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Arafa v. Health Express Corp.

Arafa v. Health Express Corp.

Supreme Court of New Jersey

March 2, 2020, Argued; July 14, 2020, Decided

A-6 September Term 2019, A-7 September Term 2019, 083174 and 083154

Opinion

 [*153]  [**498]   JUSTICE FERNANDEZ-VINA delivered the opinion of the Court.

These appeals involve arbitration agreements in contracts for employment that, plaintiffs argue, fall within the "exemption clause" of the Federal Arbitration Act (FAA), 9 U.S.C. § 1. The question posed in both cases is whether the disputed arbitration agreements would be enforceable under the New Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -36, if they are exempt from the FAA.

We address Colon v. Strategic Delivery Solutions, LLC, and Arafa v. Health Express Corp. together. Although the facts of the arbitration agreements differ, their overall thrust is the same. In  [*154]  both cases, the plaintiff employees brought suit against their employers in Superior Court, and the employers sought dismissal of the suits in light of the arbitration agreement in the respective employment contracts. Both trial courts granted the employers' motions to dismiss and to compel arbitration.

A panel of the Appellate Division agreed in Colon that the arbitration agreement would be enforceable under [***10]  the NJAA if, on remand, the trial court found the agreement exempt from the FAA; another Appellate Division panel reversed the dismissal in Arafa, ruling the arbitration agreement in that case null and void.

We now hold that the NJAA applies in the absence of the FAA and that the arbitration agreements at issue are enforceable under the NJAA if the FAA does not apply. We therefore agree with the Appellate Division's decision in Colon and reverse the judgment of the Appellate Division in Arafa.

We begin by summarizing the pertinent facts and procedural history of both matters.

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243 N.J. 147 *; 233 A.3d 495 **; 2020 N.J. LEXIS 807 ***

ESSAM ARAFA, ON BEHALF OF HIMSELF AND OTHERS SIMILARLY SITUATED, PLAINTIFF-RESPONDENT, v. HEALTH EXPRESS CORPORATION, DEFENDANT-APPELLANT. GLORIA COLON, DIANA MEJIA AND FREDDY DIAZ, ON BEHALF OF THEMSELVES AND ALL OTHER SIMILARLY SITUATED PERSONS, PLAINTIFFS-APPELLANTS, v. STRATEGIC DELIVERY SOLUTIONS, LLC, AND MYRIAM BARRETO, DEFENDANTS-RESPONDENTS.

Prior History: Essam Arafa v. Health Express Corporation (A-6-19): On certification to the Superior Court, Appellate Division. Gloria Colon v. Strategic Delivery Solutions, LLC (A-7-19): On certification to the Superior Court, Appellate Division, whose opinion is reported at 459 N.J. Super. 349, 210 A.3d 932 (App. Div. 2019) [***1] .

Arafa v. Health Express Corp., 2019 N.J. Super. Unpub. LEXIS 1283 (App.Div., June 5, 2019)Colon v. Strategic Delivery Solutions, LLC, 459 N.J. Super. 349, 210 A.3d 932, 2019 N.J. Super. LEXIS 78 (App.Div., June 4, 2019)

CORE TERMS

arbitration, arbitration agreement, parties, exempt, transportation, waived, argues, state law, trial court, unenforceable, interstate commerce, class action, asserts, preempt, statutory claim, plaintiffs', disputes, employees, mutual assent, unconscionability, agreement to arbitrate, arbitration provision, wage claim, provisions, contracts, hereunder, employment contract, unambiguous, invalid, severed

Business & Corporate Compliance, Alternative Dispute Resolution, Arbitration, Waiver, Federal Arbitration Act, Scope, Contracts Law, Contract Conditions & Provisions, Forum Selection Clauses, Civil Procedure, Federal & State Interrelationships, Choice of Law, Significant Relationships, Arbitrability, Arbitration Clauses, Federal Common Law, Preemption, Pretrial Matters, Judicial Review, Appeals, Standards of Review, De Novo Review, Contract Formation, Contract Formation, Arbitration Agreements