One of the most well known cases regarding arbitration agreements in New Jersey is Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430 (2014). In Atalese, the plaintiff previously entered into an agreement with a company for debt adjustment services. The written agreement between the parties included an arbitration clause. However, the arbitration clause did not clearly spell out that the signors were waiving their rights to seek relief in a judicial forum.
Things went south. When the plaintiff sued the company, the company asked the court to remove the case for arbitration, per the terms of the contract. After moving through the superior and appeals Courts, the Supreme Court ruled that “the absence of any language in the arbitration provision that plaintiff was waiving her statutory right to seek relief in a court of law renders the provision unenforceable.” This would seem to be a pretty big deal for future contracts.
However, subsequent court decisions have greatly reduced the practical effect of Atalese. An excellent summary of the case law is presented in Gold Mine Jewelry Shoppes, Inc. v. Copenhagen, 240 F. Supp. 3d 391 (E.D.N.C. 2017). In Gold Mine, the Court explains that Atalese is applicable only to consumer and employment contracts. The reasoning is this: in consumer and employment contracts, the consumer or employee is at a disadvantage in bargaining power, and cannot be expected to review the contract in great detail. Therefore, courts apply more stringency in informing the consumer of the arbitration terms. By contrast, in commercial transactions, the contract is typically negotiated at arm’s length and entered into by two sophisticated commercial entities, who are expected to review and understand the terms of their contract before signing it.
Large companies have updated their contracts, and contracts between businesses aren’t covered by Atalese. In effect, all Atalese has accomplished is to make large companies and employers add a few lines to their standard contracts.