by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)
In recent years, and certainly ever since the New Jersey Supreme Court decided Atalese v. U.S. Legal Services Group, L.P., there is a perception that arbitration provisions have been more difficult to enforce in New Jersey. In Scamardella v. Legal Helpers Debt Resolution, LLC, defendants tried to get around the notice requirements set forth in Atalese — namely that an arbitration provision contain a clear waiver of a party's right to a jury trial — by arguing that those requirements were against public policy. They did not succeed, partly because the Appellate Division held that there was no evidence supporting the anecdotal belief that arbitration provisions were being struck down more frequently since Atalese.
In Scamardella, plaintiff entered into an agreement with defendants to negotiate a settlement of his debts with his creditors. As part of this agreement, plaintiff was required to establish a special purpose bank account with one of the defendants. The account agreement for the account contained an arbitration provision that included the following language:
In the event of a dispute or claim relating in any way to this Agreement or our services, you agree that such a dispute shall be resolved by binding arbitration in Tulsa, Oklahoma utilizing a qualified independent arbitrator of [defendant's] choosing. The decision of an arbitrator will be final and subject to enforcement in a court of competent jurisdiction.
Plaintiff alleged that one of the defendants did not perform as agreed and sued all of them, alleging violations of the RICO, Consumer Fraud, and Debt Adjustment and Credit Counseling Acts, along with various common-law claims. The trial court concluded that these claims were not subject to arbitration because the arbitration provision did not, as required under Atalese, "at least in some general and sufficiently broad way, [ ] explain that the plaintiff [was] giving up [his] right to bring [his] claims in court or have a jury resolve the dispute." In other words, the arbitration provision did not clearly indicate that plaintiff was waiving his right to a jury trial.
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