In 2014, the New Jersey Supreme Court held in Atalese v. U.S. Legal Services Group, L.P. that in order to be enforceable, arbitration clauses must contain an express waiver of the parties’ right to seek relief in a court of law. Earlier this month, in County of Passaic v. Horizon Healthcare Services, Inc., the New Jersey Appellate Division ruled that Atalese does not apply to arbitration clauses in contracts between commercial entities. That result, standing alone, is significant, since as one commentator has observed, it is a “published decision that fundamentally reshapes the interpretation of arbitration clauses in commercial contracts.”
But beyond the context of commercial contracts, the ramifications of County of Passaic might one day lead to Atalese being overturned even as applied to consumer and employment contracts on Federal Arbitration Act (FAA) preemption grounds.
Section 2 of the FAA provides that a written arbitration agreement involving interstate commerce “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (emphasis added). Under this “saving clause,” a state law contract defense to arbitration must apply generally to “any contract,” not just to arbitration clauses, which cannot be singled out for special treatment. Thus, the U.S. Supreme Court has held that the FAA preempted a state law requiring that “[n]otice that a contract is subject to arbitration” be “typed in...
US President Donald Trump can shock people. And he did just that eleven minutes into his 40-minute address at the United Nations General Assembly (UNGA) on Tuesday (September 22). “Will a deal be ...