BLOOM v. JERSEY CITY MUNICIPAL UTILITIES AUTHORITY et al

Filing 25

OPINION. Signed by Judge William J. Martini on 2/7/08. (gh, )

B L O O M v. JERSEY CITY MUNICIPAL UTILITIES AUTHORITY et al

D o c . 25

UNITED STATES DISTRICT COURT F O R THE DISTRICT OF NEW JERSEY J E N N I F E R BLOOM, Plaintiff, M A S T E R FILE: 06-CV-3526 (W J M )

v.

OPINION H O N . WILLIAM J. MARTINI

J E R S E Y CITY MUNICIPAL UTILITIES A U T H O R I T Y , THE ESTATES OF GERARD L E T I Z I A , HOWARD JACKSON, GEORGE K E L L Y , EILEEN GAUGHAN, KATHLEEN H A R T Y E , KATHLEEN CURRAN, W I L L IA M MACCHI, THOMAS KANE, B A R B A R A GORDON, ELNARDO W E B S T E R , JR., THE CITY OF JERSEY C IT Y , JERRAMIAH HEALY, CARL C Z A P L I C K I , BRIAN O'REILLY, Defendants.

D . Gayle Loftis 2 1 0 River Street H a c k en s a c k , NJ 07601 (C o u n se l for Plaintiff) L e o n B. Piechta O 'D o n n e ll, Piechta 4 1 4 Eagle Rock Avenue S u ite 206 W e st Orange, NJ 07052-4211

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P e te r J. King 7 5 B North Beverwyck Road P .O . Box 375 L a k e Hiawatha, NJ 07034 C h a rle s P. Daglian 3 4 ­ 3 5 Jones Street (A t Journal Square) J e rs e y City, NJ 07306 T e rre n c e J. Bolan B o l a n Jahnsen Reardon, Esqs. 8 3 0 Broad Street P .O . Box 7760 S h r e w s b u ry, NJ 07702 (C o u n se l for Defendants)

W I L L I A M J. MARTINI, U.S.D.J.:

S e v e r a l Defendants in this case have moved on summary judgment to dismiss P la in tif f 's claims. These Defendants argue that Plaintiff's claims are arbitrable under an a g re e m e n t that Plaintiff entered with Defendant Jersey City Municipal Utilities Authority ( " JC M U A " ) . This Court finds that Plaintiff did enter into an agreement to arbitrate these c la im s against JCMUA and its officials both in their individual and official capacities but th a t the obligation to arbitrate does not extend to her claims against the other Defendants in this case. Accordingly, the Court stays this case until the conclusion of Plaintiff's a rb itra tio n against JCMUA.

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I.

F A C T S AND PROCEEDINGS T h is case centers around the scope and enforceability of an arbitration agreement

b e tw e e n Plaintiff and Defendant Jersey City Municipal Utilities Authority ("JCMUA"). The issue is which of Plaintiff's claims--if any--she must submit to arbitration under this a g re e m e n t. A. T h e Arbitration Agreement

P la in tif f was the Director of Administration and Financial Management for JC M U A , a municipal instrumentality that manages the sewage and water systems in Je rse y City. (Compl. ¶¶ 2, 38.) JCMUA policies established an alternative dispute re s o lu tio n procedure, which included arbitration. (Mot. for Summ. J. Ex. B.) J C M U A informed its employees of this procedure by issuing them a Policies and P r o c e d u re s Manual, which contained an array of JCMUA policies and procedures. (Ex. B .) The manual provided, inter alia, that "JCMUA has established an Alternative Dispute R e so lu tio n Procedure Program ("ADR" or "Program") for all matters involving employee d is p u te s and discipline." (Ex. B.) The manual provided that the final step of the program w o u ld consist of arbitration: "If an employee is not satisfied with the results of the In te rn a l Meeting and the issue falls within the scope of the Arbitration Policy, the e m p lo ye e may request arbitration, which is the last step of the Alternative Dispute R eso lutio n Procedure Program." (Ex. B.) With the exception of the alternative dispute resolution program, JCMUA intended

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th a t the Policies and Procedures Manual would not constitute binding contract. They m e re ly required each employee to sign an Employee's Acknowledgment of Receipt of M a n u a l ("Acknowledgment"). (Mot. for Summ. J. Ex. D.) This document stated, in r e le v a n t part, as follows: I understand that the policies and procedures described in this M a n u a l are neither a promise of employment nor a promise of c o n d itio n s of employment. . . . I further understand that the c o n te n ts of the Manual are for information only and are not in te n d e d to create or constitute a contract. I understand the M a n u a l is only a brief summary of benefits currently offered b y the JCMUA and an overview of some of its work rules and p o lic ie s . (Ex. D.) W ith respect to the alternative dispute resolution program, however, JCMUA s o u g h t to create a binding agreement with its employees. JCMUA required each e m p lo ye e to sign an Employee's Acknowledgment of Receipt and Agreement to the JC M U A 's Alternative Dispute Resolution Procedures ("Arbitration Agreement"). (Mot. f o r Summ. J. Exs. D, E.) This document stated, in relevant part and in contrast to the d o c u m e n t mentioned above, as follows: I understand that by accepting employment and being able to re c eiv e increases in compensation and benefits, I am agreeing to the important term and condition of my employment that I w ill use JCMUA's internal and external employment dispute re s o lu tio n process to resolve legal claims against JCMUA -- th e re f o re , rather than go to court or to a government agency f o r a hearing to decide my legal claim, I will submit my e m p l o ym e n t related legal claims except workers' c o m p e n s a tio n and unemployment compensation to final and b in d in g neutral third party arbitration. I understand further th a t this term of my employment replaces and supersedes any 4

p rio r agreement concerning this term and cannot be changed in any way except in writing signed by me and the Executive D ire c to r of the JCMUA . . . . (Ex. E.) J C M U A issued these documents to Plaintiff two separate times during the relevant p e rio d of her employment. JCMUA issued a set of these documents to Plaintiff initially in 2004. (Exs. D, E.) At that time, Plaintiff signed both the Acknowledgment and the A r b itr a tio n Agreement. (Exs. D, E.) JCMUA then in 2005 issued another set of these d o c u m e n ts to Plaintiff with only minor alterations that are not relevant here. (Mot. for S u m m . J. Ex. C.) Plaintiff never signed this second set of documents. (Opp'n to Mot. for S u m m . J. 1.) B. P la in tiff's Claims

P lain tiff alleges that in 2004 she began to discover that JCMUA was engaging in u n e th ica l and illegal acts concerning, inter alia, whether JCMUA was properly w ith h o ld in g its employees' wages and benefits. (Compl. ¶ 47.) Plaintiff alleges that w h e n she reported her discoveries to JCMUA officials, they declined to investigate. (Compl. ¶47.) Furthermore, Plaintiff alleges that JCMUA retaliated against her with both p e rs o n a l and professional attacks, which culminated in her termination. (Compl. ¶¶ 4 6 ­ 8 4 .) In response Plaintiff sued an array of parties: (1) JCMUA, (2) several JCMUA o f f ic ia ls both in their individual and official capacities, (3) Jersey City, (4) Mayor of J e rs e y City Jerremiah Healy, and (5) several Jersey City officials both in their individual

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a n d official capacities. (Compl. ¶¶ 2­34.) Plaintiff asserts many claims, including claims u n d e r 42 U.S.C. § 1983 for retaliation in violation of the First Amendment, under the N e w Jersey Law Against Discrimination, and under the New Jersey Civil Rights Statutes. C. T h e Instant Motions

N o w several Defendants file this motion for summary judgment. JCMUA and its o f f icia ls and employees whom Plaintiff has sued move to dismiss the entire suit. (Mot. f o r Summ. J. 6.) They argue that by signing the Arbitration Agreement, Plaintiff has a g re e d to arbitrate all of her claims. (Mot. for Summ. J. 6, 9­10.) They further argue that b ec au se all of her claims are subject to arbitration, this Court should dismiss the entire c a s e .1 (Mot. for Summ. J. 10.) P la in tif f opposes this motion and puts forth three arguments that she has not su b m itte d to arbitration. First, Plaintiff argues that she cannot be compelled to arbitrate h e r claims because she never signed the 2005 Arbitration Agreement. (Opp'n to Mot. for S u m m . J. 1.) Second, Plaintiff argues that the arbitration provision is void as a contract o f adhesion. (Opp'n to Mot. for Summ. J. 7.) Third, Plaintiff argues that parties cannot b e compelled to arbitrate § 1983 claims. (Opp'n to Mot. for Summ. J. 7.)

Several other Defendants have submitted similar motions or requests, all of which c o n c e r n the arbitrability of Plaintiff's claims. For example, Jersey City Business A d m in istra to r Brian O'Reilly has submitted a brief arguing that Plaintiff must arbitrate h e r claims against JCMUA but that as a Jersey City employee, O'Reilly cannot be c o m p e lled to participate in the arbitration. Given that JCMUA's motion requires this C o u rt to address the arbitrability of all Plaintiff's claims, this Opinion will not further d i sc u s s the other motions. 6

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In addition to these arguments, this Court must address which parties can compel P la in tif f to arbitrate. II. D IS C U S S IO N A rb itra b ility is a matter of contract. Goodwin v. Elkins & Co., 730 F.2d 99, 108 ( 3 d Cir. 1984). To compel arbitration of a claim, a party seeking to arbitrate must d e m o n stra te that the opposing party has contractually agreed to do so. Whether a party h a s so agreed is a question for this Court to answer as a threshold matter. First Options of C h i., Inc. v. Kaplan, 514 U.S. 938, 943 (1995). To make that determination, this Court w ill look to New Jersey's law of arbitration and contracts.2 A. P la in tiff's Obligations to Arbitrate Under the 2004 and 2005 Manuals

P la in tif f argues that she cannot be compelled to arbitrate her claims because she n e v e r signed the 2005 Agreement. This Court disagrees. The Supreme Court of New Jersey uses a two-part test to determine if a party has c o n tra c tu a lly agreed to arbitrate a claim. Leodori v. CIGNA Corp., 814 A.2d 1098, 1104, 1 1 0 5 (N.J. 2003). First, the arbitration provision must reflect an unambiguous intention

Although the arbitration of an employment contract is governed by the Federal A rb itra tio n Act, EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002), that Act in s tru c ts courts to refer to principles of applicable state law when determining the e x is te n c e and scope of an agreement to arbitrate. Volt Info. Sciences, Inc. v. Bd. of T ru s te e s of the Leland Stanford Junior Univ., 489 U.S. 468, 475 (1989); see Moses H. C o n e Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24­25 (1983) (holding that § 2 o f the FAA "create[s] a body of federal substantive law of arbitrability, applicable to any arb itratio n agreement within the coverage of the Act."). 7

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to arbitrate a claim. Id. at 1104. Second, the parties must have agreed to that provision. Id. at 1105. T h e Agreement meets the first prong of the test. A valid arbitration contract must c le a rly state its purpose to ensure that litigants know they are waiving their right to sue. Garfinkle v. Morristown Obstetrics & Gynecology Assocs., P.A., 773 A.2d 665, 673 (N.J. 2 0 0 1 ). The Manual clearly states that arbitration is a component of JCMUA's dispute re so lu tio n procedures. (Mot. for Summ. J. Ex. B.) Also, the Agreement clearly states th a t Plaintiff's accession to the Manual's arbitration provisions is a contractual condition o f her employment. (Mot. for Summ. J. Ex. E.) The Agreement accordingly satisfies the re q u ire m e n ts for a valid arbitration contract. In d e e d , the New Jersey Supreme Court has found a valid arbitration agreement in a s itu a tio n quite similar to this case, in which the employer promulgated an arbitration p o lic y in an employee manual and sought to bind its employees only to the arbitration p ro v is io n . In Leodori, the employer initially provided its employees with a handbook that d e ta ile d a number of the employer's policies and procedures, including an arbitration p ro c e d u re . Leodori, 814 A.2d at 1101 (the "You and CIGNA" handbook). With this h a n d b o o k , the employer distributed an acknowledgment form--stating only that the e m p lo ye e had received a handbook and had reviewed the policies therein--which the p lain tiff employee signed. Id. at 1101. The employer also distributed an agreement form s ta tin g that arbitration constituted a term of employment. Id. at 1101­02. The plaintiff

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e m p lo ye e did not sign this second form. Id. Subsequently, the plaintiff employee filed c laim s in state court against the employer, alleging that the employer had illegally re ta lia te d against him for reporting the employer's wrongdoing. Id. at 1103. The trial c o u rt dismissed the claims as arbitrable, but the Appellate Division reversed, and the S u p r e m e Court affirmed. Id. The Supreme Court held that the plaintiff was not bound by th e arbitration provision because she signed only the acknowledgment form--not the a rb itra tio n -a g re e m e n t form. Id. at 1106. The court found the plaintiff's refusal to sign th e agreement dispositive: "Without plaintiff's signature on the Agreement . . . we cannot e n f o rc e the arbitration provision." 3 Id. Thus the JCMUA Arbitration Agreement--if s ig n e d -- w o u ld be sufficient to bind Plaintiff to arbitrate her claims. W h e t h e r the Arbitration Agreement meets the second prong of the Leodori test d e p e n d s upon whether the Plaintiff agreed to arbitrate her claims given that she signed the 2 0 0 4 Arbitration Agreement but not the 2005 Arbitration Agreement. This Court finds th a t she did. By signing the 2004 Arbitration Agreement, Plaintiff undoubtedly agreed to a rb itr a te her claims against JCMUA, as explained in the analysis of the first prong. A m o d if ic a tio n of this contractual agreement would have required new consideration and th e clear assent of the both parties. County of Morris v. Fauver, 707 A.2d 958, 965 (N.J. 1 9 9 8 ). Here, there is no evidence of such new consideration or clear assent. The fact that

The court also noted that "[s]ignificantly, plaintiff did not sign the Agreement." Id . at 1102. 9

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J C M U A issued the 2005 Arbitration Agreement--which Leodori makes clear cannot bind P la in tif f without her signature--did not alter Plaintiff's obligation to arbitrate her claims u n d e r the 2004 Arbitration Agreement. The 2004 Arbitration Agreement thus remained in place and obligated Plaintiff to arbitrate her claims against JCMUA. B. W h e th e r the Arbitration Agreement Is an Unenforceable Contract of A d h e s io n

P la in tif f argues that the Arbitration Agreement is unenforceable as a contract of a d h e sio n . She notes that the Arbitration Agreement requires arbitration to be initiated by th e employee within a thirty-day period, and she argues that this is a particularly o p p re ss iv e term. (Opp'n to Mot. for Summ. J. 7.) This Court disagrees and finds that the A rb itra tio n Agreement is enforceable A contract of adhesion is one that is presented on a take-it-or-leave-it basis, c o m m o n ly in a standardized printed form, with little or no opportunity for negotiation o v e r terms. Martindale v. Sandvik, Inc., 800 A.2d 872, 880 (N.J. 2002). Such contracts a re not per se unenforceable, but courts will subject them to heightened scrutiny. Muhammad v. County Bank of Rehoboth Beach, Del., 912 A.2d 88, 96­97 (N.J. 2006). In determining a contract of adhesion's enforceability, courts will examine the subject m a tter of the contract, the parties' relative bargaining positions, the degree of economic c o m p u ls io n motivating the "adhering" party, and the public interest affected by the c o n tr a c t. Rudbart v. N. Jersey Dist. Water Supply Comm'n, 605 A.2d 681, 687 (N.J. 1 9 9 2 ). 10

C o n s id e rin g these factors, courts in New Jersey have upheld arbitration provisions in employment contracts--even though they were contracts of adhesion. See Martindale, 8 0 0 A.2d at 879­81. These courts have noted that requiring arbitration of employment d isp u tes is not particularly oppressive, the provision puts employees on notice of their w a iv e r of litigation rights, and that public policy favors arbitration. Martindale, 800 A.2d a t 879­81. T h e Arbitration Agreement here does not appear different in nature from that c o n sid e re d by the court in Martindale. Also, the thirty-day requirement that Plaintiff f o c u se s on does not seem particularly oppressive. Accordingly, this Court holds that the A rb itra tio n Agreement is enforceable. C. A r b itr a tio n of § 1983 Claims

F in a lly, Plaintiff argues that parties may never be compelled to arbitrate § 1983 c la im s .4 (Opp'n to Mot. for Summ. J. 7.) This Court disagrees. C o u rts have cast some doubt on the compulsory arbitration of § 1983 claims, but

Alternatively, Plaintiff argues that the Arbitration Agreement does not provide for th e arbitration of § 1983 claims. (Opp'n to Mot. for Summ. J. 7.) This is incorrect. While the Arbitration Agreement does not specifically state that § 1983 claims are a rb itra b le , it does state that claims under several other federal statutes are available (such a s the Civil Rights Act of 1964) and also subjects to arbitration claims under "any other f e d era l . . . statute . . . regarding employment . . . ." (Mot. for Summ. J. Ex. E.) Given th a t § 1983 is merely a legal vehicle for some of these claims, see Albright v. Oliver, 510 U .S . 266, 271 (1994), it would be contradictory to hold that the Arbitration Agreement p ro v id e s for arbitration of federal employment claims but not § 1983 claims. See Maine v . Thiboutot, 448 U.S. 1, 4 (1980) (holding that § 1983 creates a cause of action for v io la tio n s of all federal statutes). 11

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they have not widely held that parties may not be compelled to arbitrate such claims. In M c D o n a ld v. City of W. Branch, Mich., 466 U.S. 284, 287­92 (1984), the Court held that f e d era l courts may not accord preclusive effect to an unappealed arbitration award in a c a se brought under § 1983. The Court reasoned that "an arbitration proceeding cannot p ro v id e an adequate substitute for a judicial trial." Id. at 292. However, the Court did not h o ld that § 1983 claims could not be arbitrated and noted that courts in the future would h av e to decide how much weight to accord such arbitrations. Id. at 292 n.13 ("[A]n a rb itr a l decision may be admitted as evidence in a § 1983 action."). The Court then in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), c la rif ie d further its position with respect to arbitration of statutory claims. In Gilmer, the C o u rt disclaimed that McDonald precluded arbitration of any statutory claims, clarifying th a t McDonald rather dealt with the question of whether arbitration of contract-based c la im s precluded subsequent judicial resolution of statutory claims. Id. at 33­35. The C o u rt further held that although not all statutory claims may be appropriate for arbitration, w h e re parties have agreed to arbitrate a specific statutory claim, the party seeking to avoid a rb itra tio n bears the burden of showing that Congress intended to preclude a waiver of a ju d ic ia l forum for that claim. Id. at 26. This Court finds no clear congressional indication that parties may not be c o m p e lled to arbitrate § 1983 claims. Neither the Supreme Court nor the Third Circuit h a v e found that Congress intended to preclude compulsory arbitration of such claims.

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N o r does Plaintiff argue this. Plaintiff's sole support for her argument is a 2003 u n p u b lis h e d case: Tripp v. Renaissance Advantage Charter School, No. Civ. A. 02-9366, 2 0 0 3 WL 22519433 (E.D. Pa. October 8, 2003). This Court finds such an unpublished c a se insufficient to satisfy Plaintiff's burden to show that Congress intended to preclude § 1 9 8 3 arbitration, particularly in light of dicta in McDonald that courts may review such a rb itra tio n . Accordingly, this Court holds that JCMUA may compel arbitration of P la in t if f ' s § 1983 claims. D. W h e th e r Defendants Other Than JCMUA May Compel Arbitration

P la in tif f does not directly argue that only JCMUA may compel arbitration. However, Defendant O'Reilly disclaims an obligation to arbitrate on the ground that he w a s not a signatory to the Arbitration Agreement. Accordingly, this Court finds it p ru d e n t to determine which Defendants may compel arbitration. O n c e again, the starting point of the analysis is that arbitration is a matter of c o n tra c t. Nonsignatories to an arbitration agreement may not normally compel a rb itra tio n . See Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1 1 2 1 (3d Cir. 1993); Jansen v. Salomon Smith Barney, Inc., 776 A.2d 816, 819 (N.J. S u p e r. Ct. App. Div. 2001). However, nonsignatories of an arbitration agreement may be b o u n d if they are principals or agents of a signatory. Pritzker, 7 F.3d at 1121; Jansen, 776 A .2 d at 820. The question is whether the nonsignatory would be bound to the arbitration a g re e m e n t by traditional principles of contract and agency law. Bel-Ray Co. v. Chemrite

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(P ty) Ltd., 181 F.3d 435, 444 (3d Cir. 1999). W ith respect to Jersey City, the officials thereof, and Mayor Healy, Defendants h a v e failed to set forth a basis for holding that JCMUA was acting as their principal or a g e n t when it entered into the Arbitration Agreement. Courts have often held that m u n ic ip a l departments are not agencies of the municipality itself. See Rollins v. E llw o o d , 565 N.E.2d 1302, 1310 (Ill. 1990) ("[E]ven under Illinois agency law no agency r e la tio n s h ip between Baltimore and the police department has been proved . . . ."); Grosso v . City of Paterson, 150 A.2d 94, 98­99 (N.J. Super. Law Div. 1959) ("Neither the board o f health, its members nor its employees are agents of the municipality . . . ."). But see N. J e rs e y Dist. Water Supply Comm'n v. State Water Policy Comm'n, 29 A.2d 617, 617 (N .J . 1943 ("Passaic Valley Water Supply Commission is a public body organized by an a c t of the legislature to represent and act as the agent of the Cities of Paterson, Passaic a n d Clifton for the distribution of water and water supplies."). This Court has no basis u p o n which to bind Jersey City, its officials, or Mayor Healy to the arbitration agreement sig n e d by JCMUA. Thus, the Court holds that only JCMUA and its officials, in both their in d iv id u a l and official capacities, may compel Plaintiff to arbitrate.5 III. C O N C L U SIO N In light of the foregoing, this Court holds that only JCMUA and its officials in b o th their individual and official capacities--the Estates of Gerard Letizia, Howard Plaintiff's counsel concedes that if JCMUA may compel arbitration, then so too may its officials in both their individual and official capacities. 14
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J a c k so n , George Kelly, Eileen Gaughan, Kathleen Hartye, Kathleen Curran, William M a c ch i, Thomas Kane, Barbara Gordon, and Elnardo Webster, Jr.--may compel a rb itra tio n of Plaintiff's claims. The remaining Defendants--Jersey City, Mayor Healy, C a rl Czaplicki, and Brian O'Reilly--must abide by Plaintiff's choice of a judicial forum. Since only some of Plaintiff's claims must be submitted to arbitration and since D ef en d an t O'Reilly has moved to stay the litigation pending this arbitration, this Court m u s t stay the litigation of those claims subject to arbitration. See 9 U.S.C. § 3; Lloyd v. H o v e n sa , LLC., 369 F.3d 263, 269 (3d Cir. 2004) (holding that the plain language of the F ed era l Arbitration Act (FAA) affords district court no discretion to dismiss case where o n e of the parties applies for a stay pending arbitration). However, this Court cannot stay th e litigation of those claims not subject to arbitration. CTF Hotel Holdings, Inc. v. M arriott Int'l, Inc., 381 F.3d 131, 138­39 (3d Cir. 2004). A suitable Order accompanies this Opinion.

s/ William J. Martini William J. Martini, U.S.D.J.

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