TAMMIE S. NAU VS. DAVID CHUNG (C-000145-18, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5315-17T1

TAMMIE S. NAU,

Plaintiff-Appellant,

v.

DAVID CHUNG and ENGLEWOOD

LAB, INC.,

Defendants-Respondents.

________________________________

Argued May 15, 2019 – Decided June 24, 2019

Before Judges Accurso, Vernoia and Moynihan.

On appeal from the Superior Court of New Jersey,

Chancery Division, Bergen County, Docket No. C-

000145-18.

Michael S. Horn argued the cause for appellant (Archer

& Greiner, PC, attorneys; Steven B. Harz and Michael

S. Horn, on the briefs).

Claudia A. Costa and Marc Cytryn argued the cause for

respondents (Gordon & Rees, LLP, attorneys for

Englewood Lab, Inc.; Kaufman Dolowich Voluck,

LLP, attorneys for David Chung; Gregory S. Hyman,

Marc Cytryn and Hillary A. Fraenkel, on the joint

brief).

PER CURIAM

Plaintiff Tammie S. Nau appeals from a Chancery Division order

dismissing her complaint pursuant to Rule 4:6-2(a) for lack of jurisdiction and

directing that her claims proceed in mediation and arbitration in accordance with

defendant Englewood Lab, Inc.'s (Englewood) arbitration policy. We affirm.

I.

Plaintiff filed a complaint against Englewood and its chief executive

officer, defendant David Chung. The complaint alleged Chung offered plaintiff

a position as Englewood's Executive Vice President and that she would receive

"a substantial number of shares" in Englewood "once she started working,"

equating to an equity interest in the company of no less than $7 million and no

more than $9 million.

Plaintiff accepted the position and entered into a December 12, 2017

written employment agreement with Englewood. Plaintiff agreed to "comply

with all [of Englewood's] policies, procedures, rules and regulations, both

written and oral." The agreement further provided for "[s]tock [o]ption terms to

be finalized as promised by [the] end of 2018." The agreement did not otherwise

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provide for plaintiff's receipt of shares of stock or an equity interest in

Englewood.

Shortly after signing the employment agreement, plaintiff received

Englewood's Employee Handbook. The handbook's introduction states "the

procedures, practices, policies and benefits described in the [h]andbook may be

modified or discontinued by [Englewood] at any time, as it deems appropriate

and at its sole discretion. Nothing in this [h]andbook creates a contract or

otherwise modifies the at-will employment relationship."

Section 710 of the handbook addresses dispute resolution, mediation, and

arbitration. In pertinent part, it provides as follows:

If a dispute cannot be resolved internally, you and

ENGLEWOOD LAB agree to first engage in mediation,

and then arbitrate any remaining disputes.

For purposes of this policy, the following definitions

apply:

"ENGLEWOOD LAB" or the "Company" shall mean

ENGLEWOOD LAB, LLC, its officers, directors,

owners, managers, employees, agents, [affiliated]

entities, subsidiaries, clients, vendors, and parent

companies.

"Dispute", "Claim", or "Controversy" shall be broadly

interpreted to mean any claim you may have against

ENGLEWOOD LAB, or ENGLEWOOD LAB may

have against you, relating to, arising from, or having

any relationship or connection whatsoever with your

employment with ENGLEWOOD LAB or the

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termination thereof. This applies to claims including,

but not limited to, claims for wages or other

compensation due, claims for breach of any contract or

covenant, tort claims including but not limited to libel,

slander, fraud, and intentional infliction of emotional

distress, claims for discrimination (including, but not

limited to, race, sex, religion, national origin, age,

marital status, or medical condition, handicap or

disability), claims for benefits, and claims for violation

of any federal, state, or other governmental law, statute,

regulation or ordinance, except claims excluded by the

terms of this agreement. This includes claims arising

under the Age Discrimination in Employment Act

(ADEA), Title VII of the Civil Rights Act of 1964, the

Americans with Disabilities Act (ADA), the Family and

Medical Leave Act (FMLA), the Fair Labor Standards

Act (FLSA), 42 U.S.C. § 1981, including amendments

to all the foregoing statutes, the Employee Polygraph

Protection Act, the New Jersey Law Against

Discrimination, the New Jersey Conscientious

Employee Protection Act, or any other applicable

federal, state, or local laws, and/or common law

regulating employment termination, misappropriation,

breach of the duty of loyalty, the law of contract or the

law of tort; including, but not limited to, claims for

malicious prosecution, wrongful discharge, wrongful

arrest/wrongful imprisonment, intentional/negligent

infliction of emotional distress or defamation.

"Disputes", "Claims" or "Controversies" does not

include claims for state employment insurance (e.g.,

unemployment compensation, workers' compensation,

worker disability compensation) or under the National

Labor Relations Act.

....

Neither ENGLEWOOD LAB nor you can file a civil

lawsuit in court against the other party relating to such

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claims, with the exception of claims for emergent relief

related to the misuse or misappropriation of

confidential business information and/or violation of

the confidentiality and non-disclosure agreement. If a

party files a lawsuit in court to resolve claims subject

to arbitration, both agree that the court shall dismiss the

lawsuit and require the claim to be resolved through

arbitration.

If a party files a lawsuit in court involving claims that

are, and other claims that are not, subject to arbitration,

such party shall request the court to stay litigation of

the nonarbitrable claims and require that arbitration

take place with respect to those claims subject to

arbitration.

....

THE SUBMISSION OF AN APPLICATION,

ACCEPTANCE OF EMPLOYMENT OR THE

CONTINUATION OF EMPLOYMENT BY YOU

SHALL BE DEEMED TO BE ACCEPTANCE OF

THIS ARBITRATION POLICY. NO SIGNATURE

SHALL BE REQUIRED FOR THE POLICY TO BE

APPLICABLE. THE MUTUAL OBLIGATIONS SET

FORTH IN THIS AGREEMENT SHALL

CONSTITUTE A CONTRACT BETWEEN YOU AND

ENGLEWOOD LAB BUT SHALL NOT CHANGE

YOUR AT-WILL RELATIONSHIP OR ANY TERM

OF ANY OTHER CONTRACT OR AGREEMENT

BETWEEN ENGLEWOOD LAB AND YOU. THIS

POLICY SHALL CONSTITUTE THE ENTIRE

AGREEMENT BETWEEN YOU AND ENGLEWOOD

LAB REGARDING THE RESOLUTION OF

COVERED CLAIMS.

Plaintiff signed an "Acknowledgement and Receipt of Handbook" form

which, in relevant part, states:

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I acknowledge that I have received a copy of

ENGLEWOOD['s] Employee Handbook . . . . I

understand that I am expected to comply fully with each

of those policies as a condition of my employment with

ENGLEWOOD . . . .

I understand and acknowledge that this Handbook is

intended to provide me with general information about

ENGLEWOOD['s] policies and procedures, that it is

not a contract of employment, and that the Handbook is

not intended as a promise or guarantee of my

employment or of any particular term or condition of

my employment.

I understand and acknowledge that ENGLEWOOD . . .

may amend, modify, supersede or terminate the policies

described in the Handbook, or introduce new policies

and/or procedures, in its sole discretion, and at any

time, with or without notice to me.

....

I agree to mediate and arbitrate any claims I may have

against ENGLEWOOD . . . as described in Section 710

of this Handbook, and waive my right to a trial by jury.

I understand and acknowledge that my employment

with ENGLEWOOD . . . is "at will," meaning that

ENGLEWOOD . . . can terminate my employment . . .

at any time, with or without notice or cause, and for any

or no reason. . . . I understand and acknowledge that my

"at will" employment status may not be altered by any

oral or written statement made or issued by a[n

Englewood] representative, with the exception of a

written employment agreement signed by an officer of

[Englewood].

[(Emphasis added).]

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The complaint alleges that following the commencement of plaintiff's

employment, Chung sold "a majority stake" in Englewood without plaintiff's

knowledge or consent. Plaintiff claimed it was "unknown" if the transaction

involved the sale of Englewood stock shares she allegedly owned and Chung did

not notify her of any meeting at which a vote was taken to approve the sale and

change in control of Englewood. The complaint also alleged Chung denied

plaintiff access to Englewood's books and records and violated her employment

agreement by changing her role in the company.

Plaintiff sought a declaratory judgment that she is a shareholder of

Englewood and Chung's alleged transfer of her putative shares is null and void.

The complaint asserted causes of action against Englewood and Chung for

breach of "a number of agreements" between plaintiff and Englewood, breach

of the covenant of good faith and fair dealing, unjust enrichment and conversion.

Plaintiff also asserted claims against Chung for breach of fiduciary duty,

minority shareholder oppression, misrepresentation and concealment.

Englewood and Chung moved to dismiss the complaint pursuant to Rule

4:6-2(a), claiming the court lacked jurisdiction because plaintiff is obligated to

mediate and arbitrate her claims pursuant to the arbitration policy in the

A-5315-17T1

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handbook because she executed the acknowledgment form which included her

express agreement to be bound by the policy.

Plaintiff opposed the motion, asserting her employment agreement did not

include a mediation or arbitration requirement and that the handbook and

acknowledgment she signed incorporating the arbitration policy did not

constitute a binding contract. In the alternative, plaintiff claimed that even if

she is bound to arbitrate, the claims in her complaint do not fall within the

coverage of the arbitration policy.

Judge Robert P. Contillo heard argument on defendants' motion and issued

a detailed written decision and order dismissing the complaint without prejudice

for lack of subject matter jurisdiction. See R. 4:6-2(a). Judge Contillo found

plaintiff "clearly and unambiguously assented" to Englewood's arbitration

policy by executing the acknowledgment that included a waiver of the right to a

jury trial and an express agreement to mediate and arbitrate in accordance with

Section 710 of the handbook, and that the policy encompassed the claims

asserted in the complaint. The judge also found that although plaintiff believed

otherwise, she was not a shareholder in Englewood and had not been issued any

shares. The judge ordered "that all claims should be mediated then arbitrated

consistent with the valid [a]rbitration [p]olicy." This appeal followed.

A-5315-17T1

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II.

We review the court's order granting defendants' motion to compel

arbitration de novo because the validity of an arbitration agreement presents a

question of law. Kernahan v. Home Warranty Adm'r of Fla., Inc., 236 N.J. 301,

316 (2019); see also Atalese v. U.S. Legal Servs. Grp., LP, 219 N.J. 430, 445-

46 (2014) ("Our review of a contract, generally, is de novo, and therefore we

owe no special deference to the trial court's . . . interpretation. Our approach in

construing an arbitration provision of a contract is governed by the same de novo

standard of review." (citations omitted)).

We must be "mindful of the strong preference to enforce arbitration

agreements." Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). The

Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 to 16, favors enforcement of

arbitration agreements. AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 339

(2011). The "overarching purpose of the FAA . . . is to ensure the enforcement

of arbitration agreements according to their terms so as to facilitate streamlined

proceedings." Id. at 344. "The [FAA] and the nearly identical New Jersey

Arbitration Act, N.J.S.A. 2A:23B-1 to -32, enunciate federal and state policies

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favoring arbitration" as a mechanism of resolving disputes that otherwise would

be litigated. Atalese, 219 N.J. at 440 (citation omitted).

"An agreement to arbitrate 'must be the product of mutual assent, as

determined under customary principles of contract law.'" Barr v. Bishop Rosen

& Co., 442 N.J. Super. 599, 605-06 (App. Div. 2015) (quoting Atalese, 219 N.J.

at 442). As noted recently by our Supreme Court, "[a]n arbitration agreement is

valid only if the parties intended to arbitrate because parties are not required 'to

arbitrate when they have not agreed to do so.'" Kernahan, 236 N.J. at 317

(quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ.,

489 U.S. 468, 478 (1989)).

"Mutual assent requires that the parties understand the terms of their

agreement[,]" and where the "agreement includes a waiver of a party's right to

pursue a case in a judicial forum, 'clarity is required.'" Barr, 442 N.J. Super. at

606 (quoting Moore v. Woman to Woman Obstetrics & Gynecology, LLC, 416

N.J. Super. 30, 37 (App. Div. 2010)). An arbitration agreement that includes a

waiver of an employee's right to assert causes of action in court against an

employer requires "an explicit, affirmative agreement that unmistakably reflects

the employee's assent." Leodori v. Cigna Corp., 175 N.J. 293, 303 (2003).

A-5315-17T1

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Applying these principles, we are unpersuaded by plaintiff's claim that she

did not have an obligation to arbitrate because her employment agreement

lacked an arbitration provision. "[T]he question of enforceability" of plaintiff's

arbitration obligation "is determined not on the basis of whether the arbitration

agreement is contained in . . . an employment contract, but rather whether the

arbitration provision qualifies as a valid and enforceable contract." Martindale

v. Sandvik, Inc., 173 N.J. 76, 87 (2002). Although her employment agreement

did not include an arbitration provision, plaintiff signed the acknowledgment

expressly agreeing to mediate and arbitrate any claims against Englewood "as

described in Section 710 of the [h]andbook." An employee's "signature to an

agreement is the customary and perhaps surest indication of assent ." Leodori,

175 N.J. at 306-07. Plaintiff's execution of the plainly worded acknowledgment

provides that unmistakable indication here. 1

Plaintiff also asserts she is not contractually bound by Section 710 because

the handbook's introduction states that "[n]othing in this [h]andbook creates a

contract," and that language creates an ambiguity as to whether she could be

contractually bound by the handbook's provisions. The record does not support

1

Plaintiff does not argue that Section 710 of the handbook is unclear or

ambiguous.

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plaintiff's contention because her arbitration obligation is not founded on the

handbook's terms; that is, Englewood does not claim and the court did not find

that plaintiff is contractually bound to arbitrate under the handbook's terms.

Rather, the court found, and we agree, plaintiff's execution of the

acknowledgment, which clearly and unequivocally provides that plaintiff agrees

to arbitrate her claims in accordance with Section 710 of the handbook,

constitutes the binding contractual obligation requiring the mediation and

arbitration of plaintiff's claims.

Nothing in the handbook precludes plaintiff's execution of a separate

document, such as the acknowledgment, adopting the handbook's provisions as

binding contractual obligations. In Leodori, the Court recognized that an

arbitration agreement may be set forth in a document separate from the one

describing the terms of the arbitration obligation. 175 N.J. at 307. The Court

held that where an employee acknowledges and assents to an arbitration

agreement in a document separate from the one describing the arbitration

obligation, the acknowledgment form "need not recite [the full] policy verbatim

so long as the form refers specifically to arbitration in a manner indicating an

employee's assent, and the policy is described more fully in an accompanying

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handbook or in another document known to the employee." Ibid. That is the

precise circumstance present here.

Plaintiff relies on our decision in Morgan v. Raymours Furniture Co.,

where we found that an employee was not bound by an arbitration policy in the

employer's handbook. 443 N.J. Super. 338, 343 (App. Div. 2016). In Morgan,

the employee was terminated following his refusal to sign a stand-alone

arbitration agreement, id. at 341, and then filed a complaint asserting claims

under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49, and

for wrongful termination and other similar claims, id. at 339-40. The employer

moved to dismiss the complaint, arguing the employee was bound to arbitrate

his claims under an arbitration provision in an employee handbook, the receipt

of which the employee had acknowledged. Id. at 341.

We affirmed the trial court's denial of the employer's motion, finding no

evidence the employee "'clearly and unambiguously' agree[d] to a waiver of the

right to sue," id. at 343 (quoting Atalese, 219 N.J. at 443), a waiver the employer

had stated "was not 'promissory or contractual,'" and "the employer cannot fairly

contend the employee 'agreed' to a waiver of the right to sue," because the

employee only acknowledged he "'received' and 'underst[ood]' the contents of

the . . . handbook," ibid. (first alteration in original).

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Here, plaintiff did not merely acknowledge receipt of the handbook or that

she understood its terms. She executed the acknowledgment that included a

separate and express agreement to mediate and arbitrate her claims against

Englewood in accordance with Section 710 of the handbook. As we explained

in Morgan, "had plaintiff executed the stand-alone arbitration agreement

presented to him . . . a different outcome would likely have followed." Id. at

344. That different outcome is required where, as here, an employee executes

an agreement separate from a handbook, but which expressly provides that the

employee agrees to be bound by clearly defined provisions contained within the

handbook. See Leodori, 175 N.J. at 305 (finding an arbitration clause will be

enforced where there is an "explicit indication that the employee intended to

abide by that provision").

Contrary to plaintiff's assertion, our conclusion that she is bound by her

agreement to mediate and arbitrate in accordance with Section 710 of the

handbook is supported by the Supreme Court's decision in Leodori. In Leodori,

the Court found that an acknowledgment of receipt of a handbook, which

included an arbitration provision, did not create a contractual obligation to

arbitrate because the acknowledgment stated only that the employee "received"

the handbook. Id. at 297, 306. The Court specifically noted that "the

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acknowledgment form that [the] plaintiff did sign would have sufficed as

concrete proof of a waiver had it stated that the employee had agreed to the more

detailed arbitration provision contained in the handbook." Id. at 307. Here,

plaintiff executed the acknowledgment which included the "affirmative

agreement that unmistakably reflects [plaintiff's] assent," id. at 303, to the

arbitration policy the Court found missing in Leodori, see id. at 306.

Plaintiff also argues that any purported contract formed by her execution

of the acknowledgment is unenforceable as illusory because the handbook's

introduction states it "may be modified or discontinued by [Englewood] at any

time, as it deems appropriate and at its sole discretion." See Jaworski v. Ernst

& Young U.S. LLP, 441 N.J. Super. 464, 477 (App. Div. 2015) ("Under general

principles of contract law, an agreement . . . based only upon an illusory promise

is unenforceable."). We disagree. By her execution of the acknowledgment,

plaintiff agreed to mediate and arbitrate her claims "as described in Section 710

of this [h]andbook," and thus her contractual obligation was limited to only the

version of Section 710 contained in the handbook extant when she signed the

agreement. Her obligation to mediate and arbitrate is defined solely by the terms

of the acknowledgment that she signed, and it does not allow for any

modification of the mediation and arbitration requirement from that which is set

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forth in Section 710 of "this [h]andbook." As such, there is nothing in the

agreement rendering the clearly defined mediation and arbitration agreement

illusory.

We are also unpersuaded by plaintiff's contention that the arbitration

policy in Section 710 is unenforceable because it provides that "NO

SIGNATURE SHALL BE REQUIRED FOR THE POLICY TO BE

APPLICABLE." We recognize that an affirmative showing of mutual assent to

a waiver of an employee's right to a jury trial is required and that a lack of an

affirmative indication of assent, in the form of a signature or otherwise, will

render an arbitration policy unenforceable. See Leodori, 175 N.J. at 303, 307.

But we find plaintiff's reliance on the language misplaced because she actually

executed the acknowledgment and thereby provided the affirmative assent

required to constitute a valid and binding agreement.

Because we are satisfied plaintiff agreed to be contractually bound to

mediate and arbitrate her claims under Section 710 of the handbook, we also

address plaintiff's contention that the claims in the complaint are not

encompassed by the arbitration policy's terms. "A court must look to the

language of the arbitration clause to establish" the scope thereof and "its

boundaries." Hirsch, 215 N.J. at 188. "[T]he proper starting point is the plain

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meaning of the Arbitration Agreement. . . . Other interpretive principles need be

employed only if the Agreement's plain meaning cannot be determined."

Steigerwalt v. Terminix Int'l Co., 246 F. App'x 798, 801 (3d Cir. 2007).

The policy requires mediation and then arbitration of all disputes and, as

noted, includes a broad definition of the disputes subject to its terms. The policy

requires mediation and arbitration of claims "arising from, or having any

relationship or connection whatsoever with [plaintiff's] employment with

[Englewood]," "claims for . . . other compensation due, claims for breach of any

contract or covenant," and claims for "breach of the . . . law of contract."

Plaintiff argues her claims fall outside the scope of the arbitration policy

because the policy does not specifically state that it includes "shareholder

disputes." However, her complaint does not allege she was actually issued or

possessed any shares of stock in Englewood. It alleges a promise of shares of

stock conditioned on plaintiff's acceptance of employment with Englewood and

an entitlement to shares of stock based on an "equity interest" in accordance

with the terms of her employment agreement.

Plaintiff's claim she is entitled to shares of stock is encompassed by the

arbitration policy because it "arises from" her employment with Englewood and

is founded on an alleged breach of contract. The complaint alleges she accepted

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employment based on the promise of an equity interest, and her claims are

necessarily founded on the terms of her employment agreement because it

includes a provision defining her entitlement to an equity interest—"[s]tock

[o]ption terms [are] to be finalized as promised by [the] end of 2018. " We are

satisfied they fall within the disputes covered by the arbitration policy.

We last reject plaintiff's argument that the arbitration policy does not bar

her claims against Chung because he did not execute the acknowledgment form.

Section 710 plainly requires that plaintiff mediate and arbitrate her disputes

against Englewood, which is expressly defined to include its "officers, directors,

owners . . . employees, [and] agents." The complaint alleges Chung is

Englewood's chief executive officer and acted in that capacity in offering

plaintiff her employment position, executing the employment agreement and

undertaking the alleged sale of the "majority stake" in Englewood. Thus, the

claims against Chung fall within the coverage of the arbitration policy because,

at a minimum, the complaint alleges claims against Chung in his capacity as an

employee and agent of Englewood.

Plaintiff also argues her claims fall outside the scope of the arbitration

policy because "this matter involves equity that may be awarded under New

Jersey's Business Corporation Act ('BCA')" and jurisdiction under the BCA is

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expressly vested in the Superior Court, citing N.J.S.A. 14A:12-7 and 14A:12-

15. We reject plaintiff's claim because the arbitration policy encompasses all

statutory claims. In addition, the BCA pertains to actions by shareholders and,

as alleged in the complaint, plaintiff is not a shareholder. Rather, she alleges

only that she was promised shares after her employment commenced and her

employment agreement provided only for possible stock options that were to be

subject to a future agreement.

Any arguments asserted by plaintiff that we have not expressly addressed

are without sufficient merit to warrant discussion in a written opinion. R. 2:11-

3(e)(1)(E).

Affirmed.

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