Originally from Alternatives to the High Cost of Litigation

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Arbitration contract enforcement has been in flux in New Jersey since the state’s Supreme Court passed down Atalese v. U.S. Legal Services LP, 219 N.J. 430, 99 A.3d 306 (2014), cert. denied, 135 S. Ct. 2804, 192 L. Ed. 2d 847 (2015) (available at http://bit.ly/ZtfbW4).

Atalese’s primary challenge is the uncertainty the case brings about the enforceability of arbitration clauses in consumer and employment agreements. New Jersey state courts at all levels are declining to compel arbitration, citing a lack of clear contract language specifying that consumers have waived their rights to litigate claims in a court.

This view is at odds with arbitration’s favored status in federal case law and the Federal Arbitration Act. The New Jersey standard for enforcing arbitration clauses is substantially higher than it is in most other jurisdictions.

These gateway-to-ADR cases extend beyond the customary class-waiver arbitration battleground, and include notice cases and concerns about forums.