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AllianceBernstein Investments, Inc. v. Eschert

A-5420-09T4 (N.J. Super. App. Div. 2011) (Unpublished)

ARBITRATION — If an employment separation agreement unequivocally states that it nullifies and cancels all prior contracts and arrangements between the parties, then a mandatory arbitration provision in an earlier contract will no longer be in effect.

An employment separation agreement indicated, among other things, that the employee’s last day of work was one month earlier. The employer was a member of the National Association of Securities Dealers (NASD). When the employee began work, he executed a form that contained a mandatory arbitration clause. According to the clause, arbitration was mandated as to any dispute, claim or controversy that could arise between the parties.

The separation agreement provided that its terms superseded all previous contracts and agreements between the parties. One day before the separation agreement was executed, but several weeks after the employee’s actual last day on the job, the employer reported the employee’s resignation to the NASD. The employee contended that the notice falsely characterized him. More than two years after the employee’s departure, the employer was alleged to have filed an amended form that again contained false characterizations of the employee. Three years later, the employee commenced arbitration, alleging that the forms submitted by his ex-employer contained defamatory statements. The employer requested that the lower court permanently enjoin the employee from proceeding in the arbitral forum. The lower court dismissed the request, finding the employee had an adequate remedy at law within the arbitration forum.

On appeal, the Appellate Division reversed, holding that the separation agreement abrogated the parties’ previous agreement to arbitrate because it contained language that unequivocally nullified and cancelled all prior contracts and arrangements between the parties.

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