N.J.L.A.D. has supplanted that common-law cause of action. For the reasons set forth above in part III.B.4, this Court accepts defendants' argument. The Court will thus grant defendants' motion to dismiss plaintiff's common-law wrongful-termination claim against Messrs. Worley and Sepe for failure to state a claim upon which relief can be granted.
Under the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, "a written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy arising out of such contract . . . shall be 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. Plaintiff does not dispute that the arbitration agreement contained in his employment application is one "involving commerce" within the meaning of the FAA. See 9 U.S.C. § 1; see also Crawford v. West Jersey Health Sys., 847 F. Supp. 1232, 1240 (D.N.J. 1994) (requiring only the "slightest nexus with interstate commerce"). Nonetheless, he contends the arbitration agreement ought not be enforced because his instant claims are outside the arbitration clause's scope.
As a preliminary matter, this Court notes the unclear scope of the FAA. On its face, the FAA seems to exclude employment contracts from its purview: "nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 114 L. Ed. 2d 26, 111 S. Ct. 1647 (1991), the Supreme Court explicitly declined to decide whether this language excludes from coverage all contracts of employment. See id. at 25 n.2. Most courts addressing the issue have read this language very narrowly, applying it only to seamen, railroad workers, and other workers personally engaged in moving goods through interstate commerce, see, e.g., Rojas v. TK Communications, Inc., 87 F.3d 745, 747-48 (5th Cir. 1996); Asplundh Tree Expert Co. v. Bates, 71 F.3d 592, 601 (6th Cir. 1995); Miller Brewing Co. v. Brewery Workers Local Union No. 9, 739 F.2d 1159, 1162 (7th Cir. 1984), cert. denied, 469 U.S. 1160, 83 L. Ed. 2d 926, 105 S. Ct. 912 (1985); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972); Dickstein v. duPont, 443 F.2d 783, 785 (1st Cir. 1971); Tenney Eng'g, Inc. v. United Elec. Radio & Mach. Workers, 207 F.2d 450, 453 (3d Cir. 1953), although the Third, Sixth, and Ninth Circuits have in dicta cast some doubt on this interpretation. See Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1112 n.1, 1119-20 (3d Cir. 1993); Mago v. Shearson Lehman Hutton, Inc., 956 F.2d 932, 934 (9th Cir. 1992); Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 310-11 (6th Cir. 1991) (explicitly adopting a broad reading of § 1);
see also Gilmer, 500 U.S. at 36-43 (Stevens and Marshall, JJ., dissenting). Because, at least in the Third Circuit, the scope of the FAA remains an open issue, this Court chooses to avoid the question and instead rest its arbitrability decision on other grounds.
Unlike some arbitration clauses (indeed, unlike some KFC arbitration clauses), the arbitration clause plaintiff signed does not purport to encompass all employment-related disputes. Cf. Brown v. KFC Nat'l Management Co., 82 Haw. 226, 230, 921 P.2d 146, 150 (1996) (quoting a more expansive KFC arbitration clause, referring to arbitration "any controversies concerning [an employee's] compensation, employment or termination of employment"). Rather, it covers only those "claims concerning the termination of [plaintiff's] employment." Plaintiff's Ex. B. Thus, by its terms, the instant arbitration clause excludes a host of potential employment disputes: claims for equal or higher pay, disability, or health benefits; claims regarding promotions and demotions; claims to improve workplace safety; and claims to ameliorate work conditions and workplace harassment.
Clearly, plaintiffs battery and sexual harassment claims do not concern the termination of his employment--following the battery and despite the harassment, plaintiff continued to work at KFC until fired. Thus, the Court holds that these claims clearly fall outside the substantive scope of the arbitration clause.
Plaintiff's retaliation claims present a closer question, as the retaliation allegedly inflicted on plaintiff consisted of his firing. See Complaint P 18. The arbitration agreement, purporting to encompass "any claims concerning the termination of [one's] employment," is not a model of clarity or precision. A person unversed in the law and unfamiliar with contracts might read the agreement to cover only those claims that flow from his work relationship with KFC: claims for severance pay, vacation pay, or disability, claims disputing the grounds on which he might be terminated, and the like. Such a person might not consider this language to include claims arising from statutory civil rights violations. To a layman these sorts of civil rights actions might be thought to flow not from one's work relationship but rather from federal and state laws. Although there is a reference in the arbitration clause to the EEOC in the context of completing "any external administrative remedy," to an average layman this reference confuses as much as clarifies the meaning of the entire paragraph.
Interpreting the parties' arbitration agreement involves competing principles of contractual interpretation. Generally, in determining the scope of an arbitration clause, courts operate under a "presumption of arbitrability in the sense that 'an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" AT&T Techs. v. Communications Workers, 475 U.S. 643, 650, 89 L. Ed. 2d 648, 106 S. Ct. 1415 (1986) (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960)). Of course, where an agreement to arbitrate is limited in its substantive scope, courts ought not allow this "'policy favoring arbitration . . . to override the will of the parties by giving the arbitration clause greater coverage than the parties intended.'" PaineWebber v. Hartmann, 921 F.2d 507, 513 (3d Cir. 1990) (quoting National R.R. Passenger Corp. v. Boston & Maine Corp., 271 U.S. App. D.C. 63, 850 F.2d 756, 760-61 (D.C. Cir. 1988)); see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920, 1924, 131 L. Ed. 2d 985 (1995) (deeming arbitration "a way to resolve those disputes--but only those disputes--that the parties have agreed to submit to arbitration").
Cutting against this federal policy favoring arbitration are two state-law principles of contract interpretation. Although the FAA governs the enforcement of arbitration agreements affecting commerce and "preempts state law which treats arbitration agreements differently from any other contracts, it also preserves general principles of state contract law as rules of decision on whether the parties have entered into an agreement to arbitrate." Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional, 991 F.2d 42, 45-46 (2d Cir. 1993); see also Perry v. Thomas, 482 U.S. 483, 492 n.9, 96 L. Ed. 2d 426, 107 S. Ct. 2520 (1987) (dictating that state law determines whether parties have agreed to arbitrate). Thus, state-law and common-law principles of contract interpretation properly guide this Court in construing the parties agreement.
Courts have long applied the "common-law rule of contract interpretation that a court should construe ambiguous language against the interest of the party that drafted it." Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 115 S. Ct. 1212, 1219, 131 L. Ed. 2d 76 (1995); see also In re Miller, 90 N.J. 210, 221, 447 A.2d 549, 555 (1982); Restatement (Second) of Contracts § 206 (1979). Particularly where, as here, a drafter could have easily drafted a more precise document, a court ought not later reward him with a favorable, expansive interpretation. See Doto v. Russo, 140 N.J. 544, 557, 659 A.2d 1371, 1377 (1995) (considering more precise, alternate language in interpreting a vaguely drafted contract). Indeed, by naming civil rights statutes, either generally or by name, KFC could have placed the coverage of the arbitration clause safely beyond reasonable question and at the same time given job applicants meaningful notice that civil rights claims they might have against their future employer could not be brought in a court of law before a jury. Cf. Johnson v. Hubbard Broadcasting, Inc., 940 F. Supp. 1447, 1449 (D. Minn. 1996) (quoting an arbitration clause covering "all disputes governed by the Employment Retirement Income Security Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and all state and local anti-discrimination laws and ordinances").
A third principle of contractual interpretation applicable to this case derives from New Jersey courts' construction of contracts of adhesion. Contracts of adhesion are not bargained-for in the traditional sense; rather they are "presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity for the 'adhering' party to negotiate except perhaps on a few particulars." Rudbart v. Water Supply Comm'n, 127 N.J. 344, 353, 605 A.2d 681, 685 (1992); see also Black's Law Dictionary 40 (6th ed. 1990). There is no middle ground and no room to negotiate terms. Where contracts of adhesion are deemed unconscionable or otherwise against public policy, courts have refused to enforce them. See, e.g., Rudbart, 127 N.J. at 353-56, 605 A.2d at 686-87. However, where, as here, there is nothing inherently unfair in the terms of a contract of adhesion, see Gilmer, 500 U.S. at 29-33 (finding employment arbitration clauses not inherently unfair), New Jersey courts have applied a special rule of construction.
In interpreting contracts like plaintiff's, where bargaining power is disparate and contracts are ones of adhesion, New Jersey courts have construed contract terms according to the reasonable expectations of the adhering party. See Doto, 140 N.J. at 555-57, 659 A.2d at 1376-77; Allen v. Metropolitan Life Ins. Co., 44 N.J. 294, 305-06, 208 A.2d 638, 644-45 (1965); see also Gaunt v. John Hancock Mut. Life Ins. Co., 160 F.2d 599, 601-02 (2d Cir.) (L. Hand, J.), cert. denied, 331 U.S. 849, 91 L. Ed. 1858, 67 S. Ct. 1736 (1947). These courts, construing insurance policies, reason:
While insurance policies are contractual in nature, they are not ordinary contracts but contracts of adhesion between parties who are not equally situated. Even the most astute insured might find his or her bargaining power is necessarily limited. Insurance policies are often unilaterally prepared by the company's experts, persons learned in the law of insurance who serve its interest in exercising their draftsmanship art. The result of their effort is given to the insured in printed form upon the payment of his premium. Moreover, insurance contracts are not typically read or reviewed by the insured, whose understanding is often impeded by the complex terminology used in the standardized forms.
Doto, 140 N.J. at 555-56, 659 A.2d at 1376 (citations and internal quotation marks omitted).
Although the courts invoking this principle are usually interpreting insurance policies, their reasoning applies with equal force to the case at bar. Plaintiff, like most insureds, was in no position to dicker over unfavorable terms: if he wanted to be a KFC fry cook, plaintiff had to sign the arbitration agreement buried in KFC's employment application. See Plaintiff's Ex. B ("The Agreement section of the application must be read and signed in order for you to be considered for employment with KFC."). Moreover, a gross disparity in bargaining power existed between plaintiff and KFC. At the time he signed the employment application, plaintiff had an eleventh-grade education and a criminal record, was on parole and in dire need of a job. See id. ; Caldwell Aff. PP 4-5. By contrast, KFC had unlimited access to lawyers well versed in the civil rights laws, contract formation, and the principles of clear draftsmanship. Only a minimum of thought would have been required to draft a clause which was as inclusive as desired by KFC while still making clear to an applicant for a fry cook's job that statutory civil rights claims would be subject to arbitration. See, e.g., Johnson, 940 F. Supp. at 1449 (quoting an arbitration clause specifically mentioning Title VII, the ADEA, the ADA, and state analogs).
Notwithstanding a general federal preference favoring arbitration, where an arbitration clause is prepared by an employer on a take-it or leave-it basis for signature by semi-skilled job applicants, a court will read the parties' agreement to carry out plaintiff's reasonable expectations in signing it. See PaineWebber, 921 F.2d at 513 (considering the will of the parties paramount in interpreting arbitration clauses). This places the burden of drafting an understandable arbitration clause in a manner consistent with well-established contract law--on the party who is doing the drafting and on the party with the vastly superior bargaining power. To be sure, where circumstances surrounding an agreement suggest that both parties knowingly agreed to arbitrate a particular dispute, a court ought to compel arbitration and carry out their wishes. However, nothing in the FAA prescribes a wooden application of the federal presumption in favor of arbitrability to the complete exclusion of well-established principles of contract construction. Even the Gilmer Court recognized that a "claim of unequal bargaining power is best left for resolution in specific cases." Gilmer, 500 U.S. at 33. Thus, this Court holds that plaintiff would not have reasonably understood that in signing the KFC employment application he was agreeing to arbitrate a future statutory civil rights claim for retaliatory termination. Accordingly, the Court will deny defendants' motion to compel arbitration.
For the reasons set forth above, the Court will deny plaintiff's application to amend his complaint to add a claim under the New Jersey Constitution, permit plaintiff to amend his complaint to correct KFC's corporate name and to reflect that plaintiff has now received an EEOC right to sue letter, grant in part and deny in part defendants' motion to dismiss plaintiff's complaint for failure to state a claim upon which relief can be granted, and deny defendants' motion in the alternative to compel binding arbitration of plaintiff's remaining claims. An appropriate order will issue on even date herewith.
Date: MARCH 25, 1997
JOSEPH E. IRENAS, U.S.D.J.