New Jersey on a Continued, Collision Course with SCOTUS?
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Last week, the New Jersey Supreme Court issued an arbitration decision in Kernahan v. Home Warranty Administrator of Florida, Inc., No. A-15-17 (N.J. Jan. 10, 2019) (click here for a copy of the decision). In this case involving a home warranty for a consumer, the dispute resolution clause was poorly drafted with confusing language, and I believe the New Jersey Supreme Court correctly found that the clause was not enforceable because of the poor drafting.
To quote the Boss in one of his most haunting songs, “down on the boardwalk, they’re getting ready for a fight. . . . gonna be a rumble out on the promenade. . . .” For anyone interested in FAA preemption over state law, this new Kernahan case and New Jersey’s Atalese ruling set up a potential rumble with SCOTUS. Jersey’s Atalese decision appears to impose a heightened standard involving a knowing waiver of the right to sue in court, and the Atalese decision seems to require some clear language explaining the difference between litigation in court and private arbitration. Unfortunately, the Casarotto opinion from SCOTUS in 1996, an aggressive reading and application of Concepcion’s preemption test, and SCOTUS’s Kindred Nursing home case would appear to override Jersey’s Atalese ruling. In this new Kernahan case from Jersey, there is a strong concurring opinion trying to justify the Atalese ruling as surviving FAA preemption. The concurring opinion argues that the Atalese ruling does not single out arbitration and instead, Atalese is part of a broader, more neutral line of Jersey authority recognizing that all waivers of constitutional rights must be knowing and voluntary.
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