LAURA HANNEN VS. GROUP ONE AUTOMOTIVE, INC. (L-0148-19, OCEAN COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-3551-18T2
LAURA HANNEN,
Plaintiff-Appellant,
v.
GROUP ONE AUTOMOTIVE, INC.,
BMW OF ATLANTIC CITY, KERRY
LAWS, and THOMAS ALFINITO,
Defendants-Respondents.
_______________________________
Submitted December 11, 2019 – Decided December 30, 2019
Before Judges Mayer and Enright.
On appeal from the Superior Court of New Jersey, Law
Division, Ocean County, Docket No. L-0148-19.
Castronovo & McKinney, LLC, attorneys for appellant
(Thomas A. McKinney, of counsel and on the briefs;
Megan Frese Porio, on the briefs).
Cozen O'Connor, attorneys for respondents (George A.
Voegele, Jr., and Steven D. Millman, on the brief).
PER CURIAM
Plaintiff appeals from an April 12, 2019 order dismissing her complaint
with prejudice and compelling arbitration. We affirm the order compelling
arbitration. However, we remand the matter to the trial court to enter an
amended order staying the case pending arbitration.
For ten years, plaintiff worked as a human resources manager for
defendant Group One Automotive, Inc. 1 When she began her employment,
plaintiff signed an "Employee Acknowledgement and Agreement." Section
three of the Employee Acknowledgement and Agreement included an
"Arbitration Agreement," setting forth detailed information related to plaintiff's
rights.
Upon signing the Arbitration Agreement, plaintiff acknowledged she
"under[stood] that by agreeing to submit covered claims 2 to arbitration, both the
company and I give up our rights to a jury trial." The Arbitration Agreement
provided "the arbitrator selected by me and the Company to arbitrate any and all
1
Defendant BMW of Atlantic City is wholly owned by Group One Automotive,
Inc. Defendant Kerry Lewis was plaintiff's supervisor. Defendant Thomas
Alfinito was the general manager of another dealership wholly owned by Group
One Automotive, Inc. We shall refer to these parties collectively as
"defendants."
2
The term "covered claims" included "claims, disputes, and/or controversies
including but not limited to claims related to harassment, discrimination, and
wrongful discharge . . . ."
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covered claims shall be a retired federal or state court judge." In addition, the
Arbitration Agreement stated the arbitrator was bound by the rules "applicable
in civil actions in United States District Courts." Immediately above the
signature line on the Employee Acknowledgement and Agreement was the
following language:
MY SIGNATURE BELOW ATTESTS TO THE FACT
THAT I HAVE READ, UNDERSTAND, AND
AGREE TO BE LEGALLY BOUND TO ALL OF THE
ABOVE TERMS. MY SIGNATURE FURTHER
ACKNOWLEDGES THAT I HAVE HAD THE
OPPORTUNITY TO ASK QUESTIONS ABOUT THE
TERMS OF THIS AGREEMENT.
On November 12, 2018, plaintiff learned her job was being eliminated.
The next day, plaintiff was terminated. She was over sixty years old at the time.
According to plaintiff, defendants replaced her with an individual in his early
thirties.
Plaintiff filed a complaint in the Superior Court, alleging age
discrimination and other causes of action under the New Jersey Law Against
Discrimination (LAD), N.J.S.A. 10:5-1 to -49. In response, defendants filed a
motion to dismiss her complaint and compel arbitration in accordance with the
Arbitration Agreement. Plaintiff opposed defendants' motion, arguing the
Arbitration Agreement failed to identify a valid forum for conducting
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arbitration. Plaintiff further argued the Arbitration Agreement was
unenforceable because it failed to identify who would pay the fees and costs for
arbitration.
In an oral decision on April 12, 2019, the judge determined that in the
absence of an express provision in an arbitration agreement governing payment
of the arbitrator's fees, "there's an implied agreement to share the cost of
arbitration" and "arbitration contracts that divide the [costs] of arb itration are
proper and enforceable." The judge expressly stated, "the arbitration clause is
not unconscionable" because "the provisions of the [A]rbitration [A]greement
would only require plaintiff to pay [her] portion of the arbitration fees."
On the failure to specify a forum, the judge concluded the document "set
forth a basic method for choosing the arbitrator. It sets forth basi c rules that
should apply to the arbitrator . . . ." He also rejected plaintiff's argument that
the holding in Flanzman v. Jenny Craig, Inc., 456 N.J. Super. 613 (App. Div.
2018), certif. granted, 237 N.J. 310 (2019), rendered the Arbitration Agreement
void for lack of a forum. Unlike the agreement in Flanzman, the judge found
the Arbitration Agreement "sets forth the arbitrator will be a retired judge. More
importantly, it set forth the rules for the arbitration. . . . The agreement in this
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matter explains exactly what rules are to be used for the arbitration and what
arbitrator will be arbitrating the case."
On appeal, plaintiff argues the Arbitration Agreement is void for lack of
mutual assent because it failed to set forth a valid forum. She also contends the
failure to establish who pays the arbitrator's fees and costs rendered the
Arbitration Agreement unenforceable.
We apply a de novo standard of review when construing an arbitration
provision in a contract. Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430,
446 (2014). We apply the same de novo review when deciding whether a valid
and enforceable arbitration agreement exists. Barr v. Bishop Rosen & Co., 442
N.J. Super. 599, 605 (App. Div. 2015) (citing Hirsch v. Amper Fin. Servs., LLC,
215 N.J. 174, 186 (2013)). We owe "no special deference to the judge's
determination of [the enforceability of an arbitration agreement]." Flanzman,
456 N.J. Super. at 619.
Here, both federal and state laws governing arbitration agreements are
applicable. The Federal Arbitration Act, 9 U.S.C. §§ 1 to 16, and the Uniform
Arbitration Act, N.J.S.A. 2A:23B-1 to -32, favor arbitration of disputes. KPMG
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LLP v. Cocchi, 565 U.S. 18, 21 (2011); Roach v. BM Motoring, LLC, 228 N.J.
163, 173 (2017).3
"[A]n agreement to arbitrate, like any other contract, 'must be the product
of mutual assent, as determined under customary principles of contract law.'"
Atalese, 219 N.J. at 442 (citing NAACP of Camden Cty. E. v. Foulke Mgmt.
Corp., 421 N.J. Super. 404, 424 (App. Div. 2011)). "Mutual assent requires that
the parties have an understanding of the terms to which they have agreed." Ibid.A legally enforceable agreement requires a "meeting of the minds." Ibid. (citing
Morton v. 4 Orchard Land Tr., 180 N.J. 118, 120 (2004)).
Having reviewed the record, the Arbitration Agreement is valid because
it clearly and unambiguously informed plaintiff that she waived her right to
assert a claim in a judicial forum and agreed to submit her claims to binding
arbitration. By signing the Arbitration Agreement, plaintiff acknowledged her
understanding of its terms and assented to those terms. Therefore, there was a
"meeting of the minds" to establish a valid and enforceable agreement to
arbitrate.
3
Plaintiff cites N.J.S.A. 10:5-12.7 in claiming the Arbitration Agreement is
void and unenforceable. However, she concedes the statute is inapplicable
because the law applies prospectively to agreements after March 18, 2019, and
the Arbitration Agreement was signed in March 2009.
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We next consider whether the Arbitration Agreement was void because it
failed to list a proper forum. An arbitral forum is defined "as the mechanism –
or setting – that parties utilize to arbitrate their dispute." Flanzman, 456 N.J.
Super. at 623. If the parties "agree that a dispute would be arbitrated by an
arbitral institution, or an arbitrator or arbitrators, then that is the agreed upon
forum." Ibid. The failure to identify a specific arbitrator does not "render[] the
agreement unenforceable." Ibid.
Here, unlike the agreement in Flanzman that omitted any reference to an
arbitral forum, the Arbitration Agreement specified the mechanism replacing
plaintiff's right to pursue her claims in a court of law. The Arbitration
Agreement specified that arbitration would follow the rules and procedures
applicable to civil actions in the United States District Court and stated the
arbitrator shall be a retired federal or state court judge. By signing the
Arbitration Agreement, plaintiff agreed to the forum as specified. There is no
need to identify the arbitrator by name or state where and how the arbitration
would be conducted to find the Arbitration Agreement set forth a valid forum.
Id. at 625-27.
We next consider plaintiff's claim that the Arbitration Agreement is
unenforceable because defendant failed to assume all costs associated with the
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arbitration and any apportionment of the "extremely high" costs associated with
arbitration would "effectively prevent [p]laintiff from vindicating her statutory
LAD claims."
"[A]n arbitration agreement's silence with respect to [arbitration costs and
fees] does not render the agreement unenforceable." Green Tree Fin. Corp.-
Alabama v. Randolph, 531 U.S. 79, 82; 92 (2000). As the United States
Supreme Court held, "the 'risk' that [the plaintiff] will be saddled with
prohibitive costs is too speculative to justify the invalidation of an arbitration
agreement." Id. at 91.
There is nothing in the Arbitration Agreement suggesting plaintiff would
be responsible to pay the entire cost of arbitration. See Jaworski v. Ernst &
Young U.S. LLP, 441 N.J. Super. 464, 481-82 (App. Div. 2015) (upholding an
arbitration agreement that "does not provide for the potential shifting of the
entire cost of arbitrating to a non-prevailing party."). An employee's payment
of a portion of the arbitration fees and costs are "limited by substantive law and
arbitration rules." Id. at 482. N.J.S.A. 2A:23B-21(d) allows an arbitrator's
expenses and fees to "be paid as provided in the [arbitration] award." Consistent
with this statute, the Legislature vested the arbitrator with the discretion to
allocate his or her arbitration fees and costs among the parties to the arbitration.
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Applying these principles, we reject the argument that the costs of
arbitration that may be borne by plaintiff are prohibitive. Here, there is no
punitive measure contained in the Arbitration Agreement that would shift the
entire financial cost of arbitration to plaintiff in the event she did not prevail.
Further, N.J.S.A. 2A:23B-21(d) authorizes the arbitrator to allocate his or her
expenses and fees as part of any arbitration award.
While we affirm the order compelling arbitration of plaintiff's claims, the
judge improvidently dismissed plaintiff's complaint with prejudice. See GMAC
v. Pittella, 205 N.J. 572, 582 n.6 (2011) (citing N.J.S.A. 2A:23B-7(g)). The
Uniform Arbitration Act provides for stays, rather than dismissals, of matters
pending arbitration. Ibid. Therefore, we remand the matter to the trial court to
enter an amended order staying the action pending arbitration.
Affirmed as to compelling arbitration. Remanded for the entry of an
amended order consistent with this opinion. We do not retain jurisdiction.
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