Arbitration

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McGinty v. Zheng, No. A-1368-23, 2024 WL 4248446 (N.J. Super. Ct. App. Div. Sept. 20, 2024)

On March 31, 2022, a lawyer and her husband sustained personal injuries after their rideshare driver ran a red light and collided with another vehicle.[1] The lawyer underwent numerous surgeries and other procedures after sustaining cervical and lumbar spine fractures, rib fractures, a protruding hernia, traumatic injuries to her abdominal wall and pelvic floor, and other physical injuries.[2] She was unable to work for over 12 months after the accident, until April 23, 2023.[3] Her husband sustained a fractured sternum and fractures to his left arm and wrist, for which he underwent an operation and received a bone graft.[4]

In October 2023, a New York medical doctor sat down for a fateful meal with her husband and her mother-in-law at a Florida restaurant owned by the adjacent theme park.[1] The doctor, who suffered from severe nut and dairy allergies, received numerous confirmations from restaurant staff that the food she ordered complied with her dietary restrictions.[2] Before selecting the restaurant, she relied on statements made on the theme park company’s website that the restaurant offered allergen-free foods.[3] After dinner, while perusing nearby shops by herself and away from her family, the doctor suffered a severe allergic reaction.[4] She self-administered an epi-pen and was rushed to the hospital but died as a result of anaphylaxis due to elevated levels of dairy and nut in her system.[5]

The United States Supreme Court building

On May 16, 2024, the Supreme Court of the United States (“SCOTUS”) unanimously held that when a district court finds that when a lawsuit involves an arbitrable dispute and a party has requested a stay of the court proceeding pending arbitration, the Federal Arbitration Act (“FAA”) compels the court to issue a stay and the court does not have discretion to dismiss the action.  Smith v. Spizzirri, 601 U.S. 472 (May 16, 2024) (citing 9 U. S. C. §3). 

In the wake of the #MeToo Movement, New York, California and a number of other jurisdictions, both local and state, have passed new laws aimed at combatting sexual harassment in the workplace. The New York laws require written sexual harassment prevention policy, assurance that all current and new employees, and even applicants for employment, receive a copy of the policy, and mandate annual sexual harassment training for all employees. In addition, New York law now provides that employers can be liable for sexual harassment of nonemployees in the workplace, such as contractors, vendors and subcontractors. Recent legislation prohibits employers from using mandatory arbitration provisions in employment contracts or nondisclosure agreements except when this is the victim preference. Let me suggest that there are some important lessons to be learned from these laws.

If your employees are part of the 25 million who have arbitration agreements that agree to bring claims in individual arbitration alone, then you will want to watch for the U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis. The Court heard arguments in the case last Monday and several of the Justices…

Current and former franchisees of Stratus Franchising, LLC, a commercial cleaning business tried to use the RICO Act (Racketeer Influenced and Corrupt Organization Act) to assert violations but failed as Stratus Group moved to enforce the individual arbitration provisions within the franchise agreements. The franchisees argued the arbitration provision (a broad standard-form arbitration provision) was “unconscionable” which means it was oppressive, harsh, and unfair – basically calling Stratus Group cheaters & liars. The franchisees also said the other companies (Stratus Group) that didn’t even sign the agreements so they couldn’t try and enforce the agreements; the franchisees lost both of those battles.

This month the Missouri Court of Appeals for the Eastern District issued an opinion which slammed the door, once again, on the ability of employers to enter into an agreement with their employees whereby parties agree to bypass the court system in favor of private arbitration.  In Jimenez v. Cintas Corporation, S.W.3d (Mo. App. E.D. 2015) the Court found that there was insufficient consideration to support such an agreement due to lack of mutuality of obligation and the at will status of Jimenez’s employment.  This is not the first time in which a Missouri court has addressed this issue.  In Morrow v. Hallmark Cards, Inc., 273 S.W.3d 15 (Mo. App. W.D. 2008) these concepts were also addressed.  However, in Morrow, the issue of consideration was in reference to continued employment, not initial employment, which was the case in Cintas.  However, even more concerning was the fact that Cintas found that since the employer alone was exempt from arbitrating alleged violations of the non-compete provisions the agreement lacked mutuality.

The long awaited decision by the Fifth Circuit regarding the NLRB’s D.R. Horton case issued this week in which the Court bypassed a number of jurisdictional issues and went straight to the heart of the matter.  In sum, the Court found that the Board’s finding that a class action waiver in conjunction with a mandatory arbitration provision regarding employment claims was not, per se, a violation of the National Labor Relations Act.