In a case involving an action under the New Jersey Law Against Discrimination (LAD), the Appellate Division recently held that an arbitration agreement signed by a discharged employee which barred the employee from suing for punitive damages was unenforceable because it violates public policy. Roman v. Bergen Logistics, et al., – N.J. Super. – (App. Div. 2018).

Plaintiff, Milagros Roman, was employed by Bergen Logistics as a Human Resources Generalist.  She was terminated and she alleged her supervisor sexually harassed her and created a sexually hostile work environment during her employment.  She also alleged that after she objected to his conduct and advances, he retaliated against her and terminated her employment.

Plaintiff had signed an arbitration agreement when she was hired.  The agreement obligated her to arbitrate all claims against the company and provided that, by signing the agreement, she waived the right to a jury trial and to a claim for punitive damages.

The trial court found that the agreement was valid, but the Appellate Division reversed.  The Appellate Division held that the arbitration agreement’s punitive damages waiver violated the public policy underlying the LAD and rendered the agreement unenforceable.  However, the court also held that the balance of the arbitration agreement was valid and, therefore, plaintiff was obligated to arbitrate her claims, including a claim for punitive damages.

The Appellate Division did reject plaintiff’s claim that she did not knowingly enter into an agreement to arbitrate the claims asserted in her complaint and the arbitration agreement did not include a sufficiently clear waiver of her right to litigate her claims in court.  The Appellate Division pointed out that the agreement expressly provided, in bold letters, that plaintiff and Bergen Logistics waived their right to a trial by jury.  The agreement also made clear that the parties opted for arbitration in lieu of a jury trial.