Martindale v. Sandvik, Inc.
800 A.2d 872, 2002 N.J. LEXIS 1073, 173 N.J. 76 (2002)
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Rule of Law:
A clear and unambiguous arbitration agreement contained within an employment application is a valid and enforceable contract, supported by the employer's consideration of the application and subsequent hiring, and is not an unconscionable contract of adhesion merely due to the unequal bargaining power between the employer and applicant.
Facts:
- In 1994, Maureen Martindale applied for a position as a Benefits Administrator with Sandvik, Inc.
- As part of the application process, Martindale signed a four-page 'Application for Employment' which contained a clause waiving her right to a jury trial and agreeing to arbitrate all employment-related disputes.
- The agreement stated that she had the right to consult with an attorney before signing and that Sandvik gave applicants the opportunity to ask questions or take the application home for review.
- Sandvik hired Martindale.
- In January 1996, Martindale informed Sandvik that she was pregnant and subsequently went on disability leave due to pregnancy-related medical problems.
- After giving birth, Martindale was granted family and medical leave.
- Prior to the start of her family leave, Sandvik notified Martindale that her position was being eliminated due to a corporate reorganization.
Procedural Posture:
- Maureen Martindale filed a complaint against Sandvik, Inc. in the New Jersey Law Division (trial court) alleging a violation of the New Jersey Family Leave Act (FLA).
- Sandvik removed the case to the U.S. District Court for the District of New Jersey.
- The case was remanded back to the Law Division.
- Martindale amended her complaint to add a claim under the New Jersey Law Against Discrimination (LAD).
- Sandvik filed a motion in the trial court to compel arbitration and stay the proceedings.
- The trial court granted Sandvik's motion, compelling arbitration and dismissing Martindale's complaint without prejudice.
- Martindale (as appellant) appealed the trial court's order to the Appellate Division.
- The Appellate Division affirmed the trial court's decision in favor of Sandvik (as appellee).
- The Supreme Court of New Jersey granted Martindale's petition for certification.
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Issue:
Does a mandatory arbitration agreement, included as a condition of employment within a job application, constitute a valid and enforceable contract that waives an employee's right to a jury trial for statutory discrimination claims?
Opinions:
Majority - LaVecchia, J.
Yes, a mandatory arbitration agreement in a job application is a valid and enforceable contract. There is a strong federal and state policy favoring arbitration. The employer's willingness to consider the applicant for employment constitutes sufficient consideration to form a binding contract. Such an agreement is not automatically an unenforceable contract of adhesion simply because of unequal bargaining power, especially where, as here, the applicant was an educated professional who was given the opportunity to review the document and consult with counsel. The broad language waiving the right to a jury trial for 'all disputes relating to my employment' was sufficiently clear and unambiguous to encompass statutory claims under the Family Leave Act (FLA) and the Law Against Discrimination (LAD).
Dissenting - Stein, J.
No, such an agreement should be unenforceable as a matter of public policy. The vast disparity in bargaining power between a job applicant and a potential employer makes the agreement a contract of adhesion. A prospective employee is in a vulnerable position and unlikely to refuse to sign a pre-printed form if it is a precondition for being considered for a job. The agreement is also inequitable because it lacks mutuality, binding only the employee to arbitration. Public policy should prevent employers from taking unfair advantage of prospective employees by requiring them to waive fundamental rights, such as a jury trial, as a condition of being considered for employment.
Analysis:
This decision significantly strengthens the enforceability of mandatory arbitration clauses in the employment context within New Jersey, extending their validity to pre-employment applications. It establishes that an employer's promise to consider an applicant is adequate consideration for the applicant's waiver of their right to a jury trial. The ruling sets a high bar for employees attempting to invalidate such agreements as contracts of adhesion, diminishing the significance of unequal bargaining power alone. This precedent makes it more difficult for employees to bring statutory discrimination and other employment-related claims in court, channeling them into arbitral forums as dictated by initial hiring documents.
