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Favatella v. Dish Network, Inc.

A-1556-03T2 (N.J. Super. App. Div. 2004) (Unpublished)

EMPLOYER-EMPLOYEE; LAW AGAINST DISCRIMINATION; ARBITRATION—An employee can be bound to arbitrate a claim under the Law Against Discrimination and to waive a jury trial if the employee’s employment agreement contains an arbitration clause that clearly encompasses such claims.

An employee filed a claim against a co-employee and his employer alleging that the co-employee “began a campaign of anti-gay harassment against [him], [which] created a hostile working environment,” contrary to the New Jersey Law Against Discrimination (LAD). Furthermore, he alleged that his employer took no action when this was reported and that management’s actions constituted both intentional and negligent infliction of emotional stress. Moreover, he alleged that the employer’s failure to stop the hostile work environment constituted “negligent hiring, training and supervision.”

In response, the employer sought an order enforcing an arbitration agreement. This request was denied because the lower court found that the agreement constituted a contract of adhesion. Its premise was that the employer demanded the employee’s execution of the agreement as a requirement of employment. The Appellate Division disagreed. It held that the employee was free to walk away from the job offer and to seek employment elsewhere. It pointed out that it is not a violation of public policy for employment applications to contain arbitration agreements. Therefore, for the employee to show the agreement was invalid, he had the burden of showing that the terms of the arbitration agreement were oppressive or unconscionable – which the Appellate Division believed he failed to do.

The lower court also held that there was no consideration to permit enforcement of the agreement. Specifically, it ruled that there must be a knowing and equal benefit to both parties to give up the right to a trial by jury. The Appellate Division disagreed with this analysis. It held that an inquiry into consideration does not depend upon the comparative value of the “things” exchanged. The offer of employment was sufficient consideration for an arbitration agreement.

The Appellate Division also ruled that the agreement to arbitrate acted as a waiver of the employee’s right to a trial by jury for his LAD claims. An agreement to arbitrate does not have to specifically refer to the LAD or list every imaginable statute by name. All it needs to do is provide that the employee agrees to arbitrate all statutory claims arising out of the employment relationship or its termination. It should also reflect the employee’s understanding of the type of claims included in the waiver such as workplace discrimination claims.

The agreement at issue here was called a “MANDATORY ARBITRATION OF DISPUTES – WAIVER OF RIGHTS AGREEMENT.” This gave the employee adequate notice as to its content. Furthermore, it described in general terms those matters which fell within the scope of arbitration as “any dispute ... related to” the employment relationship. It also expressly barred the employer from seeking reimbursement from an employee for fees, costs, and expenses expended by the employer in successfully defending an employee’s discrimination claim, clearly showing that the agreement was intended to require the arbitration of LAD claims. Finally, the agreement declared that “THE RIGHT TO A TRIAL, TO A TRIAL BY JURY, AND TO COMMON LAW CLAIMS FOR PUNITIVE AND/OR EXEMPLARY DAMAGES ARE OF VALUE [sic] AND ARE WAIVED PURSUANT TO THIS AGREEMENT.”

The Appellate Division held that the parties clearly intended to include LAD claims within those subject to arbitration and that the agreement clearly constituted an employee’s voluntary waiver of his right to a trial by jury.


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