In an unpublished opinion issued on August 23, 2018, the NJ Appellate Division enforced an arbitration agreement signed by an employee at the time of her hire, but the court invalidated the provision in that agreement that precluded the employee from seeking punitive damages. In Roman v. Bergen Logistics, a terminated employee sued her employer for harassment and hostile work environment in violation of the New Jersey Law Against Discrimination (NJLAD). The trial court issued summary judgment in favor of the employer enforcing the arbitration agreement under the Federal Arbitration Act (FAA) and ruling that the employee was bound to go to arbitration as per the agreement she signed at the time that she was hired.

On appeal, the court sustained the summary judgment. However, the appellate court invalidated the agreement’s bar on punitive damages. The court noted that the NJ legislature amended the NJLAD in 1990, to ensure that punitive damages are an available remedy, and that the availability of punitive damages fosters the law’s purpose of eradicating workplace discrimination by focusing on deterrence and punishment of particularly egregious conduct. The court expressed concern that barring the recovery of punitive damages allows an employer’s upper management to be “willfully indifferent” to the most egregious forms of workplace discrimination without fear of punishment. Thus, the court invalidated the provision barring punitive damages on public policy grounds and because it eviscerates an essential purpose of the NJLAD.

While the unpublished opinion is not precedential, it does reinforce the view taken by the NJ courts in evaluating arbitration agreements. That is, the courts will generally enforce an arbitration agreement pursuant to the FAA; provided, however, that the agreement does not violate public policy or otherwise interfere with protected rights. If you are concerned that your form of arbitration agreement may be challenged in court, we can ease your mind with a thorough analysis and assessment of your form of agreement.