US Supreme Court Allows New Jersey Decision Restricting Arbitration Clauses To Stand

Yesterday, the United States Supreme Court decided it would not review a case from New Jersey with respect to required wording of arbitration clauses. U.S. Legal Group, L.P. v. Atalese.

This case arose out of a dispute between a law firm that specializes in debt counseling and one of its clients. When that dispute arose, the firm sought to refer it to binding arbitration. The client objected on the basis that the arbitration clause did not expressly advise her that by agreeing to arbitrate she was giving up the right to litigate the dispute in court. At both the trial court and the New Jersey Court of Appeals, it was held that the arbitration clause was binding and effective, and there exists no rule requiring that an arbitration clause expressly explain that The right to a court trial is waived. Perhaps surprisingly, the New Jersey Supreme Court did not agree with that rule. Rather, it held that the arbitration clause was itself insufficient in that it did not explain that, by agreeing to arbitrate any dispute, The parties to the agreement are waiving the right to a court trial. Specifically:[n]owhere in the arbitration clause is there any explanation that plaintiff is waiving her right to seek relief in court for a breach of her statutory rights....The provision does not explain what arbitration is, nor does it indicate how arbitration is different from a proceeding in a court of law. Nor is it written in plain language that would be clear and...