Greg Noren v. Heartland Payment Systems, Inc.

154 A.3d 178, 448 N.J. Super. 486

• Court: New Jersey Superior Court Appellate Division
• Decided: February 6, 2017
• Docket: A-2651-13T3
• Status: Published

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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