20, 2023. The court made findings:

there was mutual assent between the parties; having found assent, the contract

was valid and enforceable; the language in the contract's arbitration clause was

clear and unambiguous; and federal arbitration law 3 barred use of Section 12.7

to defeat mandatory arbitration. The trial court then stayed the matter for six

months pending arbitration. Plaintiff appealed.

                                       II.

       We review a trial court's order granting or denying a motion to compel

arbitration de novo because the validity of an arbitration agreement presents a

question of law. Skuse v. Pfizer, Inc., 244 N.J. 30, 46 (2020) (a trial court's

interpretive analysis should not be deferred to unless we find its reasoning

persuasive). We owe no special deference to the trial court's interpretation of

an arbitration provision, which we view "with fresh eyes." Morgan v. Sanford

Brown Inst., 225 N.J. 289, 303 (2016).

3
    Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16.

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      The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, and the New

Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -32, represent a

legislative choice "to keep arbitration agreements on 'equal footing' with other

contracts." Roach v. BM Motoring, LLC, 228 N.J. 163, 174 (2017) (quoting

Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 441 (2014)). Under both

statutes, "arbitration is fundamentally a matter of contract," and should be

regulated according to general contract principles.    Antonucci v. Curvature

Newco, Inc., 470 N.J. Super. 553, 561 (2022) (citing Rent-A-Center, W., Inc.

v. Jackson, 561 U.S. 63, 67 (2010); NAACP of Camden Cnty. E. v. Foulke

Mgmt. Corp., 421 N.J. Super. 404, 424 (App. Div. 2011)).

      "Although 'arbitration [is] a favored method for resolving disputes . . .

[t]hat favored status . . . is not without limits.'"     Gayles v. Sky Zone

Trampoline Park, 468 N.J. Super. 17, 23 (App. Div. 2021) (alterations in

original) (quoting Garfinkel v. Morristown Obstetrics & Gynecology Assocs.,

P.A., 168 N.J. 124, 131-32 (2001)).        An arbitration agreement may be

modified, superseded, or, in certain circumstances, waived. Cole v. Jersey

City Med. Ctr., 215 N.J. 265, 276 (2013) (citing Wein v. Morris, 194 N.J. 364,

376 (2008)).

      "An agreement to arbitrate . . . 'must be the product of mutual assent,'"

and "requires 'a meeting of the minds.'" Antonucci, 470 N.J. Super. at 561

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                                       6
(quoting Atalese, 219 N.J. at 442). "[T]o be enforceable, the terms of an

arbitration agreement must be clear," and the contract needs to explain that the

agreement waives a person's right to have their claim tried in a judicial forum.

Ibid.

        In the employment setting, we require "an express waiver of the right to

seek relief in a court of law," due to the generally unequal relationship

between the contracting parties.      Cnty. of Passaic v. Horizon Healthcare

Servs., Inc., 474 N.J. Super. 498, 503 (App. Div. 2023); see also In re

Remicade Antitrust Litigation, 938 F.3d 515, 525 (3d Cir. 2019). "Employees

should at least know that they have 'agree[d] to arbitrate all statutory claims

arising out of the employment relationship or its termination.'" Atalese, 219

N.J. at 447 (alteration in original) (quoting Garfinkel, 168 N.J. at 135).

                                       III.

                                        A.

        Plaintiff argues that her employment contract was unenforceable because

certain terms were ambiguous and other terms were unconscionable. We first

look to well-settled law to consider her ambiguity argument.

        The Atalese Court held a consumer contract arbitration clause

unenforceable, concluding the term failed to include language "that plaintiff

waived her right to seek relief in court."       219 N.J. at 435.      The Court

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                                        7
considered previous cases where "[o]ur courts have upheld arbitration clauses

phrased in various ways." Id. at 444-45. Each case cited by the Atalese Court

included an express contractual term stating arbitration was the sole remedy.

See, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 81-82 (2002) (enforcing an

arbitration clause stating, "all disputes relating to . . . employment . . . shall be

decided by an arbitrator."). The Court concluded that an effective arbitration

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," and must demonstrate the party's understanding of all

relevant terms. Id. at 447.

      Morgan gives us additional insight into ambiguity within arbitration

clauses. 225 N.J. at 310. In holding an arbitration clause like the one in

Atalese unenforceable, the Court concluded the clause was not "written in

plain language . . . clear and understandable to the average consumer." Ibid.

(quoting Atalese, 219 N.J. at 446). It also cited to the length of the clause, 750

words running on in thirty-five unbroken lines, and stated that "[t]he best that

can be said about the arbitration provision is that it is as difficult to read as

other parts of the enrollment agreement." Ibid.

                                         B.

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                                         8
      Given these core tenets, we examine Section 27 of the employment

agreement. We are mindful that "to the extent there exists any ambiguity in

the arbitration provision, that ambiguity should be construed against [the

drafter]." Medford Twp. Sch. Dist. v. Schneider Elec. Bldgs. Ams., Inc., 459

N.J. Super. 1, 12 (App. Div. 2019) (citing Roach, 228 N.J. at 174).

      An initial scan of Section 27 reveals a series of difficult to decipher and

contradictory sentences contained in a single arbitration clause. The clause

contains 887 words in thirty-six unbroken lines. A closer reading shows that

the run-on paragraph harbors within it mutually inconsistent means for dispute

resolution.

      The first six-and-one-half lines establish jurisdiction for employment

related disputes in our state courts.       It reads, "[e]ach party" consents to

Superior Court jurisdiction for "any legal action or proceedings with respect to

this Agreement . . . ." and commits the parties to accept the jurisdiction of the

courts. (Emphasis added).      The opening lines of Section 27 are clear,

unambiguous, and all-encompassing as they describe employment contract-

related claims between the parties. The use of broad phrases such as "any

legal action" and "proceedings with respect to this Agreement," leave little

room for a narrow definition of this section's scope.       Finally, this part of

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                                        9
Section 27 states that such contract-related claims shall "only be brought in the

State of New Jersey in Ocean County."

      The next six lines of Section 27 inexplicably remove the exclusive

Superior Court jurisdiction just conferred.     This run-on sentence takes a

dramatically different approach to dispute resolution, compelling arbitration

for "any claim, controversy or dispute between you and CSJPR . . . arising out

of or relating to your employment, the cessation of your employment, or any

matter relating to the foregoing . . . ." Notably, this sweeping and mandatory

arbitration language creates an exception—Section 11—identifying eleven

possible causes for plaintiff's termination which are exempt from arbitration.

The causes include but are not limited to:      plaintiff's loss of her medical

licenses, board certifications, or hospital privileges; plaintiff's failure to

comply with defendants' internal policies; and neglect of duty. Our thorough

review of Section 11's language shows that it provides no guidance concerning

how to resolve these exempt disputes. We bear this in mind as we consider the

rest of the arbitration clause.

      The twenty-sixth line of Section 27 reads in part, "the foregoing

requirement to arbitrate Controversies applies to all claims or demands by you,

including without limitation any rights or claims you may have under any

employment law whatsoever, including, but not limited to . . . the [LAD]."

                                                                          A-1703-22
                                       10
This sentence represents the drafter's third separate attempt to establish a

forum for the parties' disputes. Unlike the first two attempts, this arbitration

clause identifies no limitations or exceptions. The language is broad in scope,

like the opening sentence. Rather than limitations on arbitration, this clause

contains inclusive language, and specifically identifies various federal and

state employment discrimination claims for arbitration.

        Finally, Section 27 ends with plaintiff's waiver of her right to a trial on

any dispute concerning her employment. Lines thirty-four through thirty-six

read:    YOU UNDERSTAND AND AGREE THAT THIS ARBITRATION

PROVISION WAIVES YOUR RIGHT TO A JURY TRIAL FOR ANY AND

ALL CLAIMS, INCLUDING STATUTORY EMPLOYMENT CLAIMS.

                                         C.

        Viewing Section 27 through the lens of Atalese and Morgan, we reach

one dispositive conclusion.      Section 27 is not written in plain, clear, and

understandable language.        The confusing and poorly drafted paragraph

proposes no fewer than three distinct avenues for dispute resolution between

the parties. These separate avenues defy any way to credibly reconcile them.

        The first lines of Section 27 call for any legal action or proceedings with

respect to the agreement to be litigated in the Superior Court, Ocean County

vicinage. There are no conditions attached to that term. Next, Section 27 calls

                                                                            A-1703-22
                                         11
for limited arbitration of any claims, controversies, or disputes between the

parties to the employment agreement. The limitation specifically carves out

certain causes for termination which cannot be arbitrated, although the contract

is silent on how disputes concerning these enumerated exceptions would be

resolved. Finally, Section 27 attempts to impose an unconditional arbitration

clause, covering all claims or demands by plaintiff.      None of these three

clauses references the other. Indeed, they appear to be standalone provisions

which, by happenstance, inhabit the same section of the same contract at the

same time. The presence of each separate dispute resolution clause in Section

27 renders the other two clauses meaningless, making the employment

agreement ambiguous when read as a whole.

      We do not agree with the trial court, which reviewed the arbitration

clause and reached the legal conclusion that its terms were plain and

unambiguous. We find the court's reasoning unpersuasive, Skuse, 244 N.J. at

46. The express waiver language at the end of Section 27 does not resolve the

ambiguity preceding it, which must be construed against defendants.          See

Roach, 228 N.J. at 174. Based on our de novo review, Atalese, 219 N.J. at

245, we conclude that the arbitration clause in plaintiff's employment

agreement signed is unenforceable as a matter of law.

                                                                         A-1703-22
                                      12
      Having found the arbitration clause unenforceable, we need not reach

plaintiff's unconscionability arguments, nor the statutory questions raised on

appeal. We reverse the trial court's order compelling arbitration and remand

for proceedings consistent with this opinion.

      Reversed. We do not retain jurisdiction.

                                                                       A-1703-22
                                       13
__________________________
ROSE, J.A.D., concurring.

      I agree with the result reached by my colleagues but write separately

because I would reverse the January 20, 2023 order for a different reason.

Discerning no ambiguity in the arbitration provision, I would reach plaintiff's

statutory argument and conclude the provision improperly waives plaintiff's

right to a jury trial on her LAD claims under Section 12.7. In doing so, I

distinguish the terms of the present contract from those of the contract at issue

in Antonucci, which expressly provided the FAA governed. 470 N.J. Super. at

566. We held the FAA therefore "pre-empts Section 12.7 when applied to

prevent arbitration called for in an agreement governed by the FAA," ibid., but

declined to address "whether Section 12.7 is enforceable when applied to an

arbitration agreement governed by the [NJAA]," id. at 567.

      In the present matter, the employment contract is silent as to whether the

FAA or NJAA applies. In my view, however, there is no evidence in the

record that the parties' employment contract affects interstate commerce,

which would otherwise bring the agreement within the ambit of the FAA and

compel arbitration.   See Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56

(2003); see also Gras v. Assocs. First Cap. Corp., 346 N.J. Super. 42, 47 (App.

Div. 2001). Accordingly, I agree with the majority's decision to reverse the

order dismissing plaintiff's complaint and afford plaintiff her day in court.

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                                       14
Although I need not reach plaintiff's contention that the arbitration provision is

unenforceable under the Ending Forced Arbitration of Sexual Assault and

Sexual Harassment Act of 2021 (EFAA), 9 U.S.C. §§ 401-402, I do so for

completeness. I am persuaded by defendants' argument that plaintiff's claims

under the EFAA are time barred.

                                        I.

      In my view, the majority goes to great lengths to find ambiguity in the

arbitration provision where none exists.           The provision clearly and

unmistakably evinces the parties' intent to arbitrate the LAD claims asserted in

plaintiff's complaint. Further, the waiver-of-rights provision is printed in all

capital letters and clearly informs plaintiff she waives her right to a jury trial

for those claims. See Atalese, 219 N.J. at 447 (holding "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").

      Unlike the majority, I discern no ambiguity or confusion between the

first portion of Section 27 (court provision) and the second, albeit lengthier,

portion of the same section (arbitration provision). The court provision clearly

refers all claims pertaining to the employment contract to "the courts of the

State of New Jersey in Ocean County," while the arbitration provision

                                                                           A-1703-22
                                       15
            include[s] without limitation any claims [plaintiff]
            may have under any employment law, whatsoever,
            including but not limited to, the Age Discrimination in
            Employment Act of 1967, Section 1981 of the Civil
            Rights Act, Title VII of the Civil Rights Act of 1964,
            the Americans with Disabilities Act of 1991, the Equal
            Pay Act, the Family and Medical Leave Act and/or
            New Jersey family leave and medical leave laws, the
            New Jersey Law Against Discrimination ("LAD"), the
            New Jersey Conscientious Employee Protection Act
            ("CEPA"), or any other federal, state or local laws or
            regulations pertaining to [plaintiff's] employment, the
            termination of [plaintiff's] employment or this
            Agreement.

            [(Emphasis added).]

Without question, plaintiff's LAD claims are expressly included within the

arbitration provision and, as such, the parties' dispute falls within its scope.

See Martindale, 173 N.J. at 92.

      Nor am I persuaded the exclusion of the contract's Section 11 "events"

within the arbitration provision somehow muddies its clear intent. Set forth in

paragraphs (a) through (q), those events do not give rise to an employment law

claim and, as such, they are not arbitrable. Unlike the "multiple arbitration

provisions" we deemed "confusing" in NAACP, the arbitration provision at

issue neither was "spread across three different documents" nor "conflicting."

See 421 N.J. Super. at 430-32. Stated another way, the court and arbitration

provisions embodied in Section 27 do not conflict with each other. Instead,

they govern different types of claims, i.e., claims pertaining to the contract and

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                                       16
nonemployment-related events are litigated in court, while those pertaining to

alleged violations of employment law are resolved before an arbitrator.

      Further, I disagree with the majority's comparison of the arbitration

provision in the present matter with the provisions our Supreme Court found

faulty in Atalese and Morgan.       In those cases, the Court condemned the

arbitration provisions at issue for their "fail[ure] to explain in some minimal

way that arbitration [wa]s a substitute for a consumer's right to pursue relief in

a court of law." Morgan, 225 N.J. at 294 (quoting Atalese, 219 N.J. at 436).

That is not the case here.

      Moreover, the circumstances surrounding plaintiff's acceptance of the

contract's terms shed light on her understanding of the arbitration provision.

On February 24, 2021, Dr. Mann presented the employment contract to

plaintiff. The following month, on March 22, 2021 – after consultation with

her attorney – plaintiff requested certain changes to the contract, some of

which were incorporated therein. One week later, on March 29, 2021, plaintiff

executed the agreement.      She commenced her employment at CSJPR on

September 1, 2021, five months after she signed the contract. See Martindale,

173 N.J. at 97 (enforcing a waiver-of-rights provision in an employment

contract where the plaintiff, "an educated businesswoman . . . was provided

with ample time and opportunity to review the application").

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                                       17
      For the foregoing reasons, I disagree with the majority's conclusion that

the arbitration provision at issue is ambiguous.        Accordingly, I deem it

necessary to consider plaintiff's statutory claims.

                                        II.

      Following oral argument before us, the court sought supplemental

briefing regarding two issues:

                                     Issue 1

            Is an employment agreement that does not expressly
            cite to the . . . FAA, but contains an arbitration clause,
            subject to the FAA?

            Discuss whether the employment agreement signed by
            the parties was a "contract involving interstate
            commerce . . . subject to the FAA." (Citation
            omitted).

                                     Issue 2

            If the employment agreement signed by the parties is
            subject to the FAA, is [Section] 12.7 of the . . . LAD
            preempted as of the [March 3, 2022] enactment date of
            the . . . EFAA?" (Citation omitted).

            Can [S]ection 12.7 of the []LAD still be considered to
            frustrate the purpose of the FAA after March 3, 2022?
            If not, what effect does its resuscitated status have on
            claims brought under the LAD that accrued prior to
            March 3, 2022, but were timely filed after March 3,
            2022?

      I begin my review by summarizing the relevant statutory framework vis-

à-vis the procedural posture of the present matter to lend context to my

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analysis.   Effective March 18, 2019 – two years before plaintiff executed the

contract in this case – the Legislature amended the LAD to add several

sections, including Section 12.7. In pertinent part, Section 12.7 states:

            a. A provision in any employment contract that
            waives any substantive or procedural right or remedy
            relating to a claim of discrimination, retaliation, or
            harassment shall be deemed against public policy and
            unenforceable.

            b. No right or remedy under the [LAD], . . . or any
            other statute or case law shall be prospectively
            waived.

      Effective March 3, 2022 – one year after plaintiff executed the contract

in this case – the EFAA amended the FAA by invalidating "predispute

arbitration agreements" 4 that precluded a party from filing in court a lawsuit

involving sexual assault or sexual harassment:

            Notwithstanding any other provision of this title, at
            the election of the person alleging conduct
            constituting a sexual harassment dispute or sexual
            assault dispute . . . no predispute arbitration agreement
            or predispute joint-action waiver shall be valid or
            enforceable with respect to a case which is filed under
            Federal, Tribal, or State law and relates to the sexual
            assault dispute or the sexual harassment dispute.

            [9 U.S.C. § 402(a).]

4
  Pursuant to 9 U.S.C. § 401(1): "The term 'predispute arbitration agreement'
means any agreement to arbitrate a dispute that had not yet arisen at the time
of the making of the agreement."

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      In turn, the FAA was amended accordingly and now renders invalid

contracts containing agreements to arbitrate that violate the EFAA. 9 U.S.C.

§ 2. Pertinent to this appeal, an historical note provides in pertinent part:

"This Act, and the amendments made by this Act, shall apply with respect to

any dispute or claim that arises or accrues on or after the date of enactment of

this Act." 9 U.S.C. § 401 hist. n.

      Addressing the application of the EFAA and Section 12.7 in reverse

order, I agree with defendants that the EFAA applies to claims that accrued

after its effective date. Plaintiff's LAD claims accrued on November 9, 2021,

when she was allegedly terminated from her employment with defendants after

having reported Dr. Mann's conduct on October 18, 2021.           Indisputably,

plaintiff's claims preceded the effective date of the EFAA, and as such, her

complaint would be preempted by the FAA – if, indeed, the FAA governed the

employment contract at issue.

      In the present matter, the arbitration provision does not declare whether

the FAA or the NJAA applies. As our Supreme Court held in Arafa v. Health

Express Corp., "[t]he NJAA governs 'all agreements to arbitrate made on or

after January 1, 2003,' and exempts from its provisions only 'an arbitration

between an employer and a duly elected representative of employees under a

collective bargaining agreement or collectively negotiated agreement.'" 243

                                                                         A-1703-22
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N.J. 147, 167 (quoting N.J.S.A. 2A:23B-3(a)). By contrast, the FAA controls

transactions affecting interstate commerce and provides:

            A written provision in . . . a contract evidencing a
            transaction involving commerce to settle by arbitration
            a controversy thereafter arising out of such contract or
            transaction, or the refusal to perform the whole or any
            part thereof, or an agreement in writing to submit to
            arbitration an existing controversy arising out of such
            a contract, transaction, or refusal, shall be valid,
            irrevocable, and enforceable, save upon such grounds
            as exist at law or in equity for the revocation of any
            contract or as otherwise provided [pursuant to 9
            U.S.C. §§ 401-402].

            [9 U.S.C. § 2 (emphasis added).]

      The United States Supreme Court has held the term, "involving

commerce," must be interpreted broadly to mean any conduct that affects

interstate commerce. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265,

273-77 (1995). According to the Court, "the word 'involving' is broad and is

indeed the functional equivalent of 'affecting.'" Id. at 273-74. The Court also

analyzed the phrase, "evidencing a transaction," id. at 279, and held that it

means the "'transaction' in fact 'involve[s]' interstate commerce, even if the

parties did not contemplate an interstate commerce connection," id. at 281.

      Plaintiff argues "the record is completely devoid of even one fact

indicating that [d]efendants' business is engaged in any kind of interstate

commerce." Citing plaintiff's complaint, defendants counter plaintiff was a

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                                      21
New York resident and "work[ed] for defendants in Monmouth County."

Defendants further argue the employment contract required plaintiff to:

participate in certain insurance programs, Medicaid, and Medicare; "maintain

an accurate profile on the State Department of Health's website"; and possess a

"current controlled substance registration[] issued by . . . the United States

Drug Enforcement Agency."

      Defendants' reliance on this court's decisions in Estate of Ruszala ex rel.

Mizerak v. Brookdale Living Communities, Inc., 415 N.J. Super. 272 (App.

Div. 2010), and Alfano v. BDO Seidman, LLP, 393 N.J. Super. 560 (App. Div.

2007), is misplaced.

      In Ruszala, we concluded the arbitration provisions contained in nursing

home residency agreements were governed by the FAA even though the

provisions did not so state. Id. at 292. The record included the affidavit of the

nursing home's vice president, which stated "supplies, such as food, medicine,

and medical equipment" were purchased "'primarily from out-of-state vendors'

through 'mail, electronic mail, telephone, and facsimile transactions.'" Id. at

291. We concluded the "nursing home facilities c[ould] not function without

the materials procured from these out-of-state suppliers," and "[t]he delivery of

these goods from their points of origin to the doors of these facilities thus

'affect[ed]' interstate commerce and involve[d] the federally regulated industry

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                                       22
of interstate transportation."    Ibid.    We also noted the facilities "[we]re

incorporated in a foreign jurisdiction and they admit[ted] residents who

originally resided outside of this State." Ibid.

      In Alfano, we held: "A nexus to interstate commerce is found when

citizens of different states engage in the performance of contractual obligations

in one of those states because such a contract necessitates interstate travel of

both personnel and payments." 393 N.J. Super. at 574 (citing Crawford v. W.

Jersey Health Sys., 847 F. Supp. 1232, 1240 (D. N.J. 1994)). In Alfano, the

plaintiff was a resident of New Jersey and the defendant was "a German

corporation, with an office in New York." Ibid. However, the record also

disclosed:   "The parties met in Manhattan, and the transactions involved

investments in (1) foreign Deutsche Bank stock and options, (2) a Cayman

Island limited partnership, (3) a Cayman Island corporation, and (4) a

Delaware company." Ibid. Moreover, "[t]he securities transactions at issue

involved interstate and international commerce." Ibid.

      In Crawford, the District Court concluded the arbitration provision in an

employment contract between a New Jersey physician and New Jersey medical

practice was governed by the FAA because the practice "treat[ed] patients who

live[d] and work[ed] in Pennsylvania." 847 F. Supp. at 1240. Further, the

patients' medical costs "[we]re paid through out-of-state or multi-state

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insurance carriers"; the "[d]efendants advertise[d] regularly in out -of-state

newspapers"; and the "defendants receive[d] goods and services from

numerous out-of-state vendors." Ibid.

      Conversely, in the present matter, there is no evidence in the record that

defendants: treated patients who resided outside the state; advertised outside

the state; or received goods and services from out-of-state vendors. Therefore,

I am not persuaded by defendants' argument that because plaintiff resided in

New York and was required to participate in federal programs and licensure

requirements, the employment contract "affected" interstate commerce as

defined by the United States Court in Allied-Bruce.

      In my view, the distinguishing factor in the present matter is the lack of

any out-of-state transactions. More particularly, because the record is devoid

of any suggestion that the relationship between the parties involved the

provision of medical care to patients outside New Jersey or that plaintiff's

employment with defendants otherwise involved interstate commerce, I

conclude the contract does not "affect" interstate commerce.      Accordingly,

because plaintiff's claims accrued after the effective date of Section 12.7, the

arbitration provision is void and plaintiff's claims should be litigated in

Superior Court pursuant to Section 27.

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