Martindale v. Sandvik, Inc.

• Decision Date: 17 July 2002
• Parties: Maureen MARTINDALE, Plaintiff-Appellant, v. SANDVIK, INC., Sandvik Coromant Company, Inc., Paul Hodgen, Rick Askin and John Casciano, Defendants-Respondents, and John Does One through Seventeen, Defendant.
• Court: New Jersey Supreme Court

800 A.2d 872

173 N.J. 76

Maureen MARTINDALE, Plaintiff-Appellant, v. SANDVIK, INC., Sandvik Coromant Company, Inc., Paul Hodgen, Rick Askin and John Casciano, Defendants-Respondents, and John Does One through Seventeen, Defendant.

Supreme Court of New Jersey.

Argued January 14, 2002.

Decided July 17, 2002.

Anthony N. Iannarelli, Jr., Allendale, argued the cause for appellant.

Jill E. Jachera, Philadelphia, PA, argued the cause for respondents (Morgan, Lewis & Bockius, attorneys; Joseph A. Piesco, Jr., on the brief).

James R. Michael, Deputy Attorney General, submitted a brief on behalf of amicus curiae, New Jersey Division on Civil Rights (David N. Samson, Attorney General of New Jersey, attorney; Nancy Kaplen, Assistant Attorney General, of counsel). 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.

I.

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 adhesion. We granted plaintiff's petition for certification. 169 N.J. 610, 782 A.2d 427 (2001).

II.

The first step in considering plaintiff's challenge to enforcement of an arbitration requirement must be to determine whether a valid agreement exists. Determining whether plaintiff is contractually bound is the predicate to the question whether the specific contractual language requires arbitration of her FLA and LAD claims.

A.

We address the question whether plaintiff has entered into a binding agreement to arbitrate disputes with her employer against the backdrop that arbitration agreements may not be subjected to more burdensome contract formation requirements than that required for any other contractual topic. Pursuant to its substantive power to regulate interstate commerce, Congress enacted the Federal Arbitration Act (FAA), also known as the United States Arbitration Act, in 1925, to abrogate the then-existing common law rule disfavoring arbitration agreements "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, 1651, 114 L.Ed.2d 26, 36 (1991). Section 2 of the FAA provides that "[a] written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such a contract or transaction ... shall be valid, irrevocable, and enforceable save upon grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (1994).

In enacting section 2 of the FAA, "Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration." Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 858, 79 L.Ed.2d 1, 12 (1984). The substantive protection of the FAA applies irrespective of whether arbitrability is raised in federal or state court. Id. at 16, 104 S.Ct. at 861, 79 L.Ed.2d at 15. Those principles were reaffirmed in Circuit City Stores v. Adams, 532 U.S. 105, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001), where the Supreme Court held that the FAA's coverage extends to employment contracts. Id. at 112, 121 S.Ct. at 1307, 149 L.Ed.2d at ___. Cf. Brown v. KFC Nat'l Mgmt. Co., 82 Hawai'i 226, 921 P.2d 146, 159 (1996)

(holding arbitration agreement contained in employment application satisfied FAA; "`the creation of an employment relationship which involves commerce is a sufficient `transaction' to fall within section 2 of the [FAA]'") (quoting White-Weld & Co. v. Mosser, 587 S.W.2d 485, 487 (Tex.Civ.App.1979),

cert. denied, 446 U.S. 966, 100 S.Ct. 2943, 64 L.Ed.2d 825 (1980)).

The New Jersey Legislature codified its endorsement of arbitration agreements in N.J.S.A. 2A:24-1 to -11. Moreover, New Jersey courts also have favored arbitration as a means of resolving disputes. See, e.g., Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 131, 773 A.2d 665 (2001)

(noting favored status accorded to arbitration, but stating that favored status is not without limits); Marchak v. Claridge Commons, Inc., 134 N.J. 275, 281, 633 A.2d 531 (1993) (stating that "arbitration is a favored form of relief" and that "arbitrators function with the support, encouragement, and enforcement power of the State"); Barcon Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 186, 430 A.2d 214 (1981) (stating that Legislature has encouraged arbitration and courts have favored arbitration because of significant advantages arbitration offers to parties); Alamo Rent A Car, Inc. v. Galarza, 306 N.J.Super. 384, 389, 703 A.2d 961 (App.Div.1997) (recognizing "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"); Yale Materials Handling Corp. v. White Storage & Retrieval Sys., Inc., 240 N.J.Super. 370, 375, 573 A.2d 484 (App.Div.1990) (reiterating that "New Jersey law [is] consonant with federal law which liberally enforces arbitration agreements"). Thus, in deciding whether to enforce the arbitration provision in this application for employment, we rely on the well-recognized national policy and the established State interest in favoring arbitration.

B.

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...