Court Opinion

ID: 4430085
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:35:28.404793+00
Date Added: 2024-06-11T14:50:58.875432
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-2349-17T2

TIAN K. REID,

          Plaintiff-Appellant,

v.

DCH AUTO GROUP, INC. and
FREEHOLD NISSAN LLC, d/b/a
DCH FREEHOLD NISSAN,

          Defendants-Respondents.

                    Argued October 10, 2018 – Decided November 8, 2018

                    Before Judges Gilson and Natali.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Monmouth County, Docket No. L-2201-17.

                    Thaddeus P. Mikulski, Jr. argued the cause for
                    appellant.

                    Michael C. McQueeny argued the cause for respondents
                    (Genova Burns LLC, attorneys; Kathleen Barnett
                    Einhorn, of counsel and on the brief; Michael C.
                    McQueeny, on the brief).

PER CURIAM
      This appeal involves a dispute concerning the scope of an arbitration

provision. Plaintiff Tian K. Reid appeals from a December 15, 2017 order

dismissing his complaint with prejudice and compelling arbitration. We reverse.

Although plaintiff signed a job application containing an arbitration provision

with his former employer, that provision did not state that it would continue to

apply when, as here, plaintiff transferred employment to a separate affiliated

company.

                                       I

      We take the facts from the record developed on the motion to compel

arbitration. Between August 2006 and August 2015, plaintiff worked for three

different automobile dealerships: DCH Kay Honda; DCH Academy Honda; and

DCH Freehold Nissan. Each of those dealerships was a separate corporate

entity, but because they were commonly owned they were affiliated companies.

The employee relations manager of the owner-entity certified that the correct

name for the owner-entity corporation is DCH Auto Group (USA) Inc., and in

October 2014, that entity was acquired by Lithia Motors, Inc. We will refer to

the owner-entity as DCH Auto.

      Plaintiff first worked for DCH Kay Honda from August 2006 until June

30, 2008. Thereafter, plaintiff worked for DCH Academy Honda from July 1,

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2008 until March 31, 2014. Finally, plaintiff worked for DCH Freehold Nissan

from April 1, 2014 until August 26, 2015.

      On February 1, 2008, plaintiff submitted an employment application for

the position of finance and insurance director.       At that time, plaintiff was

working for DCH Kay Honda as its finance and insurance manager.                The

application had a blank space for the insertion of "the Company" to which

plaintiff was applying for employment. That space, however, was left blank.

Plaintiff certified that he could not recall "whether the application was submitted

for any particular open positions at any DCH dealership, whether at DCH

Academy Honda or any other dealership, or whether [he] submitted the

application as a general request to Human Resources to be considered for a

promotion." Nevertheless, it is undisputed that on July 1, 2008, plaintiff became

the finance and insurance director at DCH Academy Honda.

      The employment application plaintiff signed and submitted in February

2008 contained an arbitration provision. That provision stated that plaintiff and

the Company agreed to arbitrate any dispute concerning plaintiff's employment.

Specifically, the arbitration provision stated in relevant part:

            I acknowledge that the Company utilizes a system of
            alternative dispute resolution which involves binding
            arbitration to resolve all disputes which may arise out
            of the employment context. . . . . I and the Company

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                                         3
            both agree that any claim, dispute, and/or controversy
            (including but not limited to any claims of employment
            discrimination, harassment, and/or retaliation under
            Title VII and all other applicable federal, state, or local
            statute, regulation or common law doctrine) which
            would otherwise require or allow resort to any court or
            other governmental dispute resolution forum between
            myself and the Company (and/or its subsidiaries,
            affiliates, owners, directors, officers, managers,
            employees, agents, and parties affiliated with its
            employee benefit and health plans) arising from, related
            to, or having any relationship or connection whatsoever
            with my seeking employment with, employment by, or
            other association with the Company . . . shall be
            submitted to and determined exclusively by binding
            arbitration.

      The provision went on to provide that it was governed by "the Federal

Arbitration Act" (FAA), 9 U.S.C. §§ 1 to 16, and any dispute would be submitted

to an arbitrator "selected under the Rules of the American Arbitration

Association[.]" The arbitration provision also stated: "I UNDERSTAND BY

AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH I AND

THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY JURY. I FURTHER

UNDERSTAND THAT THIS BINDING ARBITRATION AGREEMENT IS A

CONTRACT."

      As already noted, from July 1, 2008 until March 31, 2014, plaintiff worked

for DCH Academy Honda as the finance and insurance director. DCH Academy

Honda was the business name used by the dealership. The corporate entity that

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                                        4
owned that dealership was Daron Motors, LLC, a wholly-owned subsidiary of

DCH Auto. While working at DCH Academy Honda, plaintiff received his

compensation from Daron Motors, LLC.

      In August 2011, DCH Auto issued an internal transfer policy. The policy

stated, in relevant part:

             DCH has always encouraged transfers from within or
             from dealership to dealership. What's new is that we
             will now post all open positions on our Employee
             Website, www.TheDCHWay.com, to make it easier for
             our employees to be aware of current opportunities.
             . . . . Each open requisition has an internal application
             available when an employee registers through Sterling,
             our electronic applicant tracking system and identifies
             themselves as a Current DCH Employee.                ....
             Submitting an application is not a guarantee of transfer.

      On April 1, 2014, plaintiff transferred and began working at DCH

Freehold Nissan. The registered corporate entity that owns DCH Freehold

Nissan is Freehold Nissan, LLC, another wholly-owned subsidiary of DCH

Auto. The parties do not dispute that the transfer was made under DCH Auto's

internal transfer policy. No party, however, provided a copy of the "internal

application." Nor does the record include a copy of the blank form application

referenced in the policy. Thus, there is nothing in the record that shows that

plaintiff signed a new arbitration agreement in connection with his transfer to

DCH Freehold Nissan.

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                                        5
      On August 26, 2015, plaintiff was terminated from his employment with

DCH Freehold Nissan. Just under two years later, on July 27, 2017, plaintiff

filed a complaint against DCH Auto and DCH Freehold Nissan alleging

discrimination in violation of the New Jersey Law Against Discrimination,

N.J.S.A. 10:5-1 to -49.      Specifically, plaintiff asserted two counts:       (1)

discriminatory termination and (2) discriminatory retaliation.

      In response, defendants filed a motion to compel arbitration and dismiss

plaintiff's complaint. After hearing oral argument, the trial court granted that

motion by order dated December 15, 2017. That same day, the court issued a

written opinion.

      The trial court first found that the application and arbitration provision

plaintiff signed and submitted in February 2008 were submitted in connection

with the position of finance and insurance director at DCH Academy Honda.

The court then held that the arbitration provision continued to govern plaintiff's

employment when plaintiff transferred to DCH Freehold Nissan. The court

based that holding on the language in the provision stating that plaintiff was

agreeing to arbitrate any employment dispute between himself "and the

Company (and/or its subsidiaries, affiliates, owners, directors, officers,

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                                        6
managers, employees, agents, and parties affiliated with its employee benefit

and health plans)[.]"

                                        II

      Plaintiff appeals from the order compelling arbitration and dismissing his

complaint. We review such orders de novo. Hirsch v. Amper Fin. Servs., LLC,

215 N.J. 174, 186 (2013). In that regard, the validity of an arbitration agreement

is a question of law, and we conduct a plenary review of such legal questions.

Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 445-46 (2014); Barr v.

Bishop Rosen & Co., 442 N.J. Super. 599, 605 (App. Div. 2015).

      The arbitration provision signed by plaintiff stated that it was controlled

by the FAA.     The FAA applies to 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[.]" 9 U.S.C. §

2. The FAA and "the nearly identical New Jersey Arbitration Act, N.J.S.A.

2A:23B-1 to -32, enunciate federal and state policies favoring arbitration."

Atalese, 219 N.J. at 440 (citing AT&T Mobility LLC v. Concepcion, 563 U.S.

333, 339 (2011)). Under both the FAA and New Jersey law, arbitration is

fundamentally a matter of contract. 9 U.S.C. § 2; NAACP of Camden Cty. E.

v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 424 (App. Div. 2011) (citing Rent-

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                                        7
A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010)). "[T]he 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

(alteration in original) (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 of Camden Cty. E., 421 N.J. Super. at 424).

Accordingly, to be enforceable, an arbitration agreement must clearly state that

the parties are agreeing to arbitrate and are giving up the right to pursue a claim

in court. In that regard, our Supreme Court has explained:

            Mutual assent requires that the parties have an
            understanding of the terms to which they have agreed.
            "An effective waiver requires a party to have full
            knowledge of his [or her] legal rights and intent to
            surrender those rights." "By its very nature, an
            agreement to arbitrate involves a waiver of a party's
            right to have [his or] her claims and defenses litigated
            in court."

            [Ibid. (first quoting Knorr v. Smeal, 178 N.J. 169, 177
            (2003); then quoting NAACP of Camden Cty. E., 421
            N.J. Super. at 425).]

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      In determining whether a matter should be submitted to arbitration, the

court should evaluate (1) whether a valid agreement to arbitrate exists , and (2)

whether the dispute falls within the scope of the agreement. Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985); Martindale,

173 N.J. at 92. If the agreement is valid and the claims fall within the scope of

the agreement, the FAA requires the court to direct the parties to proceed to

arbitration. PaineWebber, Inc. v. Hartmann, 921 F.2d 507, 511 (3d Cir. 1990),

overruled on other grounds by Howsam v. Dean Witter Reynolds, Inc., 537 U.S.

79, 85 (2002).

      Plaintiff contends that the arbitration provision is not valid because "the

Company" was not identified. Accordingly, plaintiff argues that he cannot be

compelled to arbitrate with an unknown entity and the arbitration provision is

illusory. We are not persuaded by that argument. The material facts in evidence

established that plaintiff submitted the employment application to become the

finance and insurance director in February 2008, and several months later, on

July 1, 2008, he became the finance and insurance director at DCH Academy

Honda. While plaintiff contends that he does not recall specifically to whom he

submitted the employment application, the employee relations manager for DCH

Auto certified that the application was made to DCH Academy Honda.

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                                       9
Moreover, the arbitration provision was clear in stating that plaintiff was

agreeing to arbitrate, that he was waiving his right to go to court and have a jury

trial, and that the binding arbitration would be conducted under the rules of the

American Arbitration Association.         Accordingly, plaintiff's agreement to

arbitrate is valid.

      Nevertheless, plaintiff's dispute with DCH Freehold Nissan does not fall

within the scope of the arbitration provision he signed with DCH Academy

Honda. Nowhere in the provision is plaintiff informed that if he transfers to a

separate affiliated company, the provision will continue to govern.            The

language concerning affiliated companies in the arbitration provision is

language relating to a dispute concerning plaintiff's employment relationship

with DCH Academy Honda. In that regard, plaintiff agreed that he would

resolve in arbitration any employment dispute with "the Company," that is, DCH

Academy Honda. Specifically, the provision states that if plaintiff and DCH

Academy Honda had an employment-related dispute, it would be subject to

arbitration:

               I and the Company both agree that any claim . . .
               between myself and the Company (and/or its
               subsidiaries, affiliates, owners, directors, officers,
               managers, employees, agents and parties affiliated with
               its employee benefit and health plans) arising from,
               related to, or having any relationship or connection

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                                        10
             whatsoever with my . . . employment by . . . the
             Company . . . shall be submitted to and determined
             exclusively by binding arbitration.

      That language informs plaintiff that if he had a dispute concerning his

employment with DCH Academy Honda and such a dispute involved an

affiliated company, then the dispute would be subject to arbitration.              That

language does not state, however, that if plaintiff transferred to an affiliated

company, the arbitration provision would continue to apply to disputes

concerning his employment with the affiliated company. If defendant intended

the provision to apply to future employment relationships between plaintiff and

affiliates of DCH Academy Honda, then the language in the arbitration provision

needed to reflect that intent.

      Moreover, "the Company" is not defined to include affiliated companies.

Instead, the reference to "affiliates" is made in connection with any dispute with

"the Company (and/or its . . . affiliates . . .) arising from . . . my employment by

. . . the Company[.]" Substituting DCH Academy Honda for "the Company,"

that provision reads:

             I and [DCH Academy Honda] both agree that any claim
             . . . between myself and [DCH Academy Honda]
             (and/or its . . . affiliates . . .) arising from, related to, or
             having any relationship or connection whatsoever with
             my . . . employment by . . . [DCH Academy Honda] . . .

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                                          11
            shall be submitted to and determined exclusively by
            binding arbitration.

That language neither clearly defines DCH Academy Honda to include affiliates,

nor does it clearly inform an employee that a separate dispute concerning future

employment with an affiliate of DCH Academy Honda will also be subject to

binding arbitration.

      Defendants contend that when plaintiff was internally transferred to DCH

Freehold Nissan, the arbitration provision continued to govern. Nothing in the

arbitration provision or DCH Auto's internal transfer policy, however, states that

an existing arbitration provision will continue to govern if an employee transfers

employment.     As noted earlier, no party provided a copy of the "internal

application," which is referenced in the DCH Auto internal transfer policy. DCH

Auto also did not provide us with a copy of the blank form internal application.

Consequently, there is nothing in the record to establish that the application used

for internal transfers stated that any prior arbitration provision with one

affiliated company continued to govern if the employee transferred to another

affiliated company.

      In short, plaintiff signed a valid arbitration provision with DCH Academy

Honda. The scope of that provision, however, did not extend to subsequent

employment at a separate affiliated company, such as DCH Freehold Nissan.

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Accordingly, we reverse the December 15, 2017 order dismissing plaintiff's

complaint and compelling arbitration.

      Reversed and remanded for further proceedings.    We do not retain

jurisdiction.

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