Law Against Discrimination Statute of Limitations Cannot be Shortened by Contract

Rodriguez v. Raymours Furniture Co., Inc., 225 N.J. 343 (2016).  Plaintiff became employed by defendant, who is better known to the public as Raymour & Flanigan.  The employment application that he signed contained a clause that said “I agree that any claim or lawsuit relating to my service with Raymour & Flanigan must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit.  I waive any statute of limitations to the contrary.”

Thereafter, plaintiff was fired.  Seven months later, he sued, claiming disability discrimination under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“LAD”).  Defendant moved for summary judgment based on the statute of limitations waiver that plaintiff had signed.  Plaintiff contended that the wavier was void and unenforceable.  The Law Division granted summary judgment and the Appellate Division affirmed.  Today, however, the Supreme Court reversed in a unanimous decision by Justice LaVecchia.

Justice LaVecchia observed that the Appellate Division “had available to it, and cited, only cases that generally dealt with private agreements to shorten statutes of limitations pertaining to common law actions and cases that did not engage in any searching analysis of whether public policy was contravened by the shortening of a limitations period for a public interest statute.”  The LAD, however, involves “intertwined” private and public interests, and Justice LaVecchia illuminated the strength of the LAD in a detailed discussion.

In Montells v. Haynes, 133 N.J. 282 (1993), the Supreme Court ruled that the LAD, which does not contain its own statute of limitations, was subject to the two-year statute of limitations under N.J.S.A. 2A:14-2, the personal injury statute of limitations.  In the years since then, the Legislature has amended the LAD more than a dozen times, “in one direction.  It has acted only to strengthen the LAD, adding more protections and for more classes of individuals,” which Justice LaVecchia catalogued exhaustively.  The Legislature tacitly approved the two-year statute of limitations by not acting to overrule Montells.

Though “there is a strong belief in this state, as elsewhere, in the freedom to contract,” that freedom is not unqualified.  Some contractual provisions violate public policy.  Notwithstanding the private interests involved in the LAD, “[i]f allowed to shorten the time for filing plaintiff’s LAD action, this contractual provision would curtail a claim designed to also further a public interest.”  Noting that aggrieved employees are given the choice by the LAD of suing in court or proceeding before the Division on Civil Rights (“DCR”) within six months, Justice LaVecchia observed that shortening the statute of limitations “undermines and thwarts the legislative scheme that includes the DCR remedy as a meaningful option.”

Moreover, a limitations period shorter than two years “effectively eliminates claims.”  It sometimes takes time for an employee to realize that he or she has been wronged (here, for example, defendant asserted a non-pretextual reduction in force was the reason that plaintiff’s employment was terminated).  Attorneys need time to investigate potential wrongful discharge claims.  Perversely, a shortened statute might lead to the premature filing of a case that, given more time, might be found to be unmeritorious.

In summary, “[r]eview of the interplay between the LAD’s administrative remedy and right to file in Superior Court, and the joint public and private interests that are advanced by an LAD discrimination claim pursued in either forum, compel the conclusion that the contractual shortening of the LAD’s two-year limitations period for a private action is contrary to the public policy expressed in the LAD.”  Justice LaVecchia cited decisions in Kansas and California that had reached comparable conclusions,”focusing on the public purpose and benefit of anti-discrimination laws.”

The Court rested its decision on the violation of public policy.  But Justice LaVecchia noted that the issue of unconscionability had also been raised.  After a review of the doctrine of unconscionability, she concluded that that doctrine, if applied, would have led to the same result of voiding the attempt to shorten the LAD’s statute of limitations.

This is an important decision, which has implications for other statutes that implicate strong public interests as well.  The strength of Justice LaVecchia’s opinion, and the unanimity of the Court, leave no doubt as to the correctness of today’s ruling.