Colon v. Strategic Delivery Solutions, LLC
Citation | 459 N.J.Super. 349,210 A.3d 932 |
Decision Date | 04 June 2019 |
Docket Number | DOCKET NO. A-2378-17T4 |
Parties | Gloria COLON, Diana Mejia and Freddy Diaz, on Behalf of Themselves and All Other Similarly Situated Persons, Plaintiffs-Appellants, v. STRATEGIC DELIVERY SOLUTIONS, LLC, and Myriam Barreto, Defendants-Respondents. |
Court | New Jersey Superior Court – Appellate Division |
Ravi Sattiraju argued the cause for appellants (The Sattiraju Law Firm, PC, attorneys; Ravi Sattiraju, of counsel and on the brief; Carole Lynn Nowicki, on the brief).
Patrick W. McGovern argued the cause for respondents (Genova Burns, LLC, attorneys; Patrick W. McGovern, of counsel and on the brief; Shawn M. Lopez, on the brief).
Before Judges Hoffman, Suter and Firko.
The opinion of the court was delivered by
SUTER, J.A.D.
Plaintiffs Gloria Colon, Diana Mejia and Freddy Diaz appeal the January 2, 2018 summary judgment order that dismissed their class action complaint and jury demand. The order required mandatory binding arbitration on an individual basis of their wage and hour claims against defendants Strategic Delivery Solutions, LLC (SDS) and Myriam Barreto.1 We vacate the order of dismissal, and reinstate the complaint for the trial court to determine whether plaintiffs were engaged in transportation services in interstate commerce and thus, exempt under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 - 16. If the FAA does not apply to plaintiffs, we hold that the New Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -32, applies and requires arbitration of their claims. We also hold that plaintiffs waived a trial by jury and the ability to proceed as a class action under their agreements with SDS.
SDS is licensed by the United States Department of Transportation as a freight forwarder and freight broker. It arranges for the local delivery of pharmaceutical products and general merchandise to its customers. Plaintiffs each signed identical "Independent Vendor Agreement[s] for Transportation Services" with SDS in which they said they owned and operated a business that provided transportation services. Plaintiffs agreed to provide transportation services as independent contractors for SDS's customers.
The agreements covered various issues: transportation needs, rate of compensation, payment, fringe benefits, vehicles, signage, uniforms, badges, tools, equipment, insurance, indemnification, and termination of the agreements.
Paragraph 19 of the agreement provided that the law of the state of residence of the "vendor" would apply, meaning that for these plaintiffs, New Jersey law governed the agreement, "including its construction and interpretation, the rights and remedies of the parties hereunder, and all claims, controversies or disputes (whether arising in contract or tort) between the parties." Plaintiffs also agreed in paragraph 19(b) to waive "any right to a trial by jury in any suit filed hereunder and agree to adjudicate any dispute pursuant to [p]aragraph 20 ...." Paragraph 20 addressed arbitration and the waiver of class actions.
Plaintiffs alleged they worked out of SDS's facility in Elizabeth from February 2015 to March 2016 performing "truck driving and ... delivery functions." They claimed SDS made "unlawful deductions" from their compensation in violation of the New Jersey Wage Payment Law (WPL), N.J.S.A. 34:11-4.1 to 4.14. They contended they were misclassified by SDS as independent contractors and should have been classified as employees. Plaintiffs alleged they should have been paid one-and-a-half their hourly rate for work in excess of forty hours per week and SDS's failure to do so violated the New Jersey Wage and Hour Law (WHL), N.J.S.A. 34:11-56a to -56a38.2
In December 2016, plaintiffs filed suit against defendants on behalf of themselves and as a class action on behalf of other "similarly situated persons," for violation of the WHL and WPL, and demanded a jury trial. Defendants filed a motion to dismiss the complaint and to compel plaintiffs to arbitrate these claims on an individual basis, not as a class. Defendants relied on paragraphs 19 and 20 of the agreement, arguing that plaintiffs agreed to waive a jury trial, to proceed on an individual (non-class) basis, and to have their claims heard in binding arbitration. Plaintiffs opposed the motion, arguing they were exempt from arbitration under the FAA, and that they had not waived their right to a jury trial or class action relief under the WHL or WPL.
The trial court granted defendants' motion, treating it as a summary judgment motion, because the parties relied on materials not referenced in the complaint. See R. 4:6-2. The court concluded in its Statement of Reasons that plaintiffs waived their right to a jury trial in paragraph 20 of the agreement, comparing the language there to "analogous" language in Martindale v. Sandvik Inc., 173 N.J. 76, 800 A.2d 872 (2002). The court found that plaintiffs' agreement to arbitrate was "clear and unambiguous" and constituted a "valid and enforceable arbitration agreement." "Similarly, the [w]aiver to [j]oin a [c]lass provision [was] clear and unambiguous ... valid and enforceable." The trial court's order required plaintiffs to adjudicate their WHL and WPL claims through arbitration. The court did not expressly address plaintiffs' claims against Barreto.
The validity of a contractual provision that requires arbitration is a question of law. See Hirsch v. Amper Financial Services, LLC, 215 N.J. 174, 186, 71 A.3d 849 (2013). We review the court's order that required arbitration of these claims on a de novo basis. Ibid.; see Atalese v. U.S. Legal Servs. Group, 219 N.J. 430, 446, 99 A.3d 306 (2014).
Paragraph 20 of the agreement provided as follows:
(a) Agreement to Arbitrate. The parties agree to comply and be bound by the Federal Arbitration Act. The parties agree that any dispute, difference, question, or claim arising out of or any way relating to this Agreement or the transportation services provided hereunder shall be subject to binding arbitration in accordance with the Rules for Commercial Arbitration of the American Arbitration Association ("AAA") in effect at the time such arbitration is initiated. The parties agree that the issue of arbitrability shall be determined by the arbitrator applying the law of the state of residence of the Vendor. The parties shall bear their own costs including, without limitation, attorneys' fees, and shall each bear one half (1/2) of the fees and costs of the arbitrator ... selected from a list of potential arbitrators provided by the AAA .... Nothing in this Agreement shall be construed as limiting or precluding the parties from bringing any action in any court of competent jurisdiction for injunctive or other extraordinary relief, in the event the arbitrator determines that it does not have jurisdiction to order such relief. The parties shall have the immediate right to seek such injunctive or other extraordinary relief at anytime ....
Arbitration is a matter of contract. NAACP of Camden Cty. E. v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 424, 24 A.3d 777 (App. Div. 2011). "An agreement to arbitrate, like any other contract ‘must be the product of mutual assent, as determined under customary principles of contract law.’ " Atalese, 219 N.J. at 442, 99 A.3d 306 (quoting Foulke, 421 N.J. Super. at 424, 24 A.3d 777 ). "Parties are not required ‘to arbitrate when they have not agreed to do so.’ " Ibid. (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford, Jr., Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) ).
In the "Agreement to Arbitrate" portion of paragraph 20, the parties agreed "to comply and be bound by the [FAA]." Plaintiffs contend that as employees engaged in interstate transportation, they are exempt under section one of the FAA. 9 U.S.C. § 1. Because the agreement does not reference the NJAA, plaintiffs contend they are not required to arbitrate these claims. We agree that the trial court, and not an arbitrator, was required to determine whether plaintiffs were engaged in interstate transportation services under the FAA. Because the court did not make that determination, we vacate the dismissal order and reinstate the complaint. On remand, the trial court must determine whether plaintiffs are exempt under section one of the FAA.
Congress enacted the FAA to "reverse the longstanding judicial hostility towards arbitration ... and to place arbitration agreements upon the same footing as other contracts."
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). "[T]he FAA compels judicial enforcement of a wide range of written arbitration agreements." Circuit City Stores v. Adams, 532 U.S. 105, 111, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). It applies to a written provision in a contract "evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ...."
9 U.S.C. § 2. The phrase "involving commerce" in section two of the FAA has been broadly construed "as implementing Congress' intent to ‘exercise [its] commerce power to the full.’ " Circuit City, 532 U.S. at 112, 121 S.Ct. 1302 (quoting Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 277, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) ).
Plaintiffs focus their argument on section one of the FAA that contains exemptions from coverage. Specifically, the FAA shall not apply "to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. The United States Supreme Court has construed this section as exempting "from the FAA only contracts of employment of transportation workers." Circuit City, 532 U.S. at 119, 121 S.Ct. 1302. Recently, the Court has determined that a "contract of employment," as used in section one of the FAA, "referred to agreements to perform work," regardless of whether the relationship was characterized as a...
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