The suit against Roger Ailes sheds light on recent developments regarding the scope of arbitration provisions in the State of New Jersey.

Fox News anchor Gretchen Carlson filed suit against Roger Ailes, Chairman of Fox News, for alleged sexual harassment in the workplace.  She chose to file her suit in State Court in New Jersey.  Subsequently, Mr. Ailes filed a separate case in the Southern District of New York, in Federal Court, seeking to compel an arbitration of the dispute between Carlson and Ailes.  Further, Mr. Ailes sought to compel arbitration pursuant to Carlson’s 2013 employment contract.  In response to that filing, Ms. Carlson moved for an injunction in the District Court of New Jersey to bar Mr. Ailes from litigating the dispute in the Federal Court in New York.  While the procedural maneuvering remains a particular to the litigation, it shines a spotlight on recent developments with respect to arbitration clauses in New Jersey which seemingly indicate a departure from previous New Jersey arbitration philosophy.

In 2003, New Jersey adopted its modified version of the Uniform Arbitration Act of 2000.  (N.J.S.A. 2A:23, B-1).  The primary purpose of the legislation together with its interpretation by the Courts of New Jersey was to establish in advance arbitration as a more palatable alternative to litigation.  At the time of its enactment, the act represented New Jersey’s public policy that arbitration was a more accelerated and more efficient approach to the resolution of disputes than litigation.  However, in recent months, New Jersey has taken a step back from its longstanding policy of enforcing arbitration agreements as long as they appeared to be voluntarily agreed to by and between the parties.  Recently, an arbitration clause that created an artificial statute of limitations governing claims under the Law Against Discrimination was held to be invalid.

Furthermore, the courts in this state recently refused to enforce an arbitration clause that was contained in an employee manual where the employee manual specifically stated in numerous places that it was not a contract of employment.  The court said that the employer could not rely on the handbook to thwart the creation of a contract rather than employment at will, and then in the same document attempt to bind an employee into contractual arbitration.  At this juncture, it is unclear whether or not these two recent decisions are simply limited to the facts of each particular case.  It may be that they are the beginning of an adjustment in the State of New Jersey with respect to its heretofore almost universal acceptance of executed arbitration agreements.

Until such time as we receive more guidance from the court, or the Legislature, an extra modicum of caution in the drafting of arbitration agreements and the presentation of those agreements to those who will sign them would be warranted.

Author: James A. Paone, II