JAYASUNDERA v. MACY'S LOGISTICS & OPERATIONS, DEPARTMENT OF HUMAN RESOURCES
OPINION. Signed by Judge Susan D. Wigenton on 8/3/2015. (anr)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
MACY’S LOGISITICS & OPERATIONS,
DEPARTMENT OF HUMAN RESOURCES,
Civil Action No. 14-CV-7455 (SDW) (SCM)
August 3, 2015
WIGENTON, District Judge.
Before this Court is defendant Macy’s Logistics and Operations, Department of Human
Resources’ (“Defendant” or “Macy’s”) Motion to Compel Arbitration pursuant to the Federal
Arbitration Act, 9 U.S.C. § 2 (2015) (“FAA”) and Dismiss the Complaint or alternatively to Stay
this Action pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332, and venue in this
District is proper pursuant to 28 U.S.C. § 1391. This Court decides this matter without oral
argument pursuant to Federal Rule of Civil Procedure 78. For the reasons herein, Defendant’s
Motion to Compel Arbitration and Dismiss the Complaint is GRANTED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Suminda Jayasundera (“Plaintiff”) commenced this action against his employer Macy’s
Raritan Distribution Center 1 (“Defendant” or “Macy’s”) for employment discrimination pursuant
to Title VII of the Civil Rights Act of 1964. (Compl. ¶ 1.)
On or about June 10, 2009, Macy’s hired Plaintiff as a security officer. (Compl., EEOC
On May 2, 2013, Plaintiff, by then an “Asset Protection Supervisor,”
applied for an “Asset Protection Manager” position, and ultimately was not offered the position.
(Compl., EEOC Letter.) As a result, Plaintiff filed a complaint with the Human Resources
Department of Macy’s Logistics and Operations against the Asset Protection Management team.
(Id.) After the Human Resources Department allegedly found potential violations of company
policies, it promised Plaintiff the next vacant managerial position in the Asset Protection
department. Plaintiff reapplied for the position in March 2014 and was again rejected. (Id.)
In 2003, Macy’s established and implemented the Solutions InSTORE program (“SIS”),
an internal early dispute resolution program to resolve workplace disputes through arbitration.
(Mot. to Compel, 2.) Upon hiring, all associates were provided with materials regarding SIS,
including the Solutions InSTORE 2007 Plan Document (2007 Plan Document”), which explained
the four-step conflict resolution system that culminated in arbitration before a neutral arbitrator
appointed by the American Arbitration Association (“AAA”). (Id.)
SIS applied to “any and all such disputes, controversies or claims whether asserted by the
Associate [Macy’s employee] against the Company and/or against any employee, officer, director
or alleged agent of the Company.” (Coney Decl., Ex. A, p. 6.) Under the fourth step of the SIS
Macy’s Raritan Distribution Center, a subsidiary of Macy’s Corporate Services, Inc., is
misnamed as “Macy’s Logistics & Operations, Department of Human Resources” in Plaintiff’s
Program “all employment-related legal disputes, controversies or claims arising out of, or relating
to, employment or cessation of employment, whether arising under federal, state or local decisional
or statutory law (‘Employment-Related Claims’) shall be settled exclusively by final and binding
arbitration.” (Id.) As part of new employee paperwork, employees were required to acknowledge
receipt of the SIS Plan Document and complete an “Opt-out Election Form” within thirty days of
hire. (Coney Decl., ¶ 22, Ex. C.) This form indicates that Defendant informed employees about
the SIS program through posters, videos, and numerous documents. (Id. ¶ 24, 25.) Defendant
alleges that Plaintiff agreed to have his employment disputes resolved through binding arbitration
by failing to submit the “opt-out Election Form.” (Mot. to Compel, 11, 12.)
On September 13, 2013, Plaintiff filed a complaint with the Equal Employment
Opportunity Commission (“EEOC”) and subsequently received a “Right to Sue” letter. (Compl.)
On December 1, 2014, Plaintiff filed a Complaint in this Court against Defendant, alleging originbased employment discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §
2000e (1991), and for “fabricat[ing] documents in a deceitful manner to mislead EEOC
investigation.” (Dkt. No. 1.) On February 13, 2015, Defendant filed the instant Motion to Compel
Arbitration and Dismiss the Complaint or in the alternative, to Stay this action in favor of
arbitration. (Dkt. No. 7.) On March 3, 2015, Plaintiff filed a response, to which Defendant filed
a reply on March 9, 2015. (Dkt. No. 9, 10.)
“In considering a motion to compel arbitration, a court must engage in a two-step analysis:
it must determine first whether there is a valid agreement to arbitrate and, if so, whether the specific
dispute falls within the scope of said agreement.” Thomas v. Jenny Craig, Inc., No. 10-2287, 2010
WL 3076861, at * 3 (D.N.J. Aug. 4, 2010) (citing Century Indem. Co. v. Certain Underwriters at
Lloyd’s, 584 F.3d 513, 523 (3d Cir. 2009); Salvadori v. Option One Mtg. Corp., 420 F.Supp.2d
349, 356 (D.N.J. 2006)). “In doing so, the Court utilizes the summary judgment standard of
Federal Rule of Civil Procedure 56(c).” Id. (citing Par-Knit Mills, Inc. v. Stockbridge Fabrics Co.,
Ltd., 636 F.2d 51, 54 n. 9 (3d Cir. 1980)). A court shall grant summary judgment “if the pleadings,
the discovery and disclosure materials on file, and any affidavits show that there is no genuine
issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Panton
v. Nash, 317 F. App’x 257, 258 (3d Cir. 2009) (citing FED. R. CIV. P. 56(c)). Therefore, a court
must first determine whether there is a genuine issue of material fact as to whether a valid
arbitration agreement exists.
See Par-Knit Mills, Inc., 636 F.2d at 54.
In making this
determination, a court must give the party opposing arbitration “the benefit of all reasonable doubts
and inferences that may arise.” Id. In examining whether certain claims fall within the ambit of
an arbitration clause, a court must “focus . . . on the ‘factual allegations in the complaint rather
than the legal causes of action asserted.’” Mutual Ben. Life Ins. Co. v. Zimmerman, 783 F.Supp.
853, 869 (D.N.J. 1992) (quoting Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d Cir.
1987)). If the court decides that the claims at issue fall within the scope of the arbitration clause,
the court must then refer the dispute to arbitration without considering the merits of the case. See
The Federal Arbitration Act Applies to the Arbitration Agreement
Defendant filed the instant motion to compel arbitration pursuant to the Federal
Arbitration Act (“FAA”). Section 4 of the FAA provides:
A party aggrieved by the alleged failure, neglect, or refusal of another to
arbitrate under a written agreement for arbitration may petition any United
States district court which, save for such agreement, would have jurisdiction
under Title 28, in a civil action or in admiralty of the subject matter of a suit
arising out of the controversy between the parties, for an order directing that
such arbitration proceed in the manner provided for in such agreement.
9 U.S.C. § 4. Any dispute settled by arbitration “shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
The FAA allows a district court to compel, or enjoin arbitration if required. 9 U.S.C. §§ 3, 5; John
Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1998). The FAA “establishes that,
as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved
in favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 2425 (1983); see also Sarbak v. Citigroup Global Markets, Inc., 354 F. Supp. 2d 531 (D.N.J. 2004).
These provisions demonstrate a “liberal federal policy favoring arbitration agreements.” Moses,
460 U.S. at 24. In order to apply the FAA, the district court must find that the contract with the
arbitration provision “evidenc[es] a transaction involving [interstate] commerce.” Id. (citing 9
U.S.C. § 2). The contract “need have only the slightest nexus with interstate commerce.”
Crawford v. West Jersey Health Systems (Voorhees Div.), 847 F. Supp. 1232, 1240 (D.N.J. 1994)
In the employment context, the Supreme Court has ruled that FAA
enforcement of arbitration agreements is required. Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 26 (1991); see also Crawford, 847 F. Supp. at 1242-43 (enforcing arbitration of the Title
VII and NJLAD claims). In Great Western Mortgage Corporation. v. Peacock, the Third Circuit
found that “employees were not included within the class of those excepted from the operation of
the FAA, and hence were required to arbitrate their disputes.” 110 F. 3d 222, 227 (3d Cir. 1997).
Here, the FAA applies to the arbitration agreement because both Defendant’s line of
business and Plaintiff’s employment duties involve participation in interstate commerce on a daily
basis. Defendant is involved in interstate commerce by providing services and having offices
throughout the United States. Plaintiff, as an “Asset Protection Supervisor” for Defendant, was
required to communicate with Defendant's customers daily. As such, both Plaintiff's employment
duties and Defendant's line of business fall within the broad definition of interstate commerce, and
the FAA governs the arbitration agreement.
The Arbitration Provision is Valid and Enforceable
State contract law principles govern the validity and enforceability of an arbitration
agreement. Leodori v. Cigna Corp., 175 N.J. 293, 302 (2003). In New Jersey, a contract is
enforceable where there “is a bargained for exchange of promises or performance that may consist
of an act, a forbearance, or the creation, modification, or destruction of a legal relation.”
Martindale v. Sandvik, 173 N.J. 76, 88 (2002) (quoting Restatement of Contracts § 71) (a contract
requires an offer, acceptance, and consideration).
Likewise, an arbitration agreement is
enforceable if it is supported by consideration and it was knowingly and voluntarily entered into.
Failure to opt out of an arbitration program after receiving notice is sufficient conduct to
signify acceptance. See Coiro v. Wachovia Bank N.A., No. 11-cv-03587, 2012 WL 628514, at *5
(D.N.J. Feb. 27, 2012) (finding the account-holder accepted the terms of the arbitration agreement
by failing to cancel her account within thirty days after receiving notice); see also Caldwell, 958
F. Supp. at 974-75 (noting that even when an employment contract with an arbitration clause is an
adhesion contract, the agreement is generally still valid and enforceable where the employee had
an opportunity to review its terms). “In all jurisdictions that have considered the question [of
employment as a contract], courts have held that the creation of an employment relationship . . . is
sufficient consideration to uphold an arbitration agreement contained in an employment
application.” Martindale, 173 N.J. at 88.
Here, Defendant made a valid offer to submit Plaintiff’s claims to arbitration. The language
of the SIS New Hire Brochure explicitly states: “[a]ll Associates are automatically covered by all
4 steps of the program by taking or continuing a job with the Company . . . . [Y]ou are covered by
Step 4 unless and until you exercise the option to exclude yourself from arbitration.” (Coney Decl.,
Plan Document 5.) Plaintiff accepted the terms of the arbitration agreement by electronically
signing the SIS Acknowledgement Form and failing to return the “opt-out Election Form” within
thirty days. Sufficient consideration for the arbitration agreement also exists, as the agreement
mutually obliges Macy’s and Plaintiff to arbitrate all employment disputes and Plaintiff has
continued his employment with Macy’s.
Furthermore, the Macy’s SIS program at issue has specifically been held to be valid and
enforceable in New Jersey. 2 See Mount v. Macy’s Retail Holdings, Inc., No. 12-cv-1081, slip op.
at 18-19 (D.N.J. Jan. 8, 2013). In Mount, Plaintiff electronically signed the SIS acknowledgment
form and did not opt out of step four of the program; therefore, accepting and continuing
employment was valid consideration of the default arbitration terms. Id. Likewise, here, all of the
elements of a valid contract have been satisfied.
The Arbitration Agreement Covers all of Plaintiff’s Claims
An employee’s claim is encompassed within an employer’s arbitration provision when the
agreement “unambiguously sets forth the drafter’s intention to arbitrate all employment-related
claims” even if it does not name the specific statute at issue. Leodori, 175 N.J. at 302-03. The
arbitration provision included in the Solutions InSTORE 2007 Plan Document, provides that: “all
employment-related legal disputes, controversies or claims arising out of, or relating to,
Chief Judge Simandle upheld the enforceability of Macy’s SIS arbitration agreement and
expressly stated that it was a valid contract under New Jersey law. See Mount v. Macy’s Retail
Holdings, Inc., No. 12-cv-1081, slip op. at 18-19 (D.N.J. Jan. 8, 2013).
employment or cessation of employment, whether arising under federal, state or local decisional
or statutory law shall be settled exclusively by final binding arbitration.” (Coney Decl., ¶ 13, Ex.
A. pp. 6-7). “Employment related claims” include, but are not limited to, any issues arising under
state law, employment termination, breach of duty of loyalty, misappropriation, contract law, and
tort law. The 2007 Plan Document explicitly includes claims arising under Title VII of the Civil
Rights Act of 1964 and other state statutes. (Coney Decl., Ex. A, p. 6.) Plaintiff’s unsupported
claims of origin-based discrimination under Title VII of the Civil Rights Act of 1964, “fabrication
of deceitful documents,” psychological abuse, mental torture, and threatening behavior fall within
the arbitration provision as they directly arise from Plaintiff’s employment with Macy’s.
In direct response to this motion, Plaintiff contends that his failure to promote claim is not
the subject of the SIS Program. In particular, he claims that the SIS Program fails to provide
“adequate protection” and that there is no provision allowing him to use the SIS Program. At best,
Plaintiff’s arguments concern the validity of the underlying employment agreement, not the
arbitration provision itself. The Supreme Court in Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440 (2006), established the rule that “a challenge to the validity of the contract as a whole,
and not specifically to the arbitration clause, must go to the arbitrator.” Buckeye, 546 U.S. at 449.
In light of Buckeye, Plaintiff’s arguments do not warrant further discussion.
For the reasons set forth above, Defendant’s Motion to Compel Arbitration and Dismiss
the Complaint is GRANTED.
s/ Susan D. Wigenton, U.S.D.J.
Steven C. Mannion, U.S.M.J.
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