On certification to the Superior Court, Appellate Division.
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
This appeal considers whether an arbitration agreement that was executed by the parties was valid and enforceable notwithstanding its inclusion in an application for employment.
In 1994, plaintiff was hired as a benefits administrator by the defendant. When plaintiff applied for the position, she had to complete and sign an employment application that included an arbitration agreement. The arbitration agreement stated that all disputes relating to the employment or termination of the employment would be decided by an arbitrator. The arbitration provision stated further that plaintiff agreed to waive the right to a jury trial in any action or proceeding relating to her employment and that her agreement was knowing and voluntary and was given without duress or coercion. Finally, the arbitration provision stated that plaintiff had the right to consult an attorney before signing it. Other than defendant advising plaintiff that she was required to sign that page of the application, there is no claim that plaintiff was coerced into signing the arbitration agreement.
In January 1996, plaintiff informed the defendant that she was pregnant. About two weeks before giving birth, plaintiff experienced medical problems related to the pregnancy and obtained disability leave. After giving birth, defendant granted plaintiff's request for family and medical leave to commence at the termination of the disability leave. Prior to the termination of the disability leave, defendant notified plaintiff that her position was being eliminated due to a reorganization of defendant's holding company and its financial department. Defendant ceased disability payments to plaintiff in November 1996.
Plaintiff filed a complaint alleging a violation of the New Jersey Family Leave Act (FLA) and filed an amended complaint adding a claim under the New Jersey Law Against Discrimination (LAD). Defendant moved to stay the proceedings and to compel arbitration. The trial court granted the motion and dismissed plaintiff's complaint without prejudice, but ordered a stay pending appeal.
On appeal, the Appellate Division affirmed the trial court's ruling. The panel determined that the arbitration agreement contained in the employment application was valid and enforceable and rejected the contention that the agreement was a contract of adhesion.
HELD: Plaintiff is bound by the arbitration agreement contained in her application for employment because it was a valid and legal agreement to arbitrate, its language was clear and unambiguous, and it was sufficiently broad to encompass plaintiff's statutory causes of action.
1. The first step in determining the enforceability of an arbitration agreement is to determine whether a valid agreement exists. Arbitration agreements may not be subjected to more burdensome contract formation requirements than that required for any other contractual topic. Congress enacted the Federal Arbitration Act (FAA) to abrogate the then-existing common law rule disfavoring arbitration agreements and to place arbitration agreements on the same footing as other contracts. Although it is firmly established that the FAA preempts state laws that invalidate arbitration agreements, the FAA specifically permits states to regulate contracts, including contracts containing arbitration agreements, under general contract principles; therefore, an arbitration clause may be invalidated upon such grounds as exist at law or in equity for the revocation of any contract. The New Jersey Legislature codified its endorsement of arbitration agreements in N.J.S.A. 2A:24-1 to -11, and New Jersey courts have also favored arbitration as a means of resolving disputes. (Pp. 5-10).
2. The parties executed an agreement to arbitrate all claims against the defendant. Enforceability is not determined by whether the arbitration agreement is contained in an application for employment or in an employment contract, but rather by whether the arbitration agreement constitutes a valid and enforceable contract. (Pp. 10 to 11).
3. Basic contract principles render a promise enforceable against the promisor if the promisee gave some consideration for the promise. If the consideration requirement is met, there is no additional requirement of gain or benefit to the promisor, loss or detriment to the promisee, equivalence in the values exchanged or mutuality of obligation. The arbitration agreement contained in the Application for Employment signed by plaintiff was supported by consideration in the form of defendant's willingness to consider employing plaintiff. Although defendant was under no obligation to actually hire plaintiff, defendant's consideration of plaintiff's application, its extension of an offer and the commencement of employment, and thereafter the provision of compensation and on- going employment constituted sufficient consideration to support the parties' agreement to arbitrate their disputes. That agreement is binding, as would be any other contractual term not contrary to public policy contained in a signed employment application that led, as here, to employment. (Pp. 11 to 14).
4. A contract of adhesion is a contract presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity of the adhering party to negotiate except perhaps on a few particulars. Even if an agreement is found to be a contract of adhesion, that does not render the contract automatically void. In determining whether to enforce a contract of adhesion, courts must look not only to the standardized nature of the contract, but also to the subject matter, the parties' relative bargaining positions, the degree of economic compulsion motivating the adhering party, and the public interest affected by the contract. Here, it is not determinative that plaintiff was required to sign an employment application containing an arbitration agreement in order to be considered for employment. The employment application was not offered on a take-it-or-leave-it basis. Defendant gave plaintiff an opportunity to ask questions about the application, and to consult with an attorney, and plaintiff herself was an educated person who was experienced in the field of human resources. Nothing in the record indicates that plaintiff asked to alter any terms of the application or that defendant would have refused to consider her for the position if she did not assent to the arbitration provision as presented. Even if the arbitration agreement could be characterized as a contract of adhesion, however, the agreement's subject matter and the public interests affected lead to the conclusion that it should not be invalidated. The affirmative policy of this State favors arbitration as mechanism of resolving disputes. (Pp. 14 to 19).
5. In determining the scope of the agreement, the duty to arbitrate rests solely on the parties' intentions as set forth in the writing. An employee may be bound by an agreement to waive his or her right to pursue a statutory claim in a judicial forum in favor of arbitration. In so doing, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral forum. The parties should be bound to the agreement unless either the Legislature has evinced an intention to preclude a waiver of judicial remedies, or the statutory claim cannot be vindicated in an arbitral forum. Here, the text and legislative histories of the FLA and New Jersey's LAD do not restrict the use of an arbitral forum. (Pp. 19 to 22).
6. The language in the arbitration agreement not only was clear and unambiguous, it was also sufficiently broad to encompass reasonably plaintiff's statutory causes of action. The arbitration provision does not contain any limiting references and its wording provided plaintiff with sufficient notice at the time she signed it that all claims relating to employment with and termination from defendant would be resolved through arbitration. It also addressed specifically a waiver of the right to a jury trial, augmenting the notice to all parties that claims involving jury trials would be resolved instead through arbitration. Finally, plaintiff's waiver of her right to pursue her statutory claims in a judicial forum was knowing and voluntary. (Pp. 22 to 26).
The judgment of the Appellate Division is AFFIRMED.
JUSTICE STEIN, dissenting, in which JUSTICES LONG and ZAZZALI join, is of the view that because of the vast disparity in bargaining power between an employer and a job applicant, a waiver of the right to jury trial and consent to arbitration contained in a job application form should be unenforceable as a matter of public policy.
CHIEF JUSTICE PORITZ and JUSTICES COLEMAN and VERNIERO join in JUSTICE LaVECCHIA's opinion. JUSTICE STEIN filed a dissenting opinion in which JUSTICES LONG and ZAZZALI join.
The opinion of the court was delivered by: LaVECCHIA, J.
This appeal addresses the enforceability of an arbitration agreement contained in an application for employment. The courts below concluded that the agreement to arbitrate executed by the parties was valid and enforceable notwithstanding its inclusion in an application for employment, and therefore held that plaintiff was bound to submit her claims against her former employer to arbitration. All of plaintiff's claims were held to be encompassed by the arbitration agreement, including her statutory claims concerning family leave and those alleging discrimination. We agree and affirm the judgment of the Appellate Division.
Plaintiff Maureen Martindale applied and was hired for the position of Benefits Administrator with defendant Sandvik, Inc. in 1994. When she applied, plaintiff had to complete and sign an "Application for Employment" that included an arbitration agreement that appeared on page four of the application. The arbitration agreement stated:
AS A CONDITION OF MY EMPLOYMENT, I AGREE TO WAIVE MY RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING RELATED TO MY EMPLOYMENT WITH SANDVIK. I UNDERSTAND THAT I AM WAIVING MY RIGHT TO A JURY TRIAL VOLUNTARILY AND KNOWINGLY, AND FREE FROM DURESS OR COERCION.
I UNDERSTAND THAT I HAVE A RIGHT TO CONSULT WITH A PERSON OF MY CHOOSING, INCLUDING AN ATTORNEY, BEFORE SIGNING THIS DOCUMENT.
I AGREE THAT ALL DISPUTES RELATING TO MY EMPLOYMENT WITH SANDVIK OR TERMINATION THEREOF SHALL BE DECIDED BY AN ARBITRATOR THROUGH THE LABOR RELATIONS SECTION OF THE AMERICAN ARBITRATION ASSOCIATION.
Plaintiff also submitted a resume that set forth her educational background and extensive experience in the field of benefits administration.
It is undisputed that defendant provided her with the opportunity to ask questions about the application and the arbitration agreement and to consult a third party, including an attorney, before signing the documents. Although plaintiff asked questions about the position, she did not ask any questions about the application. According to plaintiff, defendant informed her that she was required to sign page four of the application; nonetheless, there is no claim that plaintiff was coerced into signing the arbitration agreement. Similarly, defendant's Director of Human Resources, John Casciano, testified at a deposition that his practice, followed in respect of plaintiff, was to ask an applicant to read the Application for Employment, review the document with the applicant, and offer to answer any questions. He said that applicants were permitted to take the application home to complete it, and then return it at a later date.
In January 1996, plaintiff informed defendant that she was pregnant. Nearly two weeks before giving birth, plaintiff began to experience medical problems related to her pregnancy. Consequently, plaintiff obtained disability leave. After giving birth, plaintiff requested and defendant granted family and medical leave to commence at the termination of plaintiff's disability leave. However, prior to the termination of plaintiff's disability leave and the commencement of her family and medical leave, defendant notified plaintiff that her position was being eliminated due to a reorganization of defendant's holding company and its financial department. Defendant ceased disability payments to plaintiff in November 1996.
Plaintiff filed a complaint against defendant alleging violation of the New Jersey Family Leave Act, N.J.S.A. 34:11B-1 to -16 (FLA). Defendant removed the matter to the United States District Court for the District of New Jersey and filed a motion to dismiss, in part. Defendant alleges that while that motion was pending it recalled the agreement to arbitrate contained in the Application for Employment.
A remand to the Law Division ensued and thereafter plaintiff amended her complaint to add individual defendants and a claim under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49 (LAD). Defendant then moved to stay the proceedings and compel arbitration. The trial court granted the motion and dismissed plaintiff's complaint without prejudice, but ordered a stay pending appeal.
On appeal, the Appellate Division affirmed the orders dismissing plaintiff's complaint and compelling arbitration. The panel held that the arbitration agreement contained in the Application for Employment was valid and enforceable, and rejected the contention that the agreement was a contract of ...