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Ex-Employee's Suit Tests if Labor Firm's Arbitration Agreements Are Ironclad
New Jersey Law Journal
September 08, 2009
Littler Mendelson, a national firm whose Web site proclaims it as a source for "Employment and Labor Law Solutions Worldwide," is having its mettle tested in a suit by a former employee of its Newark, N.J., office.
The threshold question in Preston v. Littler Mendelson, L-2370-9, is whether the law firm can compel arbitration based on agreements it drafted that it says bind all employees suing the firm.
Littler, which claims it fired Newark-office administrator Emma Preston for "performance-related issues" on June 9, has moved to stay the Union County suit and to compel arbitration.
But Preston's lawyer, Westfield solo Richard Kaplow, cross-moved on Sept. 1 for a declaration that there is no enforceable arbitration agreement that applies to her claims, brought under the Conscientious Employee Protection Act, the Law Against Discrimination.
Littler's brief points out that, with more than 750 lawyers and 47 offices, it is the "largest law firm in the country exclusively devoted to representing management in employment" -- an assertion seemingly meant to underscore that it knows how to draft an enforceable arbitration agreement.
But Kaplow says that may work to Littler's disadvantage, since its expertise in employment law resulted in a greater disparity in bargaining position and a "heightened responsibility to make sure that any waiver of rights is accomplished in a fair, knowing, voluntary and purposeful way."
Preston claims she was fired in retaliation for going to the office's managing partner, Glenn Smith, alleging she had discovered financial irregularities and abuse of expense account reimbursement procedures by employees -- including a female secretary that she suspected had a personal relationship with Smith.
Preston also alleges a hostile environment in which female employees were "ridiculed, sexually harassed and humiliated by male co-employees and male supervisors," including Smith, who commented about female employees' "physical and/or sexual characteristics."
In addition to the CEPA and LAD claims, the complaint alleges wrongful termination, intentional infliction of emotional distress and interference with Preston's prospective contractual and employment rights.
Littler has not yet answered the complaint, though the firm told Kaplow about the arbitration agreements by e-mail three days before he filed the complaint on June 19, and followed up on June 21 with copies of the agreement and a demand that he withdraw the suit.
The motions that Judge William Daniel is to hear on Sept. 11 focus on what Preston signed and what she was told when the firm hired her in March 2006 after a headhunter spotted her resume on hotjobs.yahoo.com,
Littler is asking the court to enforce four purported agreements to arbitrate.
The first, part of the application package, was executed by Preston on March 21, 2006. It states "all claims ... arising during my employment ... will be presented to a neutral arbitrator for final and binding decision in accordance with procedures adopted by Littler Mendelson, P.C." Right below that paragraph and just above the signature line, it says, "This agreement is a waiver of all rights to civil court actions for termination, unlawful harassment, discrimination and/or demotion. Only the arbitrator, not a judge or jury, will decide the claim or dispute."
The other three agreements were the job offer letter and the enclosed "Agreement to Arbitrate" and "Exempt Staff Employment Agreement," all of which Preston signed. The letter stated that, by accepting the job, she was agreeing to arbitrate "any disputes arising out of your employment" while the staff agreement contained language similar to that in the application and the arbitration agreement referred to "waiver of all rights to a civil court or other action for the disputes covered by the firm's alternative dispute resolution policy and procedures" and the use of an arbitrator to decide such disputes.
Preston denies she knowingly or voluntarily gave up her right to sue. She asserts in her cross-motion that she was not told -- either in the telephone interview with National Practice Office Administrator Mark Schiavo or the sit-down with Smith and fellow partners Reed Ellis and William McClane -- that she would have to waive her right to sue as a condition of employment.
She describes a rushed hiring process, in which she was told to sign the papers and get them back quickly, with no explanation or discussion of arbitration.
Kaplow contends in his brief that the fact that Preston signed more than one agreement works against a finding of enforceability because they contain inconsistent language which "confounds any clear understanding of the parties' undertaking."
Littler's lawyer, Suzanne Cerra, of Nukk-Freeman & Cerra in Short Hills, says the agreements signed by Preston are enforceable but she declines comment on the substantive allegations except to say she is confident the case "will conclude with a denial of all claims" against Littler and Smith.
Littler has asked the court to award legal fees for the motion as a frivolous litigation sanction under Rule 1:4-8(a).
