Grant W. Morgan v. Raymours Furniture Company, Inc.
128 A.3d 1127, 443 N.J. Super. 338 (2016)
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Rule of Law:
An employer cannot enforce an arbitration agreement contained within an employee handbook when the handbook includes a clear and prominent disclaimer stating that its provisions are not promissory or contractual in nature. Such a disclaimer prevents the formation of a clear and unambiguous agreement by the employee to waive their right to sue in court.
Facts:
- Grant W. Morgan was an employee of Raymours Furniture Company, Inc.
- Raymours maintained an employee handbook which contained an arbitration clause, but also a disclaimer stating its 'rules, regulations, procedures and benefits... are not promissory or contractual in nature and are subject to change by the company.'
- Morgan electronically acknowledged receipt of this handbook.
- Morgan complained to Raymours of age discrimination in the workplace.
- Following his complaint, Raymours presented Morgan with an ultimatum to either sign a separate, stand-alone arbitration agreement or his employment would be terminated.
- Morgan refused to sign the stand-alone arbitration agreement.
- Raymours subsequently terminated Morgan's employment.
Procedural Posture:
- Grant W. Morgan filed a lawsuit against Raymours Furniture Company, Inc. and two of its representatives in the Superior Court of New Jersey, Law Division (trial court).
- Defendants unsuccessfully moved for a change of venue.
- Defendants then filed a motion to compel arbitration.
- The trial court denied the defendants' motion to compel arbitration.
- Defendants, as appellants, appealed the trial court's interlocutory order to the Superior Court of New Jersey, Appellate Division, with Morgan as the appellee.
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Issue:
Does an arbitration clause in an employee handbook bind an employee to arbitrate their claims when the handbook also contains a disclaimer stating that its contents are not contractual and are subject to change by the employer?
Opinions:
Majority - Fisher, P.J.A.D.
No, the arbitration clause is not binding. An employee must 'clearly and unambiguously' agree to waive their right to sue. It is inequitable for an employer to disclaim the contractual nature of its handbook to avoid creating binding obligations (per Woolley v. Hoffman-LaRoche), while simultaneously seeking to enforce an arbitration clause within that same handbook as a binding contract. The court rejected this 'have your cake, and eat it too' approach, citing estoppel principles. Morgan's acknowledgment of having 'received' and 'understood' the handbook does not constitute a clear agreement to be bound by its terms, especially when the handbook itself states it is not a contract. Therefore, Morgan did not clearly and unambiguously waive his valued right to sue.
Analysis:
This decision reinforces the high standard required for waiving the right to a judicial forum, as established in Atalese v. U.S. Legal Servs. Grp., L.P. It solidifies the principle that an employer cannot selectively enforce provisions of an employee handbook as contractual while simultaneously disclaiming the handbook's overall contractual nature. This ruling prevents employers from using a 'Woolley disclaimer' as both a shield against unintended employment contract claims and a sword to enforce terms favorable to them, like arbitration. Consequently, employers in New Jersey seeking enforceable arbitration agreements are strongly advised to use stand-alone agreements that are clearly presented as binding contracts, rather than embedding them in non-contractual handbooks.
