DAVID GUIRGUESS VS. PUBLIC SERVICE ELECTRIC AND GAS COMPANY (L-3041-17, MIDDLESEX COUNTY AND STATEWIDE) ( 2019 )


Menu:
  •                                 NOT FOR PUBLICATION WITHOUT THE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-2704-18T1
    DAVID GUIRGUESS,
    Plaintiff-Appellant,
    v.
    PUBLIC SERVICE ELECTRIC
    AND GAS COMPANY, PUBLIC
    SERVICE ELECTRIC AND GAS
    SERVICES CORPORATION and
    RICHARD BLACKMAN,
    Defendants-Respondents.
    ______________________________
    Argued October 16, 2019 – Decided December 10, 2019
    Before Judges Fisher, Accurso, and Gilson.
    On appeal from the Superior Court of New Jersey, Law
    Division, Middlesex County, Docket No. L-3041-17.
    Darren C. Barreiro argued the cause for appellant
    (Greenbaum, Rowe, Smith & Davis, LLP, attorneys;
    Darren C. Barreiro, of counsel and on the briefs; Irene
    Hsieh, on the briefs).
    Amanda Kirsten Caldwell argued the cause for
    respondents (Fisher & Phillips LLP, attorneys; Amanda
    Kirsten Caldwell, of counsel and on the brief; David J.
    Treibman, on the brief).
    PER CURIAM
    Plaintiff David Guirguess appeals from a February 4, 2019 order granting
    defendants' motion to compel arbitration and dismissing plaintiff's complaint
    with prejudice. We affirm the portion of the order compelling arbitration, but
    remand with direction that a new order be entered staying the action pending the
    arbitration.
    I.
    In a letter dated December 17, 2008, plaintiff was offered employment for
    the position of "Nuclear Shift Supervisor" with "PSEG Power Nuclear LLC"
    (PSEG Power), a subsidiary of Public Service Enterprise Group Incorporated
    (PSEG).        The offer stated that plaintiff was joining PSEG, and that his
    "employment with PSEG P[ower] is and will be considered at-will . . . ."
    Plaintiff accepted the offer.
    On the same day plaintiff countersigned the offer letter, he signed a
    mandatory arbitration agreement (the Arbitration Agreement). Plaintiff agreed
    to arbitrate all disputes related to his employment or termination of his
    employment with "PSEG." The Arbitration Agreement also stated that "all
    disputes arising out of or relating to this [Arbitration] Agreement or my
    A-2704-18T1
    2
    employment . . . will . . . be resolved through binding arbitration administered
    by the American Arbitration Association (AAA) in accordance with" certain
    AAA rules and "the United States Arbitration Act." Specifically, the Arbitration
    Agreement stated:
    As a condition of my employment, I agree to waive my
    right to a jury trial in any action or proceeding related
    to my employment with PSEG. I understand that I am
    waiving my right to a jury trial voluntarily and
    knowingly, and free from duress or coercion. I
    understand that I have a right to consult with a person
    of my choosing, including an attorney, before signing
    this document. I agree that all disputes relating to my
    employment with PSEG or termination thereof,
    whether based upon statute, regulation, contract, tort or
    other common law principles, shall be decided by an
    arbitrator through the Labor Relations Section of the
    American Arbitration Association.
    Any and all disputes arising out of or relating to this
    Agreement or my employment, other than an
    unemployment or workers compensation claim, will, at
    the demand of either me or PSEG, whether made before
    or after the institution of any legal proceeding, be
    resolved through binding arbitration administered by
    the American Arbitration Association (AAA) in
    accordance with the Employment Dispute Resolution
    Rules of the AAA and with the United States
    Arbitration Act. The arbitration will be conducted
    before one arbitrator in Newark, New Jersey or by
    mutual consent at another agreed upon location. If the
    parties cannot agree on the arbitrator within 30 days
    after the demand for an arbitration, then either party
    may request the AAA to select the arbitrator, which
    selection will be deemed acceptable to both parties. To
    A-2704-18T1
    3
    the maximum extent practicable, the arbitration
    proceeding will be concluded within 180 days of filing
    the demand for arbitration with the AAA. All costs and
    fees of the arbitration will be shared equally by the
    parties, unless otherwise awarded by the arbitrator.
    Each party agrees to keep all such disputes and
    arbitration proceedings strictly confidential except for
    disclosure of information required by law. Each party
    further agrees to abide by and perform any award
    rendered by the arbitrator, and that a judgment of a
    court of competent jurisdiction may be entered on the
    award.
    Three years later, on May 19, 2011, plaintiff accepted the position of
    "Project Manager (Remediation) at Corporate Headquarters-Newark, NJ." The
    offer letter was sent on letterhead from "PSEG Services Corporation" and stated
    that plaintiff's employment was "with PSE&G."         The letter did not define
    "PSE&G." The offer letter also stated that plaintiff "will continue to be eligible
    to participate in PSEG's discretionary Performance Incentive Plan (PIP) u nder
    the terms and conditions of that plan." The May 19, 2011 letter did not mention
    arbitration and it did not enclose an arbitration agreement.
    Five years later, on September 9, 2016, Richard Blackman, a senior
    project manager at PSE&G sent plaintiff a letter, on PSE&G letterhead,
    informing him that his employment was terminated effective that day. The letter
    stated that plaintiff was being terminated because he had submitted inaccurate
    records concerning the hours he worked, he was "attending to a side business
    A-2704-18T1
    4
    when [he] should have been working[]," he falsified expense reports, and he had
    removed sign-in sheets from a project site he was managing.
    In May 2017, plaintiff filed a complaint against Public Service Electric &
    Gas Company (PSE&G), PSEG Services Corporation (PSEG Services), and
    Richard Blackman. Plaintiff asserted that he had been employed by PSE&G and
    PSEG Services, which he identified collectively as "PSE&G." 1 He then alleged
    that his employment had been terminated in violation of the New Jersey
    Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -14, the
    New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49, and the
    common law.
    Defendants filed a motion to compel arbitration, contending that the
    Arbitration Agreement plaintiff signed in 2008 applied to plaintiff's employment
    with PSE&G and PSEG Services. Without hearing oral argument or giving
    reasons for its decision, the trial court granted defendants' motion and, on
    September 15, 2017, entered an order compelling arbitration and dismissing
    plaintiff's complaint with prejudice.
    1
    In his complaint, plaintiff misnamed PSEG Services as Public Service Electric
    and Gas Services Corporation.
    A-2704-18T1
    5
    Plaintiff appealed and we vacated the September 15, 2017 order. We
    explained that the trial court needed to hear oral argument and give reasons for
    its decision.   Accordingly, we remanded and "directed [the trial court] to
    reconsider defendants' motion with oral argument and enter a new order,
    together with a written or oral statement of reasons in conformity with Rule 1:7-
    4." Guirguess v. Pub. Serv. Elec. and Gas Co., No. A-0511-17 (App. Div. July
    30, 2018) (slip op. at 6).
    After hearing oral argument following the remand, the court again granted
    the motion to compel arbitration and explained its reasons on the record.
    Following extensive questioning of the parties' counsel, the trial court held that
    the 2008 Arbitration Agreement covered PSEG and its subsidiaries, including
    PSE&G and PSEG Services. The court also held that when plaintiff changed
    jobs in May 2011, from PSEG Power to PSE&G, that change was effectively a
    "transfer" from one PSEG subsidiary to another because plaintiff continued to
    receive PSEG benefits.       Consequently, the trial court ruled that the 2008
    Arbitration Agreement governed plaintiff's termination from his employment in
    2016. The court memorialized its decision in an order entered on February 4,
    2019. That order compelled arbitration and dismissed plaintiff's complaint with
    prejudice. Plaintiff now appeals from the February 4, 2019 order.
    A-2704-18T1
    6
    II.
    On this second appeal, plaintiff makes three arguments. First, plaintiff
    asks us to exercise our original jurisdiction and to hold that the Arbitration
    Agreement does not govern the claims in his complaint. Second, plaintiff argues
    that the Arbitration Agreement is unenforceable because it is contrary to a
    newly-enacted provision of LAD. Finally, he contends that the Arbitration
    Agreement does not govern his claims because the Arbitration Agreement was
    with PSEG Power and it does not apply to his employment with PSE&G and
    PSEG Services. In that regard, plaintiff asserts that, at best, the Arbitration
    Agreement is ambiguous, and therefore too vague to enforce, because it failed
    to state expressly that it applied to affiliates of PSEG Power.
    We use a de novo standard of review when determining the enforceability
    of arbitration agreements. Goffe v. Foulke Mgmt. Corp., 
    238 N.J. 191
    , 207
    (2019) (citing Hirsch v. Amper Fin. Servs., LLC, 
    215 N.J. 174
    , 186 (2013)).
    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) (citing Kieffer v. Best Buy Stores, L.P., 
    205 N.J. 213
    , 222-23 (2011)); Barr v. Bishop Rosen & Co., Inc., 
    442 N.J. Super. 599
    ,
    605 (App. Div. 2015) (citing Hirsch, 215 N.J. at 186).
    A-2704-18T1
    7
    The Arbitration Agreement signed by plaintiff stated that all disputes
    concerning his employment or its termination will be "resolved through binding
    arbitration administered by the [AAA] in accordance with the Employment
    Dispute Resolution Rules of the AAA and with the United States Arbitration
    Act." The "United States Arbitration Act" obviously refers to 
    9 U.S.C. §§ 1
     to
    16, which courts usually refer to as the Federal Arbitration Act (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
    (citations omitted).
    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-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
    A-2704-18T1
    8
    for the revocation of any contract.'" Atalese, 219 N.J. at 441 (citations omitted)
    (quoting Martindale v. Sandvik, Inc., 
    173 N.J. 76
    , 85 (2002)).
    In determining whether a matter should be submitted to arbitration, a court
    must 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
    .   The FAA, however, allows the second question              the threshold
    arbitrability question   to be delegated to the arbitrator. Henry Schein, Inc. v.
    Archer & White Sales, Inc., 586 U.S. ___, 
    139 S. Ct. 524
    , 529-30 (2019).
    The Arbitration Agreement signed by plaintiff is valid. It was the product
    of mutual assent and it clearly stated that the parties were giving up their right
    to pursue all employment-related claims in court and, instead, agreed to arbitrate
    those claims before an AAA arbitrator. See Atalese, 219 N.J. at 442 ("An
    agreement to arbitrate, like any other contract, 'must be the product of mutual
    assent, as determined under customary principles of contract law.'" (quoting
    NAACP, 421 N.J. Super. at 424)).
    Contrary to plaintiff's argument, the Arbitration Agreement is neither
    invalid nor unenforceable under the recent amendments to LAD. Effective
    March 18, 2019, the Legislature amended LAD to add several sections,
    A-2704-18T1
    9
    including a section stating 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)).
    Plaintiff argues that the amendment to LAD prohibits an arbitration agreement
    that prevents LAD claims or CEPA claims from being resolved in a court
    because one of the procedural rights under LAD and CEPA is the right to pursue
    an action in court. See N.J.S.A. 10:5-13; N.J.S.A. 34:19-5.
    The 2019 amendments to LAD apply only prospectively. L. 2019, c. 39, §
    6, states: "[t]his 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." As noted earlier, the effective date of the amendments to LAD
    was March 18, 2019. The Arbitration Agreement signed by plaintiff was entered
    into on December 20, 2008. Accordingly, the new section of LAD does not
    apply to or govern the Arbitration Agreement at issue here.
    Despite that clear language, plaintiff argues that prospective application
    of the new sections of LAD does not apply to N.J.S.A. 10:5-12.7. Plaintiff also
    asserts that N.J.S.A. 10:5-12.7 should be applied under the "time of decision
    rule" because the amendment took effect before this appeal was decided. We
    A-2704-18T1
    10
    reject both those arguments as inconsistent with the plain language establishing
    an effective date of March 18, 2019, for the amendments and the legislative
    mandate for prospective application. See L. 2019, c. 39, § 6.
    Plaintiff also argues that the Arbitration Agreement does not cover his
    dispute with PSE&G. That issue, however, is a threshold arbitrability question.
    The Arbitration Agreement delegated the threshold question of the scope of the
    agreement to the arbitrator. In that regard, the Arbitration Agreement stated "all
    disputes . . . relating to this Agreement . . . will . . . be resolved through binding
    arbitration . . . ." The Arbitration Agreement also stated that the arbitration
    would be conducted in accordance with the "Employment Dispute Resolution
    Rules" of the AAA. Those rules state that "[t]he arbitrator shall have the power
    to rule on his or her own jurisdiction, including any objections with respect to
    the existence, scope or validity of the arbitration agreement."            American
    Arbitration Association (AAA), Employment Dispute Resolution Rule 6(a)
    (Nov. 1, 2009); see Oracle Am., Inc. v. Myriad Group A.G., 
    724 F.3d 1069
    ,
    1074 (9th Cir. 2013) (noting that "[v]irtually every [federal] circuit [court of
    appeals] to have considered the issue has determined that incorporation of the
    [AAA] arbitration rules [in an arbitration agreement] constitutes clear and
    unmistakable evidence that the parties agreed to arbitrate arbitrability" (citations
    A-2704-18T1
    11
    omitted)); Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 
    809 F.3d 746
    , 763-64 (3d Cir. 2016).
    Our Supreme Court has stated that "[t]he FAA constitutes the supreme law
    of the land regarding arbitration." Goffe, 238 N.J. at 207 (citing Southland Corp.
    v. Keating, 
    465 U.S. 1
    , 10 (1984)). Moreover, the Court acknowledged "that
    when the parties' contract delegates the question of the arbitrability of a
    particular dispute to an arbitrator, a court may not override the contract, even if
    the court thinks that the argument that the arbitration agreement applies to a
    dispute is 'wholly groundless.'" Id. at 211 (quoting Schein, 586 U.S. at ___, 
    139 S. Ct. at 528-29
    ).
    In summary, the Arbitration Agreement is valid and delegates the
    threshold question of the scope of the arbitration to the arbitrator . Therefore,
    under the FAA the parties are obligated to proceed to arbitration. 
    9 U.S.C. §§ 3
    , 4; Goffe, 238 N.J. at 207, 211.
    We disagree with the trial court in one respect. The trial court should not
    have dismissed the complaint with prejudice. Instead, the FAA provides that a
    party may request a stay if a court action has been commenced and that action
    involves "any issue referable to arbitration under an agreement in writing for
    such arbitration . . . ." 
    9 U.S.C. § 3
    . Accordingly, we remand with direction
    A-2704-18T1
    12
    that the trial court enter a new order. That order will provide that plaintiff's
    claims in his complaint are stayed pending arbitration, and the parties are to
    proceed to arbitration in accordance with the Arbitration Agreement.            The
    arbitrator will then decide if the Arbitration Agreement governs plaintiff's
    termination from PSE&G. If so, the arbitrator will then decide the merits of
    plaintiff's claims. If the arbitrator determines that plaintiff's claims do not fall
    within the scope of the Arbitration Agreement, then the stay can be lifted and
    the merits of plaintiff's claims will be decided in the trial court.
    Finally, our ruling that the Arbitration Agreement is valid and that the
    parties must proceed to arbitration moots plaintiff's argument concerning our
    exercise of original jurisdiction. Consequently, we do not reach that issue.
    Affirmed in part, and remanded for further proceedings consistent with
    this opinion. We do not retain jurisdiction.
    A-2704-18T1
    13