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Court Remands Fee Award, Tackles Jury Waiver Language

February 8, 2017 | Posted in : Expenses / Costs, Fee Agreement, Fee Award, Fee Clause, Fee Issues on Appeal, Fee Jurisprudence, Fee Reduction, Fee Shifting, Prevailing Party Issues

A recent New Jersey Law Journal story by David Gialanella, “Court Remands $2M Fee Award, Tackles Jury Waiver Language,” reports that in a decision that sheds some light on the specificity of language required for waivers contained in employment contracts, a New Jersey appeals court has reversed an award of $2.06 million in attorney fees to Heartland Payment Systems Inc., though it appears the company will recover fees in some form.

The court remanded the case, holding that a claim lodged under the state Conscientious Employee Protection Act (CEPA) was not covered by a contract provision that waived the right to jury trial for disputes arising from "'this agreement.'"  That language, as well as the absence of language specifically referring to claims based in the statute, limited the provision's effect, the court ruled.  The panel also noted the high threshold for fee awards to employers under the CEPA.

"It was error for the trial judge to conclude the threshold was met based upon her finding that [the plaintiff] 'failed to set forth a viable claim against the defendant pursuant to CEPA,'" Appellate Division Judge Marianne Espinosa wrote in the Feb. 6 published opinion.

"There is a broad spectrum in the quality of proofs that fall between a claim that is not 'viable' and one that is 'without basis in law or in fact," she added.  The court directed the judge on remand, based on a fee-shifting provision in the employment contract, to apportion fees to the CEPA and contract claims.

The plaintiff, Greg Noren, was employed by Princeton-based Heartland Payment Systems from April 1998 to June 2005 as a "relationship manager," a role in which he sold payment processing services.  The contract he signed provided that he and Heartland both "'irrevocably waive any right to trial by jury in any suit, action or proceeding under, in connection with or to enforce this agreement,'" according to the decision.  Another contract provision awarded fees and costs "'[i]n any suit, action or proceeding arising out of or related to this agreement,'" according to the decision.

Noren was terminated in 2005.  His suit was eventually whittled down to the two claims, breach of contract and the CEPA violation.  His jury trial demand was denied based on the waiver provision and, after 22 days of bench trial, Bergen County Superior Court Judge Susan Steele dismissed both claims.  She awarded Heartland $2.06 million in fees and costs for the defense of both claims, finding them so intertwined that the fees could not be apportioned, the decision stated.

In his appeal, Noren did not dispute the jury waiver's applicability to the contract claim, or the notion that fees may be awarded based on Heartland's success in defeating that claim.  But he did dispute the waiver's applicability to the CEPA claim, and the corresponding fee award based on the statute.

Espinosa, joined by Appellate Division Judges Clarkson Fisher Jr. and Garry Rothstadt, held the waiver inapplicable to the CEPA claim, and remanded the case for a jury trial on that claim.

The waiver, "by using 'this agreement' as the defining threshold for all suits, actions and proceedings, ... limits the category of disputes for which a jury trial is waived," Espinosa said, relying in part on the state Supreme Court's 2001 decision in Garfinkel v. Morristown Obstetrics & Gynecology Associates, which held that such provisions should specify that statutory claims, in addition to contract-based ones, are waived.

The fee award was vacated because, the court said, Steele wrongly found that CEPA's fee-shifting provision had been triggered.  "To lack any basis in law or in fact, there must be either no legal authority to support the claim or the absence of a factual basis for the claim," Espinosa said, noting that the CEPA claim's survival of summary judgment indicated that it was not without basis.

The court said it must be determined on remand what proportion of the fees are attributable to defense of the contract claim, which are awardable based on the employment contract's fee-shifting provision.