                                NOT FOR PUBLICATION WITHOUT THE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-4682-17T4

MATTHEW SWAIN,

          Plaintiff-Appellant,

v.

HERMÈS OF PARIS and
LORENZO BAUTISTA,

     Defendants-Respondents.
___________________________

                    Argued April 1, 2019 – Decided April 23, 2019

                    Before Judges Messano, Fasciale and Rose.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Essex County, Docket No. L-4996-16.

                    Christopher W. Hager argued the cause for appellant
                    (Hager Law, LLC, attorneys; Christopher W. Hager, on
                    the brief).

                    Lawrence R. Sandak argued the cause for respondents
                    (Proskauer Rose LLP, attorneys; Lawrence R. Sandak
                    and Edna D. Guerrasio, on the brief).

PER CURIAM
      In this employment dispute, Matthew Swain (plaintiff) appeals from a

May 25, 20181 order denying his motion to reinstate his complaint against

Hermès of Paris (HOP) and Lorenzo Bautista (Bautista) (collectively

defendants). At defendants' request, a federal judge in New York compelled

arbitration. Although plaintiff had appealed from the federal order compelling

arbitration, he did not contest arbitrability, but rather, his sole argument on that

appeal was that the federal court lacked subject matter jurisdiction to hear

defendants' petition. The federal appeals court rejected plaintiff's jurisdiction

contention and upheld the order compelling arbitration. Arbitration therefore is

the appropriate forum for resolution of the parties' dispute, rather than the Law

Division. We therefore affirm.

      Plaintiff began his employment with HOP in July 2015, as the Managing

Director of its boutique in the Mall at Short Hills. Bautista was an upper

manager who also worked at the boutique. In October 2015, plaintiff submitted

a complaint to HOP's human resources department alleging that Bautista made

repeated slurs about plaintiff's sexual orientation.     Shortly thereafter, HOP

terminated plaintiff's employment, stating that he was "not the right fit."


1
  In plaintiff's Notice of Appeal and Case Information Statement, he states that
he is appealing from a May 30, 2018 order. But the order under review is dated
May 25, 2018.
                                                                              A-4682-17T4
                                         2
      In July 2016, plaintiff filed a complaint against defendants alleging

violation of the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5 -

1 to -49. HOP responded by stating that plaintiff was required to arbitrate his

LAD claims under the Dispute Resolution Procedure (DRP) that he had signed.

The DRP provides for three successive steps to facilitate resolution of

employment disputes.

            Step 1. (Internal Channels)

            Employees who have a complaint or concern should
            speak to their supervisor.      If they do not feel
            comfortable doing so, or the complaint or concern
            involves the supervisor, employees should contact the
            [Senior Vice President (SVP)] or Senior Director of
            HOP Human Resources. Our hope is that most disputes
            can be resolved through these internal discussions.

            Step 2. (External Mediation)

            If a dispute is not resolved, either you or HOP will have
            the opportunity to discuss and hopefully amicably
            resolve the matter through mediation – a voluntary,
            confidential non-binding process. Either you or HOP
            may invoke the mediation procedure by submitting a
            request to the SVP or Senior Director of Human
            Resources. Mediation allows either you or HOP to seek
            to resolve the dispute through a facilitated conversation
            before an independent, experienced, neutral mediator
            whom you and HOP will jointly select from the
            American Arbitration Association (AAA), a well-
            respected provider of alternative dispute resolution
            service. AAA mediation procedures will apply. HOP
            will pay the costs and fees of the mediation and you

                                                                        A-4682-17T4
                                          3
may, if you wish, be represented by an attorney in the
mediation, but you will be responsible for your own
attorneys' fees.

Step 3. (Final and Binding Arbitration)

If a dispute cannot be resolved through mediation,
either you or HOP may initiate final and binding
arbitration within six months after you or HOP become
aware, or should have reasonably become aware, of the
facts giving rise to the dispute, unless the dispute arises
under a law that provides an alternate filing period, in
which case such period shall apply. Your request for
arbitration should be sent to the SVP or Senior Director
of Human Resources.

Arbitration offers a speedy, confidential and
economical way for you and HOP to present the dispute
to an independent, experienced, neutral arbitrator
whom you and HOP will jointly select from the AAA
arbitrator panel. The arbitrator will decide the dispute
and his or her decision will be binding on both you and
HOP. The arbitrator has the same power to award the
remedies otherwise available in court. HOP will pay
the costs and fees associated with the arbitration, and
you may, if you wish, be represented by an attorney in
the arbitration, but you will be responsible for your
attorneys' fees.

The dispute will be resolved by a single arbitrator, to
be held in City, State and County of New York, unless
you and the Company agree otherwise. Applicable
AAA Employment Arbitration Rules shall apply except
as otherwise specified in this agreement. In reaching
his or her decision, the arbitrator shall apply the
governing substantive law applicable to the parties'
claims and defenses otherwise available in court and


                                                              A-4682-17T4
                            4
               enforce    HOP      policies   and   procedures,    as
               applicable. . . .

               Any dispute submitted to arbitration must be submitted
               only on behalf of you individually or HOP, and neither
               you nor HOP shall have the right to obtain relief
               through a class or collective action, or join or
               consolidate your dispute with the claims of any other
               person. . . .

               [(Emphasis added).]

HOP's in-house counsel attempted mediation, but plaintiff maintained that the

DRP did not apply to his LAD claims and served the complaint on HOP. HOP

subsequently withdrew its mediation efforts, instead pursuing binding

arbitration.

      HOP then filed a petition in the Southern District of New York to compel

arbitration of plaintiff's LAD claims pursuant to the Federal Arbitration Act

(FAA), 9 U.S.C.A. §§ 1 to 16. To have diversity jurisdiction, Bautista, who is

also a New Jersey resident, was not a part of HOP's petition. A federal judge in

New York compelled arbitration, and determined that she could not enjoin

plaintiff's New Jersey Law Division action against HOP and Bautista.

      Plaintiff challenged the order compelling arbitration by appealing to the

United States Court of Appeals for the Second Circuit. At the same time, HOP

and Bautista filed a motion in the Law Division seeking to dismiss plaintiff's


                                                                        A-4682-17T4
                                          5
LAD case against defendants with prejudice since the federal judge had

compelled arbitration in New York. In opposition to defendants' motion to

dismiss the Law Division action, plaintiff essentially conceded the importance

of an adverse ruling in the pending Second Circuit appeal. The motion judge

then dismissed plaintiff's complaint "without prejudice pending the outcome of

the matter . . . presently on appeal . . . ."

      The Second Circuit affirmed the New York order compelling arbitration.

In its opinion, the Second Circuit acknowledged that plaintiff "did not contest

the arbitrability of his dispute." Instead, we emphasize that his sole basis for

appealing the New York order was that the federal court lacked subject matter

jurisdiction. The Second Circuit rejected plaintiff's argument, and upheld the

New York judgment compelling arbitration.

      Plaintiff then filed a motion under Rule 4:42-2 in the Law Division to

reinstate his New Jersey LAD complaint. A different judge (the judge) heard

oral argument and denied plaintiff's motion to reinstate the complaint against

defendants. We are reviewing that order.

      On appeal, plaintiff challenges the enforceability of the DRP, even though

he did not do that in New York. He contends that the DRP is ambiguous because

it does not state which party has the obligation to initiate voluntary arbitration.


                                                                           A-4682-17T4
                                           6
And plaintiff argues that HOP breached the DRP by itself failing to initiate

arbitration and failing to pay the arbitration fees. Plaintiff claims that under

Roach v. BM Motoring, LLC, 228 N.J. 163 (2017) – a New Jersey Supreme

Court opinion that was decided between the filing of plaintiff's initial complaint

and his March 2018 motion to reinstate his complaint – the DRP is invalid.

Plaintiff urges us to reinstate the complaint against defendants.

      We review an order granting or denying a motion for reinstatement under

an abuse of discretion standard. Baskett v. Cheung, 422 N.J. Super. 377, 382

(App. Div. 2011). As to the interpretation of the DRP, we exercise de novo

review. Morgan v. Sanford Brown Inst., 225 N.J. 289, 302-03 (2016). Whether

a contractual arbitration clause is enforceable is a legal issue; thus, we afford no

special deference to the judge's determination of that issue. Hirsch v. Amper

Fin. Servs., LLC, 215 N.J. 174, 186 (2013).

      Importantly, we apply these standards fully understanding that the federal

judge in New York compelled plaintiff to arbitrate his claims against HOP, and

that the Second Circuit affirmed that ruling. Essentially, plaintiff collaterally

attacks the New York order compelling the arbitration by challenging the

enforceability of the DRP in the aftermath of the Second Circuit ruling. Plaintiff

does so by raising new contentions that he did not make in opposition to


                                                                            A-4682-17T4
                                         7
defendants' efforts to compel arbitration. Under the unique circumstances of

this case, the judge did not abuse his discretion by refusing to reinstate the

complaint against defendants.

                                        I.

      There is no basis to conclude that the DRP was ambiguous. And there is

no evidence that HOP breached its terms. Plaintiff's reliance on Roach – to

invalidate the DRP – is misplaced.

      In Roach, which is factually distinguishable, the parties had signed a

Dispute Resolution Agreement (DRA) prior to the plaintiffs filing arbitration

demands against the defendants. 228 N.J. at 166-67. The AAA dismissed the

arbitration proceedings because the defendants breached the DRA. Id. at 167.

The plaintiffs then filed a lawsuit against the defendants, who moved to dismiss

the complaint in favor of arbitration. Ibid. Our Supreme Court held that the

"defendants' failure to advance arbitration fees was a material breach of [the

DRA]," barring defendants from arbitration. Ibid.

      Generally, if there is a breach of a material term, then the non-breaching

party is relieved of any obligations. Id. at 174. A breach is material if it "goes

to the essence of the contract." Ibid. The Court adopted the "flexible criteria"

set forth in the Restatement (Second) of Contracts:


                                                                          A-4682-17T4
                                        8
             (a) the extent to which the injured party will be
             deprived of the benefit which he reasonably expected;

             (b) the extent to which the injured party can be
             adequately compensated for the part of that benefit of
             which he will be deprived;

             (c) the extent to which the party failing to perform or
             to offer to perform will suffer forfeiture;

             (d) the likelihood that the party failing to perform or to
             offer to perform will cure his failure, taking account of
             all the circumstances including any reasonable
             assurances; [and]

             (e) the extent to which the behavior of the party failing
             to perform or to offer to perform comports with
             standards of good faith and fair dealing.

             [Id. at 174-75 (alteration in original) (emphasis added)
             (quoting Restatement (Second) of Contracts:
             Circumstances Significant in Determining Whether a
             Failure Is Material § 241 (Am. Law Inst. 1981)).]

      Here, the judge concluded that there was no evidence that plaintiff had

initiated arbitration and then HOP failed to cooperate. On the issue of arbitration

fees, the judge stated that, "the DRP required [HOP] to 'pay' – not advance – the

fees and costs of an arbitration. As no arbitration is yet in progress, there were

and are no fees and costs to pay." He further explained that, "[t]he record

reflects that [HOP] was willing to proceed with the mediation step and there is

no basis in this record . . . that it would not have satisfied its obligation to bear


                                                                             A-4682-17T4
                                         9
the costs of either that phase or an arbitration if and when it were asked to do

so." The judge therefore did not reach the question of materiality because there

was no breach whatsoever.

        Alternatively, plaintiff argues that if there was no breach, then the DRP is

still unenforceable because it is ambiguous. Plaintiff contends that the DRP is

ambiguous because it does not state which party is obligated to initiate

arbitration proceedings.     The judge stated that, "the DRP clearly permitted

[HOP] to initiate the arbitration if it wished to do so to protect its right to an

arbitral forum, [but] the agreement simply does not require [HOP] to take that

action at peril of losing that right." (Emphasis added). Plaintiff claims that the

judge erroneously "confused" the terms "request" and "initiate" when he stated

that,

              the plain letter of the DRP required [plaintiff], not
              [HOP], to initiate the arbitration if he wanted an
              adjudication of his claims. Under the procedural
              mechanism set up in the agreement, [plaintiff] was
              required to do so by sending a notice to [HOP]'s SVP
              or Senior Director of Human Resources. It was and is
              only upon receipt of such notice from [plaintiff] that
              [HOP] was required to act to notify AAA of the need
              for its services.

Here, the DRP states that, "[i]f a dispute cannot be resolved through mediation,

either you or HOP may initiate final and binding arbitration within six months


                                                                            A-4682-17T4
                                        10
after you or HOP become aware, or should have reasonably become aware of

the facts giving rise to the dispute . . . ." (Emphasis added). Furthermore, the

New York judge compelled arbitration, regardless of who could have initiated

the proceedings. Under the facts of this case, the question of which party was

arguably obligated to initiate the arbitration is a red herring because the federal

court compelled it.

                                      II.

      For the first time, plaintiff claims that HOP unconscionably violated the

LAD's public policy. In Rodriguez v. Raymours Furniture Co., 225 N.J. 343,

346 (2016), the Court dealt with whether the LAD – which was established to

fulfill a public-interest purpose – could be contravened by private agreement.

Here, plaintiff claims that the contract is one of adhesion. Plaintiff never raised

these arguments in the federal court proceedings although he could have.

      The judge did not reach this argument here, and instead correctly stated

that plaintiff "could and should have raised any such arguments in the District

Court and on appeal" and concluded that plaintiff was "foreclosed from doing

so here and now."       The New York judge stated that the DRP "contains

[plaintiff]'s signature below a line that states, in bold, that his 'signature means

that you have read this agreement, understand it and are voluntarily entering into


                                                                            A-4682-17T4
                                        11
it.'"   She also stated that plaintiff's "argument that he needs discovery to

ascertain the validity of his own consent is ludicrous, since the information he

needs is entirely within his own control." "[W]hether started in state or federal

courts, the determination of a case in one system should conclude the matter."

Watkins v. Resorts Int'l Hotel & Casino, 124 N.J. 398, 409 (1991).

                                       III.

        Plaintiff opposed HOP's motion to dismiss the Law Division action by

arguing, in part, that the DRP was void as a matter of public policy as it did not

permit plaintiff to be awarded attorney's fees.

              In any action or proceeding brought under [the LAD],
              the prevailing party may be awarded a reasonable
              attorney's fee as part of the cost, provided however, that
              no attorney's fee shall be awarded to the respondent
              unless there is a determination that the complainant
              brought the charge in bad faith.

              [N.J.S.A. 10:5-27.1.]

If plaintiff prevails in arbitration against defendants, he is entitled to reasonable

attorney's fees because such fees would be a statutory remedy.

                                         IV.

        Finally, plaintiff seeks to reinstate his complaint under Rule 4:42-2, which

states that absent a court order to enter final judgment,



                                                                             A-4682-17T4
                                         12
            any order or form of decision which adjudicates fewer
            than all the claims as to all the parties shall not
            terminate the action as to any of the claims, and it shall
            be subject to revision at any time before the entry of
            final judgment in the sound discretion of the court in
            the interest of justice.

"[T]he trial [judge] has the inherent power to be exercised in [his or her] sound

discretion, to review, revise, reconsider and modify [his or her] interlocutory

orders at any time prior to the entry of final judgment." Lombardi v. Masso,

207 N.J. 517, 534 (2011). Given the Second Circuit's affirmance of the New

York order compelling arbitration against HOP, we see no abuse of discretion

by denying plaintiff's motion to reinstate his complaint against defendants.

      We therefore order the parties to arbitrate plaintiff's claims.

      Affirmed.




                                                                         A-4682-17T4
                                       13
