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New Jersey Appeals Court Tosses Arbitration Agreement that Failed to Designate Forum

In a precedential opinion, the New Jersey Appellate Division found that an arbitration agreement was invalid where it failed to designate an arbitration forum and process for conducting the arbitration. In Flanzman v. Jenny Craig, et al., Docket No. A-2580-17T1, the plaintiff filed a lawsuit alleging age discrimination and retaliatory termination against her former employer. During her employment, she had executed an arbitration agreement in which she gave up her right to a jury in favor of arbitration, but the agreement failed to identify what forum or process replaced that right. The trial court entered an order compelling arbitration over the plaintiff’s objections that the agreement should not be enforced because it was invalid as a matter of law.

On appeal, the Appellate Division found that the parties had not assented to the arbitration agreement because it failed to select an arbitration forum. The court noted that “[s]electing an arbitral institution informs the parties . . . about that institution’s arbitration rules and procedures” and that “[w]ithout this basic information . . . the parties will not reach a ‘meeting of the minds.’” The court added that while it was “not impos[ing] any special language that parties must use in an arbitration agreement,” the failure to “select[ ] an arbitration mechanism or setting . . . deprived the parties from knowing what rights replaced their right to judicial adjudication.” The court concluded:

In a contract in which one gives up a right—a jury trial for example—expecting to resolve a dispute in some other forum, one must know about that other forum. Without that knowledge, they are unable to understand the ramifications of the agreement. If the parties do not identify an arbitral institution . . . , then they should identify the process for selecting an alternate forum. Without doing that, they have no realistic idea about the rights that replaced judicial adjudication because not all arbitration forums, mechanisms, or settings are alike.

If you believe that you were victim of employment discrimination or wrongful termination, contact the New Jersey employment lawyers at Folkman Law Offices, P.C. today. Call the Cherry Hill, New Jersey office at 856-354-9444, or complete the online contact form, to schedule a consultation. Folkman Law also has an office in Philadelphia to service clients throughout Pennsylvania.