DAVID GUIRGUESS VS. PUBLIC SERVICE ELECTRIC AND GAS COMPANY (L-3041-17, MIDDLESEX 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NOT FOR PUBLICATION WITHOUT THE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-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
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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
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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
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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.
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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.
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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).
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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
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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,
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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
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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
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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
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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.
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