Arbitration Issue in Suit Against Roger Ailes

Carlson, an 11-year veteran of the network, claimed in her lawsuit that Ailes terminated her employment in June 2016 because she refused his sexual advances and because she complained about discrimination and harassment. Her suit was filed in Superior Court of New Jersey in Bergen County by attorney Nancy Erika Smith of Smith Mullin in Montclair.

The complaint asserted that Ailes lives in Cresskill, NJ. But in Ailes' notice of removal, he maintained he is a New Yorker with residences in New York City and in Garrison, NY, that his federal and state tax returns and bank and brokerage accounts use New York addresses, and that his automobile is registered in New York.

An exhibit to Ailes' motion to compel arbitration shows selected pages from Carlson's 2013 employment contract with Fox News, including the arbitration clause. The terms also called for the proceedings to be held in “strict confidence” and for any papers filed in court seeking judgment on an arbitrators' award to be filed under seal.

Lawyers who reviewed that agreement said it appears to run afoul of New Jersey's requirement that arbitration agreements in employment or consumer contracts make clear that the signers are giving up the right to a jury trial. In Atalese v. U.S. Legal Services Group L.P., 219 N.J. 430 (2014), the New Jersey Supreme Court said that any provision in which a constitutional or statutory right is being given up must make that clear to a reasonable consumer.

But New York, on the other hand, is less strict on arbitration clauses, says Jed Marcus, an employment lawyer at Bressler, Amery & Ross in Florham Park, NJ. “Under New York law, there's an excellent chance that the arbitration clause is enforceable. Even if the court were to rule that the arbitration provision is not enforceable, assuming that Mr. Ailes lives in New York and not New Jersey, there's an excellent chance that a motion to transfer the case to a New York court would succeed,” says Marcus. “It's a very New York-centric case.”

The arbitration clause in Carlson's contract lacks the language from Atalese about waiver of a jury trial. Jonathan Nirenberg, an employment lawyer at Rabner Baumgart Ben-Asher & Nirenberg in Upper Montclair, NJ, said that unless Carlson's suit “is remanded to state court, it seems likely to be transferred to the Southern District of New York.”

Carlson's lawyers Nancy Erika Smith and Martin Hyman maintain that her employment contract does not apply in the present case because Ailes is the only defendant and he is not party to the contract. Smith and Hyman said in a joint statement: “Roger Ailes is trying to force this case into a secret arbitration proceeding. Gretchen never agreed to arbitrate anything with Mr. Ailes and the contract on which he relies does not mention him and is not signed by him. Gretchen intends to fight for her right to a public jury trial, a right protected by the discrimination laws and our Constitution. It is disturbing that the head of a large media company would try to silence the press and hide from the public a matter of such importance.”

Ailes' attorney Barry Asen, of Epstein Becker & Green in Newark, said in a statement: “Gretchen Carlson had an arbitration clause in her contract, stating that any employment dispute regarding her employment at Fox News must be done via confidential arbitration. Because Ms. Carlson's lawsuit violated the arbitration clause, a motion was filed in federal court to have the case arbitrated. The federal court is the proper court to decide the motion because Ms. Carlson's primary residence is in Connecticut and Mr. Ailes' primary residence is in New York.”

Charles Toutant is a Reporter for the New Jersey Law Journal, an ALM sibling publication of Entertainment Law & Finance.