SNIGER v. CVTECH GROUP, INC. et al
Filing
28
OPINION. Signed by Judge Noel L. Hillman on 9/26/2012. (TH, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
LEO SNIGER,
Plaintiff,
v.
CIVIL ACTION NO. 11-6130
(NLH)(AMD)
CVTECH GROUP, INC., THIRAU
LTEE, THIRAU LLC, RIGGS
DISTLER & CO., INC., ANDRE
LARAMEE, Individually, AND
ALAIN GAGNE, Individually,
Defendants.
OPINION
APPEARANCES:
VERONICA W. SALTZ
SALTZ POLISHER P.C.
993 OLD EAGLE SCHOOL ROAD
SUITE 412
WAYNE, PA 19087
On behalf of plaintiffs
BRUCE E. BARRETT
MARGOLIS EDELSTEIN
100 CENTURY PARKWAY
SUITE 200
MOUNT LAUREL, NJ 08054
On behalf of defendants
HILLMAN, District Judge
This case presents the issue of whether an arbitration
agreement from an employment contract signed in 2009 survives a
1
subsequent letter agreement signed in October of 2010.
Presently
before the Court is Defendants’ motion to dismiss Plaintiff’s
complaint and compel arbitration.
The Court has considered the
parties’ submissions, and decides this matter pursuant to New
Jersey law.
For the reasons expressed below, Defendants’ motion to
dismiss the complaint pursuant to the contractual arbitration
requirement and compel arbitration is granted.
BACKGROUND
In July 2009, Defendant, Thirau LLC, purchased the company,
Defendant Riggs Distler, which was owned by Plaintiff Leo Sniger.
Following the acquisition, Riggs Distler entered into an employment
agreement with Plaintiff on or about July 21, 2009.
Later, in May
2010, Plaintiff was asked to assume the position of President for
Thirau LLC.
While serving as both President and CEO of Riggs
Distler and President of Thirau, Plaintiff reported to Defendants
Andre Laramee and Alain Gagne.
After assuming the responsibilities as President of Thirau LLC
in May of 2010, Plaintiff claims that he discovered that Thirau had
“inadequate accounting controls, policies, and/or procedures
relating to the financial aspects of the company . . . .”
Amend. Comp. at 5.)
(Pl.
Following an independent financial review,
Plaintiff alleges that he confirmed that there were numerous errors
in billing, which he attempted to communicate to Laramee and Gagne
on several occasions.
After raising these concerns, however,
2
Plaintiff claims that Defendants Laramee and Gagne became angry and
advised Plaintiff that all of his recommendations were being
rejected.
Plaintiff further claims that in August or September 2010,
Laramee asked him to purchase approximately $3 million of equipment
for Riggs Distler.
“Reasonably believing that what Defendant
Laramee had directed him to do . . . was fraudulent and illegal,”
Plaintiff refused to participate in the purchase.
(Id. at 7.)
At
an executive meeting on October 7, 2010, Plaintiff claims that he
again expressed his belief to Laramee and Gagne that the Defendants
were engaging in “fraudulent, deceptive, and illegal activities.”
(Id. at 8.)
On October 18, 2010, Laramee and Gagne advised Plaintiff that
he was being terminated from both Thirau and Riggs Distler “without
cause” and “effective immediately.”
On October 19, 2010, the
parties executed a new employment agreement in letter form, which
Plaintiff claims effectively withdrew his termination from Riggs
Distler only, and served to supersede his original Employment
Agreement dated July 21, 2009.1
Plaintiff worked under these terms until January 27, 2011,
when he was informed that he would be terminated the following day.
1
The new letter agreement stated that it was “without
prejudice and for settlement purposes only,” and indicated that
its purpose was to present Plaintiff with “other ways of putting
an end to the Employment Agreement with the Company.” (Def. Ex.
D.)
3
Although it is unclear whether Plaintiff was actually terminated
the next day, he continued to work for Defendants until February 1,
2011.
At some point after this, Plaintiff claims that he was
informed that Laramee had advised the Defendants’ Board of
Directors that Plaintiff had been terminated because of his wife’s
disability, which Plaintiff claims he had disclosed to and
discussed with Defendant Laramee in May 2010 through December
2010.2
As a result, Plaintiff filed suit.
Plaintiff claims that he
was terminated in retaliation for discovering and refusing to
participate in Defendants’ alleged fraudulent activities, and
because his wife’s illness would affect his job performance.
Plaintiff also claims that Defendants failed to pay him what he was
owed under his employment contract.
For those alleged violations,
Plaintiff has asserted claims under the New Jersey Conscientious
Employee Protection Act (“CEPA”), N.J. Stat. Ann. 34:19-1 et. seq.,
New Jersey Law Against Discrimination (“LAD”), N.J. Stat. Ann.
10:5-1 et. seq., and the New Jersey Wage and Hour Law, N.J. Stat.
Ann. 34:11-4.1. (Pl. Am. Comp. at 1.)3
Defendants have filed the
2
Plaintiff’s wife suffers from sarcoidoses, a progressive
disability that is a serious and debilitating lung disease.
3
Plaintiff’s amended complaint asserts a claim for a
violation of the New Jersey Wage Act (“Wage Act”) N.J. Stat. Ann.
34:11-57 et. seq., and the Court presumes he intends his claim to
arise under the New Jersey Wage and Hour Law.
4
present motion to dismiss the complaint and compel arbitration
pursuant to the contractual arbitration requirement.
DISCUSSION
A.
JURISDICTION
This Court has jurisdiction over this action pursuant to 28
U.S.C. § 1332 in that the Plaintiff and Defendants are of diverse
citizenship and the amount in controversy exceeds the sum or value
of $75,000.
B.
STANDARD OF REVIEW
A court “decides a motion to compel arbitration under the same
standard it applies to a motion for summary judgement.” Kaneff v.
Del. Title Loans, Inc., 587 F.3d 616, 620 (3d Cir. 2009) (citations
omitted).
The Court applies this standard because a motion to
compel arbitration is “in effect a summary disposition of the issue
of whether or not there had been a meeting of the minds on the
agreement to arbitrate.”
Century Indem. Co. v. Certain
Underwriters at Llyod’s, London, 584 F.3d 513, 528 (3d Cir. 2009).
As such, “the party opposing arbitration is given the benefit of
all reasonable doubts and inferences that may arise.”
F.3d at 620.
Kaneff, 587
Furthermore, “[a]s with the standard for summary
judgment, ‘[o]nly when there is no genuine issue of fact concerning
the formation of the agreement should the court decide as a matter
of law that the parties did or did not enter into such an
agreement.’”
Vilches v. The Travelers Cos., Inc., 413 Fed. Appx.
5
487, 491 (3d Cir. 2011) (quoting Par-Knit Mills, Inc. v.
Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir. 1980)).
C.
Analysis
In the present motion, Defendants argue that they entered into
a voluntary agreement to arbitrate disputes with Plaintiff, and as
such, this Court must dismiss Plaintiff’s complaint in favor of
arbitration.
Specifically, Defendants contend that the original
employment agreement required the parties to arbitrate the claims
Plaintiff has brought against them, and that the arbitration clause
remained in effect even after his termination and the subsequent
letter agreement.
Plaintiff disagrees.
Plaintiff argues that at the time of
his termination on January 28, 2011, there was no valid agreement
to arbitrate because he signed a new employment agreement in the
form of a Letter Agreement dated October 19, 2011, after being
terminated “without cause” one day before.
Furthermore, because
the new agreement did not include an arbitration clause, Plaintiff
argues that the arbitration agreement from the previous Employment
Agreement does not apply to the Letter Agreement, or,
alternatively, that the Employment Agreement was superseded by the
Letter Agreement.
Plaintiff further contends that this is
evidenced by the terms and conditions of the letter agreement
itself and Defendants’ conduct after the expiration of the Letter
Agreement.
6
It is generally recognized that arbitration is “a matter of
contract between the parties.”
First Options of Chicago, Inc. v.
Kaplan (“First Options”), 514 U.S. 938, 943 (1995).
Consequently,
while it is true that the Federal Arbitration Act establishes a
policy favoring the liberal construction of arbitration agreements
and the resolution of any doubts in favor of arbitration, the court
must also find that the parties have actually agreed to submit to
arbitration for any particular issue.
See Granite Rock Co. v.
International Broth. Of Teamsters, 130 S. Ct. 2847, 2858 (2010).
Whether the parties have agreed to arbitrate their disputes is
reserved for judicial determination unless the parties have clearly
indicated otherwise.
178 (3d Cir. 2009).
Puleo v. Chase Bank USA, N.A., 605 F.3d 172,
In making this determination, a court must
“inquire into (1) whether a valid agreement to arbitrate exists and
(2) whether the particular dispute falls within the scope of that
agreement.”
Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529,
532 (3d Cir. 2005).
As a general policy, “an order to arbitrate
the particular grievance should not be denied unless it may be said
with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the dispute.”
Century
Indem. Co. v. Certain Underwriters at Llyod’s, London, 584 F.3d
513, 556 (3d Cir. 2009) (citing AT & T Techs., Inc. v.
Communications Workers of Am., 475 U.S. 643, 650 (1986)); Haskins
v. First American Title Ins. Co., Civ. No. 10-5044, 2012 WL 1599998
7
(D.N.J. May 4, 2012); see also Garfinkel v. Morristown Obstectrics
& Gynecology Associates, P.A., 773 A.2d 665, 670 (N.J. 2000)
(noting that New Jersey law affords arbitration a ”favored status”
and instructing that “an agreement to arbitrate should be read
liberally in favor of arbitration” (quotation omitted)).
If the court determines that a valid and enforceable agreement
exists, then the decision to enforce arbitration is mandatory. Dean
Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985); Great
Western Mortg. Corp. v. Peacock, 110 F.3d 222, 228 (3d Cir. 1997)
(enforcement of arbitration mandatory).
It is generally accepted that federal courts should apply
“state-law principles that govern the formation of contracts . . .
. to assess whether the parties agreed to arbitrate a certain
matter.”
Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772,
2783 (2010) (quoting First Options of Chicago, Inc. v. Kaplan
(“First Options”), 514 U.S. 938, 944 (1995)); Battaglia v.
McKendry, 233 F.3d 720, 724 (3d Cir. 2000); Gilbert v. Fox & Roach,
LP, No. Civ. 05-688 (RBK), 2005 WL 2347121 (D.N.J. Sept. 23, 2005).
Here, Plaintiff does not contest that his claims are within
the scope of the arbitration agreement, if it were held valid.4
4
Claims such as the ones brought by plaintiff here have
been held to be arbitrable. See Singer v. Commodities Corp., 292
N.J. Super. 391 (N.J. Super. Ct. App. Div. 1996) (enforcing
arbitration on a CEPA claim); Young v. Prudential Ins. Co., 688
A.2d 1069 (N.J. Super. Ct. App. Div. 1997) (enforcing
arbitration on a LAD claim); Vilches v. The Travelers Cos.,
Inc.,413 Fed. Appx. 487, 494 (3d Cir. 2011) (vacating the
8
Instead, he contends that no valid agreement to arbitrate exists at
all.
Accordingly, this Court must only determine whether or not a
valid agreement to arbitrate existed when the Plaintiff was
terminated on January 28, 2011. In order to do so the Court must
look at the parties’ agreements.
The July 2009 Employment Agreement
The original employment agreement included a provision for
termination and an attached arbitration agreement.
As to
termination, Section 5.2 of the employment agreement explicitly
established the conditions for termination “without cause.”
Section 5.2 states:
The Company may terminate the Employee’s employment under this
Agreement at any time upon ninety (90) days’ prior written
notice. The Company may, at its sole discretion, by notice in
writing, specify an earlier termination date, in which case,
the Employee shall be paid the outstanding portion of salary
equal the ninety (90) days’ notice (subject to normal
withholding and other deductions). (Def. Ex. B, § 5.3.)
Appendix 2 of the July 2009 employment agreement outlines the
Arbitration Agreement, stating, that “both the Company and Employee
agree that neither shall initiate nor prosecute any lawsuit or
administrative action . . . in any way related to any claim covered
by this Arbitration Agreement.”
As to modification or revocation, section 12 of the
District Court’s decision and ordering arbitration for claims
arising under the FLSA and the New Jersey Wage and Hour law).
9
Arbitration Agreement provides:
This arbitration agreement shall survive the termination of
Employee’s employment. It can only be revoked or modified by a
writing signed by the parties which specifically states an
intent to revoke or modify this Arbitration Agreement.
When Plaintiff signed the 2009 agreement, he initialed each
page of the entire document, including all appendices, and signed
the last page of each particular appendix, thereby representing
that he read and understood all agreements between himself and the
Company.
Plaintiff does not contest the validity of the original
Employment Agreement, or that he agreed to its terms including the
arbitration agreement.
The October 2010 Letter Agreement
The letter agreement that Plaintiff and Defendants entered
into after Plaintiff’s termination from Riggs Distler was rescinded
stated that its purpose was to present Plaintiff with “‘other ways’
of putting an end to [your] Employment Agreement with the Company.”
The Letter Agreement included the following three provisions:
1.
2.
3.
In order to facilitate this transition with his
successors, [Plaintiff] agrees to assume all of his
normal functions and duties under the supervision of
Alain Gagne, Chief Operating Officer, as per stipulated
in the Employment Agreement executed July 21, 2009, for a
period of three (3) months starting October 19, 2010.
At the end of the three (3) month period and providing
that [Plaintiff] has complied with every obligation of
the Employment Agreement referred to above, Leo Sniger
will receive, subject his execution of a formal
Separation Agreement and Release . . . a separation
payment in an amount equal to ninety (90) days of his
current base salary. . . .
[Plaintiff] also agrees to release and discharge the
Company and any and all of its predecessors . . . in full
10
and final settlement of any and all claims . . . .
Plaintiff interprets the two agreements much differently than
Defendants.
Plaintiff argues that his claims are not barred from
litigation because they arose on or after October 19, 2010, the
same day he signed the Letter Agreement and one day after the
Employment and Arbitration Agreements were terminated.
Plaintiff then argues that the provision “normal functions and
duties . . . as per stipulated in the Employment Agreement” in the
October 2010 Letter Agreement refers only to a particular appendix
outlining the “Employee Functions and Responsibilities” originally
assigned to Plaintiff and does not evidence an intent that the
original employment agreement was still in effect.
Given this,
Plaintiff concludes that it was not the intent of the parties to
include the Arbitration Agreement as part of the Letter Agreement,
and therefore, arbitration is improper.
In response, Defendants present two alternative arguments
which both lead to arbitration.
Defendants argue that regardless
of whether the original agreement was superseded by the letter
agreement, the claims here arose from Plaintiff’s employment from
July 2009 through October 2010 – when the original agreement was
still in effect – and thus are subject to arbitration.
In the
alternative, Defendants argue that the issue of arbitration after
11
employment ends is dealt with in the contract itself.5
Considering the entirety of the facts in light of the
contractual terms, the surrounding circumstances,6 and the purpose
of both contracts, the Court finds Defendant’s argument to be
persuasive.
Although an agreement to arbitrate generally does not
continue in effect after the underlying contract expires, a
provision relating to dispute resolution, in some circumstances,
may survive the end of a contract.
See Litton Fin. Printing Div.
5
The Court notes that the Letter Agreement is subject to an
interpretation not argued by the parties. The Letter Agreement
could be read to constitute the 90 day written notice required by
the original Employment Agreement when the Plaintiff was
terminated “without cause.” Because, however, neither party
advanced this interpretation, and this reading does not affect
the outcome of Defendants’ motion, the Court will not consider it
further.
6
Plaintiff opaquely references Defendants’ conduct as
evidence of their intent to “enter into a new employment
agreement for a limited duration” and abandon the 2009 contract
(Pl. Brief in Opp. to Motion to Compel at 20.) While it is true
that the court may consider a contract abandoned where one party
acts in a manner inconsistent with the existence of the contract,
New Jersey law requires that those actions be “positive and
unequivocal.” County of Morris v. Fauver, 707 A.2d 958, 965-66
(N.J. 1998) (quoting Anstalt v. F.I.A. Ins. Co., 749 F.2d 175,
178 (3d Cir. 1984)). Abandonment of a contract also generally
requires that the entire contract be terminated. Fauver, 707
A.2d at 965. Accordingly, in Fauver the Court found that the
“words and actions of the parties, while demonstrating mistaken
assumptions about their agreement, did not evidence a definite
mutual intention to abandon the entire contract.” Id. at 966.
Here, Plaintiff has presented insufficient evidence to establish
abandonment of the Employment Agreement. While the Defendants
did continue to employ Plaintiff, the Letter Agreement itself
references the original Employment Agreement in more than one
location, as well as using the exact terms as the conditions for
payment.
12
v. NLRB, 501 U.S. 190, 208 (1991); Luden’s Inc. v. Local Union No.
6 of Bakery, Confectionery & Tobacco Workers Int’l Union, 28 F.3d
347, 363-64 (3d Cir. 1994).
For example, the Third Circuit in Townsend applied New Jersey
law in a similar situation and determined that the arbitration
agreement did survive the end of the contact.
Townsend v. Pinnacle
Ent., Inc., 457 Fed. Appx. 205, 209 (3d Cir. 2011).
Noting that
there, as here, the plaintiff’s previous contract with the
defendant included an arbitration agreement, the Third Circuit
looked to the text of the original contract in order to determine
whether arbitration was appropriate.
209.
Townsned, 457 Fed. Appx. at
Given that the original contract explicitly established that
“the agreement to arbitrate shall survive the expiration of this
Agreement. . .,” the Third Circuit found that arbitration in a
dispute relating to the subsequent contract was proper despite the
fact that the contract did not specifically reference the previous
arbitration agreement.
Id.
In support of its conclusion, the
Third Circuit noted that the provision evidenced “the intent of the
parties to arbitrate all disputes . . . not simply those which
[arose] during the [first term]”
Id.
As a result, the agreement
to arbitrate was valid at the time of the termination “without
regard” to the agreement.
Id.
The same conclusion must be found here.
The arbitration
provision in the 2009 agreement explicitly provides that the
13
arbitration agreement would survive the termination of Plaintiff’s
employment unless revoked or modified by a writing specifically
intended to revoke or modify the Arbitration Agreement.
The
agreement also provides that neither party shall file a lawsuit for
any claims arising under the employment agreement.
When combined,
both sections address the specific situation, as here, where a
former employee seeks to resolve any conflict with his former
company.
Moreover, these provisions are not ambiguous.
They evidence
the intent of the parties to arbitrate all disputes arising out of
the employment relationship between Plaintiff and Defendants, not
simply those that arose prior to the October 2010 Letter Agreement.
Because there is no writing that evidences a specific intent to
revoke the arbitration agreement, the Arbitration Agreement was
valid during Plaintiff’s entire tenure with Defendants, including
when Plaintiff’s claims against Defendants arose.
Accordingly,
because of the valid agreement to arbitrate Plaintiff’s claims
against Defendants, this Court is required to compel arbitration.
Conclusion
For the foregoing reasons, Defendants’ motion to dismiss the
complaint pursuant to contractual arbitration requirement and
compel arbitration will be granted.
An appropriate order will be
entered.
Date: September 26, 2012
At Camden, New Jersey
s/ Noel L. Hillman
Noel L. Hillman, U.S.D.J
14
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?