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Flanzman v. Jenny Craig, Inc.

Superior Court of New Jersey, Appellate Division

November 13, 2018

MARILYN FLANZMAN, Plaintiff-Appellant,
JENNY CRAIG, INC., LILLIAS PIRO, individually, and DENISE SHELLEY, individually, Defendants, [1] and JC USA, INC., Defendant-Respondent.

          Submitted September 24, 2018

          On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6238-17.

          Zatuchni & Associates, LLC, attorneys for appellant (David Zatuchni, on the brief).

          Ogletree, Deakins, Nash, Smoak & Stewart, PC, attorneys for respondent (Sharon P. Margello and Jocelyn A. Merced, on the brief).

          Before Judges Messano, Fasciale and Rose.


          FASCIALE, J.A.D.

         This appeal requires us to decide whether to invalidate an arbitration agreement because the parties failed to identify any arbitration forum and any process for conducting the arbitration. In general, a forum is the mechanism - or setting - that parties use to arbitrate their dispute. They could have designated an arbitral institution (like the American Arbitration Association (AAA) or the Judicial Arbitration and Mediation Services (JAMS)), or they could have communicated a general method for selecting a different arbitration setting. The mechanism or setting for the proceeding is important because the rights associated with arbitration forums may differ depending on which forum the parties choose, or on how they define the arbitral process. Here, the agreement ignored the subject altogether.

         We hold that the parties lacked a "meeting of the minds" because they did not understand the rights under the arbitration agreement that ostensibly foreclosed plaintiff's right to a jury trial. We therefore reverse the order compelling arbitration for lack of mutual assent.


         At the time of her termination, plaintiff was eighty-two years old. She had worked for defendant - a weight loss, weight management, and nutrition company - for twenty-six years. During that time, plaintiff provided weight loss counseling. Defendant gradually reduced plaintiff's full-time hours to only three hours per week. The substantial reduction in hours led to her termination.

         Plaintiff filed her complaint alleging (1) age discrimination and harassment in violation of the New Jersey Law Against Discrimination (NJLAD), N.J.S.A. 10:5-1 to -49; (2) discriminatory discharge and/or constructive termination in violation of the NJLAD; and (3) aider and abettor liability under the NJLAD. Defendant then filed its motion to compel arbitration relying on the parties' arbitration agreement.

         Plaintiff has no recollection of signing the document that contained the arbitration agreement, which the parties did not execute when defendant hired her. Rather, in 2011, twenty years after she was hired, defendant presented plaintiff with the document, which she signed to maintain her employment. In pertinent part, the agreement provides:

         Arbitration Agreement

Any and all claims or controversies arising out of or relating to [plaintiff's] employment, the termination thereof, or otherwise arising between [plaintiff] and [defendant] shall, in lieu of a jury or other civil trial, be settled by final and binding arbitration. This agreement to arbitrate includes all claims whether arising in tort or contract and whether arising under statute or common law including, but not limited to, any claim of breach of contract, discrimination or harassment of any kind.
. . . [Plaintiff] will pay the then-current Superior Court of California filing fee towards the costs of the arbitration (i.e., filing fees, administration fees, and arbitrator fees) . . . .
[(Emphasis added).]

         If enforceable, plaintiff gave up her right to a jury trial by executing the agreement. That is not an issue. The agreement, however, said nothing about what forum generally replaced that right (although it confusingly referred to California court filing fees). The judge recognized this important omission when he suggested that "the choice of which arbitral body would conduct the arbitration would be turned over to the [p]laintiff." In other words, the judge - not the parties - decided who would pick the forum.

         On appeal, plaintiff primarily argues that the arbitration agreement lacked mutual assent and is therefore invalid as a matter of contract law. She maintains that the parties did not reach a "meeting of the minds" as to the rights that replaced her right to a jury trial. She also argues that the arbitration agreement is unconscionable.[2]

         Appellate courts exercise de novo review of a judge's decision on the enforceability of contracts, such as an arbitration clause. Morgan v. Sanford Brown Inst., 225 N.J. 289, 302-03 (2016). Whether a contractual arbitration clause is enforceable is a legal issue; therefore, this court affords no special deference to the judge's determination of that issue. Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013).


         We begin by addressing plaintiff's contention that the arbitration agreement is invalid as a matter of law. Plaintiff emphasizes that there are significant consequences to the absolute absence of any reference in the arbitration agreement as to the process for generally selecting an arbitration forum. She asserts that without that information communicated somehow in the agreement - whether it be by designating AAA, JAMS, or some other mechanism intended to replace her right to a jury trial - there exists no mutual assent.

         Longstanding principles of law govern our analysis. The Federal Arbitration Act (FAA), 9 U.S.C.A. §§ 1 to 16, and the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -32, reflect federal and state policies favoring arbitration of disputes. Roach v. BM Motoring, LLC, 228 N.J. 163, 173-74 (2017). Congress enacted the FAA "to 'reverse the longstanding judicial hostility' towards arbitration agreements and to 'place arbitration agreements upon the same footing as other contracts.'" Id. at 173 (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)).

         In Atalese v. United States Legal Services Group, L.P., the New Jersey Supreme Court recognized that "[t]he FAA requires courts to 'place arbitration agreements on an equal footing with other contracts and enforce them according to their terms.'" 219 N.J. 430, 441 (2014) (quoting AT&T Mobility v. Concepcion, 563 U.S. 333, 339 (2011)). As to the application of contract law principles to arbitration agreements, the Court stated:

"[A] state cannot subject an arbitration agreement to more burdensome requirements than" other contractual provisions. An arbitration clause cannot be invalidated by state-law "defenses that apply only to arbitration or that derive their meaning from the fact ...

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