TAMMIE S. NAU VS. DAVID CHUNG (C-000145-18, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-5315-17T1
TAMMIE S. NAU,
Plaintiff-Appellant,
v.
DAVID CHUNG and ENGLEWOOD
LAB, INC.,
Defendants-Respondents.
________________________________
Argued May 15, 2019 – Decided June 24, 2019
Before Judges Accurso, Vernoia and Moynihan.
On appeal from the Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No. C-
000145-18.
Michael S. Horn argued the cause for appellant (Archer
& Greiner, PC, attorneys; Steven B. Harz and Michael
S. Horn, on the briefs).
Claudia A. Costa and Marc Cytryn argued the cause for
respondents (Gordon & Rees, LLP, attorneys for
Englewood Lab, Inc.; Kaufman Dolowich Voluck,
LLP, attorneys for David Chung; Gregory S. Hyman,
Marc Cytryn and Hillary A. Fraenkel, on the joint
brief).
PER CURIAM
Plaintiff Tammie S. Nau appeals from a Chancery Division order
dismissing her complaint pursuant to Rule 4:6-2(a) for lack of jurisdiction and
directing that her claims proceed in mediation and arbitration in accordance with
defendant Englewood Lab, Inc.'s (Englewood) arbitration policy. We affirm.
I.
Plaintiff filed a complaint against Englewood and its chief executive
officer, defendant David Chung. The complaint alleged Chung offered plaintiff
a position as Englewood's Executive Vice President and that she would receive
"a substantial number of shares" in Englewood "once she started working,"
equating to an equity interest in the company of no less than $7 million and no
more than $9 million.
Plaintiff accepted the position and entered into a December 12, 2017
written employment agreement with Englewood. Plaintiff agreed to "comply
with all [of Englewood's] policies, procedures, rules and regulations, both
written and oral." The agreement further provided for "[s]tock [o]ption terms to
be finalized as promised by [the] end of 2018." The agreement did not otherwise
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provide for plaintiff's receipt of shares of stock or an equity interest in
Englewood.
Shortly after signing the employment agreement, plaintiff received
Englewood's Employee Handbook. The handbook's introduction states "the
procedures, practices, policies and benefits described in the [h]andbook may be
modified or discontinued by [Englewood] at any time, as it deems appropriate
and at its sole discretion. Nothing in this [h]andbook creates a contract or
otherwise modifies the at-will employment relationship."
Section 710 of the handbook addresses dispute resolution, mediation, and
arbitration. In pertinent part, it provides as follows:
If a dispute cannot be resolved internally, you and
ENGLEWOOD LAB agree to first engage in mediation,
and then arbitrate any remaining disputes.
For purposes of this policy, the following definitions
apply:
"ENGLEWOOD LAB" or the "Company" shall mean
ENGLEWOOD LAB, LLC, its officers, directors,
owners, managers, employees, agents, [affiliated]
entities, subsidiaries, clients, vendors, and parent
companies.
"Dispute", "Claim", or "Controversy" shall be broadly
interpreted to mean any claim you may have against
ENGLEWOOD LAB, or ENGLEWOOD LAB may
have against you, relating to, arising from, or having
any relationship or connection whatsoever with your
employment with ENGLEWOOD LAB or the
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termination thereof. This applies to claims including,
but not limited to, claims for wages or other
compensation due, claims for breach of any contract or
covenant, tort claims including but not limited to libel,
slander, fraud, and intentional infliction of emotional
distress, claims for discrimination (including, but not
limited to, race, sex, religion, national origin, age,
marital status, or medical condition, handicap or
disability), claims for benefits, and claims for violation
of any federal, state, or other governmental law, statute,
regulation or ordinance, except claims excluded by the
terms of this agreement. This includes claims arising
under the Age Discrimination in Employment Act
(ADEA), Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act (ADA), the Family and
Medical Leave Act (FMLA), the Fair Labor Standards
Act (FLSA), 42 U.S.C. § 1981, including amendments
to all the foregoing statutes, the Employee Polygraph
Protection Act, the New Jersey Law Against
Discrimination, the New Jersey Conscientious
Employee Protection Act, or any other applicable
federal, state, or local laws, and/or common law
regulating employment termination, misappropriation,
breach of the duty of loyalty, the law of contract or the
law of tort; including, but not limited to, claims for
malicious prosecution, wrongful discharge, wrongful
arrest/wrongful imprisonment, intentional/negligent
infliction of emotional distress or defamation.
"Disputes", "Claims" or "Controversies" does not
include claims for state employment insurance (e.g.,
unemployment compensation, workers' compensation,
worker disability compensation) or under the National
Labor Relations Act.
....
Neither ENGLEWOOD LAB nor you can file a civil
lawsuit in court against the other party relating to such
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claims, with the exception of claims for emergent relief
related to the misuse or misappropriation of
confidential business information and/or violation of
the confidentiality and non-disclosure agreement. If a
party files a lawsuit in court to resolve claims subject
to arbitration, both agree that the court shall dismiss the
lawsuit and require the claim to be resolved through
arbitration.
If a party files a lawsuit in court involving claims that
are, and other claims that are not, subject to arbitration,
such party shall request the court to stay litigation of
the nonarbitrable claims and require that arbitration
take place with respect to those claims subject to
arbitration.
....
THE SUBMISSION OF AN APPLICATION,
ACCEPTANCE OF EMPLOYMENT OR THE
CONTINUATION OF EMPLOYMENT BY YOU
SHALL BE DEEMED TO BE ACCEPTANCE OF
THIS ARBITRATION POLICY. NO SIGNATURE
SHALL BE REQUIRED FOR THE POLICY TO BE
APPLICABLE. THE MUTUAL OBLIGATIONS SET
FORTH IN THIS AGREEMENT SHALL
CONSTITUTE A CONTRACT BETWEEN YOU AND
ENGLEWOOD LAB BUT SHALL NOT CHANGE
YOUR AT-WILL RELATIONSHIP OR ANY TERM
OF ANY OTHER CONTRACT OR AGREEMENT
BETWEEN ENGLEWOOD LAB AND YOU. THIS
POLICY SHALL CONSTITUTE THE ENTIRE
AGREEMENT BETWEEN YOU AND ENGLEWOOD
LAB REGARDING THE RESOLUTION OF
COVERED CLAIMS.
Plaintiff signed an "Acknowledgement and Receipt of Handbook" form
which, in relevant part, states:
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I acknowledge that I have received a copy of
ENGLEWOOD['s] Employee Handbook . . . . I
understand that I am expected to comply fully with each
of those policies as a condition of my employment with
ENGLEWOOD . . . .
I understand and acknowledge that this Handbook is
intended to provide me with general information about
ENGLEWOOD['s] policies and procedures, that it is
not a contract of employment, and that the Handbook is
not intended as a promise or guarantee of my
employment or of any particular term or condition of
my employment.
I understand and acknowledge that ENGLEWOOD . . .
may amend, modify, supersede or terminate the policies
described in the Handbook, or introduce new policies
and/or procedures, in its sole discretion, and at any
time, with or without notice to me.
....
I agree to mediate and arbitrate any claims I may have
against ENGLEWOOD . . . as described in Section 710
of this Handbook, and waive my right to a trial by jury.
I understand and acknowledge that my employment
with ENGLEWOOD . . . is "at will," meaning that
ENGLEWOOD . . . can terminate my employment . . .
at any time, with or without notice or cause, and for any
or no reason. . . . I understand and acknowledge that my
"at will" employment status may not be altered by any
oral or written statement made or issued by a[n
Englewood] representative, with the exception of a
written employment agreement signed by an officer of
[Englewood].
[(Emphasis added).]
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The complaint alleges that following the commencement of plaintiff's
employment, Chung sold "a majority stake" in Englewood without plaintiff's
knowledge or consent. Plaintiff claimed it was "unknown" if the transaction
involved the sale of Englewood stock shares she allegedly owned and Chung did
not notify her of any meeting at which a vote was taken to approve the sale and
change in control of Englewood. The complaint also alleged Chung denied
plaintiff access to Englewood's books and records and violated her employment
agreement by changing her role in the company.
Plaintiff sought a declaratory judgment that she is a shareholder of
Englewood and Chung's alleged transfer of her putative shares is null and void.
The complaint asserted causes of action against Englewood and Chung for
breach of "a number of agreements" between plaintiff and Englewood, breach
of the covenant of good faith and fair dealing, unjust enrichment and conversion.
Plaintiff also asserted claims against Chung for breach of fiduciary duty,
minority shareholder oppression, misrepresentation and concealment.
Englewood and Chung moved to dismiss the complaint pursuant to Rule
4:6-2(a), claiming the court lacked jurisdiction because plaintiff is obligated to
mediate and arbitrate her claims pursuant to the arbitration policy in the
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handbook because she executed the acknowledgment form which included her
express agreement to be bound by the policy.
Plaintiff opposed the motion, asserting her employment agreement did not
include a mediation or arbitration requirement and that the handbook and
acknowledgment she signed incorporating the arbitration policy did not
constitute a binding contract. In the alternative, plaintiff claimed that even if
she is bound to arbitrate, the claims in her complaint do not fall within the
coverage of the arbitration policy.
Judge Robert P. Contillo heard argument on defendants' motion and issued
a detailed written decision and order dismissing the complaint without prejudice
for lack of subject matter jurisdiction. See R. 4:6-2(a). Judge Contillo found
plaintiff "clearly and unambiguously assented" to Englewood's arbitration
policy by executing the acknowledgment that included a waiver of the right to a
jury trial and an express agreement to mediate and arbitrate in accordance with
Section 710 of the handbook, and that the policy encompassed the claims
asserted in the complaint. The judge also found that although plaintiff believed
otherwise, she was not a shareholder in Englewood and had not been issued any
shares. The judge ordered "that all claims should be mediated then arbitrated
consistent with the valid [a]rbitration [p]olicy." This appeal followed.
A-5315-17T1
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II.
We review the court's order granting defendants' motion to compel
arbitration de novo because the validity of an arbitration agreement presents a
question of law. Kernahan v. Home Warranty Adm'r of Fla., Inc., 236 N.J. 301,
316 (2019); see also Atalese v. U.S. Legal Servs. Grp., LP, 219 N.J. 430, 445-
46 (2014) ("Our review of a contract, generally, is de novo, and therefore we
owe no special deference to the trial court's . . . interpretation. Our approach in
construing an arbitration provision of a contract is governed by the same de novo
standard of review." (citations omitted)).
We must be "mindful of the strong preference to enforce arbitration
agreements." Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). The
Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 to 16, favors enforcement of
arbitration agreements. AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 339
(2011). The "overarching purpose of the FAA . . . is to ensure the enforcement
of arbitration agreements according to their terms so as to facilitate streamlined
proceedings." Id. at 344. "The [FAA] and the nearly identical New Jersey
Arbitration Act, N.J.S.A. 2A:23B-1 to -32, enunciate federal and state policies
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favoring arbitration" as a mechanism of resolving disputes that otherwise would
be litigated. Atalese, 219 N.J. at 440 (citation omitted).
"An agreement to arbitrate 'must be the product of mutual assent, as
determined under customary principles of contract law.'" Barr v. Bishop Rosen
& Co., 442 N.J. Super. 599, 605-06 (App. Div. 2015) (quoting Atalese, 219 N.J.
at 442). As noted recently by our Supreme Court, "[a]n arbitration agreement is
valid only if the parties intended to arbitrate because parties are not required 'to
arbitrate when they have not agreed to do so.'" Kernahan, 236 N.J. at 317
(quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ.,
489 U.S. 468, 478 (1989)).
"Mutual assent requires that the parties understand the terms of their
agreement[,]" and where the "agreement includes a waiver of a party's right to
pursue a case in a judicial forum, 'clarity is required.'" Barr, 442 N.J. Super. at
606 (quoting Moore v. Woman to Woman Obstetrics & Gynecology, LLC, 416
N.J. Super. 30, 37 (App. Div. 2010)). An arbitration agreement that includes a
waiver of an employee's right to assert causes of action in court against an
employer requires "an explicit, affirmative agreement that unmistakably reflects
the employee's assent." Leodori v. Cigna Corp., 175 N.J. 293, 303 (2003).
A-5315-17T1
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Applying these principles, we are unpersuaded by plaintiff's claim that she
did not have an obligation to arbitrate because her employment agreement
lacked an arbitration provision. "[T]he question of enforceability" of plaintiff's
arbitration obligation "is determined not on the basis of whether the arbitration
agreement is contained in . . . an employment contract, but rather whether the
arbitration provision qualifies as a valid and enforceable contract." Martindale
v. Sandvik, Inc., 173 N.J. 76, 87 (2002). Although her employment agreement
did not include an arbitration provision, plaintiff signed the acknowledgment
expressly agreeing to mediate and arbitrate any claims against Englewood "as
described in Section 710 of the [h]andbook." An employee's "signature to an
agreement is the customary and perhaps surest indication of assent ." Leodori,
175 N.J. at 306-07. Plaintiff's execution of the plainly worded acknowledgment
provides that unmistakable indication here. 1
Plaintiff also asserts she is not contractually bound by Section 710 because
the handbook's introduction states that "[n]othing in this [h]andbook creates a
contract," and that language creates an ambiguity as to whether she could be
contractually bound by the handbook's provisions. The record does not support
1
Plaintiff does not argue that Section 710 of the handbook is unclear or
ambiguous.
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plaintiff's contention because her arbitration obligation is not founded on the
handbook's terms; that is, Englewood does not claim and the court did not find
that plaintiff is contractually bound to arbitrate under the handbook's terms.
Rather, the court found, and we agree, plaintiff's execution of the
acknowledgment, which clearly and unequivocally provides that plaintiff agrees
to arbitrate her claims in accordance with Section 710 of the handbook,
constitutes the binding contractual obligation requiring the mediation and
arbitration of plaintiff's claims.
Nothing in the handbook precludes plaintiff's execution of a separate
document, such as the acknowledgment, adopting the handbook's provisions as
binding contractual obligations. In Leodori, the Court recognized that an
arbitration agreement may be set forth in a document separate from the one
describing the terms of the arbitration obligation. 175 N.J. at 307. The Court
held that where an employee acknowledges and assents to an arbitration
agreement in a document separate from the one describing the arbitration
obligation, the acknowledgment form "need not recite [the full] policy verbatim
so long as the form refers specifically to arbitration in a manner indicating an
employee's assent, and the policy is described more fully in an accompanying
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handbook or in another document known to the employee." Ibid. That is the
precise circumstance present here.
Plaintiff relies on our decision in Morgan v. Raymours Furniture Co.,
where we found that an employee was not bound by an arbitration policy in the
employer's handbook. 443 N.J. Super. 338, 343 (App. Div. 2016). In Morgan,
the employee was terminated following his refusal to sign a stand-alone
arbitration agreement, id. at 341, and then filed a complaint asserting claims
under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49, and
for wrongful termination and other similar claims, id. at 339-40. The employer
moved to dismiss the complaint, arguing the employee was bound to arbitrate
his claims under an arbitration provision in an employee handbook, the receipt
of which the employee had acknowledged. Id. at 341.
We affirmed the trial court's denial of the employer's motion, finding no
evidence the employee "'clearly and unambiguously' agree[d] to a waiver of the
right to sue," id. at 343 (quoting Atalese, 219 N.J. at 443), a waiver the employer
had stated "was not 'promissory or contractual,'" and "the employer cannot fairly
contend the employee 'agreed' to a waiver of the right to sue," because the
employee only acknowledged he "'received' and 'underst[ood]' the contents of
the . . . handbook," ibid. (first alteration in original).
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Here, plaintiff did not merely acknowledge receipt of the handbook or that
she understood its terms. She executed the acknowledgment that included a
separate and express agreement to mediate and arbitrate her claims against
Englewood in accordance with Section 710 of the handbook. As we explained
in Morgan, "had plaintiff executed the stand-alone arbitration agreement
presented to him . . . a different outcome would likely have followed." Id. at
344. That different outcome is required where, as here, an employee executes
an agreement separate from a handbook, but which expressly provides that the
employee agrees to be bound by clearly defined provisions contained within the
handbook. See Leodori, 175 N.J. at 305 (finding an arbitration clause will be
enforced where there is an "explicit indication that the employee intended to
abide by that provision").
Contrary to plaintiff's assertion, our conclusion that she is bound by her
agreement to mediate and arbitrate in accordance with Section 710 of the
handbook is supported by the Supreme Court's decision in Leodori. In Leodori,
the Court found that an acknowledgment of receipt of a handbook, which
included an arbitration provision, did not create a contractual obligation to
arbitrate because the acknowledgment stated only that the employee "received"
the handbook. Id. at 297, 306. The Court specifically noted that "the
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acknowledgment form that [the] plaintiff did sign would have sufficed as
concrete proof of a waiver had it stated that the employee had agreed to the more
detailed arbitration provision contained in the handbook." Id. at 307. Here,
plaintiff executed the acknowledgment which included the "affirmative
agreement that unmistakably reflects [plaintiff's] assent," id. at 303, to the
arbitration policy the Court found missing in Leodori, see id. at 306.
Plaintiff also argues that any purported contract formed by her execution
of the acknowledgment is unenforceable as illusory because the handbook's
introduction states it "may be modified or discontinued by [Englewood] at any
time, as it deems appropriate and at its sole discretion." See Jaworski v. Ernst
& Young U.S. LLP, 441 N.J. Super. 464, 477 (App. Div. 2015) ("Under general
principles of contract law, an agreement . . . based only upon an illusory promise
is unenforceable."). We disagree. By her execution of the acknowledgment,
plaintiff agreed to mediate and arbitrate her claims "as described in Section 710
of this [h]andbook," and thus her contractual obligation was limited to only the
version of Section 710 contained in the handbook extant when she signed the
agreement. Her obligation to mediate and arbitrate is defined solely by the terms
of the acknowledgment that she signed, and it does not allow for any
modification of the mediation and arbitration requirement from that which is set
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forth in Section 710 of "this [h]andbook." As such, there is nothing in the
agreement rendering the clearly defined mediation and arbitration agreement
illusory.
We are also unpersuaded by plaintiff's contention that the arbitration
policy in Section 710 is unenforceable because it provides that "NO
SIGNATURE SHALL BE REQUIRED FOR THE POLICY TO BE
APPLICABLE." We recognize that an affirmative showing of mutual assent to
a waiver of an employee's right to a jury trial is required and that a lack of an
affirmative indication of assent, in the form of a signature or otherwise, will
render an arbitration policy unenforceable. See Leodori, 175 N.J. at 303, 307.
But we find plaintiff's reliance on the language misplaced because she actually
executed the acknowledgment and thereby provided the affirmative assent
required to constitute a valid and binding agreement.
Because we are satisfied plaintiff agreed to be contractually bound to
mediate and arbitrate her claims under Section 710 of the handbook, we also
address plaintiff's contention that the claims in the complaint are not
encompassed by the arbitration policy's terms. "A court must look to the
language of the arbitration clause to establish" the scope thereof and "its
boundaries." Hirsch, 215 N.J. at 188. "[T]he proper starting point is the plain
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meaning of the Arbitration Agreement. . . . Other interpretive principles need be
employed only if the Agreement's plain meaning cannot be determined."
Steigerwalt v. Terminix Int'l Co., 246 F. App'x 798, 801 (3d Cir. 2007).
The policy requires mediation and then arbitration of all disputes and, as
noted, includes a broad definition of the disputes subject to its terms. The policy
requires mediation and arbitration of claims "arising from, or having any
relationship or connection whatsoever with [plaintiff's] employment with
[Englewood]," "claims for . . . other compensation due, claims for breach of any
contract or covenant," and claims for "breach of the . . . law of contract."
Plaintiff argues her claims fall outside the scope of the arbitration policy
because the policy does not specifically state that it includes "shareholder
disputes." However, her complaint does not allege she was actually issued or
possessed any shares of stock in Englewood. It alleges a promise of shares of
stock conditioned on plaintiff's acceptance of employment with Englewood and
an entitlement to shares of stock based on an "equity interest" in accordance
with the terms of her employment agreement.
Plaintiff's claim she is entitled to shares of stock is encompassed by the
arbitration policy because it "arises from" her employment with Englewood and
is founded on an alleged breach of contract. The complaint alleges she accepted
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employment based on the promise of an equity interest, and her claims are
necessarily founded on the terms of her employment agreement because it
includes a provision defining her entitlement to an equity interest—"[s]tock
[o]ption terms [are] to be finalized as promised by [the] end of 2018. " We are
satisfied they fall within the disputes covered by the arbitration policy.
We last reject plaintiff's argument that the arbitration policy does not bar
her claims against Chung because he did not execute the acknowledgment form.
Section 710 plainly requires that plaintiff mediate and arbitrate her disputes
against Englewood, which is expressly defined to include its "officers, directors,
owners . . . employees, [and] agents." The complaint alleges Chung is
Englewood's chief executive officer and acted in that capacity in offering
plaintiff her employment position, executing the employment agreement and
undertaking the alleged sale of the "majority stake" in Englewood. Thus, the
claims against Chung fall within the coverage of the arbitration policy because,
at a minimum, the complaint alleges claims against Chung in his capacity as an
employee and agent of Englewood.
Plaintiff also argues her claims fall outside the scope of the arbitration
policy because "this matter involves equity that may be awarded under New
Jersey's Business Corporation Act ('BCA')" and jurisdiction under the BCA is
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expressly vested in the Superior Court, citing N.J.S.A. 14A:12-7 and 14A:12-
15. We reject plaintiff's claim because the arbitration policy encompasses all
statutory claims. In addition, the BCA pertains to actions by shareholders and,
as alleged in the complaint, plaintiff is not a shareholder. Rather, she alleges
only that she was promised shares after her employment commenced and her
employment agreement provided only for possible stock options that were to be
subject to a future agreement.
Any arguments asserted by plaintiff that we have not expressly addressed
are without sufficient merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
Affirmed.
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