Greg Noren v. Heartland Payment Systems, Inc.

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2651-13T3
GREG NOREN,
APPROVED FOR PUBLICATION
Plaintiff-Appellant/
Cross-Respondent, February 6, 2017
v. APPELLATE DIVISION
HEARTLAND PAYMENT SYSTEMS, INC.,
Defendant-Respondent/
Cross-Appellant.
________________________________________________________________
Submitted May 3, 2016 – Decided February 6, 2017
Before Judges Fisher, Espinosa and
Rothstadt.
On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No. L-
4528-06.
Franzblau Dratch, PC, attorneys for
appellant/cross-respondent (Patrick T.
Collins, of counsel; Adam Shefki, on the
briefs).
Blank Rome, LLP, attorneys for respondent/
cross-appellant (Seth J. Lapidow, of counsel
and on the brief; Jaret N. Gronczewski, on
the brief).
The opinion of the court was delivered by
ESPINOSA, J.A.D.
Plaintiff Greg Noren brought suit against his former
employer, Heartland Payment Systems, Inc. (HPS), alleging breach
of contract and a violation of the Conscientious Employee
Protection Act (CEPA), N.J.S.A. 34:19-1 to -14.1 Pursuant to a
jury-waiver provision in Noren's employment contract, the trial
court denied his demand for a jury. Following a bench trial,
the trial court dismissed Noren's claims and awarded HPS over $2
million in fees and costs. Noren's appeal does not require us
to determine the merits of his claims. He also does not contest
the application of the jury-waiver provision to his breach of
contract claim or that fees may be awarded on that claim. He
challenges the application of the jury-waiver provision to the
CEPA claim and argues that HPS is not entitled to fees related
to his CEPA claim. Because we conclude the jury-waiver
provision was not legally enforceable as to Noren's CEPA claim,
we reverse the judgment and fee award on that claim, and remand
for a jury trial on the CEPA claim. For reasons that follow, we
also dismiss HPS's cross-appeal, challenging the trial judge's
denial of its summary judgment motion.
1
The complaint also alleged claims of intentional harassment,
wrongful discharge, intentional infliction of emotional
distress, defamation, false light, fraud and negligent
misrepresentation. These claims were dismissed before trial and
are not the subject of this appeal.
2 A-2651-13T3
I.
Noren was employed as a Relationship Manager (RM) by HPS
from April 1998 until June 2005. He sold HPS's credit and
debit, payroll and related processing card services to
merchants. On June 14, 2002, HPS terminated Noren's employment
because his contract had expired and he refused to sign a new
Relationship Manager Agreement (2002 RMA). On July 15, 2002,
Noren faxed a signed copy of the 2002 RMA to HPS and was
immediately rehired. The 2002 RMA contained a jury-waiver
provision that stated:
HPS and RM irrevocably waive any right to
trial by jury in any suit, action or
proceeding under, in connection with or to
enforce this Agreement.
In January 2003, Noren signed a Vested Relationship Manager
Agreement (2003 VRMA), which: superseded all prior agreements
between Noren and HPS, contained a jury-waiver provision
identical to the provision in the 2002 RMA as well as a fee-
shifting provision, and specified he was an at-will employee.
HPS terminated Noren's employment in June 2005.
Noren's demand for a jury trial was denied by the court
based on the jury-waiver provision in the 2002 RMA.2 After a
2
There was significant motion practice concerning the
complaint. In addition to a February 2011 order denying HPS's
motion for summary judgment and subsequent denial of HPS's
(continued)
3 A-2651-13T3
twenty-two-day bench trial, the trial court dismissed Noren's
complaint, finding he failed to prove either cause of action,
and awarded HPS $2,059,206.53 in fees and costs.
II.
The right to a trial by jury is guaranteed by the New
Jersey Constitution, N.J. Const. art. I, ¶ 9, and, in the case
of Noren's CEPA claim, explicitly established by statute,
N.J.S.A. 34:19-5. The Legislature's intent that the right to a
jury trial be guaranteed is manifest from its amendment of the
statute in 1990, following our decision in Abbamont v.
Piscataway Township Board of Education, 238 N.J. Super. 603
(App. Div. 1990), aff'd, 138 N.J. 405 (1994), in which we held
there was no right to a jury trial under CEPA. In response, the
Legislature enacted L. 1990, c. 12, amending both CEPA and the
Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49, to
(continued)
motion for reconsideration, the motion practice included: a
September 2007 order denying HPS's motion to dismiss the
complaint and strike the jury demand, a September 2008 order
dismissing the complaint as to the individual defendants, a
November 2008 order dismissing the complaint, the reinstatement
of Noren's CEPA and breach of contract claims on appeal, a March
2010 order granting HPS's motion to strike previously dismissed
allegations from Noren's second amended complaint, an October
2010 order granting HPS's motion to reconsider the 2007 denial
of its motion to strike Noren's jury demand and striking the
jury demand, and a November 2010 order denying Noren's motion
for reconsideration and disqualification of the judge.
4 A-2651-13T3
specify that a person who brings a legal action under either
statute is entitled to a jury trial. See State v. Sailor, 355
N.J. Super. 315, 322 (App. Div. 2001). As a result, CEPA now
explicitly provides, "Upon the application of any party, a jury
trial shall be directed to try the validity of any claim under
this act specified in the suit." N.J.S.A. 34:19-5 (emphasis
added).3 The amendment of CEPA and LAD in a single enactment
reflects their shared character as remedial statutes that
"promote[] a strong public policy of the State," that should be
liberally construed. Abbamont, supra, 138 N.J. at 431 (citing
Judiciary, Law and Public Safety Committee, Statement on
Assembly Bills No. 2872, 2118, 2228 (1990)).
Noren's appeal therefore turns on whether the provision in
his 2002 RMA is a legally enforceable waiver of this
constitutionally and statutorily guaranteed right, a question
decided through the application of "customary principles of
contract law." Atalese v. U.S. Legal Servs. Grp., L.P., 219
N.J. 430, 442 (2014) (quoting NAACP of Camden Cty. E. v. Foulke
Mgmt., 421 N.J. Super. 404, 424 (App. Div.), certif. granted,
209 N.J. 96 (2011), and appeal dismissed, 213 N.J. 47 (2013)),
3
But see Kaye v. Rosefielde, 432 N.J. Super. 421, 433 (App.
Div. 2013) (affirming the trial judge's exercise of ancillary
jurisdiction to hear a CEPA claim without a jury, an issue not
addressed in Supreme Court's decision reversing), rev'd, 223
N.J. 218 (2015).
5 A-2651-13T3
cert. denied, ____ U.S. ____, 135 S. Ct. 2804, 192 L. Ed. 2d 847
(2015).
"[W]hen a contract contains a waiver of rights . . . the
waiver 'must be clearly and unmistakably established.'" Morgan
v. Sanford Brown Inst., 225 N.J. 289, 308-09 (2016) (quoting
Atalese, supra, 219 N.J. at 444). The contractual waiver of
rights provision "must reflect that [the party] has agreed
clearly and unambiguously to its terms." Atalese, supra, 219
N.J. at 443 (alteration in original) (quoting Leodori v. Cigna
Corp., 175 N.J. 293, 302 (2003)). Because "[w]aiver is the
voluntary and intentional relinquishment of a known right,"
Knorr v. Smeal, 178 N.J. 169, 177 (2003), there cannot be a
clear and unambiguous agreement to waive without a "mutual
understanding" of the terms of the waiver. Atalese, supra, 219
N.J. at 446-47. To be effective, a party must "have full
knowledge of his legal rights and intent to surrender those
rights." Knorr, supra, 178 N.J. at 177.
"No magical language is required to accomplish a waiver of
rights," Morgan, supra, 225 N.J. at 309, and the provision need
not "identify the specific constitutional or statutory right"
subject to the waiver. Atalese, supra, 219 N.J. at 447. But
the provision must be grounded in "plain language that would be
clear and understandable to the average" person that statutory
6 A-2651-13T3
rights are being waived. Id. at 446. In short, to effect a
waiver, the language must clearly explain (1) what right is
being surrendered and (2) the nature of the claims covered by
the waiver.
Language that failed to meet that standard includes the
arbitration provision contained in the employment agreement in
Garfinkel v. Morristown Obstetrics & Gynecology Associates,
P.A., 168 N.J. 124 (2001). The Court found the language too
ambiguous to constitute an enforceable waiver of the employee's
LAD claim, explaining:
The clause states that "any controversy or
claim" that arises from the agreement or its
breach shall be settled by arbitration. That
language suggests that the parties intended
to arbitrate only those disputes involving a
contract term, a condition of employment, or
some other element of the contract itself.
Moreover, the language does not mention,
either expressly or by general reference,
statutory claims redressable by the LAD.
[Id. at 134 (emphasis added).]
The Court instructed, "a waiver-of-rights provision should at
least provide that the employee agrees to arbitrate all
statutory claims arising out of the employment relationship or
its termination." Id. at 135.
In contrast, the arbitration provision in Jaworski v. Ernst
& Young US LLP, 441 N.J. Super. 464 (App. Div.), certif. denied,
223 N.J. 406 (2015) identified "[c]laims based on state statutes
7 A-2651-13T3
and local ordinances, including state and local anti-
discrimination laws," as covered disputes. Id. at 480
(alteration in original). We observed, "By specifically
including state statutory anti-discrimination claims as Covered
Disputes, [Ernst & Young] clearly and unequivocally put
plaintiffs on notice that any claims arising under the LAD,
regarding termination or otherwise, were subject to mandatory
arbitration." Ibid.
Similarly, in Leodori, supra, the Supreme Court found the
relevant clause in the employee handbook "unambiguously"
articulated the intent "to arbitrate all employment-related
claims, including those that might be asserted under CEPA." 175
N.J. at 302. The Court explained,
The relevant provision lists numerous
federal statutes by name as falling within
its purview, in addition to "any other
federal, state, or local statute,
regulation, or common-law doctrine,
regarding employment discrimination,
conditions of employment, or termination of
employment." That language easily satisfies
the requirement that such clauses provide an
unmistakable expression of an employee's
willingness to waive his or her statutory
remedies.
[Id. at 302-03.]
Although it is plainly preferable for a waiver of rights
provision to explicitly state so when the waiver is intended to
include statutory rights, it is possible to provide the clarity
8 A-2651-13T3
necessary for a valid waiver without such specific reference.
The arbitration agreement in Martindale v. Sandvik, Inc., 173
N.J. 76 (2002), stated that plaintiff agreed to waive her right
to a jury trial "in any action or proceeding relating to my
employment with Sandvik" and that "all disputes relating to my
employment with Sandvik or termination thereof" would be subject
to arbitration. Id. at 96. The Court distinguished this
language from the arbitration provision in Garfinkel, stating it
was free of the "limiting references" that were fatal to the
enforceability of that arbitration provision. Ibid. The Court
concluded the arbitration provision in Martindale "was clear and
unambiguous [and] sufficiently broad to encompass reasonably
plaintiff's statutory causes of action." Ibid.
The jury-waiver provision here applied to "any suit, action
or proceeding under, in connection with or to enforce this
Agreement." (Emphasis added). It made no reference to statutory
claims and did not define the scope of claims as including all
claims relating to Noren's employment. This language was
similar to the language in Garfinkel deemed too ambiguous
because it failed to refer to statutory claims. And, by using
"this Agreement" as the defining threshold for all suits,
actions and proceedings, the provision limits the category of
disputes for which a jury trial is waived. We therefore
9 A-2651-13T3
conclude the jury-waiver provision fails to clearly and
unambiguously explain that the right to a jury trial is waived
as to a CEPA claim and that a remand is necessary for a jury
trial on this claim.
III.
The trial judge wrote an extensive opinion to support her
award of $2,059,260.53 in attorney fees and costs to HPS.
Although fee determinations by the trial court are generally
entitled to our deference, Packard-Bamberger & Co. v. Collier,
167 N.J. 427, 444 (2001), a remand is required here.
"New Jersey has a strong policy disfavoring shifting of
attorneys' fees." N. Bergen Rex Transp., Inc. v. Trailer
Leasing Co., 158 N.J. 561, 569 (1999). We allow for the
recovery of such fees only "if they are expressly provided for
by statute, court rule, or contract." Packard-Bamberger, supra,
167 N.J. at 440. In this case, there were two possible grounds
for the award of counsel fees and costs: the fee-shifting
provisions contained in CEPA, N.J.S.A. 34:19-6, and in the 2003
VRMA.
CEPA permits an award of "reasonable attorneys' fees and
court costs" to a prevailing employer "if the court determines
that an action brought by an employee under this act was without
basis in law or in fact." N.J.S.A. 34:19-6. This provision
10 A-2651-13T3
applies only to "a narrow band of cases" in which "the employer
must be vindicated and the employee must have proceeded without
basis in law or in fact. . . ." Best v. C&M Door Controls,
Inc., 200 N.J. 348, 358 (2009). Moreover, because the fee-
shifting provision is in derogation of common law, it is
strictly construed. See Buccinna v. Micheletti, 311 N.J. Super.
557, 566 (App. Div. 1998) (citing Hirsch v. Tushill, Ltd., 110
N.J. 644, 647 (1988)).
It must be noted that the threshold for the award of fees
is higher for the CEPA claim. It was error for the trial judge
to conclude the threshold was met based upon her finding that
Noren "failed to set forth a viable claim against the defendant
pursuant to CEPA." There is a broad spectrum in the quality of
proofs that fall between a claim that is not "viable" and one
that is "without basis in law or in fact." N.J.S.A. 34:19-6;
see Buccinna, supra, 311 N.J. Super. at 562 (concluding
defendant who prevailed at trial was not entitled to counsel
fees under CEPA because there was no finding that plaintiff's
claim was "without basis in law or in fact"). A claim is not
viable if it fails to satisfy all the requisite elements of
proof. To lack any basis in law or in fact, there must be
either no legal authority to support the claim or the absence of
a factual basis for the claim.
11 A-2651-13T3
The applicable standard is similar to that for Rule 1:4-8,
which authorizes a sanction for an assertion made in a paper
filed with the court when "no rational argument can be advanced
in its support, or it is not supported by any credible evidence,
or it is completely untenable." United Hearts, L.L.C. v.
Zahabian, 407 N.J. Super. 379, 389 (App. Div.) (quoting First
Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 432 (App.
Div. 2007)), certif. denied, 200 N.J. 367 (2009). In United
Hearts, we concluded,
[A] pleading cannot be deemed frivolous as a
whole nor can an attorney be deemed to have
litigated a matter in bad faith where, as in
this case, the trial court denies summary
judgment on at least one count in the
complaint and allows the matter to proceed
to trial.
[Id. at 394.]
The fact that Noren's CEPA claim survived summary judgment
would similarly appear to preclude a finding that his claim was
"without basis in law or in fact." N.J.S.A. 34:19-6; see also
Buccinna, supra, 311 N.J. Super. at 562-63 (finding the standard
for an award of fees under CEPA, N.J.S.A. 34:19-6, similar to
the standard for the frivolous claim law, N.J.S.A. 2A:15-59.1).
Turning to the fee-shifting provision in the 2003 VRMA, we
note that "when the fee-shifting is controlled by a contractual
provision, the provision should be strictly construed in light
12 A-2651-13T3
of our general policy disfavoring the award of attorneys' fees."
Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 385
(2009). The 2003 VRMA states:
In any suit, action or proceeding arising
out of or related to this Agreement, the
successful party shall be awarded, in
addition to any other relief to which it is
found to be entitled, costs of suit, fees of
experts and reasonable attorneys' fees
against the unsuccessful party.
This language tracks that of the jury-waiver provision,
which we hold failed to clearly and unequivocally extend to
Noren's CEPA claim. Further, the provision authorizes an award
of expert fees. This exceeds the award of what is permitted
under CEPA, i.e., "reasonable attorneys' fees and court costs,"
N.J.S.A. 34:19-6, and is not authorized by another statute or
any court rule. See Buccinna, supra, 311 N.J. Super. at 565-66.
The trial judge found the CEPA and breach of contract
claims "inextricably intertwined" and so, drew no distinction
between expenses incurred to defend against either claim. To be
sure, this is a difficult task but one that must be performed to
determine what fees are attributable to the breach of contract
claim.4
4
Relying on Hensley v. Eckerhart, 461 U.S. 424, 434-35, 103 S.
Ct. 1933, 1940, 76 L. Ed. 2d 40, 51-52 (1983), HPS argues that
(continued)
13 A-2651-13T3
IV.
Finally, we turn to HPS's cross-appeal, in which HPS argues
the trial court erred in denying its summary judgment motion.
Rule 2:6-1(a)(1) states, in pertinent part:
If the appeal is from a summary judgment,
the appendix shall . . . include a statement
of all items submitted to the court on the
summary judgment motion and all such items
shall be included in the appendix, except
that briefs in support of and opposition to
the motion shall be included only as
permitted by subparagraph (2) of this rule.
Contrary to the requirements of this rule, HPS did not
submit the items that had been submitted to the trial court on
the summary judgment motion or even a statement of the items
submitted. HPS's appendix included the briefs and
certifications of counsel for Noren and HPS. As to the
certification submitted in support of its motion, HPS attached
"only relevant exhibits." The certification on behalf of Noren
was in the appendix, but "excluding exhibits."
(continued)
it is entitled to fees incurred defending both the CEPA and
breach of contract claims because they involved a common core of
facts and related legal theories. In Hensley, the Court
considered the appropriate measure of attorneys' fees in a case
where a suit filed alleging several civil rights violations was
successful on one claim. Ibid. The award of fees was made
pursuant to 42 U.S.C.A. § 1988, which is designed to encourage
litigation to vindicate civil rights violations. That
underlying public policy does not apply here.
14 A-2651-13T3
In reviewing a summary judgment, we are required to view
the evidence that was submitted to the trial court "in the light
most favorable to the non-moving party," to determine "if there
is a genuine issue as to any material fact or whether the moving
party is entitled to judgment as a matter of law." Rowe v.
Mazel Thirty, LLC, 209 N.J. 35, 41 (2012) (citing Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995)). HPS's
selective inclusion of exhibits it considers relevant and
exclusion of exhibits relied upon by Noren in opposing summary
judgment makes that task impossible. Therefore, the cross-
appeal is dismissed.
In sum, we reverse the judgment as to the CEPA claim and
remand for a jury trial. The judgment regarding the breach of
contract claim remains intact and the fee award is remanded for
the trial judge to apportion the reasonable amount of fees and
costs incurred in defense of the breach of contract claim. The
cross-appeal is dismissed.
Reversed and remanded. We do not retain jurisdiction.
15 A-2651-13T3