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Reljic v. Tullett Prebon Americas Corp.

2011 WL 2491342 (U.S. Dist. Ct. D. N.J. 2011) (Unpublished)

ARBITRATION; CORPORATIONS; OFFICERS — Individual defendants who are agents of an entity that has agreed to be subject to arbitration, are obligated to arbitrate disputes arising out of their activities as agents of the entity where such disputes are required to be arbitrated.

A broker-trainee employee and her employer, an inter-dealer broker company, entered into an employment agreement which was later twice amended. Among other things, the employment agreement contained a dispute resolution clause in which the employee and the employer agreed to arbitrate any and all disputes arising out of the employment, including any claims based on Title VII of the Civil Rights Act or under the New Jersey Law Against Discrimination (NJLAD). The employee later sued her employer, asserting claims of unlawful sex discrimination, sexual harassment, and retaliation in violation of state and federal law. According to the complaint, the employee was frequently subjected to harassment, discrimination, retaliation, and a hostile work environment. The employer asked the Court to compel arbitration based on the employment agreement. In opposition, the employee argued that the arbitration clause was unenforceable because: it restricted the employee’s right to pursue a claim with the Equal Employment Opportunity Commission (EEOC), and because it failed to explicitly apprise the employee of her right to file a charge with the EEOC; she did not knowingly and voluntarily waive her rights to a jury trial; it was an unconscionable contract of adhesion; and the claims against certain individual defendants were nonarbitrable since they were not signatories to the employment agreement.

The Court rejected the employee’s argument that the arbitration clause was unenforceable because it interfered with certain rights relating to the EEOC because the arbitration would not undermine the role of the EEOC in enforcing Title VII claims. A claimant subject to an arbitration agreement is still free to file a charge with the EEOC, even though the claimant could not institute a private action.

Next, the Court noted that an agreement to arbitrate statutory employment claims is only binding on the employee when he or she has knowingly waived the right to a court hearing and has clearly agreed to the terms of the agreement. The Court found that the employee clearly agreed to the waiver-of-rights provisions because the arbitration clause specifically referred to the relevant federal and state laws, by name, as arbitrable matters. And, the employee’s signing of the agreement containing the arbitration clause constituted a concrete manifestation of her assent.

The Court then recounted that, in evaluating whether a contract of adhesion is procedurally unconscionable, a court must look not only to the “take-it-or-leave-it” nature or the standardized form of the document, but also to the subject matter of the contract; the parties’ relative bargaining positions; the degree of economic compulsion motivating the adhering party; and the public interests affected by the contract. The Court found that, although the clause was a contract of adhesion, the employee’s bargaining position was not so disadvantaged as to rob her of any meaningful choice but to accede. In light of her educational and professional background, the employee should have had no problem reading and understanding the terms of the document. Although the employee claimed the agreement was presented to her on a “take-it-or-leave-it” basis in a hurried manner, she had presented no evidence that she did not read the document or was precluded from doing so or that she could not have negotiated the terms of the contract or found another job. Therefore, the Court rejected the employee’s argument that the arbitration clause was procedurally unconscionable.

Next, the Court noted that agency principles are used to require that claims against officers or employees of one of the contracting parties, who were not signatories to the arbitration contract, be submitted to arbitration. Thus, the individual defendants, the senior managing director and the global chief operating officer of the employer, were agents, and claims against them would be subject to arbitration. Because the arbitration clause was both enforceable and applicable to all named defendants, the Court granted the employer’s motion to compel arbitration and dismiss the complaint.


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