By: Ty Hyderally, Esq., and Francine Foner, Esq.

The Third Circuit Court of Appeals recently affirmed a decision of the New Jersey District Court denying an employer’s motion to compel arbitration of a former employee’s claim of disability discrimination prior to engaging in discovery on the arbitrability of the employee’s claims.  Lepore v. SelectQuote Ins. Servs., 2023 U.S. App. LEXIS 32354, 2023 WL 8469761 (3^rd Cir. Dec. 6, 2023).

Plaintiff Giovanni Lepore (“Lepore”) worked as an insurance agent for SelectQuote from September 7, 2021, until his termination on October 11, 2021, because “his inconveniently scheduled [emergency triple bypass and valve replacement] heart surgery had brought him out of compliance with SelectQuote’s attendance policy during training for new employees.” Id. at. *2-3.

On February 18, 2022, Lepore filed a Complaint in the New Jersey Superior Court alleging claims of disability discrimination, failure to accommodate and retaliation under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1, et seq. (“LAD”). Defendants removed the case to the New Jersey District Court and then moved to compel arbitration of Lepore’s claims and stay or dismiss the suit, based on an arbitration provision contained in Lepore’s “purported” employment agreement (the “Agreement”).  However, the District Court denied the motion to compel arbitration based upon its finding that the Agreement was not relied upon or integral to Lepore’s Complaint. Rather, the District held that Lepore’s allegations were that “SelectQuote terminated his employment in violation of New Jersey disability law,” not that the terms or conditions of his employment in the Agreement were discriminatory, retaliatory or insufficiently accommodating. Id. at *7.

Because the arbitration agreement was a document which was not relied upon or integral to Lepore’s Complaint, the Circuit Court concluded that the District Court correctly followed precedent which “requires discovery unless the arbitrability of the claims under suit is apparent from ‘the complaint and its supporting documents,’ regardless of whether the plaintiff has additionally placed the agreement to arbitrate in issue.” Id. at *8, citing Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 776, 2013 U.S. App. LEXIS 10642, 2013 WL 2302324 (3d. Cir. May 8, 2013). Therefore, the Circuit Court affirmed the District Court’s Order denying Defendants’ motion to compel arbitration, albeit without prejudice to Defendants re-filing their motion to compel arbitration after the parties engaged in discovery on the arbitrability of Lepore’s claims.

Although it remains to be seen whether or not Defendants will subsequently re-file their motion to compel arbitration, this decision is nonetheless a win for New Jersey employees who seek their day in court for relief for violations of the LAD, rather than the litigating their matter in an arbitral forum.  Requiring discovery on the arbitrability of LAD claims despite the existence of an arbitration clause in an employment agreement may, in at least some cases, suffice to create a basis to deny arbitration right after the Complaint is filed.

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