Alamo Rent A Car, Inc. v. Galarza

• Decision Date: 08 December 1997
• Citation: 703 A.2d 961,306 N.J.Super. 384
• Parties: , 75 Fair Empl.Prac.Cas. (BNA) 989 ALAMO RENT A CAR, INC., Plaintiff-Appellant, v. Betzaida GALARZA, 1 , Defendant-Respondent. Superior Court of New Jersey, Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 384

306 N.J.Super. 384

703 A.2d 961, 75 Fair Empl.Prac.Cas. (BNA) 989

ALAMO RENT A CAR, INC., Plaintiff-Appellant, v. Betzaida GALARZA, ¹, Defendant-Respondent.

Superior Court of New Jersey,

Appellate Division.

Argued Oct. 7, 1997.

Decided Dec. 8, 1997.

John K. Bennett, Newark, for plaintiff-appellant (Carpenter, Bennett & Morrissey, and Stokes & Murphy, attorneys; Mr. Bennett, Arch Stokes, and Christopher Terrell, of counsel; Mr. Stokes and Mr. Terrell, on the brief).

Donald D. Vanarelli, Westfield, for defendant-respondent.

D'Andre Workman, Deputy Attorney General, for amicus curiae, New Jersey Division on Civil Rights (Peter Verniero, Attorney General, attorney; Jeffrey C. Burstein, Deputy Attorney General, of counsel; Mr. Workman, on the brief).

Before Judges LONG, STERN and KIMMELMAN.

The opinion of the court was delivered by

LONG, P.J.A.D.

In April, 1991, plaintiff Alamo Rent A Car, Inc. ("Alamo"), hired defendant Betzaida Galarza as a rental agent at its Newark, New Jersey facility. In September 1993, Galarza signed Alamo's standardized employment manual known as the Family Member Pact or the "FamPact." The FamPact outlined the terms and conditions of the employment relationship and was signed by both Galarza and an Alamo representative.

Specifically, in a paragraph entitled "My Bill of Rights," the FamPact enumerated fifteen employee rights including "the right to be free from discrimination" and "the right to be free from harassment." Further the FamPact provided:

ARBITRATION. If I claim that Alamo has violated this FamPact, I agree that the dispute shall be submitted to and resolved through binding arbitration administered by the American Arbitration Association. "Arbitration" means the settlement of a dispute by one or more persons who are chosen to hear both sides and then come to a decision.

The FamPact concluded with the following "Summary & Agreement":

I have read this FamPact, and promise and agree to:

abide by all its terms and conditions; accept my pay and benefits, including the benefits of FamPact.

Alamo has written this FamPact, and promises and agrees to:

abide by all its terms and conditions; provide me competitive pay and benefits, including the benefits of FamPact.

Alamo and I acknowledge and understand the special relationship created between us by this FamPact. It is our entire agreement of employment. Alamo's employing me under the terms and conditions of this FamPact, and my working under its terms and conditions, support this agreement.

On September 14, 1994, Alamo terminated its employment relationship with Galarza because of her "poor work performance."

In October 1994, Galarza filed a complaint with the New Jersey Division on Civil Rights (the "Division") alleging that Alamo had violated the Law Against Discrimination ("LAD"), N.J.S.A. 10:5-1 to -42, in its dealings with her. She also filed a complaint with the Equal Employment Opportunity Commission ("EEOC") which ceded jurisdiction to the Division. Galarza's case was transmitted to the Office of Administrative Law ("OAL").

In June 1996, while the administrative action was pending, Alamo, invoking the FamPact filed a verified complaint in the Law Division, seeking to compel Galarza to arbitrate her claim that Alamo violated LAD. Galarza was ordered to show cause why her claim should not be arbitrated. The trial judge ultimately ruled that Galarza did not have to submit her LAD claim to arbitration and dismissed Alamo's complaint. He stated In New Jersey, on the other hand, the Law Against Discrimination (LAD), N.J.S.A. 10:5[ ]-1 et seq. governs the facts of this case. It applies to discriminatory practices and not necessarily to terms of employment. Our state has compelling responsibility and statutory mandate to protect and make known that protection for citizens who may be subjected to the various forms of proscribed discrimination. There is a strong and distinct public interest in enforcement of LAD and that statutory procedure. Among other things, the agency has more responsibility and remedial powers than an arbitrator.

Relying on Thornton v. Potamkin Chevrolet, 94 N.J. 1, 5, 462 A.2d 133 (1983) and Gallo v. Salesian Soc'y, Inc., 290 N.J.Super. 616, 676 A.2d 580 (App.Div.1996), the judge determined that, notwithstanding the arbitration clause found in the employment agreement, "[t]he acknowledged public interest in this State would indicate the primacy of administrative over arbitration adjudications."

Alamo appeals, contending that Galarza's LAD claim is subject to arbitration under her contract of employment pursuant to N.J.S.A. 2A:24-3. Galarza counters that the Division is the exclusive forum for the resolution of LAD claims. At oral argument, the Attorney General, appearing as amicus curiae on behalf of the Division struck a middle ground, arguing that an employee may choose to waive his or her statutory remedies in favor of arbitration but that such a waiver may only be found where the circumstances surrounding the signing of the agreement clearly indicate that the waiver was knowing and voluntary. According to the Attorney General, no such showing was made here.

The case presents two questions. The first is whether an employee may agree to arbitrate statutory claims under LAD. The answer to this question is "yes." The second is whether Galarza entered into such a binding arbitration agreement, thereby waiving statutory remedies. The answer to this question is "no." As a result, we affirm the trial judge's ruling that Galarza can pursue her statutory remedies before the Division notwithstanding the arbitration clause in the FamPact. We do not approve his reasoning however, which we interpret as suggesting that an employee has the absolute right to chose statutory remedies regardless of a contract to the contrary.

I

We begin our analysis with a recognition of the strong public policy in our state favoring arbitration as a means of dispute resolution and requiring a liberal construction of contracts in favor of arbitration. Marchak v. Claridge Commons, Inc., 134 N.J. 275, 281, 633 A.2d 531 (1993); Young v. Prudential Ins. Co. of America, Inc., 297 N.J.Super. 605, 617, 688 A.2d 1069 (App.Div.), certif. denied, 149 N.J. 408, 694 A.2d 193 (1997); Singer v. Commodities Corp., 292 N.J.Super. 391, 401, 678 A.2d 1165 (App.Div.1996). The fact that what is at issue is a statutory remedy does not, in itself, affect the favored status accorded to arbitration. Indeed the "propriety of contractual waiver of statutory rights is well-established." Red Bank Reg'l Educ. Ass'n v. Red Bank Reg'l High Sch. Bd. of Educ., 78 N.J. 122, 140, 393 A.2d 267 (1978). Only if a statute or its legislative history evidences an intention to preclude alternate forms of dispute resolution, will arbitration be an unenforceable option. Young, supra, 297 N.J.Super. at 616, 688 A.2d 1069 (citing Gilmer v. Interstate/Johnson Lane Corp. 500 U.S. 20, 29, 111 S.Ct. 1647, 1653-54, 114 L.Ed.2d 26, 39 (1991)). There is no indication in the text or legislative history of LAD that members of the classes protected by that statute cannot waive the statutory process and agree to arbitrate the dispute. Young, supra, 297 N.J.Super. at 616, 688 A.2d 1069. Further, there is nothing in the Arbitration Act, N.J.S.A. 2A:24-3, restricting the type of agreement subject to arbitration. In short, it seems clear to us that an employee may, by contract, give up his or her right to pursue a statutory LAD remedy in favor of arbitration. Gilmer, supra; Young, supra.

Nothing in Thornton or Gallo supports the proposition advanced by the trial judge and Galarza that the public policy of this state allows a litigant to choose the administrative remedy in all circumstances. Thornton is an entire controversy case which holds only that the entire controversy doctrine's policy against the fractionalizing of litigation does not preclude an employee from filing a discrimination claim in the Division where that claim had been withheld from an earlier arbitration proceeding. Thornton, supra, 94 N.J. at 3, 462 A.2d 133. Thornton does not even obliquely address the issue of whether an employee may knowingly and voluntarily contract away his or her statutory rights in favor of arbitration.

Gallo, likewise, only resolved the issue of whether the mere existence of a general contractual grievance procedure bars the filing of a discrimination claim in the Division. Gallo, supra, 290 N.J.Super. at 656, 676 A.2d 580. See also Dixon v. Rutgers, The State University of New Jersey, 110 N.J. 432, 459, 541 A.2d 1046 (1988) (the existence of contractual grievance procedures does not deprive one of separate statutory rights under LAD). Nothing in Gallo can be read as addressing the question of whether an employee may enter into a clear and unequivocal agreement to waive his or her statutory remedies for discrimination. The most that can be said of the holdings in these cases, despite their occasional use of some rather expansive language, is that, in a case which does not involve a clear and unequivocal waiver of statutory rights, the employee is free to chose among statutory and other contractual remedies.

That this is a correct reading of Thornton and Gallo is underscored by the Division's position in this case: that it is not the exclusive forum for a LAD claim where an employee waives his or her statutory rights in favor of arbitration. This interpretation by the Division of its own jurisdiction is entitled to our deference. Brady v. Dep't of Personnel, 149 N.J. 244, 256, 693 A.2d 466 (1997); Desilets on Behalf of Desilets v. Clearview Reg'l Bd. of Educ., 137 N.J. 585, 595, 647 A.2d 150 (1994). We conclude that an employee may knowingly and voluntarily waive statutory remedies in favor of arbitration and be bound by that agreement.

II

The remaining question is whether, by the arbitration clause in the Alamo employment agreement, Galarza in fact agreed to submit her LAD...