“BorgataBabes” Lawsuit Revived As Trial Court Is Chided For Ignoring Appellate Division

Some of the best parts of the movie “My Cousin Vinny” are the interactions between Vinny, played by Joe Pesci, and Judge Haller, played by the late Fred Gwynne. In one scene, Judge Haller admonishes Vinny for failing to dress appropriately for court. When Vinny comes to court the next day wearing exactly the same thing he had on the day before, the following exchange occurs:

Judge Haller: Mr. Gambini, didn’t I tell you that the next time you appear in my court that you dress appropriately?

Vinny: You were serious about that?

Judge Haller was serious, and Vinny spent a night in jail as a result. I was reminded of this scene when I read Schiavo v. Marina District Development Company, LLC d/b/a Borgata Casino Hotel & Spa, where the Appellate Division had to remind the trial court that it was serious about a prior decision.

Schiavo has been pending for more than a decade. Plaintiffs worked as “costumed beverage servers” in the defendant’s “BorgataBabes” program. (Disclaimer: This is the actual name of the program, not my name for it.) They claimed that “defendant’s adoption and application of personal appearance standards (PAS) subjected them to illegal gender stereotyping, sexual harassment, disparate treatment, disparate impact, and . . . resulted in adverse employment actions.”

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Being A Compulsive Gambler Is No Defense To Breaching Line Of Credit With Casino

In Harrah’s Atlantic City Operating Co. v. Dangelico, plaintiff, a casino, lent defendant, a “casino gambler,” $160,000 against a $200,000 line of credit. The loan was secured by checks drawn on defendant’s bank account, coupled with defendant’s representation that he had sufficient funds in that account to cover the loan. Want to bet how this story unfolds?

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Three Contracts, But Only One Arbitration Provision, Means Arbitration Cannot Be Compelled

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

What happens when the same parties enter into three contracts, all related to the same underlying services, the first two of which require the parties to litigate any disputes while the third provides that the parties “may” settle any disputes through binding arbitration? When a dispute arises, do you have to sue in court, can you arbitrate instead, if one side chooses arbitration, is the other side stuck with that choice? These were the issues in the Appellate Division’s recent decision in Medford Township School District v. Schneider Electric Building Americas, Inc.

In Medford Township, plaintiff contracted with defendant to “design and implement upgrades to several of [plaintiff’s] schools and its transportation and operations center.” The initial contract between the parties did not contain an arbitration provision. To the contrary, it contained a provision requiring that any disputes be resolved under the law of the state where the services were provided, and in the “federal, state, or municipal courts serving the county in which the services [were] performed.”

Some time later, plaintiff issued a request for proposals (RFP) for a related job. The RFP did not contain an arbitration provision. Instead, it required the winning bidder to agree that “any action or proceeding that [arose] in any manner out of performance of the RFP [or the resulting contract] . . . shall be litigated in the Superior Court of New Jersey, Burlington County.”

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Supreme Court : Classwide Arbitration Unavailable Under Ambiguous Agreement

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Keith Richards once said: “I look for ambiguity when I’m writing because life is ambiguous.” This would probably be number one on the list of things a lawyer would never say. Lawyers generally do not like ambiguity. Courts don’t like it either, including the U.S. Supreme Court, and including when it evaluates the availability of class arbitration under an arbitration agreement. Several years ago, in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., the Supreme Court held that courts could not compel class arbitration when the underlying agreement was “silent” on the issue. In Lamps Plus, Inc. v. Varela, the U.S. Supreme Court extended this holding to ambiguous agreements, holding that class arbitration is not available under an arbitration agreement that is ambiguous about the availability of such arbitration.

Plaintiff in Lamps Plus was a company that sold, you guessed it, “lighting fixtures and related products.” In 2016, the company suffered a data breach that revealed the tax information of approximately 1,300 of its employees. Soon after, a fraudulent tax return was filed in defendant’s name. He sued in California federal court on behalf of himself and a putative class of employees whose tax information had been compromised. But, like most of plaintiff’s employees, defendant had signed a broad arbitration agreement when he started working at the company. Thus, in response to defendant’s complaint, plaintiff moved to compel arbitration on an individual, not classwide, basis. The district court granted the motion to compel arbitration, but rejected plaintiff’s request for individual arbitration. The U.S. Court of Appeals for the Ninth Circuit affirmed.

The Ninth Circuit determined that the arbitration agreement was ambiguous on the issue of classwide arbitration. So it applied the state law doctrine of contra proferentem – an equitable principle under which any ambiguities in a contract are construed against the drafter – and construed this ambiguity against plaintiff. The Ninth Circuit held that Stolt-Nielsen was not controlling because the arbitration agreement in that case was silent on classwide arbitration, while the arbitration agreement in Lamps Plus was ambiguous on the issue. The Ninth Circuit used contra proferentum to resolve that ambiguity.

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New Trial Ordered Where Juror Objected To Defendant Not Putting Hand On Bible When Being Sworn In

Trial lawyers warn young lawyers to be careful because jurors are always watching. You never know when what you do or say will be seen by a juror and color his or her impressions of you. This can sometimes make you paranoid. I had a Starbucks coffee with me on the first day of a jury trial but, after noticing several jurors with Dunkin Donuts coffee drinks, I switched to Dunkin. I doubt this was crucial to the jury’s deliberations, but sometimes the results are far more significant. Such was the case in Davis v. Husain, where a juror’s observation that defendant did not place his hand on the Bible when being sworn in led to the jury’s verdict being reversed and defendant being granted a new trial.

In Davis, plaintiff sued defendant under New Jersey’s Law Against Discrimination. The jury ruled in plaintiff’s favor, and awarded her damages. After the trial, the judge met ex parte with the jury. During that meeting, “a female juror mentioned that [plaintiff] had not placed his hand on the Bible when taking the oath.” The judge told counsel about this revelation, but refused to make any further inquiries of the jurors or grant a new trial.

Defendant appealed the jury’s verdict, and the case eventually made its way to the New Jersey Supreme Court, which “flatly prohibit[ed] ex parte post-verdict communications between trial judge and jurors,” like the ones that had occurred in Davis. (That decision can be found here.) The Supreme Court remanded the matter to a different trial judge to determine whether the juror’s “actions or comments affected others on the panel,” and whether “a good case showing [could be] made that the jury’s decision was tainted by misconduct.”

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Words Matter! “Acknowledgement” Of Company Policy Is Not “Agreement” To Be Bound By It

“This case exemplifies an inadequate way for an employer to go about extracting its employees’ agreement to submit to binding arbitration for future claims and thereby waive their rights to sue the employer and seek a jury trial.”

If you are an employer, and a court begins its decision this way, it is probably not going to be a good day for you. Such was the case for the defendant in Skuse v. Pfizer, Inc.

I know I have been writing a lot lately about arbitration agreements, and Skuse deals with this same topic. But it is different from other recent cases, and in an interesting way. In most of the cases I have written about, the question was whether a plaintiff’s claims fell within the scope of an arbitration agreement and, if so, whether the agreement adequately informed plaintiff that he or she waived the right to have those claims heard in court, by a jury. In Skuse, plaintiff did not argue that the text of defendant’s mandatory arbitration policy insufficiently explained the policy itself or the rights being waived. Instead, plaintiff challenged the the manner in which the policy was delivered to employees.

In Skuse, defendant sought to “extract[ ] its employee’s agreement” to arbitrate (as the Appellate Division characterized it) through what the company called a “training module.” Employees were sent an email with a link to a presentation that described the company’s mandatory arbitration policy. They were “assigned” the task of “reviewing” the presentation, which was comprised of four slides. The first slide explained that agreeing to the policy was a requirement of continued employment with the company, and indicated that employees would be required to “acknowledge” receipt of the policy in a later slide. The second slide contained a link to a “Resources” tab that contained the company’s five-page, single-spaced arbitration policy, which could be reviewed and printed by employees. The third slide contained a paragraph stating that the employee understood that agreeing to the policy was a requirement of employment and requiring the employee to click on a “rectangular box with rounded corners,” next to which was printed: “CLICK HERE to acknowledge.” This slide also indicated that even if employees did not click the acknowledgement, they would be deemed to have acknowledged the policy if they remained with the company for 60 days after receiving the presentation. The fourth and final slide thanked the employees for “reviewing” the arbitration policy.

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Where Are We Arbitrating Again? Parties Must Identify Forum And Process For Arbitration Provision To Be Enforceable

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

arbitration (PD)New Jersey courts frequently invalidate arbitration provisions that do not clearly and unambiguously explain that plaintiffs are waiving the right to seek relief in court and have their claims decided by a jury (see here, here, and here for examples). In Flanzman v. Jenny Craig, Inc., the Appellate Division invalidated one for an even more basic reason — the provision did not identify any arbitration forum or any process for conducting the arbitration.

In Flanzman, plaintiff worked for defendant. After she was terminated, she sued, alleging age discrimination. Defendant moved to compel arbitration under an agreement with plaintiff that provided:

Any and all claims or controversies arising out of or relating to [plaintiff’s] employment, the termination thereof, or otherwise arising between [plaintiff] and [defendant] shall, in lieu of a jury or other civil trial, be settled by final and binding arbitration. This agreement to arbitrate includes all claims whether arising in tort or contract and whether arising under statute or common law including, but not limited to, any claim of breach of contract, discrimination or harassment of any kind . . . [Plaintiff] will pay the then-current Superior Court of California filing fee towards the costs of the arbitration (i.e., filing fees, administration fees, and arbitrator fees).

Plaintiff did not agree to this when she began her employment with defendant. Instead, defendant presented it to her 20 years after she was hired, and plaintiff signed it to keep her job.

The flaw in the provision is that, even if it adequately advised plaintiff that she was giving up her right to a jury trial, it says “nothing about what forum generally replaced that right.” The trial court recognized this shortcoming, but instead of declaring the provision unenforceable, simply allowed plaintiff to choose the forum. Plaintiff appealed, arguing that the arbitration agreement lacked mutual assent and was therefore invalid.

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