Case Law Summaries

Manin v. Design Benefit Plans, Inc.

• Opinion Date: March 21, 2001
• Business Law
• E-Mail

ARBITRATION; EMPLOYER-EMPLOYEE; DURESS—There is no difference between duress and a claim of fraud in the inducement; each is subject to arbitration if an employment agreement provides for arbitration.

About twenty employees of a now-defunct insurance agency sought to be relieved from the terms of their employment contracts, alleging they “were forced into signing same by virtue of economic duress.” The lower court ordered that the dispute be resolved pursuant to the mediation and arbitration provisions within the disputed contract itself. Apparently, the only defense to the arbitration claim was one of economic duress. Further, in prior cases, the New Jersey courts have said, “Economic duress occurs when the party alleging it is ‘the victim of a wrongful or unlawful act or threat,’ which ‘deprives the victim of his unfettered will.’” Although such conduct “may be legal but still oppressive,” courts “have consistently determined that the economic coercion of obtaining or keeping a job, without more, is insufficient to overcome an agreement to arbitrate ... .” Further, “[d]uress is not to be presumed and, therefore, it is incumbent upon these complainants to prove that the alleged coercion actually subjugated their minds and was the efficient cause of the course of action they pursued.” In past cases, courts have held that “absent a claim of fraud directed at the arbitration clause itself, a claim of fraud in the inducement of a contract was subject to arbitration.” Consequently, the Appellate Division perceived “no difference between the defense of fraud in the inducement and that of duress.” Consequently, except for two of the ex-employees, who never signed a contract with the arbitration provision, the other employees were required to resolve their dispute pursuant to the mediation and arbitration provisions in their respective contracts.

Copyright ©2003. Meislik & Meislik. All rights reserved.