N.J. Civil Justice Inst. v. Grewal

NEW JERSEY CIVIL JUSTICE INSTITUTE and CHAMBER OFCOMMERCE OF THE UNITED STATES OF AMERICA, Plaintiffs, v. GURBIR GREWAL, in his official capacityas Attorney General of the State of New Jersey, Defendant.

Civ. No. 19-17518

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

March 25, 2021

NOT FOR PUBLICATION

OPINION

THOMPSON, U.S.D.J.

INTRODUCTION

This matter comes before the Court upon the Motion for Summary Judgment filed by Plaintiffs New Jersey Civil Justice Institute and Chamber of Commerce of the United States of America (collectively, "Plaintiffs"). (ECF No. 13.) Defendant Gurbir Grewal in his official capacity as Attorney General of the State of New Jersey ("Defendant") opposes. (ECF No. 19.) Plaintiffs seek a declaration that N.J. Stat. Ann. § 10:5-12.7 ("Section 12.7") is preempted by the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1-16, and an injunction precluding Defendant from enforcing Section 12.7. (Compl. ¶¶ 46, 50, ECF No. 1.) The Court has decided this matter based on the parties' written submissions and oral argument. For the reasons stated herein, the Motion for Summary Judgment is granted. Section 12.7 violates the Supremacy Clause of the United States Constitution, U.S. Const. art. VI, cl. 2. Defendant is hereby enjoined from enforcing Section 12.7 with respect to arbitration agreements between employers and employees that are governed by the FAA.

BACKGROUND

Plaintiff New Jersey Civil Justice Institute ("NJCJI") is a nonprofit, nonpartisan group whose members include individuals, small businesses, business associations, and professional organizations. (Compl. ¶ 13.) NJCJI's stated mission is to "advocate for a civil justice system that treats all parties fairly and resolves disputes expeditiously and impartially." (Pls.' Statement of Undisputed Material Facts ("SUMF") ¶ 19, ECF No. 13-2.) NJCJI asserts that many of its members enter into pre-dispute arbitration agreements with their employees. (Id. ¶ 26.) Plaintiff Chamber of Commerce of the United States of America ("Chamber") is a business federation representing approximately 300,000 members. (Compl. ¶ 14.) Chamber routinely advocates on matters of federal arbitration law and anti-business regulatory actions. (Pls.' SUMF ¶ 23.) Chamber asserts that many of its members operate in New Jersey and enter into pre-dispute arbitration agreements with their employees. (Id. ¶ 26.)

On March 18, 2019, New Jersey enacted Section 12.7, which provides in relevant part:

a. A provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable.

b. No right or remedy under the "Law Against Discrimination," P.L. 1945, c.169 (C.10:5-1 et seq.) or any other statute or case law shall be prospectively waived.

N.J. Stat. Ann § 10:5-12.7. Section 12.7 is an amendment to the New Jersey Law Against Discrimination, N.J. Stat. Ann. § 10:5-1 et seq. ("NJLAD"), which gives "[a]ny person claiming to be aggrieved by an unlawful employment practice or an unlawful discrimination" the "right to file a complaint in the Superior Court to be heard before a jury." §§ 10:5-13(a)(1)-(2). Under the NJLAD, an aggrieved party may also file a complaint with the Attorney General, who "shall cause prompt investigation" of the claim and "engage in conciliation." § 10:5-14. The NJLAD also authorizes the Attorney General to initiate a suit in New Jersey Superior Court on his own accord. § 10:5-13(a)(2).

Plaintiffs argue that Section 12.7, read in conjunction with the other provisions of the NJLAD, prohibits pre-dispute arbitration agreements between employers and their employees. (Pls.' Br. at 1-2, ECF No. 13-1.) For this reason, Plaintiffs assert that Section 12.7 is preempted by the FAA. (Id.)

On August 30, 2019, Plaintiffs filed the present suit seeking a declaration that Section 12.7 is preempted by the FAA and an injunction precluding Defendant from enforcing the provision. (Compl. ¶¶ 46, 50.) On January 7, 2020, Defendant filed a Motion to Dismiss, arguing that Plaintiffs lacked standing and that the case was not ripe for adjudication. (ECF No. 12.) The same day, Plaintiffs filed a Motion for Summary Judgment. (ECF No. 13.) Defendant filed an Opposition to the Motion for Summary Judgment (ECF No. 19), and Plaintiffs filed a Reply (ECF No. 23). On July 21, 2020, the Court denied Defendant's Motion to Dismiss, finding that Plaintiffs had standing and that their claims were ripe for adjudication. (Op. at 12, 16, ECF No. 24.) The Court reserved ruling on the Motion for Summary Judgment until after oral argument. (Id. at 3.) The parties exchanged discovery and submitted supplemental briefing. (ECF Nos. 44, 45.) The Court held oral argument on March 4, 2021. Plaintiffs' Motion for Summary Judgment is presently before the Court.

LEGAL STANDARD

Summary judgment shall be granted if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A dispute is "genuine" if it could lead a "reasonable jury [to] return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. When deciding the existence of a genuine dispute of material fact, the Court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52. The Court must grant summary judgment against any party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322.

At the summary judgment stage, a district court considers the facts drawn from materials in the record, "including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other materials." Fed. R. Civ. P. 56(c)(1)(A). "[I]nferences, doubts, and issues of credibility should be resolved against the moving party." Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983).

DISCUSSION

I. Standing

In the Court's previous Opinion denying Defendant's Motion to Dismiss, the Court concluded that Plaintiffs presented sufficient evidence of standing to overcome a motion to dismiss, but noted that Plaintiffs would need to present more specific evidence to prevail on a motion for summary judgment. (Op. at 7-8, 12-13.) Defendant asserts that Plaintiffs have not met this burden, and thus lack standing to bring their claims. (Def.'s Suppl. Br. at 3-9, ECF No. 45.) The Court finds that Plaintiffs have presented sufficient specific evidence to confer standing at the summary judgment stage.

To establish Article III standing for injunctive relief, a plaintiff must show (1) "that he is under threat of suffering 'injury in fact' that is concrete and particularized"; (2) "the threat must be actual and imminent, not conjectural or hypothetical"; (3) "it must be fairly traceable to the challenged action of the defendant"; and (4) "it must be likely that a favorable judicial decision will prevent or redress the injury." Free Speech Coal., Inc. v. Att'y Gen. U.S., 825 F.3d 149, 165 (3d Cir. 2016) (quoting Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009)). Because the standing elements "are not mere pleading requirements" but rather an essential part of a plaintiff's case, "each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation." Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).

A. Injury-in-Fact

To allege an injury-in-fact, Plaintiffs must show that they have suffered "an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) actual or imminent, not conjectural or hypothetical." Lujan, 504 U.S. at 560 (citations and internal quotation marks omitted). Organizations or associations "are unable to establish standing solely on the basis of institutional interest in a legal issue." Pa. Prison Soc'y v. Cortes, 508 F.3d 156, 162 (3d Cir. 2007). Instead, an organization may assert standing (a) through direct injury to the organization or (b) as a representative of injured members of the organization. See id. at 163. Both NJCJI and Chamber assert that they have associational standing, while only NJCJI advances a theory of direct organizational standing. (Pls.' Suppl. Br. at 3, ECF No. 44.)¹

1. Associational Standing

To establish representative, or associational, standing, an organization must demonstrate that "(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Hunt v. Wash. State Apple Advert. Comm'n, 432 U.S. 333, 343 (1977); see also Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167, 181 (2000). "Sufficient injury exists to confer standing where the regulation is directed at [the plaintiffs] in particular; it requires them to make significant changes in their everyday business practices; [and] if they fail to observe the . . . rule they are quite clearly exposed to the imposition of strong sanctions, even where there is no pending prosecution." Free Speech Coal., 825 F.3d at 166 (internal quotation marks omitted); see also Planned Parenthood of Cent. N.J. v. Farmer, 220 F.3d 127, 147-48 (3d Cir. 2000...