New Jersey Court Invalidates Arbitration Agreement that Fails to Designate an Arbitration Forum

New Jersey Court Invalidates Arbitration Agreement that Fails to Designate an Arbitration Forum

The New Jersey courts have consistently held that the mutual assent necessary to support a binding arbitration agreement is not present where the agreement does not sufficiently put the parties on notice that, by agreeing to arbitrate, they are giving up the right to have their dispute resolved in a judicial forum and are waiving whatever rights they might have to a jury trial. In Flanzman v. Jenny Craig, Inc., the New Jersey Appellate Division has now held that the mutual assent necessary to support a binding arbitration agreement will also be found lacking when the agreement does not designate the forum in which the arbitration will take place and otherwise fails to define the arbitration process. Background The plaintiff, Marilyn Flanzman, after being terminated from her position as a weight loss counselor for the defendant, a weight loss and nutrition company, brought suit in Superior Court, Law Division under the New Jersey Law Against Discrimination, alleging age discrimination and harassment. The defendant moved to compel arbitration based on an arbitration agreement into which the parties had entered during the plaintiff’s employment, which, in relevant part, stated: Any and all claims or controversies arising out of or relating to [plaintiff’s]...

Federal Courts Uphold Arbitration Agreements Via Email

Federal Courts Uphold Arbitration Agreements Via Email

Recently, federal district courts in New York and New Jersey turned aside employee attacks on arbitration agreements challenged on the grounds that the employer’s communication of its arbitration policy via email was inadequate. The courts in both Lockette v. Morgan Stanley and Schmell v. Morgan Stanley held that the employees’ assertions that they never saw the email forwarding the terms of the arbitration agreement were insufficient to overcome the employer’s evidence that the email had been delivered to the employees’ email inboxes. Lockette John Lockette sued Morgan Stanley in federal court in New York after Morgan Stanley terminated his employment in 2016. Lockette alleged he had been the victim of race discrimination and retaliation in violation of federal law. The company moved to compel arbitration. Prior to 2015, the company had in place an internal dispute resolution program entitled “CARE” (Convenient Access to Resolutions for Employees) for employees registered with FINRA, who could select, but were not required to select, arbitration as a means of resolving statutory discrimination claims. In 2015, however, the company expanded the CARE program to cover all employees and to require the arbitration of employment claims, including discrimination claims, among others. Under the terms of the expanded program,...

Third Circuit Overturns Summary Judgment Based on the Faragher-Ellerth Defense

Third Circuit Overturns Summary Judgment Based on the Faragher-Ellerth Defense

Employers who are sued for sexual harassment committed by a supervisor may be able to avoid liability, even if harassment had, in fact, occurred, by asserting the so-called Faragher-Ellerth affirmative defense, named after the two United States Supreme Court cases that first recognized the defense. An employer may assert the Faragher-Ellerth defense to supervisor harassment when no tangible employment action has been taken against the harassed employee and the employer is able to demonstrate (a) it exercised reasonable care to prevent and correct promptly any sexually harassing behavior and (b) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer. Recently, the United States Court of Appeals for the Third Circuit, in Minarsky v. Susquehanna County, addressed the requirements of the Faragher-Ellerth defense in the context of the assertion of a female employee that she acted reasonably in not taking advantage of the procedures made available by her employer to prevent or correct the harassment against her by her supervisor. In so doing, the Third Circuit reversed the district court’s grant of summary judgment to the employer based on the Faragher-Ellerth defense and held on the facts of the case a jury should...

The U.S. Supreme Court Declines Review of Seventh Circuit Decision Rejecting Extended Leave as a Reasonable Accomodation for Disabled Employees under the ADA

The U.S. Supreme Court Declines Review of Seventh Circuit Decision Rejecting Extended Leave as a Reasonable Accomodation for Disabled Employees under the ADA

On April 2, 2018, the United States Supreme Court declined to hear an appeal in Severson v. Heartland Woodcraft, Inc., a decision of the Seventh Circuit Court of Appeals that rejected a disabled employee’s claim that, as an accommodation for his disability, he was entitled under the Americans with Disabilities Act (“the ADA”) to leave beyond the maximum 12 weeks authorized by the Family and Medical Leave Act (“the FMLA”). The Seventh Circuit’s Decision Because of back pain, Raymond Severson took the maximum 12 weeks of leave permitted by the FMLA. On the last day of his leave he underwent back surgery, which required him to remain out of work for another two to three months. His employer rejected his request to extend his leave for an additional three months and terminated his employment, although did invite him to reapply when he was medically cleared to return to work. Instead of reapplying, Severson brought suit under the ADA, alleging that the employer failed to provide a reasonable accommodation for his disability by denying his request for extended leave. The district court granted the employer’s motion for summary judgment, and the Seventh Circuit affirmed. The Seventh Circuit’s analysis of the issue...

Seventh Circuit Upholds Forum Selection Clauses in Employee Benefits Plans

Seventh Circuit Upholds Forum Selection Clauses in Employee Benefits Plans

In Mathias v. Caterpillar, Inc., the United States Court of Appeals for the Seventh Circuit upheld a forum selection clause requiring a participant in a benefits plan governed by the Employee Retirement Income Security Act (“ERISA”) to bring suit in the Central District of Illinois. The plaintiff had brought suit in federal court in Pennsylvania, invoking ERISA’s venue provision, which, inter alia, allows suit to be brought in any district in which the defendant is found. The Court, however, ruled that ERISA’s venue provision was subject to the benefits plan’s forum selection clause. The decision is of obvious significance to employers who would prefer to avoid being subject to ERISA-based suits in multiple jurisdictions. Background Mathias, who had been employed at a Caterpillar facility in York, Pennsylvania, began receiving health insurance benefits in 1997 under the company’s long term disability plan. When he chose to retire in 2012 retroactive to 2009 his change in status mandated an increase in his insurance premiums, which Caterpillar mistakenly failed to implement. In 2013, the company realized its mistake and notified Mathias that he owed more than $9,500 in past-due premiums. When Mathias did not pay that amount, Caterpillar terminated his benefits. Mathias sued...

Third Circuit Decides Good Faith Belief of FMLA Abuse Justifies Termination

Third Circuit Decides Good Faith Belief of FMLA Abuse Justifies Termination

There are occasions when an employer becomes concerned that an employee on leave under the Family and Medical Leave Act (“FMLA” or “the Act”) is using the leave for purposes not authorized by the Act. That situation was presented in Capps v. Mondelez Global, LLC, a recently issued opinion from the Third Circuit Court of Appeals. There, the Court held that an employer’s good faith belief that an employee was abusing his authorized FMLA leave constituted sufficient grounds on which to terminate the employee. The case provides valuable guidance as to how employers should proceed in such situations. The Facts Frederick Capps worked as a dough mixing machine operator for Mondelez Global (“Mondelez”). Because of a blood flow condition, Capps underwent bilateral hip replacement. At times thereafter, he suffered from severe leg pain and was continuously recertified approximately every six months for intermittent FMLA leave for his condition. On the evening of February 14, 2013, Capps was arrested for driving under the influence and spent the night in jail. He had not reported to work that day having called Mondelez’s FMLA message line complaining of leg pain. On August 7, 2013, Capps pled guilty to a DUI charge and spent 72...

Eleventh Circuit Widens Circuit Split on Accommodation Issue

Eleventh Circuit Widens Circuit Split on Accommodation Issue

Consider the following scenario: Because of a disability an employee is unable to perform an essential function of his or her current position and there is no reasonable accommodation that will enable the employee to remain in that position. The disability, however, will not prevent the employee from performing the essential functions of an open position for which the employee is qualified. A number of courts presented with this scenario have had to decide the extent to which the Americans With Disabilities Act (ADA) mandates that the employer assign the disabled worker to the open position as a reasonable accommodation without requiring the employee to compete for the position with other qualified candidates. Recently, in Equal Employment Opportunity Commission v. St. Joseph’s Hospital, Inc., the United States Court of Appeals for the Eleventh Circuit joined the Eighth Circuit in concluding that there is no ADA violation if the employer requires the disabled employee to compete for the open position. Other courts, however, including the Seventh, Tenth, and D.C. Circuits have concluded that, in most instances, a qualified disabled employee should be placed in the open position as a reasonable accommodation. The Seventh Circuit’s decision is the subject of an earlier blog. The St....

The Third Circuit Goes Its Own Way on ADEA Disparate Impact Claims

The Third Circuit Goes Its Own Way on ADEA Disparate Impact Claims

The Age Discrimination in Employment Act (ADEA) protects from discrimination of employees who are at least 40 years of age. Recently, in Karlo v. Pittsburgh Glass Works, the United States Court of Appeals for the Third Circuit departed company with three of its sister Circuits by holding that plaintiffs asserting a claim of “disparate impact” under the ADEA may establish a disparate impact with comparisons between subgroups of employees and need not show that a challenged employment practice has had an adverse impact on employees 40 years of age or older compared to its impact on employees under 40. Thus, the Court permitted to go forward with a disparate impact claim based on a comparison between employees at least 50 years of age with employees under 50. The decision will have a profound impact on employers’ assessments of their potential ADEA liability for disparate impact claims and on the way ADEA disparate impact claims are litigated in the Third Circuit. Background To establish a claim of disparate impact discrimination under the ADEA, a plaintiff must show, through statistical evidence, that the employers implemented a facially age-neutral employment practice that fell more harshly on the protected group. If this showing is...

Ninth Circuit Holds Class Action Waivers Illegal Under the NLRA 0

Ninth Circuit Holds Class Action Waivers Illegal Under the NLRA

On August 22, 2016, in Morris v. Ernst & Young, LLP, the Ninth Circuit Court of Appeals joined the Seventh Circuit Court of Appeals in holding that class action waiver provisions in arbitration agreements governing employment disputes are illegal under the National Labor Relations Act (NLRA or the Act) because these waivers interfere with the right of employees to engage in concerted activity protected by Section 7 of the Act (Section 7). The holdings of these courts are in indirect conflict with an opinion of the Fifth Circuit Court of Appeals, which upheld the validity of such waivers in the face of a challenge under Section 7. Employers in jurisdictions whose courts have not yet decided this issue, and who employ such waivers in their arbitration agreements or otherwise, should be prepared for attacks on their arbitration agreements by employees seeking to bring class or collective actions or by the National Labor Relations Board (NLRB).

N.J. Supreme Court Invalidates Agreements to Shorten the LAD’s Statute of Limitations 0

N.J. Supreme Court Invalidates Agreements to Shorten the LAD’s Statute of Limitations

On June 15, 2016, the New Jersey Supreme Court, in Rodriguez v. Raymours Furniture Company, Inc., held that an agreement by an employee to bring claims against his employer within six months of the allegedly wrongful employment action was unenforceable insofar as the agreement applied to claims brought under the New Jersey Law Against Discrimination (“the LAD”). In 1993, the Court had held that New Jersey’s general two-year statute of limitations for personal injury actions provides the appropriate limitations period for LAD claims. In Raymours, the Court ruled that the employer’s attempt to reduce this limitations period to six months undermined the LAD’s specific enforcement scheme for the elimination of discrimination and thus, for public policy reasons, could not be judicially sanctioned. In addition, the Court found that the particular agreement at issue, set forth as part of the boilerplate in the employer’s standard employment application form, constituted an unenforceable contract of adhesion.