Paul Jaworski, Alexander Haggis and Robert Holewinski Vs. ( 2015 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5259-13T2
PAUL JAWORSKI, ALEXANDER
HAGGIS and ROBERT HOLEWINSKI, APPROVED FOR PUBLICATION
Plaintiffs-Appellants, July 23, 2015
APPELLATE DIVISION
v.
ERNST & YOUNG US LLP, TRACEY
GUNTER and RICHARD BAKER,
Defendants-Respondents.
_________________________________________
Argued February 23, 2015 – Decided July 23, 2015
Before Judges Lihotz, Espinosa and St. John.
On appeal from Superior Court of New Jersey,
Law Division, Hudson County, Docket No. L-
5223-13.
Christopher P. Lenzo argued the cause for
appellants (Lenzo & Reis, LLC, attorneys;
Mr. Lenzo, of counsel and on the briefs).
Robert T. Szyba (Seyfarth Shaw LLP) argued
the cause for respondents (Mr. Szyba and
Loren Gesinsky (Seyfarth Shaw LLP), of the
New York bar, admitted pro hac vice,
attorneys; Mr. Szyba and Mr. Gesinsky, on
the brief).
The opinion of the court was delivered by
ST. JOHN, J.A.D.
Plaintiffs Paul Jaworski, Alexander Haggis and Robert
Holewinski appeal from the trial court's order compelling
arbitration of their age-discrimination suit against defendants
Ernst & Young US LLP (EY) and two of its executives, Tracey
Gunter and Richard Baker. Plaintiffs challenge the
enforceability of EY's mandatory arbitration policy on
constitutional, statutory and common law grounds. The employees
were provided notice of changes to the arbitration policy by
electronic distribution. We must determine whether, if the
policy states assent is given by continued employment, remaining
employed with the company evinces an unmistakable indication
that the employee affirmatively has agreed to arbitrate his
claims pursuant to the changed policy. Having reviewed the
arguments advanced in light of the record and governing law, we
affirm.
I.
The record discloses the following facts and procedural
history. Plaintiffs are former employees of EY's Secaucus
office whose employment was terminated in August 2012. Jaworski
worked for EY for thirteen years and was a Finance Director in
the Global Finance Group before his employment was terminated at
the age of sixty-one. Haggis was fifty-seven years old when EY
terminated his employment after seventeen years, at which time
he was a Manager of Accounting. Holewinski worked at EY for
over eleven years before he was fired, at age fifty-five, while
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working as an Associate Director of Finance in the Global
Infrastructure Group.
In August 2002, EY initiated the Common Ground Program (the
Program), a set of mandatory alternative dispute resolution
(ADR) procedures for its employees. The Program provided in
pertinent part:
All claims, controversies, or other disputes
between [EY] and an Employee that could
otherwise be resolved by a court, [subject
to limited exceptions enumerated within]
("Covered Disputes"), shall be resolved
through the Program, and both [EY] and the
Employee expressly waive any right to
resolve any Covered Dispute through any
other means. Neither [EY] nor an Employee
will be able to sue in court in connection
with a Covered Dispute.
[(Emphasis added).]
As a non-exhaustive list of examples of Covered Disputes
within the Program's ambit, EY provided: (1) "[c]laims based on
federal statutes" including civil rights and anti-discrimination
laws; (2) "[c]laims based on state statutes and local ordinances
including state and local anti-discrimination laws"; (3)
"[c]laims based on common law theories such as tort and
contract"; (4) "[c]laims concerning wages, salary and incentive
compensation programs" subject to limited exceptions; and (5)
"[c]laims concerning application, interpretation and enforcement
of the Program." The provision further emphasized that "[a]ll
3 A-5259-13T2
Covered Disputes, whether or not listed here, must be resolved
through the Program."
In the event of a Covered Dispute, the Program first
required "the parties . . . try to resolve the [dispute] through
mediation" provided by the CPR Institute for Dispute Resolution
(CPR). Should a dispute remain unresolved following mediation,
either party was then able to proceed with binding arbitration,
also through CPR. Any dispute for $250,000 or less was to be
decided by one arbitrator, whereas any controversy involving
more than $250,000, "or if the party initiating [arbitration] so
chooses," went before a three-arbitrator panel. As to
discovery, the program limited each party to one deposition pre-
hearing, unless the arbitrator(s) found "the party seeking the
[additional] discovery ha[d] a substantial need for it and . . .
the discovery sought [was] consistent with the expedited nature
of arbitration and not unduly burdensome."
In addition to requiring the initiating party to pay any
filing fees as well as the party's own attorney's fees, the
Program provided:
The parties' intent is for the cost of the
arbitration (including administration and
arbitrator fees) to be shared equally to the
extent permitted by law. However, the
portion of the cost to be paid by an
Employee shall be adjusted to the extent, if
any, necessary for the parties' agreement to
4 A-5259-13T2
arbitrate to be enforced in accordance with
applicable law.
Finally, the ADR policy included a provision on Termination
or Amendment of the Program:
[EY] may propose termination or amendment of
the program at any time by providing notice
to Employees through the Daily Connection
[daily email bulletin] or other electronic
notice. An Employee indicates his or her
agreement to the proposed amendment or
termination, and such proposed changes
become effective as to that Employee, by
continuing his or her employment with [EY]
for at least three days after the notice is
provided. Termination or amendment shall
not affect a Covered Dispute as to which
[mediation] has already been initiated.
[(Emphasis added).]
On July 29, 2002, EY announced the implementation of the
Program to all United States (U.S.) personnel, including
plaintiffs, via its Daily Connection email bulletin. The July
29 message provided a brief synopsis of the Program and directed
the reader to two links, one leading to the policy's provisions
in their entirety in EY's employee manual and the other to an
article about the Program.
On March 23, 2006, EY announced revisions to the Program
through a Daily Connection message to all U.S. employees,
including plaintiffs. The three main changes, as identified in
the email, were: (1) "Employees now have a choice of three ADR
providers" — CPR, the American Arbitration Association (AAA) and
5 A-5259-13T2
JAMS; (2) "[e]xcept for a fee equal to what it would have cost
the employee to sue in court, the firm will pay the entire cost
of mediation (not including any attorney's fees)"; and (3)
"[d]isputes up to $1 million will be heard by a single
arbitrator, rather than by a three-arbitrator panel."
The amendments also clarified certain important provisions
through highlighting and italicization, unlike the 2002 version.
For instance, under the 2006 Program, "[n]either [EY] nor an
employee will be able to sue in court in connection with a
Covered Dispute." "All Covered Disputes . . . must be resolved
through the Program." Further, "[a]n Employee indicates his or
her agreement to the Program and is bound by its terms and
conditions by beginning or continuing employment with [EY] after
May 1, 2006 (the 'Effective Date')."
The 2006 amendments provided for expanded discovery,
including a party's right to depose three individuals prior to
any arbitration hearing. As to arbitration fees:
1. Filing and administrative fees. [EY]
will pay all filing and administrative fees
in connection with the arbitration, except
as follows:
a. An Employee starting
[arbitration] shall contribute the
Court Equivalent Fee or the
Employee's fee specified in the
Arbitration Rules, whichever is
less. An Employee who has paid
the Court Equivalent Fee in
6 A-5259-13T2
[mediation] need not contribute
when initiating [arbitration].
. . . .
2. Arbitrator fees and other costs. The
parties' intent is for the Arbitrator fees
and other costs of the arbitration, other
than filing and administrative fees, to be
shared equally to the extent permitted by
law and the Arbitration Rules. However, the
portion of the cost to be paid by an
Employee will be adjusted to the extent, if
any, necessary for the parties' agreement to
arbitrate to be enforced.
Finally, the 2006 policy amended the "Termination or
Amendment" clause, so that:
[EY] may propose termination or amendment of
the Program by providing notice to Employees
through the Daily Connection or other
electronic notice on at least two occasions.
An Employee indicates his or her agreement
to the proposed amendment or termination,
and such proposed change becomes effective
as to that Employee, by continuing his or
her employment with [EY] for at least thirty
days after the second notice is provided.
[(Emphasis added).]
However, as in the original policy, "[t]ermination or amendment
will not affect a Covered Dispute as to which [mediation] had
been initiated when the termination or amendment was proposed."
On April 25, 2006, EY sent the revised terms to all U.S.
personnel via email. EY's records reflect that plaintiffs
received the April 25 email.
7 A-5259-13T2
On June 18, 2007, EY distributed another revised version of
the Program via email to U.S. personnel, including plaintiffs.
As with the previous iterations of the Program, an employee
indicates agreement with its provisions by continuing employment
with EY after the "Effective Date," in this case July 18, 2007.
The main substantive difference between the 2006 and the 2007
versions is that under the latter an employee may only choose
between AAA and JAMS, not CPR, for purposes of mediation and
arbitration.
On August 3, 2007, Jaworski signed an EY Employment
Agreement acknowledging and assenting to the terms of the
Program. The last paragraph of the agreement states:
I HAVE READ THIS AGREEMENT AND ATTACHMENT
AND FULLY UNDERSTAND THEIR TERMS. I
ACKNOWLEDGE THAT I HAVE AGREED TO WAIVE ANY
RIGHT I MAY HAVE TO HAVE A DISPUTE BETWEEN
MYSELF AND [EY] DETERMINED BY A COURT OF LAW
AND THAT ALL SUCH DISPUTES SHALL BE RESOLVED
THROUGH MEDIATION AND ARBITRATION.
On January 27, 2010, Haggis signed a similar contract agreeing
to arbitration of any Covered Disputes. Holewinski, however,
signed his Employment Agreement on May 19, 2004, but did not
sign a new agreement after either the 2006 or 2007 amendments to
the Program became effective. Nevertheless, Holewinski, Haggis
and Jaworski all continued their employment with EY after July
18, 2007.
8 A-5259-13T2
Subsequent to their termination, plaintiffs filed the
instant suit in the Law Division. In lieu of an answer,
defendants moved to dismiss and compel arbitration, which
plaintiffs opposed. The judge denied defendants' motion,
concluding, although plaintiffs' claims fell within the meaning
of Covered Disputes under the Program, because the record was
"devoid of any indication that . . . plaintiffs signed any
paperwork regarding the arbitration agreement," the Program was
unenforceable as applied to them.1 Defendants moved for
reconsideration and, in support of their motion, attached copies
of the three agreements signed by plaintiffs individually.
Thereafter, the trial court granted defendants' motion for
reconsideration and dismissed plaintiffs' claims without
prejudice in favor of arbitration.
This appeal ensued.
II.
We begin by noting the applicable legal principles that
guide our analysis. Orders compelling or denying arbitration
are deemed final and appealable as of right. See R. 2:2-3(a);
Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). We
exercise plenary review of the trial court's decision regarding
1
The signed employment agreements referenced above were not
included with defendants' initial filing.
9 A-5259-13T2
the applicability and scope of an arbitration agreement. See
Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 446
(2014), cert. denied, 83 U.S.L.W. 3888 (U.S. June 8, 2015).
Similarly, the issue of whether parties have agreed to arbitrate
is a question of law that is reviewed de novo. See Hirsch,
supra, 215 N.J. at 186; see also Manalapan Realty, L.P. v. Twp.
Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's
interpretation of the law and the legal consequences that flow
from established facts are not entitled to any special
deference."). Nevertheless, "[i]n reviewing such orders, we are
mindful of the strong preference to enforce arbitration
agreements, both at the state and federal level." Hirsch,
supra, 215 N.J. at 186.
A.
We first must determine which iteration of the Program
controls as to each plaintiff's employment relationship with EY.
Jaworski and Haggis signed employment agreements on August 3,
2007, and January 27, 2010, respectively. These agreements
unambiguously referenced and assented to the terms of the
Program, including the 2007 amendments, particularly with
regards to "WAIV[ING] ANY RIGHT [THE EMPLOYEE] MAY HAVE TO HAVE
A DISPUTE BETWEEN MYSELF AND [EY] DETERMINED BY A COURT OF LAW."
Jaworski's and Haggis' signatures constituted "explicit,
10 A-5259-13T2
affirmative agreement[s] that unmistakably reflect[ed] the
employee[s'] assent" to be bound by the 2007 amendments to the
Program and arbitrate any employment-related disputes in lieu of
proceeding in court. See Leodori v. Cigna Corp., 175 N.J. 293,
303, cert. denied, 540 U.S. 938, 124 S. Ct. 74, 157 L. Ed. 2d
250 (2003). Therefore, there can be no dispute they are each
bound by its terms as in force as of each party's termination
date.
However, Holewinski signed his employment agreement with EY
in 2004, subsequent to the initial enactment of the Program in
2002, but before the later amendments. Relying on Leodori, he
argues he cannot be forced to arbitrate under the policy in
effect as of his termination date, because he never explicitly
indicated his agreement thereto. Any attempt to compel
arbitration, Holewinski submits, must be done under the original
2002 Program.2 We disagree.
In Leodori, the Court declined to enforce an employment
agreement's arbitration provision where there was no evidence
the plaintiff-employee assented to the agreement's terms through
his signature, and where there was no "other unmistakable
2
Holewinski goes on to challenge the 2002 Program as
unenforceable on other grounds, specifically, for failing to
provide for a neutral arbitration forum. For the reasons that
follow, we need not address this argument, which is limited
solely to the Program in its original form.
11 A-5259-13T2
indication that the employee affirmatively had agreed to
arbitrate his claims." Leodori, supra, 175 N.J. at 306-07.
However, in reaching its decision, the Court clarified, "'[t]o
enforce a waiver-of-rights provision in this setting, the Court
requires some concrete manifestation of the employee's intent as
reflected in the text of the agreement itself.'" Id. at 300
(alteration in original) (emphasis added) (quoting Garfinkel v.
Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124,
135 (2001)).
Here, unlike Leodori, where the employer's "own documents
contemplated [the employee]'s signature as a concrete
manifestation of his assent," id. at 306, EY's ADR policy
provided: "An Employee indicates his or her agreement to the
Program and is bound by its terms and conditions by beginning or
continuing employment with [EY] after July 18, 2007 (the
'Effective Date')." Not only did Holewinski continue with EY
after the Effective Date, thus manifesting his intent to be
bound pursuant to the unambiguous and specifically-emphasized
terms of the Program, he did so for an additional five years
until his termination in 2012. See Martindale v. Sandvik, Inc.,
173 N.J. 76, 88-89 (2002) ("[I]n New Jersey, continued
employment has been found to constitute sufficient consideration
to support certain employment-related agreements." (citing
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Quigley v. KPMG Peat Marwick, LLP, 330 N.J. Super. 252, 265
(App. Div.), certif. denied, 165 N.J. 527 (2000); Hogan v.
Bergen Brunswig Corp., 153 N.J. Super. 37, 43 (App. Div.
1977))).3
Therefore, consistent with Leodori, we conclude Holewinski,
Jaworski and Haggis are bound by the Program in its iteration as
of the date of their termination.
B.
Plaintiffs challenge EY's mandatory ADR policy as
unenforceable on several grounds. Specifically, they aver: (1)
the Program constitutes an illusory agreement because EY retains
the right to unilaterally modify its terms; (2) plaintiffs never
agreed to arbitrate claims relating to the termination of their
employment; (3) the Program is not a valid waiver of plaintiffs'
constitutional and statutory rights to a jury trial; and (4) the
Program is unconscionable since it imposes substantial forum
3
Moreover, although plaintiffs do not challenge the adequacy
of the email notice of changes to the Program, we agree with
those courts that have held "an e-mail, properly couched, can be
an appropriate medium for forming an arbitration agreement."
Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 555-56
(1st Cir. 2005) ("[W]e easily can envision circumstances in
which a straightforward e-mail, explicitly delineating an
arbitration agreement, would be appropriate."). EY's June 18,
2007 email to employees contained the Program's terms in their
entirety, with special emphasis on those portions affecting
employees' rights.
13 A-5259-13T2
costs on plaintiffs they would not incur if proceeding in a
court of law. We address each argument seriatim.
Plaintiffs first argue the Program constitutes an illusory
promise because, given EY's right to modify or terminate, it
impermissibly reserves the decision whether to resolve a
particular employment-related dispute through mediation and
arbitration to EY's sole discretion.4 Moreover, they contend the
notice provision concerning when and how any amendments to EY's
ADR policy take effect is functionally meaningless, because an
employee has no means of rejecting a proposed amendment short of
quitting his or her job.
As a general matter, both the Federal Arbitration Act
(FAA), 9 U.S.C.A. §§ 1-16, and the New Jersey Arbitration Act
(NJAA), N.J.S.A. 2A:23B-1 to -32, promote federal and state
4
Plaintiffs concede there is no controlling New Jersey
precedent supporting this proposition, but rely upon a litany of
decisions from other jurisdictions to contend EY's "unilateral
reservation of the right to modify or terminate" the arbitration
Program invalidates it. See Morrison v. Amway Corp., 517 F.3d
248, 254-55 (5th Cir. 2008); Al-Safin v. Circuit City Stores,
Inc., 394 F.3d 1254, 1259-60 (9th Cir. 2005); Ingle v. Circuit
City Stores, Inc., 328 F.3d 1165, 1179 (9th Cir. 2003), cert.
denied, 540 U.S. 1160, 124 S. Ct. 1169, 157 L. Ed. 2d 1204
(2004); Floss v. Ryan's Family Steak Houses, Inc., 211 F.3d 306,
315-16 (6th Cir. 2000), cert. denied, 531 U.S. 1072, 121 S. Ct.
763, 148 L. Ed. 2d 664 (2001); Keanini v. United Healthcare
Servs., Inc., 33 F. Supp. 3d 1191, 1195 (D. Haw. 2014); Phox v.
Atriums Mgmt. Co., Inc., 230 F. Supp. 2d 1279, 1282-83 (D. Kan.
2002); Cheek v. United Healthcare of the Mid-Atl., Inc., 378 Md.
139, 161 (2003).
14 A-5259-13T2
policies favoring arbitration as a means of resolving disputes
by establishing the validity of arbitration provisions. See 9
U.S.C.A. § 2; N.J.S.A. 2A:23B-6. Section 2 of the FAA states
such provisions "shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the
revocation of any contract," which the United States Supreme
Court has interpreted as reflecting the "'fundamental principle
that arbitration is a matter of contract.'" AT&T Mobility LLC
v. Concepcion, 563 U.S. ___, ___, 131 S. Ct. 1740, 1745, 179 L.
Ed. 2d 742, 751 (2011) (quoting Rent-A-Center, W., Inc. v.
Jackson, 561 U.S. 63, 67, 130 S. Ct. 2772, 2776, 177 L. Ed. 2d
403, 410 (2010)); see also N.J.S.A. 2A:23B-6 (mirroring FAA's
language).
Due to the preemptive effect of the FAA, a state may not
invalidate an agreement to arbitrate on public-policy grounds or
by defenses "'that apply only to arbitration or that derive
their meaning from the fact that an agreement to arbitrate is at
issue.'" Atalese, supra, 219 N.J. at 441 (quoting Concepcion,
supra, 563 U.S. at ___, 131 S. Ct. at 1746, 177 L. Ed. 2d at
751). However, "state courts remain free to decline to enforce
an arbitration provision by invoking traditional legal doctrines
governing the formation of a contract and its interpretation."
NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J. Super.
15 A-5259-13T2
404, 428 (App. Div.), certif. granted, 209 N.J. 96 (2011),
appeal dismissed, 213 N.J. 47 (2013).
Under general principles of contract law, an agreement,
including one to arbitrate disputes, based only upon an illusory
promise is unenforceable. See Del Sontro v. Cendant Corp., 223
F. Supp. 2d 563, 578 (D.N.J. 2002) (citing Bryant v. City of
Atl. City, 309 N.J. Super. 596, 621 (App. Div. 1998)). "An
illusory promise has been defined as[] a 'promise which by [its]
terms make[s] performance entirely optional with the promisor
whatever may happen, or whatever course of conduct in other
respects he may pursue.'" Bryant, supra, 309 N.J. Super. at 620
(second and third alterations in original) (quoting Restatement
(Second) of Contracts, § 2 cmt. e (1979)) (internal quotations
marks omitted); see also Customized Distribution Servs. v.
Zurich Ins. Co., 373 N.J. Super. 480, 493 (App. Div. 2004) ("An
illusory promise is defined as one 'in which the promisor does
not bind himself.'" (quoting Black's Law Dictionary 1213 (6th
ed. 1990))), certif. denied, 183 N.J. 214 (2005). Generally,
however, "courts should seek to avoid interpreting a contract
such that it is deemed illusory." Bryant, supra, 309 N.J.
Super. at 621 (citing Russell v. Princeton Labs., Inc., 50 N.J.
30, 38 (1967); Nolan v. Control Data Corp., 243 N.J. Super. 420,
431 (App. Div. 1990)).
16 A-5259-13T2
Here, despite plaintiffs' suggestions otherwise, the
Program was not founded on an illusory promise by EY to resolve
any Covered Disputes through arbitration. The provision
covering Termination or Amendment of the Program reads:
[EY] may propose termination or amendment of
the Program by providing notice to Employees
through the Daily Connection or other
electronic notice on at least two occasions.
An Employee indicates his or her agreement
to the proposed amendment or termination,
and such proposed change becomes effective
as to that Employee, by continuing his or
her employment with [EY] for at least thirty
days after the second notice is provided.
[(Emphasis added).]
On its face, the provision provides if EY changes its
arbitration policy, even in response to a previously-accrued
claim, any change does not become binding on a particular
employee until thirty days after he or she receives the second
electronic notice of the amendment. Construing the Termination
or Amendment clause's language as plaintiffs suggest would
functionally read out the notice provision.5
5
Plaintiffs' extra-jurisdictional authority, most of which is
readily distinguishable, need not be addressed at length. See
Morrison, supra, 517 F.3d at 256 (employer sought to
retroactively apply ADR policy to facts pre-existing the
proposal or adoption thereof); Al-Safin, supra, 394 F.3d at 1260
(employer argued amendment to ADR policy provided reasonable
notice to former employees); Floss, supra, 211 F.3d at 315-16
(employer retained the "right to alter the applicable rules and
procedures without any obligation to notify"); Keanini, supra,
(continued)
17 A-5259-13T2
Moreover, plaintiffs erroneously seek to treat the language
that "[t]ermination or amendment will not affect a Covered
Dispute as to which [mediation] has been initiated when the
termination or amendment was proposed" as exhaustive, so that
the only disputes to which an amendment to the Program would not
apply are those already in mediation at the time EY announced
the change. No such exhaustiveness is explicit or even
suggested in the language of that sentence itself or the
surrounding provisions. Therefore, even if EY altered the
Program before an employee initiated mediation for an accrued
claim, that employee, pursuant to the explicit terms of the
policy, would have thirty days to initiate before the proposed
amendment altered his or her rights under the former language.
This reading of the notice provision does not render the
language regarding the inapplicability of any termination or
amendment to a Covered Dispute for which mediation has been
(continued)
33 F. Supp. 3d at 1195 (ADR policy provided: "All arbitrations
shall be conducted in accordance with the Policy in effect on
the date [employer] receives the Demand for Arbitration"
(emphasis added)); Phox, supra, 230 F. Supp. 2d at 1283
(employer reserved "the right to alter, amend, eliminate or
modify [the arbitration] agreement prior to the initiation of
any proceeding controlled or falling under the terms of th[e
a]greement"); Cheek, supra, 378 Md. at 149 (employer retained
"the right to alter, amend, modify, or revoke the . . . [p]olicy
at its sole and absolute discretion at any time with or without
notice").
18 A-5259-13T2
initiated meaningless or superfluous. Rather, the latter
clarifies that an employee who has already begun mediation need
not take any additional action post-proposal of an amendment in
order to preserve his or her rights under the status quo of the
Program, pre-amendment.
In light of the principle that "courts should seek to avoid
interpreting a contract such that it is deemed illusory,"
Bryant, supra, 309 N.J. Super. at 621, our construction of the
Termination or Amendment clause provides a sound and equitable
response to the parties' concerns. First, an employer is able
to respond to developments in the law by adopting changes to its
ADR policy without the prohibitively burdensome and costly
obligation to negotiate the terms with each and every one of its
employees. Indeed, we note that the facts of this case
underscore the wisdom of endowing employers with such
flexibility. Even a cursory review of EY's ADR policy, as it
has developed since its initial enactment in 2002, demonstrates
EY has repeatedly responded to positive developments in the law
to amend its ADR procedures to provide greater, not fewer,
protections for its employees in resolving employment-related
disputes through ADR.
Equally important, employees need not fear that an employer
may change the terms to retroactively alter an employee's
19 A-5259-13T2
rights. All an employee must do, pursuant to the unambiguous
terms of the agreement, to ensure he or she can arbitrate under
the terms in existence at the time of accrual is provide written
notice to EY of the intention to mediate no later than thirty
days after receiving the second electronic notice of a proposed
amendment to or termination of the Program. We therefore
determine EY's ADR Program is not unenforceable as an illusory
contract.
Plaintiffs next argue the trial court erred in dismissing
their suit in favor of arbitration because they never agreed to
arbitrate claims relating to the termination of their
employment. Relying on Garfinkel and Quigley, they contend EY's
failure to include language relating to "discharge," "dismissal"
or "termination" in defining what constitutes a Covered Dispute
subject to mandatory arbitration removes plaintiffs' claims
arising from termination from the Program's ambit. We are not
persuaded.
In Garfinkel, the Court concluded an arbitration provision,
which stated "that 'any controversy or claim' that arises from
the [employment] agreement or its breach shall be settled by
arbitration," was "insufficient to constitute a waiver of [the]
plaintiff's" statutory claims. Garfinkel, supra, 168 N.J. at
134; see also Quigley, supra, 330 N.J. Super. at 272 (noting the
20 A-5259-13T2
lack of any reference to statutory claims in arbitration
clause). However, in providing guidance, the Court advised:
"The better course would be the use of
language reflecting that the employee, in
fact, knows that other options such as
federal and state administrative remedies
and judicial remedies exist; that the
employee also knows by [agreeing to] the
contract, those remedies are forever
precluded; and that, regardless of the
nature of the employee's complaint, he or
she knows that it can only be resolved by
arbitration."
[Garfinkel, supra, 168 N.J. at 135 (quoting
Alamo Rent A Car, Inc. v. Galarza, 306 N.J.
Super. 384, 394 (App. Div. 1997)).]
Plaintiffs contended their claims arose under the Law
Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49. Unlike
the provisions in Garfinkel or Quigley, EY's Program explicitly
states "[c]laims based on state statutes and local ordinances,
including state and local anti-discrimination laws," are Covered
Disputes. By specifically including state statutory anti-
discrimination claims as Covered Disputes, EY clearly and
unequivocally put plaintiffs on notice that any claims arising
under the LAD, regarding termination or otherwise, were subject
to mandatory arbitration. See also Atalese, supra, 219 N.J. at
444 ("No particular form of words is necessary to accomplish a
clear and unambiguous waiver of rights.").
21 A-5259-13T2
Plaintiffs next argue the ADR policy is not a valid waiver
of their constitutional and statutory rights to a jury trial.
They aver the decisions in Atalese and State v. Blann, 217 N.J.
517 (2014), when read in conjunction,
stand for the proposition that when parties
seek to arbitrate a claim that would
otherwise be submitted to a jury, the
arbitration agreement must inform the
parties of (1) the number of jurors, (2) the
parties' rights to choose the jurors, (3)
how many jurors would have to agree on a
verdict, and (4) who will decide the dispute
instead of the jurors.
This argument is similarly unavailing.
In Atalese, the Court emphasized:
[W]hen a contract contains a waiver of
rights — whether in an arbitration or other
clause — the waiver "must be clearly and
unmistakably established." Thus, a "clause
depriving a citizen of access to the courts
should clearly state its purpose." We have
repeatedly stated that "[t]he point is to
assure that the parties know that in
electing arbitration as the exclusive
remedy, they are waiving their time-honored
right to sue."
[Atalese, supra, 219 N.J. at 444 (second
alteration in original) (quoting Garfinkel,
supra, 168 N.J. at 132).]
Unlike the arbitration clause struck down in Atalese, here,
EY's written ADR policy unambiguously provides, with special
emphasis through highlighting and italicization, "[n]either [EY]
nor an Employee will be able to sue in court in connection with
22 A-5259-13T2
a Covered Dispute." Therefore, the Program complies with
Atalese and plaintiffs' arguments to the contrary are without
merit. Furthermore, we find plaintiffs' contention that Blann,
which addressed the issue of when a criminal defendant's waiver
of a jury trial was knowing and voluntary, see Blann, supra, 217
N.J. at 518, is applicable in resolving the present dispute to
be without sufficient merit to warrant further discussion in a
written opinion. R. 2:11-3(e)(1)(E).
Finally, plaintiffs contend the arbitration agreement is
unconscionable because it exposes them to significant expenses
related to the cost of paying arbitrators, which would not be
incurred in a court of law. Plaintiffs rely on several extra-
jurisdictional decisions to argue cost-sharing provisions for
arbitration expenses are invalid. Additionally, plaintiffs
point to a footnote in Atalese, where the Court noted that its
opinion "should not be read to approve that part of the
arbitration clause that states: 'The costs of arbitration,
excluding legal fees, will be split equally or born by the
losing party, as determined by the arbitrator.'" Atalese,
supra, 219 N.J. at 448 n.3. Plaintiffs argue this statement
implicitly invalidates EY's fee-sharing provision.
The Supreme Court has recognized that "the prospects of
having to shoulder all the costs of arbitration could chill
23 A-5259-13T2
. . . [plaintiffs] from pursuing their statutory claims through
mandatory arbitration." Delta Funding Corp. v. Harris, 189 N.J.
28, 42 (2006). In Delta Funding, the Court invalidated an
arbitration cost-shifting provision that potentially "could
force [the plaintiff-consumer] to bear the risk that she will be
required to pay all arbitration costs" as an unconscionable
"deterrent to the vindication of her statutory rights." Id. at
43. In Atalese, the Court again expressed its displeasure with
terms that potentially shift the entire cost of arbitration to
the losing party. See Atalese, supra, 219 N.J. at 448 n.3.
However, both Delta Funding and Atalese are
distinguishable.6 Here, unlike those matters, EY's fee-sharing
provision does not provide for the potential shifting of the
entire cost of arbitrating to a non-prevailing employee.
Rather, the provision states: "The parties' intent is for
Arbitrator fees and other costs of the arbitration . . . to be
shared equally to the extent permitted by law and the
Arbitration Rules." Any portion an employee might pay towards
arbitration costs is to be limited by substantive law and
6
Alexander v. Anthony International, L.P., 341 F.3d 256 (3d
Cir. 2003), upon which plaintiffs also rely, is similarly
distinguishable. See id. at 267-68 (invalidating fee provision
requiring losing party to "bear the costs of the arbitrator's
fees and expenses").
24 A-5259-13T2
arbitration rules.7 There is no language suggesting employees
would have to shoulder the entire pecuniary burden of the
arbitration process. Therefore, we determine EY's fee-sharing
provision does not render its ADR policy unconscionable.8
For these reasons, we conclude EY's ADR policy, as
reflected in the 2007 iteration of its Program, is valid and
enforceable as to plaintiffs, and hold the trial court properly
dismissed the complaint in favor of mandatory arbitration.
Affirmed.
7
Both AAA's and JAMS' rules governing arbitration of
employment-related disputes limit an employee's financial burden
to the initial filing fee, with the employer being responsible
for the balance of the costs. See American Arbitration
Association, Employment Arbitration Rules & Mediation Procedures
1-2 (Nov. 1, 2014), available at https://www.adr.org/
aaa/ShowPDF?doc=ADRSTAGE2025292; JAMS, Employment Arbitration
Rules & Procedures 26 (July 1, 2014), available at
http://www.jamsadr.com/files/Uploads/Documents/JAMS-
Rules/JAMS_employment_arbitration_rules-2014.pdf.
8
Furthermore, even if the fee-sharing provision was
unconscionable, which we hold it is not, the Program contains a
clause providing for broad severability in the event any portion
of its terms is found unenforceable. See Delta Funding, supra
189 N.J. at 46 ("[I]f an arbitrator were to interpret all of the
disputed provisions in a manner that would render them
unconscionable, we have no doubt that those provisions could be
severed [in light of the arbitration policy's broad severability
clause] and that the remainder of the arbitration agreement
would be capable of enforcement.").
25 A-5259-13T2