ESTHER WAFULA v. ARTECH INFORMATION SYSTEMS, LLC (L-4457-18, 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NOT FOR PUBLICATION WITHOUT THE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-1160-20
ESTHER WAFULA,
Plaintiff-Respondent,
v.
ARTECH INFORMATION
SYSTEMS, LLC,
Defendant,
and
SANDOZ, INC.,
Defendant-Appellant.
__________________________
Submitted November 9, 2021 – Decided April 1, 2022
Before Judges DeAlmeida and Smith.
On appeal from the Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-4457-18.
Ogletree, Deakins, Nash, Smoak & Stewart, PC,
attorneys for appellant (Peter O. Hughes and Michael J.
Riccobono, on the briefs).
O'Connor, Parsons, Lane & Noble, LLC, attorneys for
respondent (Gregory B. Noble, of counsel and on the
brief; R. Daniel Bause, on the brief).
PER CURIAM
Defendant Sandoz, Inc. (Sandoz) appeals from the November 13, 2020
order of the Law Division denying its motion to dismiss plaintiff Esther Wafula's
claims under the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49,
and to compel arbitration of those claims. Because the trial court's findings of
fact and conclusions of law are insufficient to permit appellate review, we are
constrained to remand the matter for further proceedings.
I.
Defendant Artech Information Systems, LLC (Artech) is a staffing
agency. Sandoz, a division of Novartis Group, manufactures generic
pharmaceuticals and biosimilars. The two entities are not related, do not share
parents or subsidiaries, and do not have common ownership. Sandoz is a client
of Artech.
In 2017, Artech hired Wafula. She signed an employment agreement with
Artech in which she agreed to work for Artech's "Client," as that term is defined
in the contract, as a clinical trials assistant. Wafula alleges that she was hired
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by Artech to work for Sandoz. The contract provides that Wafula
"acknowledges and agrees that he/she is not an employee of any Client . . . ."
The employment agreement contains an arbitration provision. The clause,
which refers to Wafula as "Employee," provides, in relevant part:
ARBITRATION. Except for monetary claims of
$5,000.00 or less, Employee explicitly agrees that any
dispute in any matter related to Employee's
employment with ARTECH, which the parties are
unable to resolve through direct discussion, regardless
of the kind or type of dispute (excluding claims for
unemployment insurance, worker's compensation, or
any matter within the jurisdiction of the Labor
Commissioner), shall be exclusively subject to final
and binding arbitration . . . . Employee agrees to submit
all such disputes in writing, specifically requesting
arbitration, to ARTECH within one year of termination
of Employee's employment with ARTECH.
Shortly after hiring Wafula, Artech assigned her to work at Sandoz.
Wafula was terminated in October 2017.
In 2018, Wafula filed a complaint in the Law Division against Artech and
Sandoz. She alleged the defendants engaged in pregnancy, disability, and
perceived disability discrimination in violation of the LAD when they
terminated her soon after learning she was pregnant.
Defendants moved to dismiss the complaint and compel arbitration of
Wafula's claims. They relied on the arbitration provision of the employment
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agreement between Artech and Wafula. Sandoz argued that although it is not a
party to the employment agreement it is a third-party beneficiary of the
arbitration clause and is entitled to compel arbitration of Wafula's claims.
Wafula opposed the motion.
At the conclusion of oral argument, the trial court reserved decision on
the motion. The court informed counsel that it would issue either a written or
oral decision shortly. On November 13, 2020, the trial court issued an order
granting Artech's motion, dismissing Wafula's claims against that entity, and
compelling her to submit those claims to arbitration. With respect to Sandoz's
motion, the entirety of the trial court's decision was "the [m]otion as to
[d]efendant Sandoz is DENIED substantially for the reasons set forth in
[p]laintiff's opposition papers as to the ability of a non-party to compel
arbitration under the specific facts of this matter."
This appeal follows. Sandoz argues that
the plain language of the agreement and the
circumstances surrounding [p]laintiff's execution of
same, and the strong public policy of New Jersey
favoring arbitration, all support a finding that Sandoz is
a third-party beneficiary of the agreement and entitled
to enforce the arbitration provision. Any other result
would unnecessarily duplicate the proceedings, force
the parties to try this matter in two different forums,
and potentially lead to inconsistent results.
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Sandoz bases its arguments on: (1) various provisions of the employment
agreement that vest in Sandoz significant control over "virtually every aspect
of" Wafula's assignment; (2) Wafula's knowledge that the arbitration provision
would apply to claims she might raise against Sandoz; (3) the intent of both
parties to the contract to give Sandoz the benefit of the arbitration provision;
and (4) waiver, in that Wafula should be precluded from arguing Sandoz is not
a third-party beneficiary of the contract because she effectively alleged in her
complaint that Artech and Sandoz were her joint employers. In addition, Sandoz
argues that public policy militates in favor of finding that Sandoz is a third-party
beneficiary of the contract to avoid piecemeal litigation.
II.
It is well-established that a court must apply state contract principles to
determine whether a valid agreement to arbitrate exists. Hojnowski v. Vans
Skate Park, 187 N.J. 323, 341-42 (2006). As our Supreme Court explained when
deciding the enforceability of an arbitration provision, "'traditional principles'
of state law allow a contract to be enforced by or against nonparties to the
contract through 'assumption, piercing the corporate veil, alter ego,
incorporation by reference, third[-]party beneficiary theories, waiver and
estoppel.'" Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 188 (2013) (internal
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quotation marks omitted) (quoting Arthur Andersen LLP v. Carlisle, 566 U.S.
624, 631 (2009)). It is under the third-party beneficiary theory that Sandoz
claims it is entitled to compel arbitration of Wafula's claims.
"The standard applied by courts in determining third-party beneficiary
status is 'whether the contracting parties intended that a third party should
receive a benefit which might be enforced in the courts . . . .'" Reider Cmtys.,
Inc. v. Twp. of N. Brunswick, 227 N.J. Super. 214, 222 (App. Div. 1988)
(quoting Brooklawn v. Brooklawn Hous. Corp., 124 N.J.L. 73, 77 (E. & A.
1940)). "[T]he intention of contracting parties to benefit an unnamed third party
must be garnered from an examination of the contract and a consideration of the
circumstances attendant to its execution." Id. at 222. "The principle that
determines the existence of a third[-]party beneficiary status focuses on whether
the parties to the contract intended others to benefit from the existence of the
contract, or whether the benefit so derived arises merely as an unintended
incident of the agreement." Broadway Maint. Corp. v. Rutgers, The State Univ.,
90 N.J. 253, 259 (1982) (footnote omitted).
These are the facts and legal standards the trial court was to apply in
deciding Sandoz's motion. Rule 1:7-4(a) states that a trial court "shall, by an
opinion or memorandum decision, either written or oral, find the facts and state
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its conclusions of law thereon . . . on every motion decided by a written order
that is appealable as of right . . . ." "[A]ny order either compelling arbitration
. . . or denying arbitration shall . . . be deemed a final judgment of the court for
appeal purposes." R. 2:2-3(a). A final judgment is appealable as of right. R.
2:2-3(a)(1).
"The rule requires specific findings of fact and conclusions of law . . . ."
Pressler & Verniero, Current N.J. Court Rules, cmt. 1 on R. 1:7-4 (2022). "[A]n
articulation of reasons is essential to the fair resolution of a case." Schwarz v.
Schwarz, 328 N.J. Super. 275, 282 (App. Div. 2000). Effective appellate review
of a trial court's decision requires examination of the findings of fact and
conclusions of law on which the trial court relied. See Raspantini v. Arocho,
364 N.J. Super. 528, 533-34 (App. Div. 2003).
While a trial court's explicit reliance on the arguments made by a party as
the basis for denying a motion might suffice as the court's decision on a motion
for which Rule 1:7-4 does not require findings of fact and conclusions of law,
Vartenissian v. Food Haulers, Inc., 193 N.J. Super. 603, 611-13 (App. Div.
1984), this practice is not "preferable," id. at 612, and this court "should not be
forced to examine the moving papers and attempt to glean the judge's reasons "
for denial of a motion. Ibid. Where the order is appealable as of right or requires
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findings of fact, the need for a clear record of the trial court's decision is more
pronounced. "[N]either the parties nor we are well-served by an opinion devoid
of analysis or citation to even a single case." Great Atl. & Pac. Tea Co., Inc. v.
Checcio, 335 N.J. Super. 495, 498 (App. Div. 2000).
The determination of whether a party is a third-party beneficiary of a
contract involves consideration of a number of factors, including the intent of
the parties to the contract, the circumstances surrounding its execution, and the
meaning of its provisions. A trial court's evaluation of these factors requires
factfinding. In addition, Sandoz raised public policy considerations and arg ued
that Wafula waived her argument by alleging that Artech and Sandoz were her
joint employers. The complexity of the issues raised requires written findings
of fact and conclusions of law to permit effective appellate review.
The matter is remanded to permit the trial court to issue written findings
of fact and conclusions of law on Sandoz's motion to dismiss Wafula's claims
and compel her to submit those claims to arbitration. The remand proceedings
shall be completed in thirty days. We retain jurisdiction.
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