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Defeating Your Employer’s Arbitration Agreement Based on that Clause’s Ambiguous or Misleading Nature

Many times, employers prefer to resolve employees’ claims of discrimination or harassment through arbitration rather than litigation. To that end, they often place arbitration clauses within the employment documents that new hires sign at the start of their employment. Sometimes, those provisions are clearly written and properly presented to provide the new employee with fair notice of the clause’s terms. However, when they’re not, then you as an employee may be able to use those facts to escape arbitration. If you’re pursuing an employment discrimination case and you need to defeat an arbitration provision, an experienced New Jersey national origin discrimination lawyer can show what avenues may be available to you to get that done.

The national origin discrimination case of G.R. is an example of a dispute that turned on the arbitration clause he signed.

G.R., a man of Turkish and European descent, accepted a role as the Director of Human Resources at a pharmaceutical company’s US headquarters in Berkeley Heights. As part of the acceptance process, G.R. signed several papers, including an acceptance letter and something labeled a “Proprietary Information and Inventions Agreement.” The latter was six pages long and contained an arbitration clause situated at the top of page five.

Four years later, the employer fired the director. The employee sued, alleging that the employer fired him based on race, national origin, and/or ancestry. Specifically, he alleged that the employer, whose worldwide HQ was in Tokyo, “favored Japanese employees and employees with Japanese heritage” and fired him because he complained about the ethnically-biased treatment of employees.

The employer promptly filed a motion asking the trial court to send the case to arbitration, and the trial judge granted the motion. The director argued that the employer had impermissibly hidden the arbitration clause in a side agreement, that it lacked a waiver of statutory rights, and that it was ambiguous.

The judge, however, concluded that the clause was clear and unambiguous, meaning that the director knew (or should have known) what he signed and the employer was entitled to demand the enforcement of the provision.

The Appellate Division court later upheld that decision.

In the director’s case, the Arbitration clause appeared in its own section, and that section was labeled “Arbitration.” The word “Arbitration” appeared on a separate line at the top of a page and was underlined. The clause itself was well-written, clear, and unambiguous. The trial court concluded that the provision “discusses binding arbitration as the forum for any disputes arising out of plaintiff’s employment or the termination thereof.”

Even though the employer placed the clause inside a document that it entitled a “Proprietary Information and Inventions Agreement,” that fact alone was not enough to show that the choice of placement concealed the clause, de-emphasized its importance, or deceived the employee. Despite the document title, the provision’s wording left “no room for confusion regarding the requirement to arbitrate any ‘claims… arising out of or relating to the employment relationship… or the termination of same.”

Although this employee was unsuccessful, the Appellate Division’s opinion offers some useful insights on circumstances where an employee can succeed in such an argument.

A Clause Marred by Confusing Wording and Placement

An employee seeking to invalidate an arbitration clause can do so if he/she can establish that there was no “mutuality of assent” to the provision, and an employee can do that by proving that the agreement was confusing, misleading, or contradictory. The New Jersey Supreme Court in 2003 declared that an “arbitration provision must reflect that an employee has agreed clearly and unambiguously to arbitrate the disputed claim.”

In 2019, the high court ruled against enforcing an arbitration agreement in a different case. According to the courts in G.R.’s case, the facts in that situation were very different. In that earlier case, the contract was confusing and ambiguous in that it conflated mediation and arbitration in several places. Indeed, the arbitration clause in question was situated within a section entitled “MEDIATION” and was literally “the fine print,” as it appeared to violate “font size requirements.”

That all stood in marked contrast to the facts in G.R.’s unsuccessful effort to avoid arbitration.9

Altogether, given the degree of confusion and ambiguity in the clause’s wording, coupled with the potentially misleading way the clause was placed in the contract, there was enough to defeat a motion to compel arbitration.

Whether you are preparing to litigate, preparing to arbitrate, or seeking to avoid arbitration, you need skilled legal counsel on your side to advance your employment discrimination claims. The diligent and experienced New Jersey national origin discrimination attorneys at Phillips & Associates are here to help. We’ve been working for years on behalf of workers harmed by illegal discrimination, and we’re eager to get to work on your behalf. Contact us online or at (833) 529-3476 today to set up a free and confidential consultation.

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