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Leodori v. Cigna Corp.

February 13, 2003

PAUL LEODORI, PLAINTIFF-RESPONDENT,
v.
CIGNA CORPORATION, CIGNA INSURANCE COMPANY, INSURANCE COMPANY OF NORTH AMERICA, WILSON TAYLOR, THOMAS WAGNER, GERALD ISOM, JAMES ENGEL, JOHN MURPHY, DAVID GOLD, BEVERLY SHERBONDY, STEPHANIE MIDDLETON, ANTHONY SMITH, ALFRED DECRANE, JAMES J. RITCHIE AND ROBERT CAMPBELL, DEFENDANTS-APPELLANTS, AND JOHN DOES 1-5, AND ABC CORPORATIONS 1-5, SAID INDIVIDUALS AND CORPORATIONS BEING FICTITIOUS, DEFENDANTS.
PAUL LEODORI, PLAINTIFF-RESPONDENT,
v.
CIGNA CORPORATION, CIGNA INSURANCE COMPANY AND INSURANCE COMPANY OF NORTH AMERICA, DEFENDANTS-APPELLANTS, AND SCHNADER HARRISON SEGAL & LEWIS, LLP, ARLIN ADAMS, LISA DETWEILER, WILSON TAYLOR, THOMAS WAGNER, GERALD ISOM, JAMES ENGEL, JOHN MURPHY, DAVID GOLD, BEVERLY SHERBONDY, STEPHANIE MIDDLETON, ANTHONY SMITH, JAMES J. RITCHIE, ROBERT CAMPBELL, DENNIS KANE, ALFRED DECRANE, PETER LARSON, JOSEPH NEUBAUER, HAROLD WAGNER, CAROL COX WAIT, JOHN DOES 1-10 AND ABC CORPORATIONS 1-10, SAID INDIVIDUALS AND CORPORATIONS BEING FICTITIOUS, DEFENDANTS.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(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).

Paul Leodori v. CIGNA Corporation, et als. (A-120-01)

Argued December 2, 2002 -

Decided February 13, 2003

VERNIERO, J., writing for a unanimous Court.

In this appeal, the Court considers the enforceability of a waiver-of-rights provision contained in an employee handbook distributed by defendant, CIGNA, which provision requires all employees to resolve employment-related claims by submitting them to an arbitrator, rather than to a jury.

Plaintiff, Paul Leodori, began working for Insurance Company of North America (INA), CIGNA's sister company, in June 1995. During the course of his employment, Leodori served as an in-house attorney at INA's Division of Legal and Public Affairs (L&PA). About one year before Leodori began his employment, L&PA had adopted an arbitration policy that required arbitration as a final means for resolving employment-related disputes between INA and its employees. About a year after Leodori began his employment with the company, in August 1996, INA sent a revised policy via inter-office mail and U.S. mail to all L&PA employees, including Leodori. That revised policy also identified arbitration as the final method by which the company and its employees would resolve their disagreements.

A subsequent L&PA handbook, which contained a similar arbitration clause, was distributed in June 1998 to all employees, including Leodori. That handbook was distributed with an acknowledgement form, which did not contain any language specifically referring to arbitration. Rather, the form, which Leodori signed, merely contained an acknowledgement of receipt of the handbook and a recitation that the recipient understood that the handbook included information on "division" policies.

One month later, in July 1998, the company distributed another handbook to Leodori and other employees, entitled "You and CIGNA." That handbook also contained a purported agreement to arbitrate all employment disputes. The opening page to the handbook signaled the importance of two terms of employment addressed in the handbook, one of which was the agreement to arbitrate employment-related claims. An acknowledgement form also accompanied the "You and CIGNA" handbook, similar to the one that accompanied the L&PA handbook. Leodori signed that acknowledgment. He did not sign a separate "Employee Handbook Receipt and Agreement" form that accompanied the handbook, which described the arbitration agreement as a term of employment.

Leodori alleges that during the course of his employment, he became aware of actions by certain officers or employees of the company that he believed were illegal or improper. He alleges that after he reported those actions to the general counsel, as well as to others within the company, INA suspended him with pay and transferred him to CIGNA's payroll. The company hired a retired appellate judge to investigate Leodori's claims. In May 1999, after receiving a report from the former judge concluding that neither the facts nor the law supported his claims, Leodori was terminated.

Following his termination, in February 2000, Leodori filed a complaint in the Law Division, alleging that the company had violated CEPA by firing him because of what he had discovered and reported. The trial court dismissed that complaint, finding that the parties had entered into a binding agreement to arbitrate their dispute. Leodori filed a similar action in the Law Division in June 2000, which also was dismissed.

A-120-01 Paul Leodori v. Cigna Corporation, et als. 2.

Leodori appealed. In an unreported decision, the Appellate Division reversed the trial court's dismissal of Leodori's first complaint. As a result, the panel concluded that the second complaint was moot.

The Supreme Court granted CIGNA's petition for certification.

HELD: The unambiguous waiver-of-rights provision set forth in defendant CIGNA Corporation's employee handbook, requiring all of its employees to resolve employment-related disputes through arbitration, is not enforceable against Leodori, the plaintiff-employee, where that employee did not sign a form agreeing to the provision and where the record contains no other clear evidence of his agreement to that waiver-of-rights provision.

1. Recent Court decisions have recognized that parties to an agreement may waive statutory remedies in favor of arbitration. However, to enforce a waiver-of-rights provision in this setting, some concrete manifestation of the employee's intent, as reflected in the text of the agreement itself, is required. In addition, to pass muster, a waiver-of- rights provision should at least provide that the employee agrees to arbitrate all statutory claims arising out the employment relationship or its termination, and should also reflect the employee's general understanding of the type of claims included in the waiver. (pp. 10-12)

2. Consistent with federal law, a state cannot subject an arbitration agreement to more burdensome requirements than those governing the formation of other contracts. In addition, to be enforceable in New Jersey, a waiver-of- rights provision must reflect that an employee has agreed clearly and unambiguously to arbitrate the disputed claim. Generally, a written agreement's validity is determined by considering the intentions of the parties as reflected in the four corners of the written instrument. (pp. 12-14)

3. The arbitration clause in the "You and CIGNA" handbook unambiguously sets forth the drafter's intention to arbitrate all employment-related claims, including those that might be asserted under CEPA. (pp. 14-15)

4. A valid waiver of statutory rights results only from an explicit, affirmative agreement that unmistakably reflects the employee's assent, and an implied agreement to arbitrate is not necessarily created by mere receipt of a handbook containing an arbitration clause. (pp. 15-17)

5. Although contracts generally do not need to be in writing to be enforceable, when one party presents a contract for signature to another party, the omission of that other party's signature is a significant factor in determining whether the two parties mutually have reached an agreement. (pp. 17-18)

6. Without Leodori's signature on the Agreement that accompanied the "You and CIGNA" handbook, the arbitration provision cannot be enforced unless there exists some other explicit indication that the employee intended to abide by that provision. The record as a whole does not demonstrate that Leodori had surrendered his statutory rights knowingly and voluntarily, which remains the critical inquiry. (pp. 18-19)

7. The Court's unremarkable conclusion that an arbitration provision cannot be enforced against an employee who does not sign or otherwise explicitly indicate his or her agreement to it does not offend the Federal Arbitration Act. (p. 19)

8. Although the record clearly establishes that Leodori knew of the company's arbitration policy based on its publication in numerous documents he had received during the course of his employment, the record contains no one document or other piece of evidence that unmistakably reflects his agreement to that policy. (p. 20)

9. The implied-contract doctrine of Woolley v. Hoffmann-LaRoche, Inc., 99 N.J. 284 (1985), does not extend to a waiver-of-rights agreement. Although not strictly required, a party's signature to an agreement is the customary and perhaps surest indication of assent. Absent Leodori's signature here or some other clear indication that he ...


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