ESSEX et al v. THE CHILDRENS PLACE, INC.
OPINION. Signed by Judge John Michael Vazquez on 12/4/2017. (JB, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ANGELA R. ESSEX and GABRIELA
MARADIAGA, individually and on Behalf of
All Other Persons Similarly Situated,
Civil Action No. 15-5621
THE CHILDREN’S PLACE, INC.,
John Michael Vazguez, U.S.D.J.
This case is a collective action pursuant to the Fair Labor Standards Act. Currently before
the Court is a motion to compel arbitration as to certain opt-in plaintiffs (“Opt-In Plaintiffs”) filed
by Defendant The Children’s Place, Inc. (“TCP” or “Defendant”). D.E. 117. Plaintiffs Angela
Essex and Gabriela Maradiaga (“Plaintiffs”) filed a brief in opposition, D.E. 124, to which
Defendant replied. D.E. 127.1
The Court reviewed the submissions made in support and in
opposition of the motion and considered the motion without oral argument pursuant to Fed. R. Civ.
P. 78(b) and L. Civ. R. 78.1(b). For the reasons that follow, Defendant’s motion to compel is
‘In this Opinion, Defendant’s motion to compel (D.E. 117) will be referred to as “Def. MTC.”
Plaintiffs’ brief in opposition (D.E. 124) will be referred to as “P1. Opp.” Defendant’s reply brief
(D.E. 127) will be referred to as “Def Rep.”
FACTS AND PROCEDURAL HISTORY
A. Factual Background
Defendant TCP is a Delaware corporation and “a public company with more than 959
specialty retail stores nationwide, selling children’s clothing and related goods and services.”
Complaint (“Compl.”) ¶ 14; D.E. 1. Plaintiff Angela Essex is a former TCP Store Manager, who
worked for TCP from approximately May 12, 2012 until April 18, 2015. Id.
Gabriela Maradiaga is also a former TCP Store Manager, who TCP employed from
approximately February 2011 until May 2014. Id.
12. Plaintiffs represent a class of 377
current and former TCP Store Managers. Def. MTC.; D.E. 117.
In October 2014, TCP developed an arbitration program. The program applied to all TCP
Associates (“Associates”), which includes Store Managers, working at retail stores in the United
States. Declaration of Jennie Commoreto in Support of Defendant’s Motion to Compel
Arbitration (“Commoreto Decl.”)
¶ 2; D.E.
117-2. TCP uses an intranet portal (“Portal”) to
communicate with Associates. To gain access, Associates use an employee identification
number and personal password. Id. Since October 2014, the Portal has included The Mutual
Agreement to Arbitrate Claims (“the Arbitration Agreement”). Id.
When TCP introduced its arbitration program, Associates already working for TCP
received a message through the Portal, directing them to review the Arbitration Agreement. Id.
3. The message explained that TCP was implementing an arbitration program. It, further, stated
that “[i]t is important that you review the Arbitration Agreement carefully” and that “[w]e expect
all Associates to review and sign the Arbitration Agreement. However, because it is not a
mandatoiy condition ofyour employment, you may elect to opt out and not be subject to the
Arbitration Agreement.” Commoreto Decl. Exhb. 1 (TCP Arbitration Agreement
Announcement); D.E. 117-3 (emphasis added). Associates hired after October 2014 reviewed
the Arbitration Agreement following orientation. Id. ¶4.
The Arbitration Agreement’s introductory paragraph states:
The Children’s Place and Associate recognize that differences may
arise during or following the Associate’s application, assignment,
employment, including any and all periods of employment with The
Children’s Place. By entering into this Agreement, The Children’s
Place and Associate anticipate gaining the benefits of an impartial
final and binding dispute-resolution procedure.
Commoreto Decl. Exhb. 2 at 1.
The Arbitration Agreement further states in in relevant part:
1. Arbitration. Arbitration under this Agreement is governed by the
Federal Arbitration Act (9 U.S.C. § 1 et seq.). Subject to Section 2
below, this Agreement applies to any dispute arising out of or related
to Associate’s application for employment, employment or
separation of employment with The Children’s Place regardless of
its date of accrual and survives after the employment relationship
Except as otherwise stated in Section 6 below, The children ‘s Place
and Associate agree that any dispitte or controversy covered by this
Agreement, or arising ottt of relating to, or concerning the validity,
enforceability or breach of this Agreement, shalt be resolved by
binding arbitration and not by court or July trial. Except as
othervt’ise stated in this Agreement, The Children ‘s Place and
Associate understand and agree that they are waiving their right to
maintain a court action orjwy trial to resolve the covered dispitte.
2. Claims Covered by this Agreement. Except as otherwise provided,
this Agreement also applies, without limitation, to disputes arising
out of or related to the employment relationship or termination of
compensation, classification, minimum wage,
seating, expense reimbursement, overtime, breaks, meal and rest
periods, termination, discrimination or harassment and claims
arising under.. Fair Labor Standards Act... state or local statutes
or regulations addressing the same or similar matters, and all other
federal, state or local legal claims arising out of or relating to
Associate’s employment or termination
Id. at 1-2 (emphasis in original).
Importantly, the Arbitration Agreement also includes a class, collective, and
6. Class, Collective, and Representation Waiver. THIS
AGREEMENT AFFECTS ASSOCIATE’S ABILITY TO
ACTIONS. BOTH THE CHILDREN’S
PLACE AND ASSOCIATE AGREE TO BRING ANY DISPUTE
COVERED BY THIS AGREEMENT IN ARBITRATION ON AN
INDIVIDUAL BASIS ONLY, AND NOT AS A CLASS,
COLLECTIVE OR PRIVATE ATTORNEY GENERAL OR
OTHER REPRESENTATIVE ACTION. THEREFORE, BY
ENTERING INTO THIS AGREEMENT, THERE IS NO RIGHT
OR AUTHORITY FOR ANY DISPUTE COVERED BY THIS
AGREEMENT TO BE BROUGHT, HEARD OR ARBITRATED
AS A CLASS, COLLECTIVE, OR PRIVATE ATTORNEY
GENERAL OR OTHER REPRESENTATIVE ACTION, OR AS A
MEMBER IN ANY SUCH CLASS, COLLECTIVE, OR PRIVATE
ATTORNEY GENERAL OR OTHER REPRESENTATIVE
PROCEEDING (“Class Action Waiver”).
Notwithstanding any other provision of this Agreement or the AAA
Rules, disputes regarding the validity, enforceability or breach of the
Class Action Waiver may be resolved only by a civil court of
competent jurisdiction and not by an arbitrator.
The Children’s Place will not retaliate against, discipline or threaten
to discipline Associate as a result of Associate exercising
Associate’s rights under Section 7 of the National Labor Relations
Act by the filing of or participation in a class, collective, or private
attorney general or other representative action in any forum.
However, The Children’s Place may lawfully seek enforcement of
this Agreement and the Class Action Waiver under the Federal
Arbitration Act and seek dismissal of such class, collective, or
private attorney general or other representative actions or claims.
Id. at 3 (emphasis in original).
Finally, the Arbitration Agreement contains an opt out provision:
8. Opt Out Right. Arbitration is not a mandatory condition of
Associate’s employment at The Children’s Place, and therefore
Associate may submit a statement notifying The Children’s Place
that Associate wishes to opt out and not be subject to this
Agreement. If Associate elects to opt out Associate must notify The
Children’s Place of Associate’s intention to opt out by submitting a
signed and dated statement on a “Mutual Agreement to Arbitrate Opt
Out Form” that can be accessed on the Portal at People/My Place/
Supplemental. In order to be effective, Associate’s opt out notice
must be provided within 30 days of Associate’s receipt of this
Agreement. If Associate timely opt outs as provided in this
paragraph Associate will not be subject to any adverse employment
action as a consequence of that decision, and Associate may pursue
available legal remedies without regard to this Agreement. If
Associate does not opt out of this Agreement within 30 days of
Associate’s receipt of this Agreement, continuing employment
constitutes mutual acceptance of the terms of this Agreement by The
Children’s Place and Associate, and The Children’s Place and
Associate will be bound by the terms of this Agreement.
THIS AGREEMENT IS A CONTRACT AND COVERS
IMPORTANT ISSUES RELATING TO ASSOCIATE’S RIGHTS.
IT IS ASSOCIATE’S SOLE RESPONSIBILITY TO READ IT
AND UNDERSTAND IT. ASSOCIATE HAS THE RIGHT TO
CONSULT WITH COUNSEL OR INDEPENDENT ADVISORS
Of ASSOCIATE’S CHOICE OUTSIDE THE COMPANY
CONCERNING THIS AGREEMENT.
Id. at 4. (emphasis in original).
The Arbitration Agreement is signed electronically by an Associate. Id.
Associate is instructed to “Click to Sign” on the electronic form, which evidences his or her
electronic signature. Id. The Associate also needs to enter the last four digits of his or her social
security number to confirm his or her identity. Id. Clicking the accept button prompts the
Associate to receive a message that confirms the validity of his or her signature. Id. The
Associate then clicks a submit button to complete the process.
An Associate who declines to accept the terms of the Arbitration Agreement, fills out and
submits the Mutual Agreement
Opt Out form (“Opt Out form”), which is also located on the
TCP Portal. Id. ¶6. The Opt Out Form provides:
I have received and read the Mutual Agreement to Arbitrate
Claims (“Agreement”) and have elected to opt out of the
Agreement. I understand that there will be no adverse employment
action taken against me as a consequence of that decision. I
understand that the Agreement will not apply to me.
Commoreto Deci. Exhb. 4 (Opt Out Form); D.E. l173.2
TCP alleges, and Plaintiffs do not dispute, that of the 377 TCP Store Managers who have
filed consent to join this lawsuit, 209 of them signed and submitted the Arbitration Agreements.
¶ 11. Additionally, one Store Manager, Edward Matthews, who filed consent
to join the lawsuit, was deemed to have accepted the Arbitration Agreement by never returning
an Opt Out form and continuing his employment with TCP “after being advised in writing that
continued employment would constitute acceptance of the Arbitration Agreement’s terms.” Id.
12. On the other hand, TCP admits that Plaintiff Angela Essex and forty-eight other TCP Store
Managers who have filed consent to join the lawsuit signed and submitted Opt Out forms. Id.
A TCP Associate has thirty days after receiving the Arbitration Agreement to sign and submit it
or sign and submit an Opt Out Form. If an Associate does neither, TCP’s Human Resource
Department sends a letter to the Associate’s home address. The letter advises the Associate of
the options described on the TCP Portal and encloses a copy of the Arbitration Agreement. The
letter, further, advises the Associate that he or she has an additional thirty days to sign and
submit either the Arbitration Agreement or Opt Out Form. However, if at end of the additional
time period, the Associate still has not taken action, TCP deems that the Associate to have agreed
to the Arbitration Agreement. Commoreto Decl. ¶ 9-10.
B. Procedural Background
On July 17, 2015 Plaintiffs filed a Complaint alleging that “they are entitled to, inter alia:
(i) unpaid overtime wages for hours worked above 40 in a workweek, as required by law, and (ii)
liquidated damages pursuant to the FL$A, 29 U.S.C.
et seq.” Compl.
On March 4,
2016, the case was reassigned from Judge Cecchi to the undersigned. D.E. 53.
On August 16, 2016, the Court conditionally certified a class of TCP Store Managers and
ordered that by September 16, 2016, the parties had to submit the proposed notice and consent
forms to the Court for review and approval. D.E. 73, 74. After reviewing Defendant’s
objections to the proposed notice and consent forms, the Court, on September 29, 2016, ordered
that notice had to be sent to all TCP Store Managers within three years of August 16, 2016,
regardless of whether a Store Manager signed an arbitration agreement. D.E. 78. The Order
indicated that while the Court was not addressing any potential arbitration agreement at the
conditional certification stage, the Court would address the applicability of any such agreement
“at a later date, if necessary[.]” Id. at 2.
As noted, following notice to potential plaintiffs, Defendant now moves to compel
arbitration as to certain Opt-In Plaintiffs, which Plaintiffs oppose. Plaintiffs later submitted a
letter asking the Court to consider the case of NLRB v. Alternative Entertainment, Inc., No. 161385 (6th Cir. May 26, 2017). D.E. 12$. Defendant responded with a letter refuting Plaintiffs’
interpretation of Alternative Entertainment, Inc. D. E. 129.
Originally passed in 1925, the federal Arbitration Act (“FAA”) “makes agreements to
arbitrate enforceable to the same extent as other contracts.” Harris v. Green Tree fin. Corp.,
183 F.3d 173, 17$ (3d Cir. 1999) (citing Seus v. Nuveen & Co., 146 f.3d 175, 17$ (3d Cir.
199$)). As a consequence, “federal law presumptively favors the enforcement of arbitration
agreements.” Harris, 183 f.3d at 178 (citing In re Prudential Ins. Co. ofAm. Sales Practice
Litig., 133 F.3d 225, 231 (3d Cir. 199$)). To that end, “as a matter of federal law, any doubts
concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Singh v.
Uber Techs. Inc., 235 F. Supp. 3d 656, 664 (D.N.J. 2017) (internal quotations and citations
Notwithstanding the presumption of favoring arbitration agreements, a district court
“must affirmatively answer the following two questions before compelling arbitration pursuant
§ 4 of the FAA: (1) whether the parties entered into a valid arbitration agreement; and (2)
whether the dispute at issue falls within the scope of the arbitration agreement.” Sing/i, 235 F.
Supp. 3d at 523 (citing Centzt,y Indem. Co. v. Certain Undenvriters at Lloyd’s, 584 F.3d 513,
523 (3d Cir. 2009)). To determine the validity of an arbitration agreement, courts apply
“ordinary state-law principles that govern the formation of contracts.” Kirteis
McCamey & Chilcote, P.C., 560 F.3d 156, 160 (3d Cir. 2009) (quoting first Options of Chic.,
Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). New Jersey courts apply basic contract principles
when determining whether a valid arbitration agreement exists. Martindale v. Sandvik, Inc., 173
N.J. 76, 87 (2002). To be enforceable, a “waiver-of-rights provision must reflect that an
employee has agreed clearly and unambiguously to arbitrate the disputed claim. Generally, [New
Defendant applies New Jersey law to its arguments concerning contract interpretation. Plaintiff
does not dispute the suitability of New Jersey law. Thus, the Court will apply New Jersey law.
See Manley Toys, Ltd. v. Toys R Us, Inc., 2013 WL 244737, at *2 (D.N.J. Jan. 22, 2013)
(“Because the parties have argued the viability of the remaining claims as though New Jersey
substantive law applies, the Court will assume that to be the case.”) (citing USA Mach. Corp. v.
CSC, Ltd., 184 F.3d 257, 263 (3d Cir. 1999) (“[Djespite the interstate, and indeed international,
nature of the putative transactions at issue, the parties have not chosen to address choice-of-law
Because the parties appear to be in agreement on this issue, we will assume, without
deciding, that Pennsylvania law supplies the appropriate substantive rules.)).
Jersey courts] determine a written agreement’s validity by considering the intentions of the
parties as reflected in the four corners of the written instrument.” Leodori v. CIGNA Corp., 175
N.J. 293, 302 (2003). “In determining whether the particular dispute falls within a valid
arbitration agreement’s scope, ‘there is a presumption of arbitrability[:] 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 asserted dispute.”
Centtuylndem. Co., 584 F.3d at 524 (quoting AT& TTechs. v. Communs. Workers ofAm., 475
U.s. 643, 650 (1986) (internal quotation marks and citations omitted)).
As a threshold matter, Defendant contends that Opt-In Plaintiffs who signed the Arbitration
Agreement entered into valid arbitration agreements and that those agreements cover the wageand-hour claims at issue here. Def. MTC. at 12-16. Plaintiffs do not contest Defendant’s
analysis and apparently concede the point. The Court agrees with Defendant’s analysis and finds
that the parties entered into a valid arbitration agreement and that the dispute at issue falls within
the scope of the arbitration agreement. The Arbitration Agreement clearly indicates that it
“applies to any dispute arising out of or related to Associate ‘s application for employment,
employment or separation of employment with The Children’s Place regardless of its date of
accrual and survives afier the employment relationship terminates.” Commoreto Deci. Exhb. 2
at 1 (emphases added). The current suit falls within the scope of this language: it concerns
appropriate pay during the time that the relevant Opt-In Plaintiffs were employed by Defendant.
Instead of contesting the two requisite elements, Plaintiffs assert that they have a right to
engage in concerted legal action and that the “Class, Collective and Representation Action
Waiver” (“the Waiver”) in the Arbitration Agreement violates that right. P1. Opp. 12-14.
Plaintiffs, further, argue that the “Opt Out Right” in the Arbitration Agreement does not make
the Arbitration Agreement legal. Id. at 14-17. To support their position, Plaintiffs rely on
several recent circuit decisions, including: Morris v. Ernst & Yottng, LLF, 834 F.3d 975, 979 (9th
Cir. 2016), cert. granted, 137 S. Ct. 809 (2017); Lewis v. Epic Svs. Coip., 823 F.3d 1147, 1151
(7th Cir. 2016), cert. granted, 137 S. Ct. 809 (2017); and Nat? Labor Relations 3d. v. Alternative
Entm’t, Inc., $58 f.3d 393, 396 (6th Cir. 2017). The Third Circuit has not addressed the issue.
The Court does not find these cases apposite.4 In all three cases, employees had to sign
an arbitration agreement with a provisions permitting only individual arbitration as a mandatory
condition of employment. For example, in Morris, an accounting finn “required” employees to
sign agreements not to join with other employees as “a condition of employment.” 834 F.3d. at
979. Similarly, in Lewis, a healthcare software company sent some employees “an arbitration
agreement mandating that wage-and-hour claims could be brought only through individual
arbitration” and “gave employees no option to decline [to sign] if they wanted to keep their
jobs.” 823 F.3d at 1151 (emphases added). And in Alternative Entertainment, Inc., the
administrative law judge found that the company “compel[ed] employees, as a condition of
employment, to sign arbitration agreements waiving their right to pursue class or collective
actions in all forums, arbitral and judicial.” 85$ F.3d at 399-400.
In contrast, the relevant Opt-In Plaintiffs were not required to participate in TCP’s
arbitration program as a condition of employment with TCP. TCP’s “Arbitration Agreement
The Court is not indicating that it would (or, for that matter, would not) follow those decisions
even if the Arbitration Agreement here was mandatory rather than optional. As noted, the Third
Circuit has not addressed the issue, and at least one court in this District has disagreed with the
reasoning from other Circuits. See Kobren v. A-i Limousine Inc., 2016 WL 6594075 (D.N.J.
Nov. 7, 2016). Because the Arbitration Agreement was optional, the Court does not reach the
Announcement” and the Arbitration Agreement expressly state that signing the Arbitration
Agreement is not a mandatory condition of employment. See Commoreto Deci. Exhb. 1;
Commoreto Decl. Exhb. 2 at 4. To the contrary, the Arbitration Agreement has a clear “opt out”
provision. Indeed, the named Plaintiffs and numerous other Plaintiffs who have opted into this
case first opted out of the Arbitration Agreement. Thus, this case is like Singh, where the court
found that it did not need to reach the circuit split discussed in Morris and Lewis, because the
arbitration agreement at issue was optional. 235 F. Supp. 3d at 673 -74 (holding that unlike in the
circuit split cases, the arbitration agreement had an opt-out clause and that “[s]uch a provision
can hardly be construed to interfere with, restrain, or coerce an employee into forfeiting the
rights afforded by
§ 7 of the NLRA”).5 As noted, here, forty-nine Plaintiffs did opt out of the
Arbitration Agreement, Commoreto Decl.
¶ 7, and Defendant admits that they are, therefore, not
subject to this motion to compel. Def. Rep. at 4.
In sum, the Court finds that Plaintiffs who signed the TCP Arbitration Agreement entered
into a valid and enforceable arbitration agreement and that this wage-and-hour dispute falls
within the scope of the Arbitration Agreement. Thus, the relevant Opt-In Plaintiffs must, as a
consequence, arbitrate their claims. Plaintiffs who opted out of the Arbitration Agreement are
not bound by it.
Indeed, in Morris the Ninth Circuit noted that “[i]n contrast [to the case at bar], there was no §
8 violation in Johnmohammadi v. Bloomingdale’s, Inc. because the employee there could have
opted out of the individual dispute resolution agreement and chose not to. 755 F.3d 1072, 1076
(9th Cir. 2014).” 834 F.3d at 983 n. 4.
Therefore, for the reasons discussed above, the Court GRANTS Defendant’s motion to
compel arbitration as to the relevant Opt-In Plaintiffs. An appropriate Order accompanies this
Dated: December 4. 2017
John Michael Vaze4U.S.D.J.
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?