Ogunyemi v. Garden St. Med. Ctr.

313 A.3d 420

478 N.J.Super. 310

Esther OGUNYEMI, Plaintiff-Appellant,

v.GARDEN STATE MEDICAL CENTER, Center for Spine and Joint Pain Relief, and Dharam Mann, Defendants-Respondents.

DOCKET NO. A-1703-22

Superior Court of New Jersey, Appellate Division.

Argued October 11, 2023

Decided March 25, 2024

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1263-22.

Nancy E. Smith, Montclair, argued the cause for appellant (Smith Mullin, PC, attorneys; Nancy E. Smith, of counsel and on the briefs).

Joseph M. Vento (Seyfarth Shaw, LLP) argued the cause for respondents.

Before Judges Sumners, Rose and Smith (Judge Rose concurring).

₃₁₂The opinion of the court was delivered by

SMITH, J.A.D.

Plaintiff, Dr. Esther Ogunyemi, appeals from a trial court order staying all claims in her complaint pending arbitration, including her claim that defendants violated the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -50, by terminating her employment in retaliation for reporting sexual harassment.

₃₁₃On appeal, plaintiff contends that the arbitration clause in her employment contract is ambiguous, and that certain other terms in her contract are unconscionable. As a result, she argues that the arbitration clause is unenforceable. She also argues that to the extent the trial court found she waived her right to bring her claims in a court of law, an amendment to the LAD, N.J.S.A. 10:5-12.7, (Section 12.7) prohibits that waiver.

Because we find the arbitration clause in plaintiff’s employment contract ambiguous, we conclude its terms are unenforceable. Having reached this conclusion, we do not reach the unconscionability or statutory issues raised by plaintiff. We reverse.

I.

Plaintiff applied for a job as a pain specialist with defendants in February 2021. Defendants offered plaintiff a position and gave her a draft employment contract to review. After reviewing the draft contract and suggesting some modifications not related to the issues before us, plaintiff signed a ten-page employment agreement on March 29, 2021. We highlight the relevant terms.

Section 27, "VENUE, ARBITRATION AND ACCEPTANCE OF SERVICE OF PROCESS," states in pertinent part:

Each party to this Agreement hereby agrees and consents that any legal action or proceedings with respect to thisAgreement shall only be brought in the courts of the State of New Jersey in Ocean County. … [E]ach such party hereby (i) accepts the jurisdiction of the aforesaid courts … Except as set forth in Section 11 hereof ["Termination"], any claim, controversy or dispute between you and CSJPR¹ (including without limitation CSJPR’s affiliates, shareholders, employees, representatives, or agents) arising out of or relating to your employment, the cessation of your employment, or any matter relating to the foregoing (any "Controversy"), shall be submitted to and settled by arbitration before a single arbitrator … The foregoing requirement to arbitrate Controversies applies to all claims or demands by you, including without limitation any rights or claims you may have under any employment law whatsoever, including, but not limited to … the New Jersey Law Against Discrimination ("LAD") … or any other federal, state or local laws or regulations pertaining to your employment, the termination of your employment or this Agreement. YOU UNDERSTAND AND AGREE THAT THIS ARBITRATION₃₁₄ PROVISION WAIVES YOUR RIGHT TO A JURY TRIAL FOR ANY AND ALL CLAIMS, INCLUDING STATUTORY EMPLOYMENT CLAIMS.

Section 11, referenced by Section 27, is titled, "TERMINATION," and states in pertinent part:

This Agreement may be terminated upon the happening of any of the following events:

….

(l) [Y]ou are unable to perform the essential functions of your position due to physical or mental illness, disability, or incapacity, with or without a reasonable accommodation it being recognized that your inability to perform your essential job functions for any prolonged period of time, usually twelve (12) weeks or more, will result in an undue hardship to the operations of CSJPR; or CSJPR is dissolved, ceases operations or files for bankruptcy.

Plaintiff’s first day of work was September 1, 2021. Shortly after she began, on October 8, plaintiff alleged she was sexually assaulted at the home of co-defendant, Dr. Dharam Mann, while attending a new doctors welcome party. Plaintiff confronted Dr. Mann about the assault on October 19, and told him the incident was causing her distress. CSJPR terminated plaintiff one month after the incident, on November 9.²

On May 9, 2022, plaintiff filed a complaint against defendants alleging violations of the LAD; sexual assault and battery; and intentional infliction of emotional distress. Defendants moved to compel arbitration pursuant to the contract.

The trial court heard argument in August 2022, and issued an order granting defendants’ motion on January 20, 2023. The court made findings: there was mutual assent between the parties; having found assent, the contract was valid and enforceable; the language in the contract’s arbitration clause was clear and unambiguous; and federal arbitration law³ barred use of Section 12.7 to ₃₁₅defeat mandatory arbitration. The trial court then stayed the matter for six months pending arbitration. Plaintiff appealed.

II.

[1, 2] We review a trial court’s order granting or denying a motion to compel arbitration de novo because the validity of an arbitration agreement presents a question of law. Skuse v. Pfizer, Inc., 244 N.J. 30, 46, 236 A.3d 939 (2020) (a trial court’s interpretive analysis should not be deferred to unless we find its reasoning persuasive). We owe no special deference to the trial court’s interpretation of an arbitration provision, which we view "with fresh eyes." Morgan v. Sanford Brown Inst., 225 N.J. 289, 303, 137 A.3d 1168 (2016).

[3, 4] The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, and the New Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -32, represent a legislative choice "to keep arbitration agreements on ‘equal footing’ with other contracts." Roach v. BM Motoring, LLC, 228 N.J. 163, 174, 155 A.3d 985 (2017) (quoting Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 441, 99 A.3d 306 (2014)). Under both statutes, "arbitration is fundamentally a matter of contract," and should be regulated according to general contract principles. Antonucci v. Curvature Newco, Inc., 470 N.J. Super. 553, 561, 270 A.3d 1088 (2022) (citing Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010); NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 424, 24 A.3d 777 (App. Div. 2011)).

[5, 6] "Although ‘arbitration [is] a favored method for resolving disputes … [t]hat favored status … is not without limits.’ " Gayles v. Sky Zone Trampoline Park, 468 N.J. Super. 17, 23, 254 A.3d 1271 (App. Div. 2021) (alterations in original) (quoting Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 131-32, 773 A.2d 665 (2001)). An arbitration agreement may be modified, superseded, or, in certain circumstances, waived. Cole v. Jersey City Med. Ctr., 215 N.J. 265, 276, 72 A.3d 224 ₃₁₆(2013) (citing Wein v. Morris, 194 N.J. 364, 376, 944 A.2d 642 (2008)).

[7, 8] "An agreement to arbitrate … ‘must be the product of mutual assent,’ " and "requires ‘a meeting of the minds.’ " Antonucci, 470 N.J. Super. at 561, 270 A.3d 1088 (quoting Atalese, 219 N.J. at 442, 99 A.3d 306). "[T]o be enforceable, the terms of an arbitration agreement must be clear," and the contract needs to explain that the agreement waives a person’s right to have their claim tried in a judicial forum. Ibid.

[9] In the employment setting, we require "an express waiver of the right to seek relief in a court of law," due to the generally unequal relationship between the contracting parties. Cnty. of Passaic v. Horizon Healthcare Servs., Inc., 474 N.J. Super. 498, 503, 289 A.3d 495 (App. Div. 2023); see also In re Remicade Antitrust Litigation, 938 F.3d 515, 525 (3d Cir. 2019). "Employees should at least know that they have ‘agree[d] to arbitrate all statutory claims arising out of the employment relationship or its termination.’ " Atalese, 219 N.J. at 447, 99 A.3d 306 (alteration in original) (quoting Garfinkel, 168 N.J. at 135, 773 A.2d 665).

III.

A.

[10] Plaintiff argues that her employment contract was unenforceable because certain terms were ambiguous and other terms were unconscionable. We first look to well-settled law to consider her ambiguity argument.

The Atalese Court held a consumer contract arbitration clause unenforceable, concluding the term failed to include language "that plaintiff waived her right to seek relief in court." 219 N.J. at 435, 99 A.3d 306. The Court considered previous eases where "[o]ur courts have upheld arbitration clauses phrased in various ways." Id. at 444-45, 99 A.3d 306. Each case cited by the Atalese Court included an express contractual term stating arbitration was ₃₁₇the sole remedy. See, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 81-82, 800 A.2d 872 (2002) (enforcing an arbitration clause stating, "all disputes relating to … employment … shall be decided by an arbitrator."). The Court concluded that an effective arbitration clause, "at least in some general and sufficiently broad way, must explain that the plaintiff is giving up her right to bring her claims in court or have a jury resolve the dispute," and must demonstrate the party’s understanding of all relevant terms. Id. at 447, 99 A.3d 306.

Morgan gives us additional insight into ambiguity within arbitration clauses. 225 N.J. at 310, 137 A.3d 1168. In holding an arbitration clause like the one in Atalese unenforceable, the Court concluded the clause was not "written in plain language … clear and understandable to the average consumer." Ibid. (quoting Atalese, 219 N.J. at 446, 99 A.3d 306). It also cited to the length of the clause, 750 words running on in thirty-five unbroken...