(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interests of brevity, portions of any opinion may not have been summarized).
Argued March 26, 2001 -- Decided June 13, 2001
VERNIERO, J., writing for a unanimous Court.
The primary issue in this appeal is whether plaintiff, David A. Garfinkel, M.D., waived his right to sue in
court the medical practice that had employed and subsequently discharged him for reasons that Garfinkel claims
violated the New Jersey Law Against Discrimination, N.J.S.A. 10:51-1 to -42 (LAD).
Garfinkel and defendant Morristown Obstetrics & Gynecology Associates, P.A. (MOGA), entered into an
employment agreement on August 9, 1996. Among other aspects of the employment relationship, the agreement
addressed the circumstances under which either party could terminate the relationship and compensation Garfinkel
would receive in the event of termination.
The employment agreement contained a provision that “any controversy or claim arising out of, or relating
to, this Agreement or the breach thereof, shall be settled by arbitration[.]” The arbitration clause expressly excepted
from its scope matters relating to post-termination restrictions (paragraph fourteen) and pension benefits (paragraph
fifteen), but it is likely that the reference to the paragraph regarding pension benefits was in error and that the parties
intended to exclude from the arbitration requirement issues pertaining to severance pay (paragraph thirteen), for that
paragraph contemplates action by “a court of competent jurisdiction” in the event of discharge.
In January 1998, MOGA allegedly informed Garfinkel that he would not be allowed to exercise his option
to become a shareholder in the practice because he was “born the wrong sex.” Two months later, a MOGA
shareholder told Garfinkel he was being terminated. Another shareholder told him the reason for his termination was
that he “did not attract patients well because he was male[.]”
Garfinkel filed suit in the Law Division in September 1998 against MOGA, its two shareholders, and
Lifeline Medical Associates, identified as a successor in interest to MOGA. Garfinkel alleged in his complaint that
defendants breached the employment agreement, violated the implied covenant of good faith and fair dealing,
tortiously interfered with his prospective economic advantage, violated the LAD, and defamed him.
After filing an answer and counterclaim to the complaint, defendants moved to dismiss the complaint on the
basis of the arbitration clause of the employment agreement (paragraph eighteen).
The trial court granted defendants' motion to dismiss, ruling that the arbitration provision was binding as to
all claims, including those asserted under the LAD. The court concluded that the parties had chosen knowingly and
voluntarily to arbitrate their disputes and that in this setting public policy favored arbitration.
Garfinkel appealed and the Appellate Division affirmed the judgment of the Law Division. The court also
concluded that Garfinkel's common-law claims against defendants must be resolved by arbitration. The Supreme
Court granted Garfinkel's petition for certification and permitted the New Jersey Division on Civil Rights (DCR) to
participate in the appeal as amicus curiae. The DCR opposes compulsory, binding arbitration based on a vaguely
worded clause or where a waiver of rights is not voluntary. The DCR believes the arbitration clause in this case is
ambiguous on its face.
HELD: The language of the arbitration clause in the agreement between Peter Garfinkel, M.D., and Morristown
Obstetrics & Gynecology Associates, P.A., is ambiguous and does not constitute a waiver of Garfinkel's statutory
rights under the Law Against Discrimination. Garfinkel may proceed with his employment discrimination action,
and the related common-law claims, in the Law Division.
1. The LAD provides a mechanism by which victims of discrimination in the workplace may seeks redress for their
injuries. Under the LAD, an aggrieved employee may file suit in the Law Division or may pursue an administrative
remedy by filing a complaint with the DCR. (pp. 7-8)
2. Arbitration has long been a favored method of dispute resolution in New Jersey and because of its favored status,
agreements to arbitrate are to be read liberally in favor of arbitration. The agreement to arbitrate must be clear and
consensual, however, for parties must know that by electing arbitration, they are giving up the right to sue in court.
Therefore, a party's waiver of statutory rights must be unmistakable and courts will not read such a waiver broadly.
(pp. 9-10)
3. The language used in the arbitration clause of the parties' employment agreement does not mention, either
expressly or by general reference, statutory claims asserted under the LAD; the language suggests that the parties
intended to arbitrate only disputes involving a contract term, a condition of employment, or some other element of
the agreement itself. The clause is insufficient to constitute a waiver of remedies under the LAD. (pp. 10-14)
4. The policies that support the LAD and the rights it confers on employees are essential to eradicating
discrimination in the workplace and the Court will not assume that an employee intends to waive those rights unless
the terms of an agreement that so provides are unambiguous. To be enforceable, a waiver-of-rights provision should
provide at least that the employee agrees to arbitrate all statutory claims arising out of the employment relationship
or its termination. (pp. 14-15)
5. The Court assumes, without deciding, that Garfinkel's common-law claims are subject to arbitration, but for
reasons of judicial economy, the common-law claims should be joined with the LAD claim for trial in the Law
Division. (pp. 17-18)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law Division
for resolution of all issues, including the common-law claims.
CHIEF JUSTICE PORITZ and ASSOCIATES JUSTICES STEIN, COLEMAN, LONG,
LaVECCHIA, and ZAZZALI join in JUSTICE VERNIERO'S opinion.
SUPREME COURT OF NEW JERSEY
A-
52 September Term 2000
DAVID A. GARFINKEL, M.D.,
Plaintiff-Appellant,
v.
MORRISTOWN OBSTETRICS &
GYNECOLOGY ASSOCIATES, P.A.,
DAVID E. JACOBWITZ, M.D., and
JOSEPH RAMIERI, M.D.,
Defendants-Respondents,
and
LIFELINE MEDICAL ASSOCIATES,
Defendant.
Argued March 26, 2001 -- Decided June 13, 2001
On certification to the Superior Court,
Appellate Division, whose opinion is
reported at
333 N.J. Super. 291 (2000).
Andrew Dwyer argued the cause for appellant
(The Dwyer Law Firm, attorneys).
Glenn A. Montgomery argued the cause for
respondents Morristown Obstetrics &
Gynecology Associates, P.A. and Joseph
Ramieri, M.D. (Pollock, Montgomery & Chapin,
attorneys).
James E. Shepard argued the cause for
respondent David E. Jacobwitz, M.D. (Fein,
Such, Kahn & Shepard, attorneys; Brian W.
Kincaid, of counsel and on the brief).
Jeffrey C. Burstein, Senior Deputy Attorney
General, argued the cause for amicus curiae,
New Jersey Division on Civil Rights (John J.
Farmer, Jr., Attorney General of New Jersey,
attorney; James R. Michael, Deputy Attorney
General, on the brief).
The opinion of the Court was delivered by
VERNIERO, J.
The principal issue in this appeal is whether plaintiff
waived his right to sue his former employer in the Law Division
for alleged violations of the Law Against Discrimination,
N.J.S.A. 10:5-1 to -42 (LAD). Plaintiff is a physician formerly
associated with an obstetrics and gynecology practice in Morris
County. He claims that he was unlawfully discharged from that
practice on account of his gender. He also asserts under the
common law that his employer's conduct constituted defamation and
tortious interference with his economic advantage.
The trial court determined that plaintiff's claims,
including those asserted under the LAD, were subject to
arbitration pursuant to the parties' written employment
agreement. That agreement, which plaintiff signed prior to
joining the practice, provides that “any controversy arising out
of, or relating to, this Agreement or the breach thereof, shall
be settled by arbitration[.]” The Appellate Division affirmed
the trial court's determination.
We now reverse. We hold that because of its ambiguity the
language contained in the arbitration clause does not constitute
an enforceable waiver of plaintiff's statutory rights under the
LAD. Therefore, plaintiff may proceed with his discrimination
action in the Law Division. Consistent with principles of
judicial economy, plaintiff's common-law claims should be tried
in the same action as the LAD claim.
David Garfinkel, M.D. (plaintiff) and the Morristown Obstetrics & Gynecology Associates, P.A. (MOGA) entered into an employment agreement on August 9, 1996. The agreement sets forth plaintiff's work obligations, salary, eligibility for stock ownership in the association, and restrictions on subsequent employment. In respect of termination, the agreement enumerates the circumstances under which either party may terminate employment and the remuneration that would be due plaintiff in the event of termination.
Critical to the disposition of this appeal, paragraph eighteen of the agreement provides:
Except as otherwise expressly set forth in Paragraphs 14 or 15 hereof, any controversy or claim arising out of, or relating to, this Agreement or the breach thereof, shall be settled by arbitration in Morristown, New Jersey, in accordance with the rules then obtaining of the American Arbitration Association, and judgement [sic] upon any reward [sic] rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof.
By its express language, the arbitration clause does not apply to post-termination employment restrictions (paragraph fourteen) and pension benefits (paragraph fifteen). We note, however, that paragraph fifteen provides that plaintiff shall share in the employer's pension or profit sharing plan and does not, on its face, contemplate litigation. Instead, paragraph thirteen, which pertains to severance pay and is not expressly excluded from the arbitration clause, contemplates certain action by a “court of competent jurisdiction” in the event of plaintiff's discharge. We thus assume that the drafters of the arbitration provision inadvertently referred to paragraph fifteen when they actually intended to refer to paragraph thirteen.
In January 1998, MOGA allegedly informed plaintiff that he would not be permitted to exercise his option to become a shareholder because he was “born the wrong sex.” Nonetheless, MOGA continued to employ plaintiff. On March 6, 1998, one of the shareholder-physicians of MOGA informed plaintiff that he was being terminated. Two days later, another MOGA shareholder informed plaintiff that he should not return to work. The following day that same shareholder allegedly stated to plaintiff that the reason for his termination was that he “did not attract patients well because he was male[.]”
In September 1998, plaintiff filed this action in the Law Division against MOGA and its two shareholders (defendants), as well as Lifeline Medical Associates, described by plaintiff as a successor in interest to MOGA. Plaintiff's complaint alleges that defendants breached the employment agreement, violated the covenant of good faith and fair dealing implicit in that agreement, violated the LAD, tortiously interfered with plaintiff's prospective economic advantage, and defamed him. In its answer and counterclaim, MOGA alleges that plaintiff misrepresented the extent of his practice prior to entering into the agreement, and wrongfully solicited patients away from MOGA for his exclusive economic benefit.
On the basis of the arbitration clause of the agreement (paragraph eighteen), defendants moved to dismiss plaintiff's complaint. Plaintiff responded that his consent to that clause was not voluntary because it was a non-negotiable provision, that the clause itself was unenforceable because it precluded access to the courts in respect of a discrimination claim, and that defendants waived operation of the clause by virtue of their answer and counterclaim. The trial court granted defendants' motion, ruling that the arbitration provision was binding in respect of all claims, including those asserted under the LAD. The court concluded that the parties had made a knowing and voluntary choice to arbitrate their disputes and that public policy favored arbitration in this setting.
In a reported opinion, the Appellate Division affirmed the trial court's determination. Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 333 N.J. Super. 291 (App. Div. 2000). Noting the general rule that parties may agree to arbitrate statutory claims, the panel held that the broad language of paragraph eighteen constituted such an agreement. Id. at 300, 302. The court likewise concluded that plaintiff's common-law claims must be settled by arbitration. Id. at 303-04. We granted plaintiff's petition for certification. 166 N.J. 606 (2000).
We also granted the Attorney General's motion on behalf of the New Jersey Division on Civil Rights (the Division) for leave to appear as amicus curiae. The Division does not object to the use of arbitration to resolve discrimination complaints. It does, however, oppose “compulsory and binding arbitration in settings where it is based on a vaguely worded clause or where the waiver was not voluntary.” The Division contends that the Court need not address the issue of voluntariness because the arbitration clause in plaintiff's agreement is ambiguous on its face. On that basis alone, the Division asserts, the clause should not be enforced.
The LAD provides a mechanism by which victims of discrimination may seek redress for their injuries. Pertinent to this appeal, the statute provides aggrieved employees with a choice of forum to prosecute their claims. The employee may pursue an administrative remedy by filing a verified complaint with the Division, or may file suit in the Law Division of the Superior Court. N.J.S.A. 10:5-13; Hernandez v. Region Nine Hous. Corp., 146 N.J. 645, 652 (1996) (tracing history of election-of- remedies provision under LAD and comparing it to analogous federal statutes). The choice of forum established by the LAD is an integral feature of the statute. One court has explained:
[T]here is a clear mandate of public policy permitting persons alleging violations of the LAD to proceed administratively or judicially. Within the LAD there is an established right permitting a party to seek redress in the courts directly or through the Division. The history of the [LAD] also indicates that there is a clear right to a trial by jury for the aggrieved. The Division [on] Civil Rights was empowered by the LAD to investigate and prosecute discrimination claims. The Division was also given broad rights to remedy the effects of unlawful discrimination[.]
[Ackerman v. The Money Store, 321 N.J. Super. 308, 324 (Law Div. 1998) (internal citations omitted).]
In addition to furthering the strong aims of the LAD, our jurisprudence has recognized arbitration as a favored method for resolving disputes. See Barcon Assocs. v. Tri-County Asphalt Corp., 86 N.J. 179, 186 (1981) (noting long-standing practice of arbitration in New Jersey, and statutes and case law in favor of that practice). In that regard, the Appellate Division has observed:
The ancient practice of arbitration “[i]n its broad sense, [] is a substitution, by consent of the parties, of another tribunal for the tribunal provided by the ordinary processes of law. The object of arbitration is the final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between the parties.”
[Carpenter v. Bloomer, 54 N.J. Super. 157, 162 (App. Div. 1959) (quoting E. Eng'g Co. v. Ocean City, 11 N.J. Misc. 508, 510-11 (Sup. Ct. 1933)).]
That parties to an agreement may waive statutory remedies in favor of arbitration is a settled principle of law in this State. See, e.g., Red Bank Reg'l Educ. Ass'n v. Red Bank Reg'l High Sch. Bd. of Educ., 78 N.J. 122, 140 (1978) (observing that “propriety of a contractual waiver of statutory rights is well- established”). The Court affirms that principle both as a general rule and as applied specifically to claims arising under the LAD. Accord Quigley v. KPMG Peat Marwick, LLP, 330 N.J. Super. 252, 259 (App. Div.) (recognizing within context of LAD that courts have enforced arbitration of discrimination claims as provided in employment agreements), certif. denied, 165 N.J. 527 (2000); Alamo Rent A Car, Inc. v. Galarza, 306 N.J. Super. 384, 389 (App. Div. 1997) (concluding that employee may surrender right to pursue statutory LAD claim in favor of arbitration).
Because of the favored status afforded to arbitration, “[a]n agreement to arbitrate should be read liberally in favor of arbitration.” Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993). That favored status, however, is not without limits. The Court has stressed that “[i]n the absence of a consensual understanding, neither party is entitled to force the other to arbitrate their dispute. Subsumed in this principle is the proposition that only those issues may be arbitrated which the parties have agreed shall be.” In re Arbitration Between Grover & Universal Underwriters Ins. Co., 80 N.J. 221, 228 (1979). In respect of specific contractual language, “[a] clause depriving a citizen of access to the courts should clearly state its purpose. The point is to assure that the parties know that in electing arbitration as the exclusive remedy, they are waiving their time- honored right to sue.” Marchak, supra, 134 N.J. at 282. As we have stressed in other contexts, a party's waiver of statutory rights “must be clearly and unmistakably established, and contractual language alleged to constitute a waiver will not be read expansively.” Red Bank Reg'l Educ. Ass'n, supra, 78 N.J. at 140. In the same vein, a “court may not rewrite a contract to broaden the scope of arbitration[.]” Yale Materials Handling Corp. v. White Storage & Retrieval Sys., Inc., 240 N.J. Super. 370, 374 (App. Div. 1990).
The court concluded that the arbitration clause was ambiguous in respect of the employee's LAD claim and thus “should be construed against the interest of defendant.” Id. at 270, 273. In reaching that conclusion, the panel noted that the clause did not refer specifically to disputes arising from termination or to claims redressable by the LAD or similar statutes. Id. at 272. The court found that the phrase “arising out of [] this Agreement,” coupled with the phrase “terms and conditions of employment,” suggested that the parties intended “that a question concerning the meaning of the agreement language, or a dispute concerning the enforcement of a term or condition of employment was of the type of claim subject to arbitration.” Id. at 273. The court considered those items to be distinct from a statutory claim. Ibid. The panel observed that “[i]f defendant wanted to enter into an agreement to bind plaintiff to arbitration under all circumstances, it should have written an inclusive arbitration clause.” Ibid.
The Appellate Division reached the same result in Alamo Rent A Car, Inc. v. Galarza, supra, 306 N.J. Super. 384. In that case, the court found that the parties' arbitration clause was inadequate to constitute a waiver of the employee's remedies under the LAD. The employee in Alamo alleged that her employer had violated the LAD in its dealings with her. Id. at 387. The employee had signed a standardized employment manual, known as the “FamPact,” which set forth the terms and conditions of employment. Ibid. The FamPact provided in part that “'[i]f I claim that [the employer] has violated this FamPact, I agree that the dispute shall be submitted to and resolved through binding arbitration[.]'” Ibid.
The court found that the FamPact language was ambiguous in respect of the employee's discrimination claim. The court reasoned:
. . . No reading of the [FamPact] arbitration clause clearly and unmistakably establishes that [the employee] waived her right to pursue her LAD claim.
By its very terms, the [] arbitration clause applies only to disputes under the [FamPact] not controversies arising under the LAD. If [the employer] wanted to enter into a contract to bind [the employee] to arbitration under all circumstances, it should have written an inclusive arbitration clause. This is not a difficult chore. . . .
The [] arbitration clause does not approach . . . the kind of language which we view as more fully ensuring that a waiver of statutory remedies is indeed knowing and voluntar[y]. On its face, it is simply inadequate to require arbitration of any issue other than a [FamPact] violation.
We reason similarly and conclude that paragraph eighteen of the parties' agreement is insufficient to constitute a waiver of plaintiff's remedies under the LAD. The clause states that “any controversy or claim” that arises from the agreement or its breach shall be settled by arbitration. That language suggests that the parties intended to arbitrate only those disputes involving a contract term, a condition of employment, or some other element of the contract itself. Moreover, the language does not mention, either expressly or by general reference, statutory claims redressable by the LAD. As noted, paragraph eighteen excepts from its purview the two paragraphs of the agreement pertaining to post-termination restrictions and severance pay. Those exceptions further suggest that the parties intended disputes over the terms and conditions of the contract, not statutory claims, to be the subject of arbitration.
Defendants urge a contrary conclusion, arguing that the language of paragraph eighteen is sufficient by its plain terms to encompass plaintiff's LAD claim. We disagree. Although we might interpret the paragraph to cover any dispute involving a term or condition of employment, the clause is silent in respect of plaintiff's statutory remedies. To enforce a waiver-of-rights provision in this setting, the Court requires some concrete manifestation of the employee's intent as reflected in the text of the agreement itself. “In interpreting a contract, '[i]t is not the real intent but the intent expressed or apparent in the writing that controls.'” Quigley, supra, 330 N.J. Super. at 266 (quoting Friedman v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956)).
To reiterate, the policies that support the LAD and the rights it confers on aggrieved employees are essential to eradicating discrimination in the workplace. The Court will not assume that employees intend to waive those rights unless their agreements so provide in unambiguous terms. That said, we do not suggest that a party need refer specifically to the LAD or list every imaginable statute by name to effectuate a knowing and voluntary waiver of rights. To pass muster, however, a waiver- of-rights provision should at least provide that the employee agrees to arbitrate all statutory claims arising out of the employment relationship or its termination. It should also reflect the employee's general understanding of the type of claims included in the waiver, e.g., workplace discrimination claims. Along those lines, the court in Alamo aptly observed:
The better course would be the use of language reflecting that the employee, in fact, knows that other options such as federal and state administrative remedies and judicial remedies exist; that the employee also knows by signing the contract, those remedies are forever precluded; and that, regardless of the nature of the employee's complaint, he or she knows that it can only be resolved by arbitration.
[Alamo, supra, 306 N.J. Super. at 394.]
Defendants also assert that plaintiff should be bound to the arbitration provision because he is “a medical professional who negotiated the complex agreement and a supplement thereto with the assistance of counsel.” Garfinkel, supra, 333 N.J. Super. at 302. In essence, defendants argue that as a highly-trained professional, plaintiff should be precluded from claiming that he agreed to the arbitration clause against his will or without understanding the consequences of his action. In their brief, defendants argue that plaintiff stands in stark contrast to the employee in Quigley who, as an existing manager, “had limited bargaining power, or options, when [the employer] imposed the agreement on him.”
Defendants suggest that the Court should focus predominately on plaintiff's level of sophistication to ensure that he acted of his own volition. That suggestion is misplaced. Irrespective of plaintiff's status or the quality of his counsel, the Court must be convinced that he actually intended to waive his statutory rights. An unambiguous writing is essential to such a determination. See Alamo, supra, 306 N.J. Super. at 393, 394-95 (observing that clear and unequivocal language in waiver clause “more fully ensur[es] that a waiver of statutory remedies is indeed knowing and voluntar[y]”).
In sum, we are satisfied that plaintiff's purported waiver of his statutory remedies is not reflected in the language of the arbitration clause. Because the choice of forum permitted by the LAD is an integral component of the statute, we will not assume that an employee intends to surrender that choice in favor of arbitration unless that intention has been “clearly and unmistakably established[.]” Red Bank Reg'l Educ. Ass'n, supra, 78 N.J. at 140. The arbitration clause in plaintiff's agreement does not satisfy that test. Our approach strikes the appropriate balance between fostering the salutary goals of the arbitration system and ensuring that the choice-of-forum provision under the LAD is preserved for the benefit of aggrieved employees.
In keeping with those principles, the Court assumes, without deciding, that plaintiff's common-law claims are subject to arbitration. The question, then, is whether notions of judicial economy dictate the joinder of those claims in a single Law Division action. The Court concludes that plaintiff's claims should be so joined. “Just as we view piecemeal litigation as anathema, we also look with disfavor upon the unnecessary bifurcation of disputes between judicial resolution and arbitration.” Ohio Cas. Ins. Co. v. Benson, 87 N.J. 191, 199 (1981). In view of our disposition in respect of plaintiff's LAD claim, the matter is remanded for resolution of all issues, including plaintiff's common-law allegations, in a single Law Division action.
The judgment of the Appellate Division is reversed.
CHIEF JUSTICE PORITZ and JUSTICES STEIN, COLEMAN, LONG, LaVECCHIA and ZAZZALI join in JUSTICE VERNIERO's opinion.
NO. A-52 SEPTEMBER TERM 2000
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
DAVID A. GARFINKEL, M.D.,
Plaintiff-Appellant,
v.
MORRISTOWN OBSTETRICS &
GYNECOLOGY ASSOCIATES, P.A.,
DAVID E. JACOBWITZ, M.D., and
JOSEPH RAMIERI, M.D.,
Defendants-Respondents,
and
LIFELINE MEDICAL ASSOCIATES,
Defendant.
DECIDED June 13, 2001
Chief Justice Poritz PRESIDING
OPINION BY Justice Verniero
CONCURRING OPINION BY
DISSENTING OPINION BY