NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-1703-22
ESTHER OGUNYEMI,
Plaintiff-Appellant, APPROVED FOR PUBLICATION v. March 25, 2024
GARDEN STATE MEDICAL APPELLATE DIVISION CENTER, CENTER FOR SPINE AND JOINT PAIN RELIEF, and DHARAM MANN,
Defendants-Respondents. _____________________________
Argued October 11, 2023 – Decided March 25, 2024
Before Judges Sumners, Rose and Smith (Judge Rose concurring).
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1263-22.
Nancy E. Smith argued the cause for appellant (Smith Mullin, PC, attorneys; Nancy E. Smith, of counsel and on the briefs).
Joseph M. Vento (Seyfarth Shaw, LLP) argued the cause for respondents.
The opinion of the court was delivered by
SMITH, J.A.D. Plaintiff, Dr. Esther Ogunyemi, appeals from a trial court order staying
all claims in her complaint pending arbitration, including her claim that
defendants violated the New Jersey Law Against Discrimination (LAD),
N.J.S.A. 10:5-1 to -50, by terminating her employment in retaliation for
reporting sexual harassment.
On appeal, plaintiff contends that the arbitration clause in her
employment contract is ambiguous, and that certain other terms in her contract
are unconscionable. As a result, she argues that the arbitration clause is
unenforceable. She also argues that to the extent the trial court found she
waived her right to bring her claims in a court of law, an amendment to the
LAD, N.J.S.A. 10:5-12.7, (Section 12.7) prohibits that waiver.
Because we find the arbitration clause in plaintiff's employment contract
ambiguous, we conclude its terms are unenforceable. Having reached this
conclusion, we do not reach the unconscionability or statutory issues raised by
plaintiff. We reverse.
I.
Plaintiff applied for a job as a pain specialist with defendants in
February 2021. Defendants offered plaintiff a position and gave her a draft
employment contract to review. After reviewing the draft contract and
suggesting some modifications not related to the issues before us, plaintiff
A-1703-22 2 signed a ten-page employment agreement on March 29, 2021. We highlight
the relevant terms.
Section 27, "VENUE, ARBITRATION AND ACCEPTANCE OF
SERVICE OF PROCESS," states in pertinent part:
Each party to this Agreement hereby agrees and consents that any legal action or proceedings with respect to this Agreement shall only be brought in the courts of the State of New Jersey in Ocean County. . . . [E]ach such party hereby (i) accepts the jurisdiction of the aforesaid courts . . . Except as set forth in Section 11 hereof ["Termination"], any claim, controversy or dispute between you and CSJPR [1] (including without limitation CSJPR's affiliates, shareholders, employees, representatives, or agents) arising out of or relating to your employment, the cessation of your employment, or any matter relating to the foregoing (any "Controversy"), shall be submitted to and settled by arbitration before a single arbitrator . . . The foregoing requirement to arbitrate Controversies applies to all claims or demands by you, including without limitation any rights or claims you may have under any employment law whatsoever, including, but not limited to . . . the New Jersey Law Against Discrimination ("LAD") . . . or any other federal, state or local laws or regulations pertaining to your employment, the termination of your employment or this Agreement. YOU UNDERSTAND AND AGREE THAT THIS ARBITRATION PROVISION WAIVES YOUR RIGHT TO A JURY TRIAL FOR ANY AND ALL CLAIMS, INCLUDING STATUTORY EMPLOYMENT CLAIMS.
1 Co-defendant Center for Spine and Joint Pain Relief.
A-1703-22 3 Section 11, referenced by Section 27, is titled, "TERMINATION," and
states in pertinent part:
This Agreement may be terminated upon the happening of any of the following events:
....
(l) [Y]ou are unable to perform the essential functions of your position due to physical or mental illness, disability, or incapacity, with or without a reasonable accommodation it being recognized that your inability to perform your essential job functions for any prolonged period of time, usually twelve (12) weeks or more, will result in an undue hardship to the operations of CSJPR; or CSJPR is dissolved, ceases operations or files for bankruptcy.
Plaintiff's first day of work was September 1, 2021. Shortly after she
began, on October 8, plaintiff alleged she was sexually assaulted at the home
of co-defendant, Dr. Dharam Mann, while attending a new doctors welcome
party. Plaintiff confronted Dr. Mann about the assault on October 19, and told
him the incident was causing her distress. CSJPR terminated plaintiff one
month after the incident, on November 9. 2
2 The reason for plaintiff's termination is not found in the record, but plaintiff's merits brief states that defendants informed her that her termination was due to "ceased operations." The record shows discovery has not been completed, but the particular facts underlying the LAD claim do not affect the outcome on appeal.
A-1703-22 4 On May 9, 2022, plaintiff filed a complaint against defendants alleging
violations of the LAD; sexual assault and battery; and intentional infliction of
emotional distress. Defendants moved to compel arbitration pursuant to the
contract.
The trial court heard argument in August 2022, and issued an order
granting defendants' motion on January 20, 2023. The court made findings:
there was mutual assent between the parties; having found assent, the contract
was valid and enforceable; the language in the contract's arbitration clause was
clear and unambiguous; and federal arbitration law 3 barred use of Section 12.7
to defeat mandatory arbitration. The trial court then stayed the matter for six
months pending arbitration. Plaintiff appealed.
II.
We review a trial court's order granting or denying a motion to compel
arbitration de novo because the validity of an arbitration agreement presents a
question of law. Skuse v. Pfizer, Inc., 244 N.J. 30, 46 (2020) (a trial court's
interpretive analysis should not be deferred to unless we find its reasoning
persuasive). We owe no special deference to the trial court's interpretation of
an arbitration provision, which we view "with fresh eyes." Morgan v. Sanford
Brown Inst., 225 N.J. 289, 303 (2016).
3 Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16.
A-1703-22 5 The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, and the New
Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -32, represent a
legislative choice "to keep arbitration agreements on 'equal footing' with other
contracts." Roach v. BM Motoring, LLC, 228 N.J. 163, 174 (2017) (quoting
Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 441 (2014)). Under both
statutes, "arbitration is fundamentally a matter of contract," and should be
regulated according to general contract principles. Antonucci v. Curvature
Newco, Inc., 470 N.J. Super. 553, 561 (2022) (citing Rent-A-Center, W., Inc.
v. Jackson, 561 U.S. 63, 67 (2010); NAACP of Camden Cnty. E. v. Foulke
Mgmt. Corp., 421 N.J. Super. 404, 424 (App. Div. 2011)).
"Although 'arbitration [is] a favored method for resolving disputes . . .
[t]hat favored status . . . is not without limits.'" Gayles v. Sky Zone
Trampoline Park, 468 N.J. Super. 17, 23 (App. Div. 2021) (alterations in
original) (quoting Garfinkel v. Morristown Obstetrics & Gynecology Assocs.,
P.A., 168 N.J. 124, 131-32 (2001)). An arbitration agreement may be
modified, superseded, or, in certain circumstances, waived. Cole v. Jersey
City Med. Ctr., 215 N.J. 265, 276 (2013) (citing Wein v. Morris, 194 N.J. 364,
376 (2008)).
"An agreement to arbitrate . . . 'must be the product of mutual assent,'"
and "requires 'a meeting of the minds.'" Antonucci, 470 N.J. Super. at 561
A-1703-22 6 (quoting Atalese, 219 N.J. at 442). "[T]o be enforceable, the terms of an
arbitration agreement must be clear," and the contract needs to explain that the
agreement waives a person's right to have their claim tried in a judicial forum.
Ibid.
In the employment setting, we require "an express waiver of the right to
seek relief in a court of law," due to the generally unequal relationship
between the contracting parties. Cnty. of Passaic v. Horizon Healthcare
Servs., Inc., 474 N.J. Super. 498, 503 (App. Div. 2023); see also In re
Remicade Antitrust Litigation, 938 F.3d 515, 525 (3d Cir. 2019). "Employees
should at least know that they have 'agree[d] to arbitrate all statutory claims
arising out of the employment relationship or its termination.'" Atalese, 219
N.J. at 447 (alteration in original) (quoting Garfinkel, 168 N.J. at 135).
III.
A.
Plaintiff argues that her employment contract was unenforceable because
certain terms were ambiguous and other terms were unconscionable. We first
look to well-settled law to consider her ambiguity argument.
The Atalese Court held a consumer contract arbitration clause
unenforceable, concluding the term failed to include language "that plaintiff
waived her right to seek relief in court." 219 N.J. at 435. The Court
A-1703-22 7 considered previous cases where "[o]ur courts have upheld arbitration clauses
phrased in various ways." Id. at 444-45. Each case cited by the Atalese Court
included an express contractual term stating arbitration was the sole remedy.
See, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 81-82 (2002) (enforcing an
arbitration clause stating, "all disputes relating to . . . employment . . . shall be
decided by an arbitrator."). The Court concluded that an effective arbitration
clause, "at least in some general and sufficiently broad way, must explain that
the plaintiff is giving up her right to bring her claims in court or have a jury
resolve the dispute," and must demonstrate the party's understanding of all
relevant terms. Id. at 447.
Morgan gives us additional insight into ambiguity within arbitration
clauses. 225 N.J. at 310. In holding an arbitration clause like the one in
Atalese unenforceable, the Court concluded the clause was not "written in
plain language . . . clear and understandable to the average consumer." Ibid.
(quoting Atalese, 219 N.J. at 446). It also cited to the length of the clause, 750
words running on in thirty-five unbroken lines, and stated that "[t]he best that
can be said about the arbitration provision is that it is as difficult to read as
other parts of the enrollment agreement." Ibid.
B.
A-1703-22 8 Given these core tenets, we examine Section 27 of the employment
agreement. We are mindful that "to the extent there exists any ambiguity in
the arbitration provision, that ambiguity should be construed against [the
drafter]." Medford Twp. Sch. Dist. v. Schneider Elec. Bldgs. Ams., Inc., 459
N.J. Super. 1, 12 (App. Div. 2019) (citing Roach, 228 N.J. at 174).
An initial scan of Section 27 reveals a series of difficult to decipher and
contradictory sentences contained in a single arbitration clause. The clause
contains 887 words in thirty-six unbroken lines. A closer reading shows that
the run-on paragraph harbors within it mutually inconsistent means for dispute
resolution.
The first six-and-one-half lines establish jurisdiction for employment
related disputes in our state courts. It reads, "[e]ach party" consents to
Superior Court jurisdiction for "any legal action or proceedings with respect to
this Agreement . . . ." and commits the parties to accept the jurisdiction of the
courts. (Emphasis added). The opening lines of Section 27 are clear,
unambiguous, and all-encompassing as they describe employment contract-
related claims between the parties. The use of broad phrases such as "any
legal action" and "proceedings with respect to this Agreement," leave little
room for a narrow definition of this section's scope. Finally, this part of
A-1703-22 9 Section 27 states that such contract-related claims shall "only be brought in the
State of New Jersey in Ocean County."
The next six lines of Section 27 inexplicably remove the exclusive
Superior Court jurisdiction just conferred. This run-on sentence takes a
dramatically different approach to dispute resolution, compelling arbitration
for "any claim, controversy or dispute between you and CSJPR . . . arising out
of or relating to your employment, the cessation of your employment, or any
matter relating to the foregoing . . . ." Notably, this sweeping and mandatory
arbitration language creates an exception—Section 11—identifying eleven
possible causes for plaintiff's termination which are exempt from arbitration.
The causes include but are not limited to: plaintiff's loss of her medical
licenses, board certifications, or hospital privileges; plaintiff's failure to
comply with defendants' internal policies; and neglect of duty. Our thorough
review of Section 11's language shows that it provides no guidance concerning
how to resolve these exempt disputes. We bear this in mind as we consider the
rest of the arbitration clause.
The twenty-sixth line of Section 27 reads in part, "the foregoing
requirement to arbitrate Controversies applies to all claims or demands by you,
including without limitation any rights or claims you may have under any
employment law whatsoever, including, but not limited to . . . the [LAD]."
A-1703-22 10 This sentence represents the drafter's third separate attempt to establish a
forum for the parties' disputes. Unlike the first two attempts, this arbitration
clause identifies no limitations or exceptions. The language is broad in scope,
like the opening sentence. Rather than limitations on arbitration, this clause
contains inclusive language, and specifically identifies various federal and
state employment discrimination claims for arbitration.
Finally, Section 27 ends with plaintiff's waiver of her right to a trial on
any dispute concerning her employment. Lines thirty-four through thirty-six
read: YOU UNDERSTAND AND AGREE THAT THIS ARBITRATION
PROVISION WAIVES YOUR RIGHT TO A JURY TRIAL FOR ANY AND
ALL CLAIMS, INCLUDING STATUTORY EMPLOYMENT CLAIMS.
C.
Viewing Section 27 through the lens of Atalese and Morgan, we reach
one dispositive conclusion. Section 27 is not written in plain, clear, and
understandable language. The confusing and poorly drafted paragraph
proposes no fewer than three distinct avenues for dispute resolution between
the parties. These separate avenues defy any way to credibly reconcile them.
The first lines of Section 27 call for any legal action or proceedings with
respect to the agreement to be litigated in the Superior Court, Ocean County
vicinage. There are no conditions attached to that term. Next, Section 27 calls
A-1703-22 11 for limited arbitration of any claims, controversies, or disputes between the
parties to the employment agreement. The limitation specifically carves out
certain causes for termination which cannot be arbitrated, although the contract
is silent on how disputes concerning these enumerated exceptions would be
resolved. Finally, Section 27 attempts to impose an unconditional arbitration
clause, covering all claims or demands by plaintiff. None of these three
clauses references the other. Indeed, they appear to be standalone provisions
which, by happenstance, inhabit the same section of the same contract at the
same time. The presence of each separate dispute resolution clause in Section
27 renders the other two clauses meaningless, making the employment
agreement ambiguous when read as a whole.
We do not agree with the trial court, which reviewed the arbitration
clause and reached the legal conclusion that its terms were plain and
unambiguous. We find the court's reasoning unpersuasive, Skuse, 244 N.J. at
46. The express waiver language at the end of Section 27 does not resolve the
ambiguity preceding it, which must be construed against defendants. See
Roach, 228 N.J. at 174. Based on our de novo review, Atalese, 219 N.J. at
245, we conclude that the arbitration clause in plaintiff's employment
agreement signed is unenforceable as a matter of law.
A-1703-22 12 Having found the arbitration clause unenforceable, we need not reach
plaintiff's unconscionability arguments, nor the statutory questions raised on
appeal. We reverse the trial court's order compelling arbitration and remand
for proceedings consistent with this opinion.
Reversed. We do not retain jurisdiction.
A-1703-22 13 __________________________ ROSE, J.A.D., concurring.
I agree with the result reached by my colleagues but write separately
because I would reverse the January 20, 2023 order for a different reason.
Discerning no ambiguity in the arbitration provision, I would reach plaintiff's
statutory argument and conclude the provision improperly waives plaintiff's
right to a jury trial on her LAD claims under Section 12.7. In doing so, I
distinguish the terms of the present contract from those of the contract at issue
in Antonucci, which expressly provided the FAA governed. 470 N.J. Super. at
566. We held the FAA therefore "pre-empts Section 12.7 when applied to
prevent arbitration called for in an agreement governed by the FAA," ibid., but
declined to address "whether Section 12.7 is enforceable when applied to an
arbitration agreement governed by the [NJAA]," id. at 567.
In the present matter, the employment contract is silent as to whether the
FAA or NJAA applies. In my view, however, there is no evidence in the
record that the parties' employment contract affects interstate commerce,
which would otherwise bring the agreement within the ambit of the FAA and
compel arbitration. See Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56
(2003); see also Gras v. Assocs. First Cap. Corp., 346 N.J. Super. 42, 47 (App.
Div. 2001). Accordingly, I agree with the majority's decision to reverse the
order dismissing plaintiff's complaint and afford plaintiff her day in court.
A-1703-22 14 Although I need not reach plaintiff's contention that the arbitration provision is
unenforceable under the Ending Forced Arbitration of Sexual Assault and
Sexual Harassment Act of 2021 (EFAA), 9 U.S.C. §§ 401-402, I do so for
completeness. I am persuaded by defendants' argument that plaintiff's claims
under the EFAA are time barred.
In my view, the majority goes to great lengths to find ambiguity in the
arbitration provision where none exists. The provision clearly and
unmistakably evinces the parties' intent to arbitrate the LAD claims asserted in
plaintiff's complaint. Further, the waiver-of-rights provision is printed in all
capital letters and clearly informs plaintiff she waives her right to a jury trial
for those claims. See Atalese, 219 N.J. at 447 (holding "the clause, at least in
some general and sufficiently broad way, must explain that the plaintiff is
giving up her right to bring her claims in court or have a jury resolve the
dispute").
Unlike the majority, I discern no ambiguity or confusion between the
first portion of Section 27 (court provision) and the second, albeit lengthier,
portion of the same section (arbitration provision). The court provision clearly
refers all claims pertaining to the employment contract to "the courts of the
State of New Jersey in Ocean County," while the arbitration provision
A-1703-22 15 include[s] without limitation any claims [plaintiff] may have under any employment law, whatsoever, including but not limited to, the Age Discrimination in Employment Act of 1967, Section 1981 of the Civil Rights Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1991, the Equal Pay Act, the Family and Medical Leave Act and/or New Jersey family leave and medical leave laws, the New Jersey Law Against Discrimination ("LAD"), the New Jersey Conscientious Employee Protection Act ("CEPA"), or any other federal, state or local laws or regulations pertaining to [plaintiff's] employment, the termination of [plaintiff's] employment or this Agreement.
[(Emphasis added).]
Without question, plaintiff's LAD claims are expressly included within the
arbitration provision and, as such, the parties' dispute falls within its scope.
See Martindale, 173 N.J. at 92.
Nor am I persuaded the exclusion of the contract's Section 11 "events"
within the arbitration provision somehow muddies its clear intent. Set forth in
paragraphs (a) through (q), those events do not give rise to an employment law
claim and, as such, they are not arbitrable. Unlike the "multiple arbitration
provisions" we deemed "confusing" in NAACP, the arbitration provision at
issue neither was "spread across three different documents" nor "conflicting."
See 421 N.J. Super. at 430-32. Stated another way, the court and arbitration
provisions embodied in Section 27 do not conflict with each other. Instead,
they govern different types of claims, i.e., claims pertaining to the contract and
A-1703-22 16 nonemployment-related events are litigated in court, while those pertaining to
alleged violations of employment law are resolved before an arbitrator.
Further, I disagree with the majority's comparison of the arbitration
provision in the present matter with the provisions our Supreme Court found
faulty in Atalese and Morgan. In those cases, the Court condemned the
arbitration provisions at issue for their "fail[ure] to explain in some minimal
way that arbitration [wa]s a substitute for a consumer's right to pursue relief in
a court of law." Morgan, 225 N.J. at 294 (quoting Atalese, 219 N.J. at 436).
That is not the case here.
Moreover, the circumstances surrounding plaintiff's acceptance of the
contract's terms shed light on her understanding of the arbitration provision.
On February 24, 2021, Dr. Mann presented the employment contract to
plaintiff. The following month, on March 22, 2021 – after consultation with
her attorney – plaintiff requested certain changes to the contract, some of
which were incorporated therein. One week later, on March 29, 2021, plaintiff
executed the agreement. She commenced her employment at CSJPR on
September 1, 2021, five months after she signed the contract. See Martindale,
173 N.J. at 97 (enforcing a waiver-of-rights provision in an employment
contract where the plaintiff, "an educated businesswoman . . . was provided
with ample time and opportunity to review the application").
A-1703-22 17 For the foregoing reasons, I disagree with the majority's conclusion that
the arbitration provision at issue is ambiguous. Accordingly, I deem it
necessary to consider plaintiff's statutory claims.
Following oral argument before us, the court sought supplemental
briefing regarding two issues:
Issue 1
Is an employment agreement that does not expressly cite to the . . . FAA, but contains an arbitration clause, subject to the FAA?
Discuss whether the employment agreement signed by the parties was a "contract involving interstate commerce . . . subject to the FAA." (Citation omitted).
Issue 2
If the employment agreement signed by the parties is subject to the FAA, is [Section] 12.7 of the . . . LAD preempted as of the [March 3, 2022] enactment date of the . . . EFAA?" (Citation omitted).
Can [S]ection 12.7 of the []LAD still be considered to frustrate the purpose of the FAA after March 3, 2022? If not, what effect does its resuscitated status have on claims brought under the LAD that accrued prior to March 3, 2022, but were timely filed after March 3, 2022?
I begin my review by summarizing the relevant statutory framework vis-
à-vis the procedural posture of the present matter to lend context to my
A-1703-22 18 analysis. Effective March 18, 2019 – two years before plaintiff executed the
contract in this case – the Legislature amended the LAD to add several
sections, including Section 12.7. In pertinent part, Section 12.7 states:
a. 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.
b. No right or remedy under the [LAD], . . . or any other statute or case law shall be prospectively waived.
Effective March 3, 2022 – one year after plaintiff executed the contract
in this case – the EFAA amended the FAA by invalidating "predispute
arbitration agreements" 4 that precluded a party from filing in court a lawsuit
involving sexual assault or sexual harassment:
Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute . . . no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.
[9 U.S.C. § 402(a).]
4 Pursuant to 9 U.S.C. § 401(1): "The term 'predispute arbitration agreement' means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement."
A-1703-22 19 In turn, the FAA was amended accordingly and now renders invalid
contracts containing agreements to arbitrate that violate the EFAA. 9 U.S.C.
§ 2. Pertinent to this appeal, an historical note provides in pertinent part:
"This Act, and the amendments made by this Act, shall apply with respect to
any dispute or claim that arises or accrues on or after the date of enactment of
this Act." 9 U.S.C. § 401 hist. n.
Addressing the application of the EFAA and Section 12.7 in reverse
order, I agree with defendants that the EFAA applies to claims that accrued
after its effective date. Plaintiff's LAD claims accrued on November 9, 2021,
when she was allegedly terminated from her employment with defendants after
having reported Dr. Mann's conduct on October 18, 2021. Indisputably,
plaintiff's claims preceded the effective date of the EFAA, and as such, her
complaint would be preempted by the FAA – if, indeed, the FAA governed the
employment contract at issue.
In the present matter, the arbitration provision does not declare whether
the FAA or the NJAA applies. As our Supreme Court held in Arafa v. Health
Express Corp., "[t]he NJAA governs 'all agreements to arbitrate made on or
after January 1, 2003,' and exempts from its provisions only 'an arbitration
between an employer and a duly elected representative of employees under a
collective bargaining agreement or collectively negotiated agreement.'" 243
A-1703-22 20 N.J. 147, 167 (quoting N.J.S.A. 2A:23B-3(a)). By contrast, the FAA controls
transactions affecting interstate commerce and provides:
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, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided [pursuant to 9 U.S.C. §§ 401-402].
[9 U.S.C. § 2 (emphasis added).]
The United States Supreme Court has held the term, "involving
commerce," must be interpreted broadly to mean any conduct that affects
interstate commerce. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265,
273-77 (1995). According to the Court, "the word 'involving' is broad and is
indeed the functional equivalent of 'affecting.'" Id. at 273-74. The Court also
analyzed the phrase, "evidencing a transaction," id. at 279, and held that it
means the "'transaction' in fact 'involve[s]' interstate commerce, even if the
parties did not contemplate an interstate commerce connection," id. at 281.
Plaintiff argues "the record is completely devoid of even one fact
indicating that [d]efendants' business is engaged in any kind of interstate
commerce." Citing plaintiff's complaint, defendants counter plaintiff was a
A-1703-22 21 New York resident and "work[ed] for defendants in Monmouth County."
Defendants further argue the employment contract required plaintiff to:
participate in certain insurance programs, Medicaid, and Medicare; "maintain
an accurate profile on the State Department of Health's website"; and possess a
"current controlled substance registration[] issued by . . . the United States
Drug Enforcement Agency."
Defendants' reliance on this court's decisions in Estate of Ruszala ex rel.
Mizerak v. Brookdale Living Communities, Inc., 415 N.J. Super. 272 (App.
Div. 2010), and Alfano v. BDO Seidman, LLP, 393 N.J. Super. 560 (App. Div.
2007), is misplaced.
In Ruszala, we concluded the arbitration provisions contained in nursing
home residency agreements were governed by the FAA even though the
provisions did not so state. Id. at 292. The record included the affidavit of the
nursing home's vice president, which stated "supplies, such as food, medicine,
and medical equipment" were purchased "'primarily from out-of-state vendors'
through 'mail, electronic mail, telephone, and facsimile transactions.'" Id. at
291. We concluded the "nursing home facilities c[ould] not function without
the materials procured from these out-of-state suppliers," and "[t]he delivery of
these goods from their points of origin to the doors of these facilities thus
'affect[ed]' interstate commerce and involve[d] the federally regulated industry
A-1703-22 22 of interstate transportation." Ibid. We also noted the facilities "[we]re
incorporated in a foreign jurisdiction and they admit[ted] residents who
originally resided outside of this State." Ibid.
In Alfano, we held: "A nexus to interstate commerce is found when
citizens of different states engage in the performance of contractual obligations
in one of those states because such a contract necessitates interstate travel of
both personnel and payments." 393 N.J. Super. at 574 (citing Crawford v. W.
Jersey Health Sys., 847 F. Supp. 1232, 1240 (D. N.J. 1994)). In Alfano, the
plaintiff was a resident of New Jersey and the defendant was "a German
corporation, with an office in New York." Ibid. However, the record also
disclosed: "The parties met in Manhattan, and the transactions involved
investments in (1) foreign Deutsche Bank stock and options, (2) a Cayman
Island limited partnership, (3) a Cayman Island corporation, and (4) a
Delaware company." Ibid. Moreover, "[t]he securities transactions at issue
involved interstate and international commerce." Ibid.
In Crawford, the District Court concluded the arbitration provision in an
employment contract between a New Jersey physician and New Jersey medical
practice was governed by the FAA because the practice "treat[ed] patients who
live[d] and work[ed] in Pennsylvania." 847 F. Supp. at 1240. Further, the
patients' medical costs "[we]re paid through out-of-state or multi-state
A-1703-22 23 insurance carriers"; the "[d]efendants advertise[d] regularly in out -of-state
newspapers"; and the "defendants receive[d] goods and services from
numerous out-of-state vendors." Ibid.
Conversely, in the present matter, there is no evidence in the record that
defendants: treated patients who resided outside the state; advertised outside
the state; or received goods and services from out-of-state vendors. Therefore,
I am not persuaded by defendants' argument that because plaintiff resided in
New York and was required to participate in federal programs and licensure
requirements, the employment contract "affected" interstate commerce as
defined by the United States Court in Allied-Bruce.
In my view, the distinguishing factor in the present matter is the lack of
any out-of-state transactions. More particularly, because the record is devoid
of any suggestion that the relationship between the parties involved the
provision of medical care to patients outside New Jersey or that plaintiff's
employment with defendants otherwise involved interstate commerce, I
conclude the contract does not "affect" interstate commerce. Accordingly,
because plaintiff's claims accrued after the effective date of Section 12.7, the
arbitration provision is void and plaintiff's claims should be litigated in
Superior Court pursuant to Section 27.
A-1703-22 24