Articles Posted in Arbitration / Mediation

Arbitration is widely believed to favor big business over individuals.  I have written numerous articles about forced arbitration, including cases that enforced arbitration of employment law claims, and ones that overturned such provisions.  In my law practice, I have fought against forced arbitration on many occasions.

Yesterday, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 into law.  As its name suggest, this law now prohibits forced arbitration of sexual harassment and sexual assault claims.  The law received bipartisan support in Congress, a rare feat in the current political climate.

The new statute deems that a person who files a case in which he or she alleges sexual harassment or sexual assault cannot be forced to be bound by an arbitration agreement or class or collective action waiver that he or she entered into before the dispute arose.  However, the person asserting the sexual harassment or assault still can chose to enforce an arbitration agreement.  Likewise, parties still can agree to enter into arbitration agreements after a dispute involving sexual harassment or sexual assault if that is their preference, and either party can enforce such an agreement.

In a recent employment law case, New Jersey’s Appellate Division ruled that an employer had waived its right to compel arbitration by waiting 10 months before it sought to do so.

Tevin Welcome worked as a van driver for Huffmaster, Inc.  Before Huffmaster hired him, Mr. Welcome completed an online application.  The application included an arbitration provision, which indicated that if he accepted a job with the company, then he would have to resolve any dispute with the company, including claims of discrimination or retaliation, through arbitration instead of in court.

Van driver fired after objecting to violations of COVID-19 mask mandateWhen Huffmaster hired Mr. Welcome, he moved from Texas to New Jersey for the job.  However, he quickly discovered that few of his coworkers and the clients who rode in the van he drove complied with New Jersey’s COVID-19 mask mandate.  Mr. Welcome was particularly concerned that he could get COVID and give it to his six-year-old son who has health problems.

New Jersey Supreme Court enforces arbitration agreement in age discrimination caseLast week, the New Jersey Supreme Court ruled that, to be enforceable, an arbitration agreement does not necessarily have to set forth the rules or procedures that will apply in arbitration or to select a forum for the arbitration.

The case involved Marilyn Flanzman, who worked for Jenny Craig as a weight maintenance counselor in Paramus, New Jersey, for almost 27 years.  In 2011, she signed an Arbitration Agreement with Jenny Craig.  That agreement states that all disputes, including discrimination claims, must be resolved through “final and binding arbitration” rather than a jury or other civil trial.

In February 2017, Jenny Craig reduced Ms. Flanzman from thirty-five hours per week to nineteen hours per week.  At the time, Ms. Flanzman was 82 years old.  In April 2017, Jenny Craig further reduced Ms. Flanzman’s hours, to approximately thirteen hours per week.  In June 2017, the company reduced her to only three hours per week.  When Ms. Flanzman complained to her supervisors, they told her: “That is just the way it is,” and that if she did not accept her new schedule she would be fired.  Ms. Flanzman, who apparently was the only employee in Paramus whose hours were reduced so dramatically, rejected the three-hour-per-week schedule.

In a recent ruling, the Third Circuit Court of Appeals concluded that an arbitration agreement did not prohibit an exotic dancer from pursuing her overtime and minimum wage claims in court.

Exotic Dancer Can Bring Wage and Hour Claim in CourtAlissa Moon worked at the Breathless Men’s Club, which is in Rahway, New Jersey.  The Club treated her as an independent contractor, rather than an employee.  In fact, she had to agree to rent space from the Club where she could perform, and signed an “Independent Dancer Rental Agreement” which expressly states that she is an independent contractor.

That agreement also includes the following arbitration provision:

Earlier this week, I was quoted in the New Jersey Law Journal regarding the lawsuit Grethen Carlson recently filed against Roger Ailes, the CEO of Fox News Network.  Ms. Carlson alleges that Mr. Ailes sexually harassed her and eventually fired her as a Fox News anchor because she resisted his sexual advances.

Ms. Carlson filed her lawsuit in Bergen County, New Jersey.  However, Mr. Ailes had the case removed to Federal Court.  He is currently seeking to force the case into a confidential arbitration rather than a public court.  Mr. Ailes is relying on the fact that Ms. Carlson’s employment contract with Fox News includes an arbitration clause.

Judge to decide whether case must go to arbitrationAccording to the Law Journal article, Fox News Suit Could Hinge on Disparate Arbitration Stances in NY, NJ, Ms. Carlson is claiming the arbitration clause does not apply to her case because Mr. Ailes is not a party to her employment agreement with Fox News and is not even mentioned in it.  In contrast, Fox is arguing that a lawsuit against Mr. Ailes in his capacity as Fox’s CEO is in effect a lawsuit against the network, and that the arbitration clause is broad enough to encompass this dispute because it arises out of Ms. Carlson’s employment relationship with it.

Employee Handbook Contiaining Unenforceable Arbitration ProvisionLast week, New Jersey’s Appellate Division ruled that Raymours Furniture Company cannot enforce the arbitration policy in its employee handbook because the handbook expressly states that it is not a contract. As a result, former Raymours & Flanigan employee Grant Morgan can proceed with his age discrimination claim in court rather than in arbitration.

Mr. Morgan alleges he experienced age discrimination in the workplace, and when he complained about it the company instructed him to sign an arbitration agreement or it would fire him. When Mr. Morgan refused to sign the agreement, the company followed through with its threat and fired him.

After Mr. Morgan filed a lawsuit, Raymours asked the court to enforce the arbitration provision in its employee handbook. The trial court denied its motion, and Raymours appealed.

In recent years, employers have been increasingly requiring their employees to sign arbitration agreements. An arbitration agreement is when you agree to have a private arbitrator, rather than a judge or jury, decide your legal disputes. Arbitration generally is considered less fair to individual employees and more favorable to big businesses. Nonetheless, courts generally enforce arbitration agreements as long as they are clear and unambiguous.

However, a recent ruling by the New Jersey Supreme Court recognizes that to be valid, an arbitration agreement has to make it clear you are waiving your right to pursue your case in court. The case, Atalese v. U.S. Legal Services Group, L.P., was decided in the context of a consumer contract dispute. However, it seems likely the same principle would apply to employment law arbitration agreements.

The arbitration provision in the Atalese case states that “any claim or dispute . . . shall be submitted to binding arbitration upon the request of either party.” It also indicates that an arbitrator will “resolve the dispute” and the “decision of the arbitrator shall be final.”

Earlier today, New Jersey’s Appellate Division ruled in favor of one of my clients, Karen Cole, holding that her former employer waived its right to enforce her arbitration agreement because it waited too long to raise it as a defense. As a result, her case can proceed to a jury trial instead of having her claims decided in arbitration.

Ms. Cole, a nurse anesthetist, worked at Jersey City Medical Center through her employer, Liberty Anesthesia Associates, LLC. In 2007, Jersey City revoked her hospital privileges. Liberty fired Ms. Cole shortly thereafter. Ms. Cole has evidence that Jersey City’s decision to revoke her privileges, and Liberty’s decision to fire her, were due to the fact that she has a disability, Ehlers Danlos Syndrome, and because she objected to illegal practices at the hospital. Accordingly, she sued Jersey City for disability discrimination in violation of the New Jersey Law Against Discrimination (LAD), and retaliation in violation of New Jersey’s whistleblower law, the Conscientious Employee Protection Act (CEPA). She later named Liberty as a defendant, alleging it discriminated and retaliated against her when it fired her.

Jury Box.jpgLiberty was a defendant in Ms. Cole’s case for 20 months, and actively participated in the litigation during that period. However, it did not raise arbitration as a defense until three days before the trial. Liberty claims it waited so long because Ms. Cole did not have an arbitration agreement with Jersey City, and it believed it made more sense to keep the entire case together in court. However, after Ms. Cole settled her claims against Jersey City a few weeks before the scheduled trial, Liberty decided to enforce the arbitration agreement. Liberty filed its motion to compel arbitration only 3 days before the scheduled trial date.

The trial judge found that Ms. Cole was required to bring her case against Liberty in arbitration, and dismissed her case from court. But the Appellate Division reversed. In Cole v. Jersey City Medical Center, it ruled that Liberty waived its right to enforce Ms. Cole’s arbitration agreement by intentionally waiting until the eve of trial before it raised it as a defense. It concluded that Liberty could have sought to require Ms. Cole’s to arbitrate her claims against it earlier, but chose not to do so for strategic reasons. It also found that Ms. Cole was prejudiced by Liberty’s delay, since she had to spend time preparing for a jury trial, which is much more time consuming than preparing for arbitration. As a result, it ruled that Liberty waived its right to require Ms. Cole to have her case decided in arbitration, and that Ms. Cole is entitled to a jury trial. The Appellate Division’s opinion was approved for publication, meaning it is a binding legal precedent.

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In January, the United States District Court for the Southern District of New York (“SDNY”) began requiring early mediation in all employment discrimination cases other than cases brought under the Fair Labor Standards Act (“FLSA”). Mediation is a form of Alternative Dispute Resolution (“ADR”) in which a lawyer, retired judge, or other trained mediator tries to help the parties settle their case.

Mediation offers the parties to a lawsuit a way to resolve their cases before they spend too much time, money, or mental energy trying to prove their cases. A study has shown that Settling Is Better Than Going to Trial for both employers and employees. As a result, it makes perfect sense that the SDNY would require early mediation in employment discrimination cases, which often can be very time consuming, costly, and emotional for everyone involved.

SDNY.jpgThe SDNY is a federal court which is located in downtown Manhattan, White Plains and Middletown, New York. It covers the Bronx, New York, Westchester Rockland, Putnam, Orange, Dutchess, and Sullivan Counties. The SDNY’s mediation program is free, since the mediators donate their time.

Like the SDNY, New Jersey’s state courts require early mediation in most employment law cases. However, currently the United States District Court for the District of New Jersey (“DNJ”) does not require mediation in every employment discrimination case, but instead leaves it up to individual judges to decide if and when to send the parties to mediation.

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On February 9, 2011, the United States Court of Appeals for the Third Circuit ruled that an arbitrator, rather than a judge, must decide whether an arbitration agreement allows the parties to have a class action arbitration. As a result, it reversed the District of New Jersey’s decision which had ruled that the case must proceed to arbitration as individual claims, rather than as a class action.

I represent the plaintiffs in the case, Jose Ivan Vilches, Francis Sheehan, Jr., and Jack Costeria. They each worked for the Travelers Companies, Inc., and related companies as appraisers in New Jersey. They filed a lawsuit on behalf of themselves and other appraisers who worked for Travelers, seeking damages for unpaid overtime pay under the Fair Labor Standards Act (FLSA) and the New Jersey Wage & Hour Law (NJWHL).

Gavel On Lawbook.jpgWhen they began working for Travelers, Mr. Vilches, Mr. Sheehan and Mr. Costeria each signed agreements which require them to pursue their legal claims against Travelers through arbitration. Those agreements do not say, one way or the other, whether they can bring a class action in arbitration. Travelers later modified its arbitration policy to say that employees cannot bring class action cases. However, Mr. Vilches, Mr. Sheehan and Mr. Costeria never agreed to that new policy.

Last year, the District of New Jersey granted Travelers’ motion to compel arbitration. The court also ruled that the plaintiffs were bound by the arbitration policy which prohibited them from bringing a class action.

But on appeal, in an unpublished opinion in Vilches v. Travelers Companies, Inc., the Third Circuit Court of Appeals ruled that the District Court should not have decided whether the arbitration agreement the plaintiffs agreed prohibited them from bringing a class action wage and hour case. Rather, since the question involves interpreting the arbitration agreement they signed when they were hired to determine whether that agreement permits class action arbitration, the Third Circuit concluded that the arbitrator rather than a judge must answer that question. As a result, the Third Circuit reversed the lower court’s ruling, and referred the case to arbitration to decide whether the case can proceed as a class action.

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