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Carino v. Allstate Financial Services, LLC

A-5717-09T4 (N.J. Super. App. Div. 2011) (Unpublished)

ARBITRATION; RES JUDICATA — An arbitration award has the same effect under the doctrine of res judicata as does a judgment of the court and arbitration awards operate as valid and final judgments, not subject to review or appeal.

An applicant for employment applied to a financial services company for a job as a security products salesperson. As part of the required application package, she submitted her National Association of Securities Dealers (NASD) Series 6 license. It was nearing its two year expiration at the end of that month and would expire if she was no longer employed. Three days before the license was to expire, the company rejected her job application because of her past work history. The applicant, however, was not notified that her application had been rejected until seven months later. By that time, her Series 6 license had expired.

The applicant sued the prospective employer, alleging negligence and breach of contract. She sought damages flowing from the expiration of her license, specifically alleging that had the company notified her of its rejection prior to the license expiration date, her license may not have expired because she would have sought affiliation elsewhere. As part of the job application process, she executed a pre-employment document that provided for binding NASD arbitration for any issue between the parties. The company moved to dismiss the lawsuit, and the lower court granted that relief without prejudice, holding that NASD arbitration was the appropriate forum to resolve the dispute. The Appellate Division affirmed, finding that the applicant, when she executed the pre-employment document, had agreed to arbitrate any claims she might have had against the company.
The job applicant then filed a demand for arbitration. The panel rejected the applicant’s claims in their entirety. She subsequently sued the company and two of its affiliates. Following the close of discovery, the company and its affiliates moved for summary judgment, requesting confirmation of the arbitration award as a matter of law. The lower court entered an order granting the motion and thus dismissed the applicant’s complaint with prejudice. The job applicant subsequently moved to reinstate her original complaint. Following argument, the lower court denied her motion, citing res judicata, collateral estoppel, and the entire controversy doctrine.

She appealed, but the Appellate Division affirmed, holding that an arbitration award has the same effect under the doctrine of res judicata as does a judgment of the court, and in this matter the arbitration award operated as a valid and final judgment, not subject to review or appeal. The Court also held that even though the company’s affiliates were not under the NASD’s jurisdiction, they nevertheless were affiliated and related to the prospective employer so as to be in privity with the parties in the earlier arbitration proceeding.

The Court acknowledged the preclusive effect of arbitration when the party to be bound has had an ample chance to be heard in the arbitral forum, and where the arbitration, as the first action, provided the party with a full and fair opportunity to litigate all issues. In this matter, the Court found that the arbitration process consisted of eighteen hearing sessions over the course of nine days and the job applicant had called twelve witnesses.


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