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Quigley v. KPMG Peat Marwick

April 25, 2000


Before Judges Havey, A.A. Rodr¡guez and Collester.

The opinion of the court was delivered by: Havey, P.J.A.D.


Argued January 31, 2000

On appeal from Superior Court of New Jersey, Law Division, Camden County.

Plaintiff Joseph Quigley was terminated from his position as senior manager with defendant KPMG Peat Marwick, LLP after eighteen years of employment. He filed a complaint alleging discrimination on account of his age in violation of the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49. He now appeals from an order dismissing the complaint and compelling arbitration. Plaintiff had signed agreements with defendant in 1981 and 1984 consenting to submit claims arising out of the agreements, or breach thereof, to arbitration. In entering the order, the trial court concluded that plaintiff knowingly waived his statutory rights under the LAD when he signed the agreements.

We reject plaintiff's argument that the trial court erred in "elevating the public policy favoring arbitration over the public policy against discrimination" by enforcing the arbitration clause. We also reject his contention that he was coerced into consenting to arbitration. However, we agree with plaintiff that, at the time he signed the agreements in 1981 and 1984, he did not knowingly and voluntarily waive his right to a trial by jury on his LAD claim, since no such statutory right existed at the time. We also agree with him that the language of the arbitration clause was too ambiguous and inadequate to constitute a waiver of his statutory remedies. We therefore reverse and remand for further proceedings.

Plaintiff filed a complaint in the Superior Court, Law Division, in July 1998, alleging that he was a senior manager with defendant, serving as defendant's "personal and regional coordinator" for its telecommunications consulting practice. Plaintiff states that defendant hired him in 1978; he worked from his home office in Haddon Heights; and he received "consistent praise for his good work, along with annual performance bonuses and raises." According to the complaint, defendant terminated plaintiff without notice or good cause in July 1996, and offered his position to a younger person. Plaintiff alleges that defendant discriminated against him because of his age in violation of the LAD, that as a result of defendant's actions, he lost wages, bonuses, pension benefits, and unused personal days, and suffered humiliation and emotional distress. He demands compensatory and punitive damages, attorneys' fees and interest.

Defendant filed a notice of motion to compel arbitration and dismiss the complaint, arguing that plaintiff had agreed to submit any claim he had against defendant to arbitration. Defendant submitted a certification of Deborah Keller, its assistant general counsel, stating that plaintiff was promoted to the position of manager in July 1981, and to senior manager in July 1984. Keller explained that, in accordance with defendant's policy, as consideration for these promotions defendant required plaintiff to execute a Manager's Agreement and a Senior Manager's Agreement respectively. Paragraph eleven of the agreements provide:

Any claim or controversy between the parties arising out of or relating to this Agreement or the breach thereof, or in any way related to the terms and conditions of the employment of Manager by [defendant], shall be settled by arbitration under the laws of the state in which Manager's office is located.

Plaintiff responded, arguing that (1) defendant waived its right to arbitrate by failing to plead arbitration as an affirmative defense, and by "invoking the litigation machinery of the court," and (2) plaintiff did not knowingly and voluntarily waive his right to a jury trial under the LAD since, when he signed the Senior Manager's Agreement in 1984, there was no right to a jury trial in discrimination cases. According to the plaintiff, the 1984 Senior Manager's Agreement was given to me as a condition of continued employment. When my Supervisor, Paul J. Grant, told me to sign the Agreement, I told him that I did not want to sign the Agreement because I felt that it did not benefit me. . . . Mr. Grant told me, "If you don't sign this, you don't work here anymore."

I signed the Agreement under duress, because I needed the job to support my family. In order to indicate, however, that the Agreement was not signed voluntarily, I inserted the initials "U.D." in between my first and last name on the signature line so as to indicate that the contract was signed "under duress."

Plaintiff added that he signed the 1981 Manager's Agreement "in the same manner because [he] was given a similar ultimatum." He claimed that defendant presented him with other contracts, after 1984, containing an arbitration clause, without the ultimatum, and he refused to sign them. Finally, plaintiff objected to being forced "to pay an exorbitant amount of money for an Arbitrator against [his] will."

In dismissing the complaint and ordering arbitration, the trial court found "plaintiff knowingly waived the statutory remedies," and rejected plaintiff's duress argument:

By putting his initials U.D. in there I agree with the defense that he can't have it both ways to get all the benefits to the agreement without having to perform the obligations.

I find [plaintiff] gave a false indication that he was voluntarily accepting the terms of the agreement, therefore, he should be bound to them. All this is also with the understanding that the public policy in New Jersey is so strong in favoring arbitration claims such as [these].

Upon entry of the order, defendant agreed to pay the arbitrator's fees on behalf of both parties.


Plaintiff contends that by compelling arbitration, the trial court erred in determining that the public policy favoring arbitration is stronger than "the public policy protecting citizens and employees of New Jersey from discrimination."

Plaintiff is correct that New Jersey's public policy against discrimination is strong. Our Legislature has declared that "discrimination threatens not only the rights and proper privileges of the inhabitants of the State but menaces the institutions and foundation of a free democratic State . . . ." N.J.S.A. 10:5-3. See also Dixon v. Rutgers, The State Univ., 110 N.J. 432, 451 (1988) (holding that "[t]he eradication of 'the cancer of discrimination' has long been one of our State's highest priorities") (quoting Fuchilla v. Layman, 109 N.J. 319, 334 (1988)). However, there is a competing public policy favoring arbitration, set forth in the Federal Arbitration Act (FAA), 9 U.S.C.A. ยงยง 1-16, and its parallel legislation in New Jersey, N.J.S.A. 2A:24-1 to -11. Both the FAA and its New Jersey counterpart, provide that an agreement to settle a controversy arising out of a contract or a "refusal to ...

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