NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-1983-20
GILBERT ANTONUCCI,
Plaintiff-Appellant, APPROVED FOR PUBLICATION v. February 15, 2022 APPELLATE DIVISION CURVATURE NEWCO, INC., TODD GREDESKY, and ELIZABETH DAPOLITE,
Defendants-Respondents. ____________________________
Submitted December 8, 2021 – Decided February 15, 2022
Before Judges Gilson, Gooden Brown, and Gummer.
On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1034-20.
Ionno & Higbee, attorneys for appellant (Sebastian B. Ionno and D. Rebecca Higbee, on the briefs).
Gibbons, PC, attorneys for respondents (John C. Romeo and Cassandra J. Neugold, on the brief).
The opinion of the court was delivered by
GILSON, J.A.D.
Plaintiff Gilbert Antonucci appeals from an order compelling arbitration
and dismissing with prejudice his discrimination complaint against his former employer and two of its employees. This appeal presents two questions: (1)
whether the parties entered a binding agreement to arbitrate their employment
disputes; and (2) whether the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16,
pre-empts a 2019 amendment to New Jersey's Law Against Discrimination
(LAD), N.J.S.A. 10:5-1 to -50, that prohibits the waiver of procedural and
substantive rights under LAD. That second question is an issue of first
impression in this court.
We hold that the arbitration agreement is binding and that LAD's
procedural prohibition, which would preclude arbitration, is pre-empted when
applied to an arbitration agreement governed by the FAA. Nevertheless, we
vacate the order entered by the Law Division and remand for the entry of a new
order. Contrary to section 3 of the FAA, 9 U.S.C. § 3, the order on appeal
dismissed plaintiff's complaint with prejudice rather than stay the litigation. We,
therefore, remand for the entry of a new order compelling arbitration and staying
the Law Division action until the arbitration is completed.
I.
In December 2010, plaintiff was hired as a field engineer by SMS Systems
Maintenance Services, Inc. (SMS). In 2017, SMS merged with Curvature
A-1983-20 2 Newco, Inc. (defendant or Curvature) and the combined entity used the
Curvature name.
In October 2019, Curvature sent plaintiff an electronic version of the
company's Codes of ethics and conduct and Employee Handbook (the
Handbook). Plaintiff was directed to read and acknowledge the Codes and
Handbook by reviewing them online as part of a training program.
The Codes and Handbook were over 112 pages and included an arbitration
agreement (the Arbitration Agreement). The Arbitration Agreement was
identified in the Handbook's table of contents and attached as a separate
document in Appendix A.
The Arbitration Agreement stated that all disputes between Curvature and
an employee would be resolved by binding and final arbitration. Curvature is
defined to include the company and any of its directors, officers, or employees.
The Agreement expressly stated that it covered all employment-related claims,
including claims of wrongful termination and "discrimination, harassment, or
retaliation." The Arbitration Agreement also explained that employees were
waiving and giving up their right to bring claims in court or to have a jury trial
on those claims. The waiver included claims based on federal or state statutes.
Specifically, the Arbitration Agreement stated, in relevant part:
A-1983-20 3 By virtue of this Arbitration Agreement, you agree that any and all disputes, claims, or controversies between Curvature and you arising out of or relating to this Agreement, the employment relationship between the Parties, or the formation or termination of the employment relationship, that are not resolved by mutual agreement shall be resolved by final and binding arbitration as set forth in this Agreement. This Agreement includes claims that Curvature may have against Employee, or that Employee may have against Curvature. The term "Curvature" shall mean Curvature and its parents, subsidiaries, affiliated companies, owners, officers, directors, current and former employees, representatives, agents and assigns.
By entering into this Agreement, Curvature and you are waiving the right to a jury trial for employment related disputes. You further understand that entering into this Arbitration Agreement does not alter your at- will employment with Curvature.
....
. . . This Arbitration Agreement does apply to all statutory, contractual and/or common law claims arising from employment with Curvature, including . . . wrongful termination; . . . discrimination, harassment, or retaliation of any kind, . . . violations of any federal, state or other governmental constitution, statute, ordinance or regulation . . . .
The Arbitration Agreement set forth an overview of the arbitration
process, including descriptions of the arbitrator, the binding and final nature of
the arbitrator's decision, that the arbitration would be conducted under the rules
and procedures of the American Arbitration Association (AAA), and how the
A-1983-20 4 employee could obtain a copy of those rules and procedures. The Arbitration
Agreement also stated that it was "enforceable under and subject to the Federal
Arbitration Act, 9 U.S.C. Sec. 1, et seq."
At the end of the Arbitration Agreement, it stated that an employee may
indicate his or her acceptance "by signing in the space below." The Agreement
also explained:
However, if you voluntarily continue employment after the effective date of the Employee Handbook to which this Agreement is attached, you will also be deemed to have knowingly and voluntarily consented to, and accepted all the terms set forth in, this Agreement notwithstanding the lack of [the employee's] signature below.
Curvature's records establish that on October 22, 2019, plaintiff spent one
hour and thirty-three minutes reviewing the company's Codes and 2019
Handbook, to which the Arbitration Agreement was attached. Plaintiff did not
sign the Arbitration Agreement in the space provided. He electronically clicked
on an "I Accept" check box acknowledging that he had "received and reviewed
the policies and procedures" outlined in the Codes and Handbook.
On May 31, 2020, plaintiff was fired from his employment with
Curvature. Several months later, in September 2020, he filed a complaint
against Curvature and two of its employees in the Law Division. In the
A-1983-20 5 complaint, which he amended, he asserted claims of discrimination and
wrongful termination under LAD. He also asserted that defendants "caused
post-employment harm to [p]laintiff by contesting his claim for unemployment
benefits."
In lieu of an answer, defendants moved to dismiss the complaint and
compel arbitration. On February 19, 2021, the trial court heard oral argument,
and that same day it issued a written opinion and order dismissing plaintiff's
complaint with prejudice and compelling arbitration.
The trial court found that plaintiff had agreed to the Arbitration
Agreement. In making that finding, the trial court found that Curvature had sent
plaintiff the Handbook and Arbitration Agreement, he had acknowledged
reviewing the documents, and that the Arbitration Agreement was clear in
explaining that his continued employment constituted acceptance of the
Arbitration Agreement. The trial court also found that the Agreement was valid
and enforceable and that it covered the discrimination claims asserted by
plaintiff. The trial court did not address the issue of whether the 2019
amendment to LAD was pre-empted by the FAA. Plaintiff now appeals from
the order dismissing his complaint and compelling arbitration.
A-1983-20 6 II.
On appeal, plaintiff makes two arguments, contending that the trial court
erred in (1) finding that he had agreed to the Arbitration Agreement; and (2)
implicitly ruling that LAD's prohibition on arbitration of discrimination claims
was pre-empted by the FAA.
1. The Enforceability of the Arbitration Agreement.
The interpretation of an arbitration agreement and its enforceability are
questions of law that we review de novo. Goffe v. Foulke Mgmt. Corp., 238
N.J. 191, 207 (2019); Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 445-
46 (2014). It is undisputed that plaintiff was given a copy of the Arbitration
Agreement and had an opportunity to review it. Consequently, we also review
on a de novo basis the question whether plaintiff agreed to arbitrate because that
issue involves the application of established facts to the legal question of what
constitutes assent to a contract. Skuse v. Pfizer, Inc., 244 N.J. 30, 50 (2020).
Under both the FAA and New Jersey law, arbitration is fundamentally a
matter of contract. Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010);
9 U.S.C. § 2; NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J.
Super. 404, 424 (App. Div. 2011). The FAA "places arbitration agreements on
an equal footing with other contracts." Rent-A-Center, 561 U.S. at 67.
A-1983-20 7 Accordingly, "the 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 for the revocation of any
contract.'" Atalese, 219 N.J. at 441 (quoting Martindale v. Sandvik, Inc., 173
N.J. 76, 85 (2002)).
"An agreement to arbitrate, like any other contract, 'must be the product
of mutual assent, as determined under customary principles of contract law.'"
Id. at 442 (quoting NAACP, 421 N.J. Super. at 424). "A legally enforceable
agreement requires 'a meeting of the minds.'" Ibid. (quoting Morton v. 4
Orchard Land Tr., 180 N.J. 118, 120 (2004)). Consequently, to be enforceable,
the terms of an arbitration agreement must be clear, and any legal rights being
waived must be identified. Id. at 442-43; see also Kernahan v. Home Warranty
Adm'r of Fla., Inc., 236 N.J. 301, 319-20 (2019).
To accomplish a waiver of rights, "[n]o magical language is required."
Morgan v. Sanford Brown Inst., 225 N.J. 289, 309 (2016). Instead, "[o]ur courts
have upheld arbitration clauses that have explained in various simple ways 'that
arbitration is a waiver of the right to bring suit in a judicial forum.'" Ibid.
(quoting Atalese, 219 N.J. at 444). Accordingly, in employment settings, "a
waiver-of-rights provision must reflect that an employee has agreed clearly and
A-1983-20 8 unambiguously to arbitrate the disputed claim." Leodori v. Cigna Corp., 175
N.J. 293, 302 (2003). Moreover, the agreement must be supported by
consideration. Martindale, 173 N.J. at 87-88.
The New Jersey Supreme Court addressed the enforceability of a similar
employment-arbitration agreement in Skuse v. Pfizer, Inc., 244 N.J. 30 (2020).
There, Pfizer sent its agreement to the employee by email. Id. at 53-54. The
agreement informed the employee that by continuing to be employed for sixty
days, she would waive her right to pursue employment-discrimination claims
against Pfizer in court. Id. at 50. In addition, Pfizer explained the agreement
through an online "training module," and provided a link to a frequently asked
questions (FAQs) document. Id. at 37. Finally, Pfizer requested employees to
click a box to electronically "acknowledge" the agreement. Id. at 60-61.
In holding that Pfizer's arbitration agreement was valid, the Court made it
clear that an arbitration agreement can be sent to employees by electronic means,
such as email. Id. at 49-50. Moreover, if an employer's communications
unambiguously explain that continued employment will be deemed assent to the
agreement, then the employee will be considered to have consented to the
agreement's terms. Id. at 50-52. Under those circumstances, continued
employment constitutes valid consideration. Id. at 50; see also Martindale, 173
A-1983-20 9 N.J. at 88 (explaining that "continued employment has been found to constitute
sufficient consideration to support certain employment-related agreements").
Here, the Arbitration Agreement reviewed by plaintiff is valid and
enforceable. The terms of the Agreement clearly stated that the parties were
giving up the right to pursue all employment-related claims in court, and instead
agreed to arbitrate those claims before an AAA arbitrator. In that regard, the
Arbitration Agreement expressly stated that it covered discrimination claims,
including statutory claims. 1
The Arbitration Agreement was also the product of mutual assent.
Curvature sent plaintiff a copy of the Arbitration Agreement. Plaintiff had the
opportunity to, and indeed did, review the Codes and Handbook. Accordingly,
plaintiff had the opportunity to review the Arbitration Agreement , which was
attached to the Handbook. Plaintiff also acknowledged that he had reviewed
those documents and all the policies and procedures they described. Although
plaintiff did not sign the Arbitration Agreement itself, he was informed that his
1 We note that plaintiff does not dispute that if the Arbitration Agreement is valid, it covers his discrimination claims. To the extent that he disputed the scope of what should be arbitrated, the Agreement delegated that issue to the arbitrator. Delegations of the scope of an arbitration agreement are enforceable under the FAA. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___, 139 S. Ct. 524, 529-30 (2019). A-1983-20 10 continued employment would constitute an acknowledgment of his agreement
to arbitrate any employment-related disputes. Consequently, we hold that the
Arbitration Agreement is a valid and enforceable agreement.
2. Pre-emption Under the FAA.
LAD "plays a uniquely important role in fulfilling the public imperative
of eradicating discrimination." Rodriguez v. Raymours Furniture Co., 225 N.J.
343, 347 (2016). Effective March 18, 2019, the Legislature amended LAD to
add several sections, including Section 12.7, which states 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)). Section 12.7 also provides that no right or
remedy under LAD "or any other statute or case law shall be prospectively
waived." N.J.S.A 10:5-12.7(b).
The 2019 amendments to LAD apply prospectively. L. 2019, c. 39, § 6.
In that regard, the amendment states: "This 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." Plaintiff was sent and agreed to the
A-1983-20 11 Arbitration Agreement in October 2019. Accordingly, Section 12.7 of LAD
applies to the Arbitration Agreement between Curvature and plaintiff.
Therefore, the issue is whether the FAA pre-empts Section 12.7 from
applying to an arbitration agreement governed by the FAA. That issue is a
question of law that we review de novo. See Skuse, 244 N.J. at 46; Kernahan,
236 N.J. at 316. Moreover, that legal question involves interpretations of the
FAA and Section 12.7 of LAD and, therefore, is a mixed question of federal and
New Jersey state law. See Kernahan, 236 N.J. at 316-19.
"The 'principal purpose' of the FAA is to 'ensur[e] that private arbitration
agreements are enforced according to their terms.'" AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 344 (2011) (alteration in original) (quoting Volt Info.
Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478
(1989)). Section 2 of the FAA makes arbitration agreements "valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract." 9 U.S.C. § 2.
The FAA "contains no express pre-emptive provision." Volt, 489 U.S. at
477. Nevertheless, the FAA protects arbitration agreements involving interstate
commerce. Id. at 476. Accordingly, a state law that conflicts with the FAA or
A-1983-20 12 frustrates its purpose violates the Supremacy Cause of the United States
Constitution. U.S. Const. art. VI, cl. 2; Concepcion, 563 U.S. at 347 n.6.
"When state law prohibits outright the arbitration of a particular type of
claim," the conflicting state law is pre-empted by the FAA. Concepcion, 563
U.S. at 341; Preston v. Ferrer, 552 U.S. 346, 353 (2008). Even when the state
law does not expressly single out arbitration agreements, it will be pre -empted
if its application "covertly accomplishes the same objective by disfavoring
contracts that . . . have the defining features of arbitration agreements." Kindred
Nursing Ctrs. Ltd. P'ship v. Clark, 581 U.S. ___, 137 S. Ct. 1421, 1426 (2017).
See also Concepcion, 563 U.S. at 352 (explaining that a state law that "stands
as an obstacle" to the FAA is pre-empted (quoting Hines v. Davidowitz, 312
U.S. 52, 67 (1941))).
The United States Supreme Court has explained:
The [FAA] also displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements. In Concepcion, for example, we described a hypothetical state law declaring unenforceable any contract that "disallow[ed] an ultimate disposition [of a dispute] by a jury." Such a law might avoid referring to arbitration by name; but still, we explained, it would "rely on the uniqueness of an agreement to arbitrate as [its] basis" . . . .
A-1983-20 13 [Kindred Nursing, 137 S. Ct. at 1426 (all but first alteration in original) (citations omitted) (quoting Concepcion, 563 U.S. at 341-42).]
See also Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 132 (2020).
One of the procedural rights under LAD is the right to pursue an action in
court "to be heard before a jury." N.J.S.A. 10:5-13(a)(1). Before the 2019
amendments to LAD, the New Jersey Supreme Court had recognized "that an
individual may agree by contract to submit his or her statutory LAD claim to
alternative dispute resolution." Rodriguez, 225 N.J. at 364 (citing Garfinkel v.
Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 131 (2001)).
Section 12.7 does not expressly use the term "arbitration," nor does it expressly
state that it applies to agreements to arbitrate. Nevertheless, applied to an
arbitration agreement in the employment context, the plain language of Section
12.7 of LAD prohibits all pre-dispute agreements if those agreements
prospectively waive the right to file a court action for a LAD claim.
The waiver of the right to go to court and receive a jury trial is one of the
primary objectives or "defining features" of an arbitration agreement. Kindred
Nursing, 137 S. Ct. at 1426; see also Epic Sys. Corp. v. Lewis, 584 U.S. ___,
138 S. Ct. 1612, 1622 (2018) (noting that section 2 of the FAA "does not save
defenses that target arbitration . . . by 'interfer[ing] with fundamental attributes
A-1983-20 14 of arbitration'" (alteration in original) (quoting Concepcion, 563 U.S. at 344));
Skuse, 244 N.J. at 62 (Albin, J., concurring) (noting arbitration clauses affect
"New Jersey's most fundamental public policy," the "right to a civil jury trial").
Consequently, Section 12.7 effectively "singles out arbitration agreements for
disfavored treatment." Kindred Nursing, 137 S. Ct. at 1425; see also Marmet
Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 530-31 (2012) (holding the FAA
pre-empted a state court's rule that prohibited arbitration of personal-injury and
wrongful-death suits in nursing home admission agreements); Perry v. Thomas,
482 U.S. 483, 491 (1987) (holding the FAA pre-empted a state-law requirement
that litigants be provided a judicial forum for wage disputes); Estate of Ruszala
ex. rel. Mizerak v. Brookdale Living Communities, Inc., 415 N.J. Super. 272,
293 (App. Div. 2010) (holding the FAA pre-empted New Jersey's statutory
prohibition of arbitration agreements in nursing-home contracts).
Accordingly, we conclude that the FAA pre-empts Section 12.7 when
applied to prevent arbitration called for in an agreement governed by the FAA.
Our Supreme Court has recognized that "[b]y agreeing to arbitrate a statutory
claim, a party does not forgo the substantive rights afforded by the statute; it
only submits to their resolution in an arbitral[,] rather than a judicial, forum."
A-1983-20 15 Martindale, 173 N.J. at 93 (first alteration in original) (quoting Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).
In making our ruling, we point out that not all applications of Section 12.7
to other provisions included in an arbitration agreement are pre-empted. For
example, a provision in an arbitration agreement reducing the time for bringing
a discrimination claim to less than two years would not be enforceable under
Section 12.7, or existing New Jersey case law, because it would waive a
substantive or procedural right related to a claim of discrimination. The
application of Section 12.7 to that provision would not be pre-empted by the
FAA because it would not affect the parties' right to arbitrate; rather, the
application would protect LAD's two-year limitation period. See Rodriguez,
225 N.J. at 364 (holding that a pre-dispute employment application that
contractually shortened LAD's two-year limitation period was unenforceable as
against New Jersey's public policy). We do not address the question whether
Section 12.7 is enforceable when applied to an arbitration agreement governed
by the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -36.
Applying our ruling to the order on appeal, we affirm the provision of the
order compelling arbitration. We reverse the provision of the order dismissing
the case with prejudice. See 9 U.S.C. § 3 (stating a court action should be stayed
A-1983-20 16 if the action involves "any issue referable to arbitration"). Therefore, we remand
for entry of a new order and direct that the new order compel arbitration and
stay this civil action pending the arbitration.
Affirmed in part, reversed in part, and remanded. We do not retain
jurisdiction.
A-1983-20 17