Court Opinion

ID: 6221775
Source: CourtListenerOpinion
Date Created: 2022-02-15 15:07:35.331137+00
Date Added: 2024-06-11T08:57:24.157392
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-1983-20

GILBERT ANTONUCCI,

     Plaintiff-Appellant,
                                           APPROVED FOR PUBLICATION
v.                                                 February 15, 2022
                                                 APPELLATE DIVISION
CURVATURE NEWCO, INC.,
TODD GREDESKY, and
ELIZABETH DAPOLITE,

     Defendants-Respondents.
____________________________

           Submitted December 8, 2021 – Decided February 15, 2022

           Before Judges Gilson, Gooden Brown, and Gummer.

           On appeal from the Superior Court of New Jersey, Law
           Division, Gloucester County, Docket No. L-1034-20.

           Ionno & Higbee, attorneys for appellant (Sebastian B.
           Ionno and D. Rebecca Higbee, on the briefs).

           Gibbons, PC, attorneys for respondents (John C.
           Romeo and Cassandra J. Neugold, on the brief).

     The opinion of the court was delivered by

GILSON, J.A.D.

     Plaintiff Gilbert Antonucci appeals from an order compelling arbitration

and dismissing with prejudice his discrimination complaint against his former
employer and two of its employees. This appeal presents two questions: (1)

whether the parties entered a binding agreement to arbitrate their employment

disputes; and (2) whether the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16,

pre-empts a 2019 amendment to New Jersey's Law Against Discrimination

(LAD), N.J.S.A. 10:5-1 to -50, that prohibits the waiver of procedural and

substantive rights under LAD.       That second question is an issue of first

impression in this court.

      We hold that the arbitration agreement is binding and that LAD's

procedural prohibition, which would preclude arbitration, is pre-empted when

applied to an arbitration agreement governed by the FAA. Nevertheless, we

vacate the order entered by the Law Division and remand for the entry of a new

order. Contrary to section 3 of the FAA, 9 U.S.C. § 3, the order on appeal

dismissed plaintiff's complaint with prejudice rather than stay the litigation. We,

therefore, remand for the entry of a new order compelling arbitration and staying

the Law Division action until the arbitration is completed.

                                        I.

      In December 2010, plaintiff was hired as a field engineer by SMS Systems

Maintenance Services, Inc. (SMS).       In 2017, SMS merged with Curvature

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Newco, Inc. (defendant or Curvature) and the combined entity used the

Curvature name.

      In October 2019, Curvature sent plaintiff an electronic version of the

company's Codes of ethics and conduct and Employee Handbook (the

Handbook). Plaintiff was directed to read and acknowledge the Codes and

Handbook by reviewing them online as part of a training program.

      The Codes and Handbook were over 112 pages and included an arbitration

agreement (the Arbitration Agreement).        The Arbitration Agreement was

identified in the Handbook's table of contents and attached as a separate

document in Appendix A.

      The Arbitration Agreement stated that all disputes between Curvature and

an employee would be resolved by binding and final arbitration. Curvature is

defined to include the company and any of its directors, officers, or employees.

The Agreement expressly stated that it covered all employment-related claims,

including claims of wrongful termination and "discrimination, harassment, or

retaliation." The Arbitration Agreement also explained that employees were

waiving and giving up their right to bring claims in court or to have a jury trial

on those claims. The waiver included claims based on federal or state statutes.

      Specifically, the Arbitration Agreement stated, in relevant part:

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                   By virtue of this Arbitration Agreement, you
            agree that any and all disputes, claims, or controversies
            between Curvature and you arising out of or relating to
            this Agreement, the employment relationship between
            the Parties, or the formation or termination of the
            employment relationship, that are not resolved by
            mutual agreement shall be resolved by final and binding
            arbitration as set forth in this Agreement. This
            Agreement includes claims that Curvature may have
            against Employee, or that Employee may have against
            Curvature. The term "Curvature" shall mean Curvature
            and its parents, subsidiaries, affiliated companies,
            owners, officers, directors, current and former
            employees, representatives, agents and assigns.

                   By entering into this Agreement, Curvature and
            you are waiving the right to a jury trial for employment
            related disputes. You further understand that entering
            into this Arbitration Agreement does not alter your at-
            will employment with Curvature.

                  ....

                   . . . This Arbitration Agreement does apply to all
            statutory, contractual and/or common law claims
            arising from employment with Curvature, including
            . . . wrongful termination; . . . discrimination,
            harassment, or retaliation of any kind, . . . violations of
            any federal, state or other governmental constitution,
            statute, ordinance or regulation . . . .

      The Arbitration Agreement set forth an overview of the arbitration

process, including descriptions of the arbitrator, the binding and final nature of

the arbitrator's decision, that the arbitration would be conducted under the rules

and procedures of the American Arbitration Association (AAA), and how the

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employee could obtain a copy of those rules and procedures. The Arbitration

Agreement also stated that it was "enforceable under and subject to the Federal

Arbitration Act, 9 U.S.C. Sec. 1, et seq."

      At the end of the Arbitration Agreement, it stated that an employee may

indicate his or her acceptance "by signing in the space below." The Agreement

also explained:

            However, if you voluntarily continue employment after
            the effective date of the Employee Handbook to which
            this Agreement is attached, you will also be deemed to
            have knowingly and voluntarily consented to, and
            accepted all the terms set forth in, this Agreement
            notwithstanding the lack of [the employee's] signature
            below.

      Curvature's records establish that on October 22, 2019, plaintiff spent one

hour and thirty-three minutes reviewing the company's Codes and 2019

Handbook, to which the Arbitration Agreement was attached. Plaintiff did not

sign the Arbitration Agreement in the space provided. He electronically clicked

on an "I Accept" check box acknowledging that he had "received and reviewed

the policies and procedures" outlined in the Codes and Handbook.

      On May 31, 2020, plaintiff was fired from his employment with

Curvature. Several months later, in September 2020, he filed a complaint

against Curvature and two of its employees in the Law Division.           In the

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complaint, which he amended, he asserted claims of discrimination and

wrongful termination under LAD. He also asserted that defendants "caused

post-employment harm to [p]laintiff by contesting his claim for unemployment

benefits."

       In lieu of an answer, defendants moved to dismiss the complaint and

compel arbitration. On February 19, 2021, the trial court heard oral argument,

and that same day it issued a written opinion and order dismissing plaintiff's

complaint with prejudice and compelling arbitration.

       The trial court found that plaintiff had agreed to the Arbitration

Agreement. In making that finding, the trial court found that Curvature had sent

plaintiff the Handbook and Arbitration Agreement, he had acknowledged

reviewing the documents, and that the Arbitration Agreement was clear in

explaining that his continued employment constituted acceptance of the

Arbitration Agreement. The trial court also found that the Agreement was valid

and enforceable and that it covered the discrimination claims asserted by

plaintiff.   The trial court did not address the issue of whether the 2019

amendment to LAD was pre-empted by the FAA. Plaintiff now appeals from

the order dismissing his complaint and compelling arbitration.

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                                        II.

      On appeal, plaintiff makes two arguments, contending that the trial court

erred in (1) finding that he had agreed to the Arbitration Agreement; and (2)

implicitly ruling that LAD's prohibition on arbitration of discrimination claims

was pre-empted by the FAA.

      1.    The Enforceability of the Arbitration Agreement.

      The interpretation of an arbitration agreement and its enforceability are

questions of law that we review de novo. Goffe v. Foulke Mgmt. Corp., 238

N.J. 191, 207 (2019); Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 445-

46 (2014). It is undisputed that plaintiff was given a copy of the Arbitration

Agreement and had an opportunity to review it. Consequently, we also review

on a de novo basis the question whether plaintiff agreed to arbitrate because that

issue involves the application of established facts to the legal question of what

constitutes assent to a contract. Skuse v. Pfizer, Inc., 244 N.J. 30, 50 (2020).

      Under both the FAA and New Jersey law, arbitration is fundamentally a

matter of contract. Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010);

9 U.S.C. § 2; NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J.

Super. 404, 424 (App. Div. 2011). The FAA "places arbitration agreements on

an equal footing with other contracts."       Rent-A-Center, 561 U.S. at 67.

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Accordingly, "the FAA 'permits states to regulate . . . arbitration agreements

under general contract principles,' and a court may invalidate an arbitration

clause 'upon such grounds as exist at law or in equity for the revocation of any

contract.'" Atalese, 219 N.J. at 441 (quoting Martindale v. Sandvik, Inc., 173

N.J. 76, 85 (2002)).

      "An agreement to arbitrate, like any other contract, 'must be the product

of mutual assent, as determined under customary principles of contract law.'"

Id. at 442 (quoting NAACP, 421 N.J. Super. at 424). "A legally enforceable

agreement requires 'a meeting of the minds.'"       Ibid. (quoting Morton v. 4

Orchard Land Tr., 180 N.J. 118, 120 (2004)). Consequently, to be enforceable,

the terms of an arbitration agreement must be clear, and any legal rights being

waived must be identified. Id. at 442-43; see also Kernahan v. Home Warranty

Adm'r of Fla., Inc., 236 N.J. 301, 319-20 (2019).

      To accomplish a waiver of rights, "[n]o magical language is required."

Morgan v. Sanford Brown Inst., 225 N.J. 289, 309 (2016). Instead, "[o]ur courts

have upheld arbitration clauses that have explained in various simple ways 'that

arbitration is a waiver of the right to bring suit in a judicial forum.'" Ibid.

(quoting Atalese, 219 N.J. at 444). Accordingly, in employment settings, "a

waiver-of-rights provision must reflect that an employee has agreed clearly and

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unambiguously to arbitrate the disputed claim." Leodori v. Cigna Corp., 175

N.J. 293, 302 (2003).      Moreover, the agreement must be supported by

consideration. Martindale, 173 N.J. at 87-88.

      The New Jersey Supreme Court addressed the enforceability of a similar

employment-arbitration agreement in Skuse v. Pfizer, Inc., 244 N.J. 30 (2020).

There, Pfizer sent its agreement to the employee by email. Id. at 53-54. The

agreement informed the employee that by continuing to be employed for sixty

days, she would waive her right to pursue employment-discrimination claims

against Pfizer in court. Id. at 50. In addition, Pfizer explained the agreement

through an online "training module," and provided a link to a frequently asked

questions (FAQs) document. Id. at 37. Finally, Pfizer requested employees to

click a box to electronically "acknowledge" the agreement. Id. at 60-61.

      In holding that Pfizer's arbitration agreement was valid, the Court made it

clear that an arbitration agreement can be sent to employees by electronic means,

such as email.   Id. at 49-50. Moreover, if an employer's communications

unambiguously explain that continued employment will be deemed assent to the

agreement, then the employee will be considered to have consented to the

agreement's terms.    Id. at 50-52.    Under those circumstances, continued

employment constitutes valid consideration. Id. at 50; see also Martindale, 173

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N.J. at 88 (explaining that "continued employment has been found to constitute

sufficient consideration to support certain employment-related agreements").

      Here, the Arbitration Agreement reviewed by plaintiff is valid and

enforceable. The terms of the Agreement clearly stated that the parties were

giving up the right to pursue all employment-related claims in court, and instead

agreed to arbitrate those claims before an AAA arbitrator. In that regard, the

Arbitration Agreement expressly stated that it covered discrimination claims,

including statutory claims. 1

      The Arbitration Agreement was also the product of mutual assent.

Curvature sent plaintiff a copy of the Arbitration Agreement. Plaintiff had the

opportunity to, and indeed did, review the Codes and Handbook. Accordingly,

plaintiff had the opportunity to review the Arbitration Agreement , which was

attached to the Handbook. Plaintiff also acknowledged that he had reviewed

those documents and all the policies and procedures they described. Although

plaintiff did not sign the Arbitration Agreement itself, he was informed that his

1
  We note that plaintiff does not dispute that if the Arbitration Agreement is
valid, it covers his discrimination claims. To the extent that he disputed the
scope of what should be arbitrated, the Agreement delegated that issue to the
arbitrator. Delegations of the scope of an arbitration agreement are enforceable
under the FAA. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___,
139 S. Ct. 524, 529-30 (2019).
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continued employment would constitute an acknowledgment of his agreement

to arbitrate any employment-related disputes. Consequently, we hold that the

Arbitration Agreement is a valid and enforceable agreement.

      2.    Pre-emption Under the FAA.

      LAD "plays a uniquely important role in fulfilling the public imperative

of eradicating discrimination." Rodriguez v. Raymours Furniture Co., 225 N.J.

343, 347 (2016). Effective March 18, 2019, the Legislature amended LAD to

add several sections, including Section 12.7, which states that "[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."          N.J.S.A. 10:5-12.7(a)

(codifying L. 2019, c. 39, § 1(a)). Section 12.7 also provides that no right or

remedy under LAD "or any other statute or case law shall be prospectively

waived." N.J.S.A 10:5-12.7(b).

      The 2019 amendments to LAD apply prospectively. L. 2019, c. 39, § 6.

In that regard, the amendment states: "This act shall take effect immediately

and shall apply to all contracts and agreements entered into, renewed, modified,

or amended on or after the effective date." Plaintiff was sent and agreed to the

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Arbitration Agreement in October 2019. Accordingly, Section 12.7 of LAD

applies to the Arbitration Agreement between Curvature and plaintiff.

      Therefore, the issue is whether the FAA pre-empts Section 12.7 from

applying to an arbitration agreement governed by the FAA. That issue is a

question of law that we review de novo. See Skuse, 244 N.J. at 46; Kernahan,

236 N.J. at 316. Moreover, that legal question involves interpretations of the

FAA and Section 12.7 of LAD and, therefore, is a mixed question of federal and

New Jersey state law. See Kernahan, 236 N.J. at 316-19.

      "The 'principal purpose' of the FAA is to 'ensur[e] that private arbitration

agreements are enforced according to their terms.'" AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 344 (2011) (alteration in original) (quoting Volt Info.

Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478

(1989)). Section 2 of the FAA makes arbitration agreements "valid, irrevocable,

and enforceable, save upon such grounds as exist at law or in equity for the

revocation of any contract." 9 U.S.C. § 2.

      The FAA "contains no express pre-emptive provision." Volt, 489 U.S. at

477. Nevertheless, the FAA protects arbitration agreements involving interstate

commerce. Id. at 476. Accordingly, a state law that conflicts with the FAA or

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frustrates its purpose violates the Supremacy Cause of the United States

Constitution. U.S. Const. art. VI, cl. 2; Concepcion, 563 U.S. at 347 n.6.

      "When state law prohibits outright the arbitration of a particular type of

claim," the conflicting state law is pre-empted by the FAA. Concepcion, 563

U.S. at 341; Preston v. Ferrer, 552 U.S. 346, 353 (2008). Even when the state

law does not expressly single out arbitration agreements, it will be pre -empted

if its application "covertly accomplishes the same objective by disfavoring

contracts that . . . have the defining features of arbitration agreements." Kindred

Nursing Ctrs. Ltd. P'ship v. Clark, 581 U.S. ___, 137 S. Ct. 1421, 1426 (2017).

See also Concepcion, 563 U.S. at 352 (explaining that a state law that "stands

as an obstacle" to the FAA is pre-empted (quoting Hines v. Davidowitz, 312

U.S. 52, 67 (1941))).

      The United States Supreme Court has explained:

            The [FAA] also displaces any rule that covertly
            accomplishes the same objective by disfavoring
            contracts that (oh so coincidentally) have the defining
            features of arbitration agreements. In Concepcion, for
            example, we described a hypothetical state law
            declaring unenforceable any contract that "disallow[ed]
            an ultimate disposition [of a dispute] by a jury." Such
            a law might avoid referring to arbitration by name; but
            still, we explained, it would "rely on the uniqueness of
            an agreement to arbitrate as [its] basis" . . . .

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                                       13
            [Kindred Nursing, 137 S. Ct. at 1426 (all but first
            alteration in original) (citations omitted) (quoting
            Concepcion, 563 U.S. at 341-42).]

See also Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 132 (2020).

      One of the procedural rights under LAD is the right to pursue an action in

court "to be heard before a jury." N.J.S.A. 10:5-13(a)(1). Before the 2019

amendments to LAD, the New Jersey Supreme Court had recognized "that an

individual may agree by contract to submit his or her statutory LAD claim to

alternative dispute resolution." Rodriguez, 225 N.J. at 364 (citing Garfinkel v.

Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 131 (2001)).

Section 12.7 does not expressly use the term "arbitration," nor does it expressly

state that it applies to agreements to arbitrate. Nevertheless, applied to an

arbitration agreement in the employment context, the plain language of Section

12.7 of LAD prohibits all pre-dispute agreements if those agreements

prospectively waive the right to file a court action for a LAD claim.

      The waiver of the right to go to court and receive a jury trial is one of the

primary objectives or "defining features" of an arbitration agreement. Kindred

Nursing, 137 S. Ct. at 1426; see also Epic Sys. Corp. v. Lewis, 584 U.S. ___,

138 S. Ct. 1612, 1622 (2018) (noting that section 2 of the FAA "does not save

defenses that target arbitration . . . by 'interfer[ing] with fundamental attributes

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of arbitration'" (alteration in original) (quoting Concepcion, 563 U.S. at 344));

Skuse, 244 N.J. at 62 (Albin, J., concurring) (noting arbitration clauses affect

"New Jersey's most fundamental public policy," the "right to a civil jury trial").

Consequently, Section 12.7 effectively "singles out arbitration agreements for

disfavored treatment." Kindred Nursing, 137 S. Ct. at 1425; see also Marmet

Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 530-31 (2012) (holding the FAA

pre-empted a state court's rule that prohibited arbitration of personal-injury and

wrongful-death suits in nursing home admission agreements); Perry v. Thomas,

482 U.S. 483, 491 (1987) (holding the FAA pre-empted a state-law requirement

that litigants be provided a judicial forum for wage disputes); Estate of Ruszala

ex. rel. Mizerak v. Brookdale Living Communities, Inc., 415 N.J. Super. 272,

293 (App. Div. 2010) (holding the FAA pre-empted New Jersey's statutory

prohibition of arbitration agreements in nursing-home contracts).

      Accordingly, we conclude that the FAA pre-empts Section 12.7 when

applied to prevent arbitration called for in an agreement governed by the FAA.

Our Supreme Court has recognized that "[b]y agreeing to arbitrate a statutory

claim, a party does not forgo the substantive rights afforded by the statute; it

only submits to their resolution in an arbitral[,] rather than a judicial, forum."

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Martindale, 173 N.J. at 93 (first alteration in original) (quoting Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).

      In making our ruling, we point out that not all applications of Section 12.7

to other provisions included in an arbitration agreement are pre-empted. For

example, a provision in an arbitration agreement reducing the time for bringing

a discrimination claim to less than two years would not be enforceable under

Section 12.7, or existing New Jersey case law, because it would waive a

substantive or procedural right related to a claim of discrimination.         The

application of Section 12.7 to that provision would not be pre-empted by the

FAA because it would not affect the parties' right to arbitrate; rather, the

application would protect LAD's two-year limitation period. See Rodriguez,

225 N.J. at 364 (holding that a pre-dispute employment application that

contractually shortened LAD's two-year limitation period was unenforceable as

against New Jersey's public policy). We do not address the question whether

Section 12.7 is enforceable when applied to an arbitration agreement governed

by the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -36.

      Applying our ruling to the order on appeal, we affirm the provision of the

order compelling arbitration. We reverse the provision of the order dismissing

the case with prejudice. See 9 U.S.C. § 3 (stating a court action should be stayed

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if the action involves "any issue referable to arbitration"). Therefore, we remand

for entry of a new order and direct that the new order compel arbitration and

stay this civil action pending the arbitration.

      Affirmed in part, reversed in part, and remanded. We do not retain

jurisdiction.

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