NEW JERSEY SUPREME COURT PERMITS PLAINTIFF TO SEEK RELIANCE DAMAGES UNDER THE THEORY OF PROMMISSORY ESTOPPEL FOR A RESCINDED JOB OFFER

NEW JERSEY SUPREME COURT PERMITS PLAINTIFF TO SEEK RELIANCE DAMAGES UNDER THE THEORY OF PROMMISSORY ESTOPPEL FOR A RESCINDED JOB OFFER.

By Allison J. Vogel, Esq., March 1, 2021

 

The New Jersey Supreme Court recently affirmed, as modified, the liability judgment of the Appellate Division and remanded for a new damages trial on a promissory estoppel claim where the plaintiff’s prospective employer allegedly reneged on an oral promise of employment after he left his prior employer to accept the position.  Goldfarb v. Solimine, 2021 WL 626991 (App. Div. Feb. 18, 2021).

The plaintiff, Jed Goldfarb, asserted a claim for promissory estoppel against his prospective employer, David Solimine, seeking payment for wages lost in reliance on promises of employment.

Goldfarb, a research analyst, was employed by a brokerage firm, analyzing financial markets in order to offer investment advice and earning between $308,000 and $466,000 in annual commissions.  Goldfarb alleged that Solimine orally offered him a position managing his family’s sizable investment portfolio, promising him a base salary and return on investments.  The agreement was never memorialized in writing.  In reliance on the position, Goldfarb left the brokerage firm and began providing Solimine with stock tips and financial advice.  Shortly afterwards, Solimine told Goldfarb that he would not employ him.

Goldfarb subsequently sued, asserting, in relevant part, a claim for promissory estoppel.  Solimine moved for summary judgment, arguing that the claim was barred by the Uniform Securities Law due to the absence of a written agreement between the parties.  The trial court denied Solimine’s motion and the matter proceeded to trial.  The trial judge also denied Goldfarb’s pre-trial motion to recuse herself due to an appearance of impropriety.  At trial, the court barred the testimony of Goldfarb’s economic expert, denied Solimine’s motion for dismissal, and limited Goldfarb’s potential recovery to expectation damages.  The jury found for Goldfarb on liability and awarded him damages.  Solimine then moved for judgment notwithstanding the verdict, which was denied.  Goldfarb appealed and Solimine cross-appealed.

At the Appellate Division, Goldfarb appealed the denial of his recusal motion and sought a new trial only on damages.  Solimine cross-appealed, arguing that the parties’ agreement was barred by the Securities Act and its writing requirement.  The Appellate Division reversed the trial judge’s refusal to recuse herself, affirmed the jury finding of liability, and concluded that Goldfarb was entitled to present evidence of his reliance damages and expert testimony on his claim.  The Appellate Division remanded for a new trial on the issue of reliance damages.  Solimine petitioned for certification, which was granted.

The Supreme Court affirmed the judgment of the Appellate Division, upholding the jury’s finding of liability against Solimine on the promissory estoppel claim.  In relevant part, the Supreme Court found that the Securities Law does not prohibit the pursuit of a promissory estoppel claim for reliance damages.  The Supreme Court also affirmed the Appellate Division’s remand for a new trial on reliance damages only, leaving the determination on the admissibility of experts to the remand court. The Supreme Court, however, rejected the “family office” exception to the Securities Law because a factual finding on the issue was never presented to the jury.  Justice Albin dissented, finding the grant of reliance damages on a promissory estoppel claim to be in contravention of the Securities Law.

This decision is significant as it provides guidance on the differences in recovery between contract and promissory estoppel claims in situations where a prospective employer rescinds an offer of employment.  While the plaintiff was statutorily barred from recovering expectation damages under the oral employment agreement, he was permitted to seek damages for wages lost in reliance on the promise of employment.  Employers, however, should be prepared to defend against both types of claims and should seek guidance from counsel whenever they are rescinding a meaningful job offer.

 

Please contact NFC if you have any questions regarding this decision.

NJ Appellate Division Issues Latest Pro-Arbitration Ruling Requiring Former Re/Max Agent to Arbitrate Sexual Harassment Claims Brought under LAD

NJ Appellate Division Issues Latest Pro-Arbitration Ruling Requiring Former Re/Max Agent to Arbitrate Sexual Harassment Claims Brought under LAD

By Lindsey Andreozzi, Esq., February 24, 2021

Earlier this month, the New Jersey Appellate Division issued a decision that will join the litany of New Jersey cases following the recent trend of liberally enforcing arbitration agreements.

In Sengebush v. House Values Real Estate School LLC d/b/a Re/Max House Values et al., A-3094-19T4, the New Jersey Appellate Division issued a decision that will require a former Re/Max agent to arbitrate her sexual harassment and discrimination claims brought in state court under the New Jersey Law Against Discrimination (“LAD”). This decision follows just months after two landmark pro-arbitration decisions were issued by the New Jersey Supreme Court. In the 5-1 decision for Skuse v. Pfizer, Inc., 2020 WL 4760077 (N.J. Aug. 18, 2020), the Court held that an electronic arbitration agreement was enforceable under New Jersey contract law, and that Plaintiff “clearly and unmistakably” agreed to arbitrate her claims, according to the standard previously set forth by the Court in Leodori v. CIGNA Corp., 175 N.J. 293, 814 A.2d 1098 (2003). Similarly, in Flanzman v. Jenny Craig, 2020 WL5491899 (N.J. Sept. 11, 2020), the New Jersey Supreme Court unanimously held that an employee’s arbitration agreement that did not designate an arbitral forum or process for selecting an arbitral forum was valid and enforceable.

In March 2016, Plaintiff Lindsey Sengebush (“Plaintiff”) entered into an agreement to act as an exclusive real estate sales associate for Re/Max House Values (the “Agreement”). The Agreement contained an arbitration provision requiring “all disputes arising out of the Agreement, plaintiff’s conduct, activities or service as a real estate licensee, and Plaintiff’s relationship with Re/Max HV or any Re/Max affiliate to first go to mediation and then binding arbitration.” After entering into the agreement, Plaintiff worked as a real estate sales associate for Re/Max House Values from April 2016 until July 30, 2019, when she was terminated.

In November 2019, Plaintiff filed a complaint against Re/Max House Values and two individual named defendants, asserting various LAD claims for sexual harassment and gender discrimination as well as common law torts. Defendants moved to dismiss the complaint under Rule 4:6-2(a), alleging that the court “lacked jurisdiction of the subject matter based on an agreement to arbitrate” and under Rule 4:6-2(e), contending that it failed to state claims upon which relief could be granted in light of the binding arbitration agreement governing Plaintiff’s claims. After hearing oral arguments, the trial court issued a written opinion and orders dismissing plaintiff’s complaint without prejudice and staying the proceedings pending arbitration. The trial court held that the Agreement’s language “not to resort to the courts or the judicial system” was broad enough to waive the Plaintiff’s right to a jury trial and the right to pursue statutory claims, including LAD claims, in court. Also notably, the trial court found that Plaintiff was an independent contractor and, therefore, she could not assert claims under LAD.

Following Plaintiff’s appeal, on February 2, 2021, the appellate panel affirmed the trial court’s finding that Plaintiff’s claims were covered by the arbitration provision in her Agreement, stating that the parties’ Agreement was broad enough to waive Plaintiff’s right to a jury trial or to pursue statutory claims in court. However, the Appellate Division vacated the April 2, 2020 order, reasoning that the trial court should have entered an order explicitly staying the action and compelling arbitration under the Agreement. Further, the appellate panel agreed with Plaintiff’s argument that the trial court erred in holding that Plaintiff was an independent contractor, observing that this issue should be determined by the arbitrator.

While the Appellate Court’s decisions on these issues were largely consistent with the current requirements set forth by the New Jersey Supreme Court for a binding and enforceable arbitration agreement under Martindale v. Sandvik, Inc., 173 N.J. 76 (2002) and Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430 (2014), the Court’s ruling that the Agreement’s “broad” language was sufficient to cover Plaintiff’s statutory LAD claims is noteworthy, to say the least.

While arbitration case law in New Jersey is ever-evolving, we recommend that employers continue to specifically detail the statutory employment claims in their arbitration agreements to ensure that they are enforceable and in order to make it abundantly clear to employees that they are waiving their right to pursue their claims in Court.

Please contact an NFC team member if you have any questions or seek further assistance.

New Union, New Agreement: The Third Circuit holds original CBAs with prior labor union invalid

New Union, New Agreement: The Third Circuit holds original CBAs with prior labor union invalid in Utility Workers United Association, Local 537 v. Pennsylvania American Water Company.

By Monvan Hu, Esq., January 11, 2021

 

On December 18, 2020, a Third Circuit panel unanimously affirmed the dismissal of a breach of contract claim brought by a utility workers union, Utility Workers United Association, Local 537 (the “Association”), against the utility company, the Pennsylvania American Water Company (“PAWC”).  The panel reasoned that a breach of contract claim could not be sustained on collective bargaining agreements (“CBA”) struck between PAWC and the prior union representing its workers, Utility Workers Union of America, AFL-CIO, Local 537 (“UW Union of America”) as those contracts became null and void upon the election and certification of a new union.

 

Previously, UW Union of America had entered into two separate CBAs with PAWC setting forth the wages, hours and other conditions of employment in PAWC’s service areas in and around Pittsburgh.  In March 2018, members of UW Union of America decided to disaffiliate from the union and affiliate with the Association as their new exclusive collective bargaining agent.  The Association then notified PAWC that it was adopting all prior CBAs and labor relations practices already in effect, including the two CBAs between PAWC and UW Union of America.  The employees later petitioned the National Labor Relations Board (“NLRB”) to decertify UW Union of America as the exclusive bargaining agent for the labor contracts and to substitute the Association in its place.  The NLRB held elections on the petitions and certified the Association in December 2018.

 

The Association then requested that the NLRB compel PAWC to begin deducting union dues, but the NLRB denied the request. The NLRB also denied the Association’s subsequent appeal, finding that the Association was a “completely new labor organization, bargaining towards a new contract.”  The Association commenced litigation in the Western District of Pennsylvania against PAWC, alleging that PAWC was refusing to abide by the terms of the original CBAs and the arbitration agreement therein.  It sought a declaratory judgment that the Association was the lawful successor to UW Union of America and that the CBAs were binding on PAWC.

 

PAWC then moved to dismiss the complaint arguing that once the Association was certified by the NLRB to be the exclusive bargaining agent, all prior contracts with the predecessor union were null and void. On the motion, the District Court deferred in large part to the NLRB’s holding that the Association is a completely new labor organization bargaining towards a first contract.  On appeal, the Third Circuit panel affirmed the decision, although it relied on a slightly different rationale based on prior NLRB decisions, holding that “[a] contract between a former union and an employer becomes null and void when a challenging union prevails against the former union in an NLRB representation election and the challenging union is certified as the new collective-bargaining representative of the employer’s employees.” Without a valid contract, there could be no breach of contract.

 

The decision is consistent with longstanding NLRB precedent, and it illustrates the importance for employers and successor labor unions to come to the negotiating table. For more information or questions, please contact NFC’s Labor Management Relations Team.

COVID-19 Employment Lawsuits Climbing the Courts: Second Circuit to Hear Previously Dismissed Public Nuisance and Workplace Safety Claims Against Amazon

COVID-19 Employment Lawsuits Climbing the Courts: Second Circuit to Hear Previously Dismissed Public Nuisance and Workplace Safety Claims Against Amazon.

 

By Jesse Grasty, Esq., December 23, 2020

Employees at an Amazon warehouse in Staten Island have appealed the recent dismissal of their lawsuit, which alleged the company failed to comply with state and federal public health requirements during the COVID-19 pandemic. They will now bring their case before the United States Court of Appeals for the Second Circuit after recently filing an appeal on November 24, 2020.

In their lawsuit, Palmer v. Amazon.com, Inc., 20-cv-2468 (BMC) (E.D.N.Y.), which was originally filed in June, the workers alleged that Amazon created a public nuisance and breached its duty to provide a safe workplace under New York Labor Law Section 200 because:

• Amazon’s productivity requirements prevent employees from engaging in basic hygiene, sanitization, and social distancing. For instance, they feared that stopping to wash their hands or sanitize their works stations would lower their productivity scores.

• Only two of the breakrooms at the warehouse are air conditioned, causing workers to cluster in those areas on hot days, further impeding social distancing.

• Although Amazon conducts contact tracing, Plaintiffs claim it fails to do so adequately. Specifically, they claim that while Amazon uses surveillance to track movements it does not conduct interviews to get more information.

In addition, Plaintiffs alleged that Amazon violated New York Labor Law Wage Payment Law under Section 191 by failing to clearly communicate to its employees the availability of leave related to COVID-19 and failing to promptly pay workers the required leave.

On November 2, 2020, Judge Cogan in the Eastern District of New York granted Amazon’s motion to dismiss the public nuisance and New York Labor Law Section 200 claims without prejudice and the New York Labor Law Section 191 claim with prejudice.

In dismissing the public nuisance and Section 200 claims, Judge Cogan held that those claims belonged before OSHA. The Court explained that, “The central issue in this case is whether Amazon’s workplace policies at [its warehouse] adequately protect the safety of its workers during the COVID-19 pandemic.” The Court further reasoned that analyzing Plaintiffs’ claims required “both technical and policy expertise,” which the courts lack.

The Court further held that even if OSHA did not have primary jurisdiction over these claims, it still would have dismissed them. The Court noted that a public nuisance claims requires a special injury. However, Plaintiffs’ alleged injury – increased exposure to COVID-19 – was common to all New Yorkers. As to the Section 200 claim, the Court held that these claims for past workplace injuries belonged exclusively before workers’ compensation.

The Court also dismissed the Wage Payment claim, rejecting the New York Department of Labor’s recent guidance and noting that the statute applied to unpaid wages, which did not include sick leave.

Plaintiff’s counsel disagreed with the Court’s ruling. In a statement, counsel maintained that the “civil justice system, and not an Occupational Safety and Health Administration that has been AWOL throughout this crisis, is the right place for these … workers and members of their households to pursue their claims.”

While it remains uncertain how the Second Circuit will rule on this issue, it is clear that we will continue to see an increase in claims related to COVID-19, as plaintiffs and their lawyers continue to vigorously pursue all potential claims. It will also be interesting to see if other courts follow suit with the Eastern District of New York and encourage workers to file workplace safety claims with OSHA rather than our courts.

 

Third Circuit Holds That Good Faith Bargaining Requires Production of Presumptively Relevant Information, Not A Concession To Overbroad Requests

Third Circuit Holds That Good Faith Bargaining Requires Production of Presumptively Relevant Information, Not A Concession To Overbroad Requests

 

By Kristine V. Ryan, Esq., October 2, 2020

A basic tenet of the National Labor Relations Act (“NLRA”) requires an employer to bargain in good faith with a union by providing all information relevant to the union’s bargaining obligations. See 29 U.S.C. § 158.  This requirement extends to “effects bargaining” – the situation where an employer is required to bargain with the union over the effects of certain management decisions including, as in this case, the sale of a business.  On September 24, 2020, a divided panel of the Third Circuit held that the employer violated the NLRA when it failed to cede, at least in relevant part, to the union’s demand for the complete asset purchase agreement (“Agreement”) for its multi-million dollar acquisition – a one hundred page long contract with seventy-seven exhibits and schedules that touched on the employer’s most sensitive information.  See Crozer-Chester Med. Ctr. v. Nat’l Labor Relations Bd., No. 18-1640, 2020 WL 5667742 (3d Cir. Sept. 24, 2020).

Soon after entering into the Agreement, but before it received regulatory approval, Crozer-Keystone Health System told its five unions of the sale.  It advised them through a letter, which included an attached list of more than 30 answered “frequently asked questions,” that key terms and conditions of its members’ employment would remain the same.  Shortly thereafter, the Pennsylvania Association of Staff Nurses and Allied Professionals (the “Union”) demanded the entire Agreement for purposes of “effects bargaining”.  The Union never articulated why it needed the entire Agreement.

Crozer objected.  It stated that the entire Agreement was not relevant for effects bargaining over the terms and conditions of employment of the Union’s members, was largely confidential and proprietary and contained a confidentiality provision.  The Union did not budge from its position and Crozer never provided those portions of the Agreement it deemed relevant.  The Union filed a charge.

The Board affirmed the ALJ’s decision that Crozer violated the NLRA by failing to provide the relevant parts of the Agreement to the Union.  It ordered Crozer to disclose the entire Agreement, including information the Union never established as relevant.  Crozer appealed the decision and the Union sought to enforce it.

The Third Circuit held that substantial evidence in the record — including documents and testimony from Crozer executives — supported the finding that at least some of the Agreement contained presumptively relevant information, although the ALJ was unclear regarding what portions of the Agreement were presumptively relevant.  The Court found unpersuasive the fact that the Union did not specify its relevance to Crozer, which had a duty to furnish at least part of the Agreement where the need to move quickly to bargain in a period of transition is “readily apparent”.   The Court also discounted the confidentiality argument, holding that Crozer failed to meets its burden of establishing a legitimate and substantial confidentiality interest in the entire Agreement.

While holding that substantial evidence supported the Board’s conclusion that Crozer violated the NLRA by failing to provide the Union with presumptively relevant information in the Agreement, the Court also held that the Board abused its discretion by imposing a punitive requirement that Crozer produce the entire Agreement, including those portions that Union failed to establish as relevant.  Accordingly, the Court remanded for the Board to determine which portions of the Agreement were sufficiently relevant and within the Union’s right to receive.  Notably, the Union had long since obtained the body of the Agreement, which Crozer had filed with its petition to obtain approval for the sale in the Delaware County Court of Common Pleas, as well as two of its schedules, due to the intervention of the Pennsylvania’s Attorney General.  Accordingly, the Board’s determination is limited to the remaining exhibits and schedules not yet disclosed.

The NLRA’s duty to bargain in good faith runs both ways.  Here, both sides faltered.  The Union cast an overbroad request and refused to move or otherwise indicate which parts of the Agreement it deemed relevant.  The employer’s offers to consider “any alternative requests” from the Union rang hollow in the face of its failure to produce even that information its own employees deemed relevant.   This stalemate — which now has spanned nearly five years — ended where it should have begun:  with an agreement to produce relevant information required for good faith bargaining.