News & Noteworthy

Authored - NJ Contract Law Update - Arbitration Clause Not Applied Retroactively Even To Related Entity
JUNE 06, 2013 | Windels Marx - Commercial Litigation

In Budhan v. TruGreen Corp. et al., ___ N.J.Super. ___ 2013 WL 2096348 (App.Div. May 16, 2013), the Appellate Division refused to retroactively apply an arbitration clause entered into by plaintiff with the second of two related entities for which he worked. There was no arbitration clause in effect for the first entity at the time he worked there. By the time he 'signed up' with the second entity, there was some language in those 'sign-up documents' from which the Appellate Division could have concluded (albeit in arguably attenuated fashion) that the intent was to arbitrate even those issues which had arisen in the original employment, prior to any arbitration clause being presented or agreed to. However, that Court agreed with the trial Court's reconsideration Order that the documents did not specifically-enough mandate arbitration for a statutory discrimination claim arising from the original employment.

Obviously, parties may sometimes enter into arbitration clauses after employment and before litigation, to resolve a dispute. But this fact pattern did not fit that mold.

The defendants' arguments to halt the litigation in favor of arbitration were clever; and initially succeeded, before the trial Court granted reconsideration. But the moral of the story is that arbitration clauses have to be as clear as can be when signed in an unusual context--a fortiori when waiving statutory discrimination claims, in light of Garflinkel v. Morristown Obstetrics, 160 N.J. 124 (2001).

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

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