Flanzman v. Jenny Craig, Inc., 244 N.J. 119 (2020). As discussed here, the Appellate Division in this employment discrimination case held that an arbitration provision that did not specify a forum or process for the arbitration did not reflect a meeting of the minds and was not enforceable. Defendant obtained Supreme Court review and that Court reversed in a unanimous opinion by Justice Patterson that applied de novo review to the legal issues involved. The Court restored the judgment of the Law Division that arbitration was required, but modified that judgment in one respect.
Justice Patterson began with the principle, stated in both federal and New Jersey law, that arbitration agreements may be voided based on “grounds as exist at law or in equity for the revocation of any contract.” She then cited a provision of the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 et seq. (“NJAA”), which states that if parties have not agreed on a method for appointing an arbitrator, “the court, on application of a party to the arbitration proceeding, shall appoint the arbitrator.” That provision was merely the application in the arbitration context of the general common law rule that “if parties agree on essential terms and manifest an intention to be bound by those terms, they have created an enforceable contract,” and a court can supply any missing terms.
Here, the Court found that the parties had reached a meeting of the minds as to plaintiff’s waiver of a lawsuit in court in favor of arbitration. The question then became whether the absence of an “arbitral institution” or “the general process for selecting an arbitration mechanism or setting” meant that essential terms were missing and the arbitration agreement could be voided.
Justice Patterson held that those gaps were not “grounds as exist at law or in equity for the revocation of any contract.” And “[n]othing in the NJAA suggests the parties’ agreement in their contract on an arbitral institution or individual or multiple arbitrators is a prerequisite to the court’s appointment of an arbitrator. Indeed, the NJAA expressly states that the court may appoint an arbitrator on a party’s application in several settings, including circumstances in which ‘the parties have not agreed on a method’ to select an arbitrator. N.J.S.A.2A:23B-11(a).”
The Court added a short postscript regarding the Law Division’s conclusion that California law was to govern the arbitration and that the forum for the arbitration was to be in California. The Law Division had so ruled because the arbitration agreement provided that plaintiff “will pay the then-current Superior Court of California filing fee towards the costs of the arbitration.” But this filing fee provision did not “constitute either a choice-of-law provision prescribing California law as the law governing the arbitration or a forum-selection clause requiring that the arbitration be conducted in California.” Instead, the agreement was silent on those issues. As a result, Justice Patterson said, those issues were to be decided by the arbitrator.