Zatuchni & Associates Wins Landmark Decision Refusing to Enforce an Arbitration Agreement for Lack of Mutual Assent

David Zatuchni

Recently, the New Jersey Appellate Division reversed a lower court’s order compelling the arbitration of our client, Marilyn Flanzman’s, claims and depriving her of her day in court.  This decision represents a victory, not only for Zatuchni & Associates, but to all New Jersey employees subject to arbitration agreements that fail to specify an arbitration forum or even a process for selecting such a forum.

Ms. Flanzman sued her former employer of twenty-six years, Jenny Craig, for age discrimination and constructive termination under the New Jersey Law Against Discrimination.  In response, Jenny Craig filed a motion to remove Ms. Flanzman’s claims and to compel their arbitration.  Jenny Craig based its motion on the fact that, after some twenty years of working for the company, Ms. Flanzman was presented with and signed an arbitration contract, whereby she waived her right to litigate her disputes against Jenny Craig in court and agreed to arbitrate them instead.

Zatuchni & Associates, however, argued the contract failed to specify the arbitration forum (typically, an agency like the American Arbitration Association) that would decide Ms. Flanzman’s claims in lieu of court.  Moreover, the agreement muddied the waters by referring to California law and filing fees.  This messy drafting created the suggestion that the unnamed arbitration forum was possibly in California, and/or that California law possibly governed the dispute.  Given the omission of and general confusion regarding a forum, Zatuchni & Associates argued there was no “meeting of the minds” between Ms. Flanzman and Jenny Craig as to an arbitration forum, and therefore the contract could not be enforced.

The Appellate Division agreed, finding that the arbitration contract (1) did not specify an arbitration forum, and also (2) did not specify a process whereby the respective parties could select an arbitration forum.  Accordingly, the court held there was no “mutual assent”, or true agreement, between Ms. Flanzman and Jenny Craig as to where her claims would be arbitrated, or how such a forum would be chosen. As such, the contract was unenforceable because Ms. Flanzman was not fully apprised of and did not understand what she was electing in place of a jury trial.

The Flanzman case is a win for New Jersey workers to the extent that it forces employers to more clearly specify the rights they are waiving when they sign an arbitration agreement.  Because the Appellate Division refused to enforce the faulty arbitration contract, Ms. Flanzman is now proceeding against Jenny Craig in court.

David Zatuchni
David Zatuchni graduated from Northwestern University School of Law in 1995. Since that time, he has exclusively practiced in the field of employment law. For many years, Mr. Zatuchni defended large corporations in all types of employment discrimination lawsuits and labor law matters. Read More

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