New Jersey: An Increasingly Anti-Arbitration Jurisdiction?
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In recent years, courts from the great state of the Boss (sorry, I’m a Springsteen fan!) have issued opinions that appear to be in tension with the pro-arbitration FAA principles coming from the US Supreme Court. For example, in 2014, the New Jersey Supreme Court issued its decision in Atalese, which requires drafters of consumer arbitration clauses to use clear language distinguishing between arbitration and litigation. According to the Atalese decision, a consumer arbitration clause is not enforceable if it fails to explain that a consumer is losing the right to go to court. New Jersey’s 2014 Atalese decision appears to require heightened disclosures for an arbitration clause. However, the US Supreme Court has previously struck down state-imposed heightened disclosure requirements for arbitration clauses during the 1990s in the case of Doctor’s Associates v. Casarotto.
In a recent New Jersey case, Flanzman v. Jenny Craig, Inc., No. A-2580-17T1, (N.J. Super. Ct. App. Div. Oct. 17, 2018) (click here for a copy of the decision), the court issued a decision going a step beyond Atalese and also in tension with the Supreme Court’s Casarotto decision. In an employment dispute involving the Jenny Craig weight loss company, the court held that an arbitration clause was not enforceable because the clause did not specify the name of an arbitral institution, like the American Arbitration Association or JAMS, or did not specify the means for selecting an arbitration forum. The particular clause used by the company stated that the parties agreed to arbitrate all disputes arising from the employment relationship, without specifying a particular arbitral institution.
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