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A covenant in a job application, by which the prospective employee agrees that workplace disputes will be settled by arbitration, is enforceable as a matter of law and public policy, the New Jersey Supreme Court ruled July 17. The justices ruled 4-3 that a clause on the application form — stating that legal disputes with the company would be decided by an arbitrator selected by the American Arbitration Association — was so unequivocal that the waiver of judicial remedies was knowing and voluntarily. “In the circumstances of this case, the language in the arbitration agreement not only was clear and unambiguous, it was also sufficiently broad to encompass reasonably plaintiff’s statutory causes of action,” Justice Jaynee LaVecchia wrote in Martindale v. Sandvik Inc., A-10-01. She was joined by Justices Peter Verniero, James Coleman Jr. and Chief Justice Deborah Poritz. “Its wording provided plaintiff with sufficient notice at the time she signed the agreement that all claims relating to employment with and termination … would be resolved through arbitration. It also addressed specifically a waiver of the right to a jury trial, augmenting the notice to all parties to the agreement that any claims involving jury trials would be resolved instead through arbitration.” While the majority found that enforcing the arbitration clause was consistent with New Jersey public policy and statutory law, establishing arbitration as the favored method of resolving disputes, the dissenters, led by Justice Gary Stein, had strong misgivings. Stein wrote that because of the “vast disparity” in bargaining power between an employer and a job applicant, a waiver of the right to a jury trial as part of an employment application should be unenforceable as a matter of public policy. The plaintiff, Maureen Martindale, agreed to the arbitration clause when she applied for her job as a benefits manager at the Fair Lawn, N.J., office of a Swedish company in August 1994. The application form said she had the right to consult with an attorney before signing, but she did not. She became pregnant in January 1996, and her doctor told her in August that, due to medical complications, she could work only at home after giving birth. She requested and was granted time off under the Family Leave Act, but in November 1996, she was told her position had been eliminated. Bergen County, N.J., Superior Court Judge Patrick Fitzpatrick dismissed Martindale’s Law Against Discrimination complaint, citing the arbitration clause. The Appellate Division affirmed in an unsigned opinion. In the July 17 ruling, LaVecchia said courts in other jurisdictions that have considered similar questions have held that the creation of an employment relationship, which is reached when an employer agrees to consider or agrees to hire an applicant, is enough justification to uphold an arbitration contained in an employment application. She cited Johnson v. Circuit City Stores, 148 F.3d 373 (4th Cir. 1998), Koveleskie v. SEC Capital Mkts., 167 F.3d 361 (7th Cir. 1999), and Rogers v. Brown, 986 F. Supp. 354 (M.D. La. 1997). LaVecchia said there is nothing contrary to public policy to declare such agreements unenforceable. “The agreement is binding, as would be any other contractual term not contrary to public policy contained in a signed employment application that led, as here, to employment.” The employer’s attorney, Jill Jachera, says the decision “was a very close call.” “It was evident during oral argument that it was going to be difficult to get a majority,” says Jachera, of counsel at Morgan, Lewis & Bockius in Princeton, N.J. “In the recent line of employment cases in New Jersey, very few have gone in favor of the employer.” In the end, she says, what carried the day was the general tendency to favor arbitration over litigation as a way to reduce legal costs and lessen the burden on the court system. Martindale’s attorney, Allendale, N.J., solo practitioner Anthony Iannarelli Jr., says he is “cautiously optimistic” that Martindale will get a thorough and fair hearing before an arbitrator. The conduct of the arbitration, he says, “will represent a litmus test in determining whether an individual, upon having been compelled to forego their fundamental right to have claims heard before the judicial branch of our government, will be treated in accordance to law.” Iannarelli also says he believes he will still be able to pursue punitive damages and attorney fees as well as compensatory damages. Iannarelli adds that the ruling may not be a totally positive omen for employers. “Concerns have been raised by the business community because of mandatory arbitration agreements,” he says. Corporations, especially those in the securities industry, “are finding themselves confronted with huge arbitration awards that have more to do with today’s anti-business climate rather than evidence of malfeasance.”

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