Kiraly v. Forcepoint, Inc., No. A-2676-17T1 (N.J. Super. Ct. App. Div. Oct. 2, 2018) [click for opinion]

In January 2015, Plaintiff was hired by Defendant Forcepoint, Inc. as a member of its sales force. In November 2015, Plaintiff was terminated. Plaintiff brought an action under the New Jersey Law Against Discrimination and also brought a common law claim for malicious interference with economic relations. In her complaint, Plaintiff alleged sexual harassment, gender discrimination, and a hostile work environment. Plaintiff also alleged that, after she objected to the conduct, she was retaliated against and terminated.

When Plaintiff was hired, she signed a Confidentiality, Invention Assignment, Non-Solicit, Non-Compete, and Arbitration Agreement (“Arbitration Agreement”), which incorporated a two-page Dispute Resolution Addendum (the “Addendum”) detailing the arbitration requirements, processes, and procedures. The Arbitration Agreement contained a clause providing that “any controversy or dispute… as to all or any part of this Agreement… or any dispute or controversy whatsoever pertaining to or arising out of the relationship between [employer and employee], or the dissolution or termination of same… shall… be resolved exclusively by binding arbitration” between Plaintiff and Defendant. The Addendum further provided, inter alia, that “all arbitrable disputes shall be resolved only by final and binding arbitration.”

Defendant filed a motion to dismiss Plaintiff’s complaint and to compel arbitration under the Arbitration Agreement. The lower court found the Arbitration Agreement enforceable, and granted Defendant’s motion. The superior court (appellate division), however, reversed, finding that the Arbitration Agreement did not include a sufficiently clear waiver of Plaintiff’s right to litigate her claims in court.

In reaching its decision, the court recognized that the Federal Arbitration Act and the New Jersey Arbitration Act reflect federal and state policies favoring arbitration of disputes, and cited to precedent containing examples of enforceable arbitration clauses. While the court explained that no particular form of words is necessary to accomplish a clear and unambiguous waiver, the court acknowledged that the clause must explain, in some general and sufficiently broad way, that a plaintiff is giving up the right to litigate a claim in court.

Applying the law to the Arbitration Agreement, the court found that both the agreement and Addendum were deficient under New Jersey precedent. While the documents referred to binding arbitration and detailed the process, they lacked any references to the waiver of any right, and failed to state that Plaintiff was foreclosed from bringing her claim in court. The Arbitration Agreement also lacked the language described in precedent to ensure a knowledgeable waiver, and, without such a reference, an average member of the public may not be able to know that arbitration is a substitute for the right to have a claim adjudicated.

For these reasons, the court found the Arbitration Agreement unenforceable, and reversed and remanded for further proceedings.

A version of this post originally appeared in the November 2018 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.

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