Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-15-03789/USCOURTS-ca3-15-03789-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT 

_____________

No. 15-3789

_____________

ARTHUR CHASSEN; DEBORAH MEREDITH; 

JOEL OSTER; DENNIS SCRIMER; GLEN J. DALAKIAN; 

JACK HOFFMAN; DEBORAH HOFFMAN; KATHLEEN 

COOPER; RICHARD MURPHY, individually and on behalf 

of others similarly situated; AMI FELLER,

 Appellants 

v.

FIDELITY NATIONAL FINANCIAL, INC., a Delaware 

corporation; FIDELITY NATIONAL TITLE INSURANCE 

COMPANY, a California corporation; 

CHICAGO TITLE INSURANCE COMPANY, a Missouri 

corporation; THE FIRST AMERICAN CORPORATION, a 

California corporation; FIRST AMERICAN TITLE 

INSURANCE COMPANY, a California corporation; 

LANDAMERICA FINANCIAL GROUP, INC., a Virginia 

corporation; TRANSNATION TITLE INSURANCE 

COMPANY, a Nebraska corporation; LAWYERS TITLE 

INSURANCE CORPORATION, a Nebraska corporation; 

STEWART INFORMATION SERVICES CORPORATION, 

a Delaware corporation; STEWART TITLE GUARANTY 

COMPANY, a Texas corporation; OLD REPUBLIC 

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2

INTERNATIONAL CORPORATION, a Delaware 

corporation; OLD REPUBLIC TITLE INSURANCE 

GROUP, INC., a Delaware corporation; OLD REPUBLIC 

NATIONAL TITLE INSURANCE COMPANY, a Minnesota 

corporation; WEICHERT TITLE AGENCY

On Appeal from the United States District Court

for the District of New Jersey

District Court No. 3-09-cv-00291

District Judge: The Honorable Peter G. Sheridan 

Argued July 13, 2016

Before: SMITH, ROTH, and RENDELL, Circuit Judges

(Filed: September 8, 2016)

Esther E. Berezofsky, Esq.

Williams Cuker Berezofsky

210 Lake Drive East

Woodland Falls Corporate Park

Suite 101

Cherry Hill, NJ 08002

Mark R. Cuker, Esq.

Michael J. Quirk, Esq. [ARGUED]

Williams Cuker Berezofsky

1515 Market Street

Suite 1300

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Philadelphia, PA 19102

Andrew R. Wolf, Esq.

Henry P. Wolfe, Esq.

The Wolf Law Firm

1520 U.S. Highway 130

Suite 101

North Brunswick, NJ 08902

Counsel for Appellant

Derrick R. Freijomil, Esq.

Michael R. O’Donnell, Esq. [ARGUED]

Riker Danzig Scherer Hyland & Perretti

One Speedwell Avenue

Headquarters Plaza

Morristown, NJ 07962

Grant J. Ankrom, Esq.

Jason E. Maschmann, Esq.

Charles A. Newman, Esq.

Denton US

One Metropolitan Square

211 North Broadway, Suite 3000

St. Louis, MO 63102

Frederick W. Alworth, Esq.

Joshua R. Elias, Esq.

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Gibbons

One Gateway Center

Newark, NJ 07102

Kevin M. Fee, Jr., Esq.

Gerard D. Kelly, Esq.

Sidley Austin

One South Dearborn Street

Chicago, IL 60201

Steven P. Benenson, Esq.

Porzio Bromberg & Newman

100 Southgate Parkway

Morristown, NJ 07960

Counsel for Appellees

________________

OPINION

________________

SMITH, Circuit Judge.

“A waived claim or defense is one that a party has 

knowingly and intelligently relinquished.” Wood v. Milyard, 

132 S. Ct. 1826, 1832 n.4 (2012). How, then, can a party 

waive a right “in a situation in which no right existed[?]” 

Ackerberg v. Johnson, 892 F.2d 1328, 1333 (8th Cir. 1989). 

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The answer is: it cannot. Every circuit to have answered this 

question has held that “a litigant [need not] engage in futile 

gestures merely to avoid a claim of waiver.” Miller v. Drexel 

Burnham Lambert, Inc., 791 F.2d 850, 854 (11th Cir. 1986), 

abrogated on other grounds by Gulfstream Aerospace Corp. 

v. Mayacamas Corp., 485 U.S. 271 (1988). We too adopt this 

position and therefore hold that futility can excuse the 

delayed invocation of the right to compel arbitration. 

Because we also conclude that any attempt to compel bipolar 

– that is, individual – arbitration in this case prior to the 

Supreme Court’s decision in AT&T Mobility LLC v. 

Concepcion, 563 U.S. 333 (2011), would have been futile, we 

will remand with instructions that the District Court compel

bipolar arbitration of all Plaintiffs’ arbitrable claims in 

accordance with its May 14, 2015, order and this opinion.

I.

Plaintiffs represent a putative class of New Jersey real 

estate purchasers and refinancers who were overcharged 

between $70 and $350 in fees stemming from the recording 

of their deeds and mortgage instruments. Plaintiffs allege that 

the settlement agents – title agents and attorneys who were, in 

turn, agents of the Defendants – intentionally charged

Plaintiffs more than the county clerk charged for recording 

these documents and pocketed the difference. Plaintiffs 

further allege that the class claims add up to over $50 million, 

exclusive of treble damages and interest.

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On January 22, 2009, Plaintiffs filed a complaint in the

U.S. District Court for the District of New Jersey alleging 

both breach of contract and violation of New Jersey law. In 

response, Defendants sought to dismiss a number of these

claims and raised several affirmative defenses. They did not, 

however, seek to compel arbitration based on the arbitration 

clauses present in their contracts with Plaintiffs.1

 While no 

explanation for this inaction was given, we conclude infra

that an attempt to compel bipolar arbitration would have been 

futile under prevailing New Jersey law. Because arbitration 

was not sought, the case was litigated for two and a half years 

with the focus primarily on class certification. In that time, 

both sides conducted broad discovery and contested several 

substantive motions on their merits. Plaintiffs have also 

extensively documented their efforts in this case and note that 

they served over 130 non-party subpoenas and spent over 

$50,000 on experts before Defendants sought bipolar 

arbitration. 

However, on April 27, 2011, the Supreme Court in 

Concepcion held that the Federal Arbitration Act (FAA) 

preempted state laws that had previously prohibited a party

from compelling bipolar arbitration in certain situations even 

when it was specifically agreed to by contract. 563 U.S. at 

 1 There are two arbitration clauses at issue here; some 

putative class members have claims under the 1987 Owner’s 

Policy while others have claims under the 1992 Loan Policy. 

For purposes of this analysis, the minor differences between 

the two are immaterial.

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352.2 Sensing an opportunity to ward off this potential class 

action, Defendants sent a letter to Plaintiffs on June 8, 2011, 

demanding enforcement of the arbitration agreements in light 

of this change in the law.

3

 Plaintiffs rejected this arbitration

demand and noted that the question of arbitration “might have 

been an interesting issue had you thought of it two and a half 

years ago when the case was filed . . . .” JA 816. Defendants 

then filed a motion in the District Court to compel bipolar 

arbitration on August 1, 2011. The District Court concluded 

 2 It cannot be disputed that Concepcion marked a change in 

our jurisprudence. See Litman v. Cellco P’ship, 655 F.3d 

225, 230 (3d Cir. 2011) (“The specific question before us 

remains whether the FAA preempts the New Jersey Supreme 

Court’s ruling in Muhammad. As noted above, we had 

previously held that, pursuant to Homa, it did not. We now 

examine that decision anew and hold that Homa has been 

abrogated by Concepcion and that Muhammad is preempted 

by the FAA.”).

3 The dissent characterizes Defendants’ “about-face” as a 

“litigation tactic [intended] to derail the court proceedings.” 

Such a characterization would seem to apply regardless of 

when Defendants moved for arbitration, as arbitration by 

definition derails court proceedings. In addition, deciding

whether to invoke an arbitration clause is certainly a litigation 

“tactic,” but tactical decision making alone does not counsel 

against enforcement of a valid arbitration agreement. Indeed, 

this general disapproval of arbitration clauses has been 

roundly rejected by the Supreme Court. Concepcion, 563 

U.S. at 339 (explaining that the FAA reflects a “liberal 

federal policy favoring arbitration.”).

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that any attempt to compel bipolar arbitration prior to 

Concepcion would have been futile. Accordingly, the District 

Court granted the motion, stayed the case, and ordered bipolar 

arbitration.

This decision, however, led to a barrage of motions for 

reconsideration that, as the District Court observed, “has 

come to resemble a ping pong match between the parties.” 

JA 42. Ultimately, the District Court conducted an 

evidentiary hearing and found that all but two Plaintiffs had

agreed to bipolar arbitration. Accordingly, over Plaintiffs’ 

strong protest, it again compelled bipolar arbitration of the

remaining claims.

Three issues relating to this ruling were certified for 

interlocutory appeal pursuant to 28 U.S.C. § 1292(b):

(a) Whether the [District] Court’s decision to 

allow Defendants to assert the affirmative

defense of arbitration due to a change in law 

even though a substantial period of time elapsed 

between [D]efendant[s’] answer and filing of 

the motion to assert the defense was in error; (b) 

Whether Plaintiffs’ claims against Defendants 

alleging a violation of the New Jersey 

Consumer Fraud Act, N.J.S.A. §§ 56:8-1 et 

seq., are barred; and (c) any other issues arising 

out of the District Court’s decision concerning 

the arbitration of the claims. 

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JA 195-96 (internal citations omitted). Because we conclude 

that the District Court did not err in compelling bipolar 

arbitration, we need not address any other issues on appeal.4

II.

We first consider whether, as an abstract matter, the 

futility of raising bipolar arbitration as a defense should 

excuse the delay in doing so. Generally, “[a] written 

provision in any . . . contract . . . to settle by arbitration a 

controversy thereafter arising out of such contract . . . shall be 

valid, irrevocable, and enforceable, save upon such grounds 

as exist at law or in equity for the revocation of any contract.” 

Federal Arbitration Act, 9 U.S.C. § 2. The Supreme Court 

has stated that this provision reflects a “‘liberal federal policy 

favoring arbitration.’” Concepcion, 563 U.S. at 339 (quoting 

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 

U.S. 1, 24 (1983)). Thus “any doubts concerning the scope of 

arbitrable issues should be resolved in favor of arbitration, 

whether the problem at hand is the construction of the 

contract language itself or any allegation of waiver, delay, or 

a like defense to arbitrability.” Moses H. Cone, 460 U.S. at 

24-25; see also Volt Info. Scis., Inc. v. Bd. of Trs. of Leland 

Stanford Junior Univ., 489 U.S. 468, 476 (1989) (“There is 

no federal policy favoring arbitration under a certain set of 

 4 The District Court had jurisdiction pursuant to 28 U.S.C. 

§ 1332(d)(2) and this Court has jurisdiction pursuant to 28 

U.S.C. § 1292(b). 

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procedural rules; the federal policy is simply to ensure the 

enforceability, according to their terms, of private agreements 

to arbitrate.”). Given this strong preference to enforce 

arbitration agreements, we have concluded that a party waives

the right to arbitrate “only where the demand for arbitration 

came long after the suit commenced and when both parties 

had engaged in extensive discovery.” PaineWebber Inc. v. 

Faragalli, 61 F.3d 1063, 1068-69 (3d Cir. 1995) (internal 

quotation marks and citation omitted).

For example, in Ehleiter v. Grapetree Shores, Inc., we 

held that a defendant seeking to compel arbitration may waive 

the right to do so when the plaintiff demonstrates unfair

prejudice arising from the defendant’s delay in raising 

arbitration as an affirmative defense. 482 F.3d 207, 223 (3d 

Cir. 2007). To guide this prejudice inquiry, in Hoxworth v. 

Blinder, Robinson & Co. we identified six nonexclusive 

factors that courts should consider when determining if the 

defense of arbitration has been waived: (1) the timeliness or 

lack thereof of the motion to arbitrate; (2) the extent to which 

the party seeking arbitration has contested the merits of the 

opposing party’s claims; (3) whether the party seeking 

arbitration informed its adversary of its intent to pursue 

arbitration prior to seeking to enjoin the court proceedings; 

(4) the extent to which the party seeking arbitration engaged 

in non-merits motion practice; (5) the party’s acquiescence to 

the court’s pretrial orders; and (6) the extent to which the 

parties have engaged in discovery. 980 F.2d 912, 926-27 (3d 

Cir. 1992).

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None of these cases, however, dealt with a situation in 

which the prejudicial delay occurred solely because an

attempt to raise the defense of arbitration earlier would have 

been futile. Accordingly, we believe that our analysis in a 

futility case cannot rely solely on Hoxworth because there,

waiver was premised on the fact that the right in question 

indisputably existed and could have been raised earlier. 

Wood, 132 S. Ct. at 1832 (defining waiver as the known 

relinquishment of a claim or defense). It makes no sense to 

consider, for example, whether a party “assent[ed] to the 

district court’s pretrial orders,” Hoxworth, 980 F.2d at 927,

when, at the time the orders were issued, the party had no 

grounds on which it could plausibly contest them. In other 

words, Hoxworth was simply not a futility case. Thus, its list 

of factors for determining prejudice is ill suited for our 

analysis here.

Accordingly, we must look beyond Hoxworth to 

determine whether and when futility can excuse the delayed 

invocation of an arbitration clause as an affirmative defense. 

In so doing, we identify three primary reasons why we 

believe that adoption of the futility exception in this context is 

appropriate.

First, we believe that in the arbitration context, the 

logic of our waiver analysis – in addition to its specific 

factors – is undercut to the extent that the delay we are 

considering was the result of futility. This suggests to us that 

the standard waiver analysis should not apply in the futility 

context. Cf. Moses H. Cone, 460 U.S. at 24-25 (“[A]ny 

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doubts concerning the scope of arbitrable issues should be 

resolved in favor of arbitration, whether the problem at hand 

is the construction of the contract language itself or any 

allegation of waiver, delay, or a like defense to 

arbitrability.”). As we noted in Hoxworth, “‘where a party 

fails to demand arbitration during pretrial proceedings, and, in 

the meantime, engages in pretrial activity inconsistent with an 

intent to arbitrate, the party later opposing a motion to compel 

arbitration may more easily show that its position has been 

compromised, i.e., prejudiced.’” 980 F.2d at 926 (quoting 

Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156, 1161 

(5th Cir. 1986)). In other words, one of the primary 

justifications for waiver is that the party attempting to raise it 

as a belated defense acted inconsistently with his earlier 

known right to do so. However, if an earlier attempt to assert 

the defense of arbitration would have been futile, this failure 

to take a futile action is not inconsistent with that defense. 

See Fisher, 791 F.2d at 697 (“[T]he Fishers have failed to 

demonstrate that Becker acted inconsistently with a known 

existing right to compel arbitration.”). Thus, applicability of 

the standard waiver analysis seems to miss the key fact that 

while there may be some prejudice resulting from the delay in 

raising a particular defense, that prejudice is attributable to a 

change in the applicable law, not to any negligent action on 

the part of either party.

Second, we have recognized futility as an exception to 

both ripeness and administrative exhaustion. See Sammon v. 

N. J. Bd. of Med. Examiners, 66 F.3d 639, 641 (3d Cir. 1995) 

(engaging in a “futile gesture to establish ripeness” would be 

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unnecessary); Berger v. Edgewater Steel Co., 911 F.2d 911, 

916 (3d Cir. 1990) (“Although the exhaustion requirement is 

strictly enforced, courts have recognized an exception when 

resort to the administrative process would be futile.”); 

Harrow v. Prudential Ins. Co. of Am., 279 F.3d 244, 249 (3d 

Cir. 2002) (“A plaintiff is excused from exhausting 

administrative procedures under ERISA if it would be futile 

to do so.”). We see no reason why this logic would not 

extend to the case at hand. Why would we require a party to 

make a “futile gesture” to prevent waiver when we do not 

require such gestures in other scenarios?

Finally, as Plaintiffs’ admitted at oral argument, all 

four circuits to have considered this issue have undertaken 

similar analyses and come to the same conclusion. Fisher v. 

A.G. Becker Paribas Inc., 791 F.2d 691, 697 (9th Cir. 1986) 

(“Until the Supreme Court’s decision in Byrd, the arbitration 

agreement in this case was unenforceable. Therefore, the 

Fishers have failed to demonstrate that Becker acted 

inconsistently with a known existing right to compel 

arbitration.”); Miller, 791 F.2d at 854 (“This circuit does not 

require a litigant to engage in futile gestures merely to avoid a 

claim of waiver. Thus, appellees’ failure to request 

arbitration prior to the Byrd decision is irrelevant to the issue 

of waiver.”); Peterson v. Shearson/Am. Exp., Inc., 849 F.2d 

464, 466 (10th Cir. 1988) (“There was no requirement that 

Shearson make a futile attempt to obtain arbitration on the 

federal claim given the state of the law; indeed, it would be 

difficult to argue that such an attempt had a basis in existing 

law.”); Ackerberg, 892 F.2d at 1333 (“[W]e cannot find 

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waiver, the voluntary relinquishment of a known right, in a 

situation in which no right existed. . . . To find that the [] 

defendants waived a right they did not have . . . is not only 

illogical, but also would encourage litigants, in order to avoid 

a finding of waiver, to file motions they knew to be futile.”). 

We therefore hold that futility can excuse the delayed 

invocation of the defense of arbitration.

III.

We next look at the futility exception in the context of

this case. To do this, we first consider the existing bipolar 

and class arbitration case law and conclude that courts have 

typically treated each form of arbitration as substantively 

distinct. We therefore conclude that each can be 

independently waived, thereby requiring that each receive a

separate futility analysis. We next ask what it means for the 

assertion of a right to have been futile, concluding that the 

appropriate test is whether assertion of that right was almost 

certain to fail. Finally, we apply this framework and hold that 

here, a motion to compel bipolar arbitration prior to 

Concepcion was almost certain to fail.

A.

Plaintiffs contend that it would not have been futile for 

Defendants to have moved to enforce the arbitration clauses

prior to Concepcion. Defendants, however, assert that this is 

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not the proper question. Instead, they suggest that the real 

question is whether they could have compelled bipolar

arbitration prior to Concepcion.

5

 We agree with Defendants 

that the latter question is the proper inquiry, largely because 

profound differences distinguish class and bipolar arbitration. 

Cf. David S. Clancy, Matthew M.K. Stein, An Uninvited 

Guest: Class Arbitration and the Federal Arbitration Act’s 

Legislative History, 63 Bus. Law. 55, 62 (2007) (“Class 

arbitration is very different from the arbitration contemplated 

by Congress when Congress passed the FAA, and it is 

different in ways that plainly matter: its characteristics are the 

opposite of those that impressed Congress about 

arbitration.”). In Opalinski v. Robert Half International, Inc., 

we undertook a thorough review of Supreme Court and Third 

Circuit cases dealing with class and bipolar arbitration. 761 

F.3d 326 (3d Cir. 2014). In doing so, we concluded that 

bipolar and class arbitration are distinct at a fundamental, 

substantive level. They are thus not merely different 

adjudicative procedures that are easily interchanged:

[W]e read the Supreme Court as characterizing 

the permissibility of classwide arbitration not 

solely as a question of procedure or contract 

interpretation but as a substantive gateway 

 5 Indeed, Plaintiffs acknowledge that “Defendants have not 

sought arbitration other than on an individual basis” and at 

one point in this litigation argued that the motion to compel 

such arbitration should be denied because it would not allow 

for class arbitration. ECF No. 221 at * 40.

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dispute qualitatively separate from deciding an 

individual quarrel. Traditional individual 

arbitration and class arbitration are so distinct 

that a choice between the two goes, we believe, 

to the very type of controversy to be resolved.

Id. at 334. Indeed, we further noted that “[t]he [Supreme] 

Court’s line of post-Bazzle opinions . . . indicates that, 

because of the fundamental differences between classwide 

and bilateral arbitration, and the consequences of proceeding 

with one rather than the other, the availability of classwide 

arbitrability is a substantive gateway question . . . .” Id. at 

335 (discussing Green Tree Fin. Corp. v. Bazzle, 539 U.S. 

444, 459 (2003)). Accordingly, we held that – absent clear 

and unmistakable evidence of agreement to the contrary – the 

court, not the arbitrator, must decide whether a contract 

permits either bipolar or class arbitration. Id. at 330, 335.

Indeed, the Supreme Court in Concepcion also 

highlighted three reasons why class arbitration is 

fundamentally different from bipolar arbitration. “First, the 

switch from bilateral to class arbitration sacrifices the 

principal advantage of arbitration—its informality—and 

makes the process slower, more costly, and more likely to 

generate procedural morass than final judgment.” 563 U.S. at 

348. “Second, class arbitration requires procedural formality. 

The AAA’s rules governing class arbitrations mimic the 

Federal Rules of Civil Procedure for class litigation.” Id. at 

349. “Third, class arbitration greatly increases risks to 

defendants.” Id. at 350. Indeed, as Concepcion concluded, 

“[a]rbitration is poorly suited to the higher stakes of class 

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litigation.” Id. These differences make it clear why parties, 

to put it bluntly, care so much about whether the agreement to 

arbitrate permits class arbitration. They also make clear why 

having the right to compel class arbitration is not the same as 

having the right to compel bipolar arbitration.6

 We thus part 

ways with our dissenting colleague who believes that the 

“dispositive question here” is whether “it would have been 

futile in 2009 for [Defendants] to move to enforce the 

arbitration clauses.” By so broadening the dispositive inquiry

in this case, it is no wonder she concludes that the futility 

exception does not apply. Had Defendants sought to enforce 

the arbitration clauses in 2009, they would have been, as we 

explain below, forced into class arbitration with near 

certainty.

7

 Even the dissent begrudgingly acknowledges that 

 6 We recognize that both Concepcion and Opalinski were 

decided after this case was brought and thus were not 

available to Defendants when they had to decide whether to 

move for bipolar arbitration. That said, we believe that these 

cases fairly summarize the rather uncontroversial position that 

class arbitration differs greatly from bipolar arbitration. See 

Bazzle, 539 U.S. at 459 (recognizing that parties who have 

agreed to bipolar arbitration cannot be forced into class 

arbitration because the two procedures are substantively 

distinct); EEOC v. Waffle House, Inc., 534 U.S. 279, 289 

(2002) (“[N]othing in the [FAA] authorizes a court to compel 

arbitration of any issues, or by any parties, that are not 

already covered in the agreement.”). This was well 

understood in 2009 when the complaint was filed.

7 As discussed infra, the New Jersey Supreme Court made it 

clear that “it [is] unconscionable for defendants to deprive 

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they “might not have succeeded in getting what they wanted: 

individual arbitration.” How, then, can we say that 

Defendants waived the right to individual arbitration by 

failing to seek to enforce an arbitration clause which almost 

certainly would have resulted in class arbitration? We 

believe that the right to individual arbitration is a distinct 

right separate from the right to class arbitration. We therefore 

hold that – whether or not class arbitration was permissible –

a court must also determine whether it would have been futile 

to move for bipolar arbitration under the prevailing law. We 

turn, then, to that question.

B.

To determine whether Defendants’ motion to compel

bipolar arbitration would have been futile, we must first 

define futility as understood in this context. Other courts to

address this issue have concluded that futility does not mean 

something is absolutely impossible; nor does it mean 

something is merely improbable. See generally Garcia v. 

Wachovia Corp., 699 F.3d 1273, 1279 (11th Cir. 2012) (“The 

more lenient unlikely-to-succeed standard . . . would only 

encourage litigants to delay moving to compel arbitration 

until they could ascertain how the case was going in federal 

district court.” (internal citations and quotation marks 

omitted)). Instead, when asking whether arbitration would 

 

[plaintiff] of the mechanism of a class-wide action, whether 

in arbitration or in court litigation.” Muhammad, 189 N.J. at 

22.

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have been futile, courts ask whether “it was almost certain

. . . that a motion to compel arbitration would have been 

denied.” Id. (emphasis added); see also Miller, 791 F.2d at 

854 (“[A]ny motion to compel arbitration would almost 

certainly have been futile.”); Peterson, 849 F.2d at 466

(“Because Shearson almost certainly could not have obtained 

an order for arbitration of the Rule 10b-5 claim prior to 

McMahon, it did not waive its right to arbitrate the claim.”).8

We agree, which requires us to ask whether a motion 

to compel bipolar arbitration filed by Defendants prior to 

Concepcion was almost certain to fail. We hold that it was. 

Then-existing New Jersey law prohibited courts from 

compelling bipolar arbitration in a certain subset of adhesive 

consumer contracts. Muhammad v. Cty. Band of Rehoboth 

Beach, DE, 189 N.J. 1 (2006). Because we conclude that the 

contracts here fall within the subset of contracts for which 

compelled bipolar arbitration would have been 

unconscionable under Muhammad, we hold that any attempt 

 8 We see no conflict between the “almost certain to fail” 

standard and the Eighth Circuit’s position that waiver is 

appropriate if “it should have been clear . . . that the 

arbitration agreement was at least arguably enforceable.” Se. 

Stud & Components, Inc. v. Am. Eagle Design Build Studios, 

LLC, 588 F.3d 963, 967 (8th Cir. 2009). If an arbitration 

clause is not at least arguably enforceable, it is almost certain 

to fail. These are, if not essentially the same standard, 

logically parallel.

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to seek bipolar arbitration in this case prior to Concepcion

was almost certain to fail.

In Muhammad, the New Jersey Supreme Court held 

that “it was unconscionable for defendants to deprive 

Muhammad of the mechanism of a class-wide action, whether 

in arbitration or in court litigation.” 189 N.J. at 22. This was 

because “[t]he public interest at stake in [the plaintiff’s]

ability and the ability of her fellow consumers effectively to 

pursue their statutory rights under this State’s consumer 

protection laws overrides the defendants’ right to seek 

enforcement of the class-arbitration bar in their agreement.” 

Id. Specifically, the court considered “the small amount of 

damages being pursued in this action involving complicated 

financial arrangements and multiple out-of-state entities.” Id. 

It then went on to note that the small value of each claim – at 

most $600 – would make it difficult to pursue individually, 

even if recovery of attorney’s fees were permitted. Id. at 21 

(“One may be hard-pressed to find an attorney willing to 

work on a consumer-fraud complaint involving complex 

arrangements . . . when the recovery is so small.”). 

Accordingly, the court concluded – after performing a fact 

intensive inquiry – that in a certain subset of adhesive

contracts, a consumer cannot be compelled to submit to 

bipolar arbitration. This was primarily because the court 

concluded that individual plaintiffs were frequently 

discouraged from asserting meritorious claims by the 

relatively high costs inherent in doing so. Thus, as a policy 

matter, the court concluded that consumers in such situations 

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could not be forbidden from pursuing their claims in a class 

setting. Id.

Three years later in Homa v. American Express Co., 

we also confirmed that this New Jersey policy was not 

preempted by the FAA. 558 F.3d 225 (3d Cir. 2009). In 

Homa, a putative class of consumers alleged that American 

Express misrepresented the terms of the rewards program for 

one of its credit cards. 558 F.3d at 227. Like Muhammad, 

the claims at issue in Homa were small claims that were not 

generally worth litigating on an individual basis. Id. The 

District Court in Homa, however, held that despite

Muhammad, American Express could compel bipolar 

arbitration by enforcing the class arbitration waiver provision

in its contracts. Id. at 230-231. We read Muhammad

differently and reversed. First, we noted that the District 

Court placed too much emphasis on language in Muhammad

explaining that class-arbitration waivers are not per se

unenforceable. Id. at 230. We concluded that this focus on 

the lack of a per se rule inappropriately minimized the 

broader applicability of Muhammad and its conclusion that

certain contracts barring class arbitration violated New 

Jersey’s public policy against exculpatory clauses. Id. 

Second, we compared the facts of Homa to those in 

Muhammad and concluded that 

the contract at issue [in Homa] bears the 

hallmarks of a contract of adhesion—it was 

presented on a take-it-or-leave-it basis, . . . in a 

standardized printed form, without opportunity 

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22

for the adhering party to negotiate except 

perhaps on a few particulars and, as Appellant’s 

underlying claim implicates less than five 

percent of a cardholder’s overall credit card 

balance, predictably involves a small amount of 

damages . . . . [Thus,] the District Court should 

have denied the 12(b)(6) motion and concluded 

that, in light of Muhammad, at this stage the 

class-arbitration waiver at issue violates New 

Jersey’s fundamental public policy.

Id. at 231. Thus, “we h[e]ld that, if the claims at issue are of 

such a low value as effectively to preclude relief if decided 

individually, then, under Muhammad, . . . the class-arbitration 

waiver is unconscionable.”9

 Here, however, because we 

 9 In a concurring opinion, Judge Weis also discussed some of 

the specific factors that New Jersey courts seemed to focus on 

when determining if a contract is unconscionable. This list,

too, makes it clear that one of the key factors is the relatively 

small value of the individual claims: “[m]atters bearing on the 

Court’s appraisal included the lawsuit’s complexity, the 

amount of damages involved, and the availability of 

attorneys’ fees and statutory multipliers. The size of potential 

damages was considered to be an important consideration and 

was used to limit the holding to ‘low-value’ cases.” Homa, 

558 F.3d at 233. He did, however, express some doubt about 

our ability to determine with certainty how the New Jersey 

Supreme Court would rule if confronted with this case, and 

thus explained that the District Court should perform a more 

in depth application of Muhammad on remand. Id. at 233-34.

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know the value of the individual claims, we need not require 

the District Court to conduct further inquiry into this issue on 

remand.

Applying Homa and Muhammad, we must undertake a 

fact specific inquiry into whether the contracts in this case 

have the same characteristics as those discussed above. See 

Rudbart v. N. Jersey Dist. Water Supply Comm’n, 605 A.2d 

681, 687 (N.J. 1992) (“[I]n determining whether to enforce 

the terms of a contract of adhesion, courts have looked not 

only to the take-it-or-leave-it nature or the standardized form 

of the document but also to the subject matter of the contract, 

the parties’ relative bargaining positions, the degree of 

economic compulsion motivating the ‘adhering’ party, and 

the public interests affected by the contract.”). If so, we can

confidently conclude that any attempt by the Defendants to 

compel bipolar arbitration – and “deprive [Plaintiffs] of the 

mechanism of a class-wide action, whether in arbitration or in 

court litigation,” Muhammad, 189 N.J. at 22 – was almost 

certain to fail.

In doing so, we conclude that the contracts here

contain the same characteristics as those in Muhammad and 

Homa. Therefore, a New Jersey court confronted with this 

case in 2009 would almost certainly have found Muhammad

controlling and would have denied Defendants’ motion to 

compel bipolar arbitration. Specifically, we highlight three 

key similarities. First, the value of the individual claims in 

this case are small, between $70 and $350; the claims in 

Muhammad were all for less than $600. This suggests that it 

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24

would be, in most cases, impractical to bring an individual 

claim for relief. See Delta Funding Corp. v. Harris, 912 A.2d 

104, 115 (N.J. 2006) (“Harris has adequate incentive to bring 

her claim as an individual action. Not only are her damages 

substantial, but the fact that her home is at stake in the 

foreclosure proceeding makes it likely that she would contact 

an attorney. The same cannot be said of low-value claims 

where individuals have little, if any, incentive to seek out an 

attorney.”). Second, there is little doubt that these contracts 

are adhesive consumer contracts; they were presented on a 

“take-it-or-leave-it basis, commonly in a standardized printed 

form, without opportunity for the ‘adhering’ party to 

negotiate except perhaps on a few particulars.” Muhammad, 

189 N.J. at 15.10 Finally, it is likely that here, “without the 

availability of a class-action mechanism, many consumerfraud victims may never realize that they may have been 

wronged.” Id. at 20. Most consumers would lack the 

necessary motivation to spend time looking into the costs 

associated with filing records in their county. Because these 

 10 We recognize that Plaintiffs had the option to augment a 

few specific terms in the contract by, for example, asking for 

a pre-printed Arbitration Endorsement which would have 

required both parties to consent to arbitration. Based on the 

evidence presented to the District Court, this option was 

rarely, if ever, requested. Nonetheless, the ability to exercise 

this option in a real estate closing hardly provides support for 

the position that this is anything but a contract of adhesion.

Indeed, Muhammad recognized that the ability to negotiate 

“on a few particulars” does not prevent a contract from being 

adhesive. 189 N.J. at 15.

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similarities all evidence the same unconscionability concerns 

highlighted in Muhammad, we hold that any attempt by 

Defendants to compel bipolar arbitration prior to Concepcion

would almost certainly have failed.

11

Indeed, even the Plaintiffs at one point argued that 

under Muhammad, the contracts here would be 

unconscionable if read to prohibit class arbitration and 

compel bipolar arbitration. In a section of Plaintiffs’ response 

to Defendants’ motion to compel arbitration that is aptly titled 

“Under New Jersey Law Chosen by Defendants, a 

Requirement of Individual Arbitration of Plaintiffs’ Claims 

Would be Unconscionable,” the Plaintiffs explained that 

“[t]he factors identified by the Court in Muhammad as 

rendering the class action ban unconscionable are present 

here to the extent Defendants invoke their arbitration clause 

solely in order to prohibit any class action.” Pl.’s Br. in Opp. 

 11 While we readily acknowledge the concerns which the New 

Jersey Supreme Court has suggested necessitate a finding of 

procedural unconscionability, we need not opine on the public 

policy considerations inherent in deciding whether to enforce

similar arbitration clauses because Congress has already made 

this difficult decision. As the Supreme Court made clear in 

Concepcion, “[t]he principle purpose of the FAA is to ensure 

that private arbitration agreements are enforced according to 

their terms.” 563 U.S. at 344. And because the Supreme 

Court has decided that the FAA preempts contrary state law, 

we need not address this issue further.

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to Joint Mot. to Stay, ECF No. 221 at *39. 12 While not 

giving this inconsistency any real weight, we simply note its 

existence.

 12 This further highlights the key error the dissent makes

when suggesting that the lack of a class arbitration waiver 

meaningfully distinguishes this case from Muhammad. The 

dissent argues that in our case, it is unlikely that a New Jersey 

court would have held the arbitration clauses unconscionable 

because the clauses could have been read to permit class 

arbitration (due to their lack of a class-arbitration waiver). 

While this is true, the right question to ask when assessing 

futility here is not whether the arbitration clauses, as a whole,

would have been unconscionable. The question is whether a 

motion to compel bipolar arbitration would have been futile 

prior to Concepcion. Indeed, practically speaking, the 

dissent’s approach to futility would lead to an absurd outcome

in this case. In order to prevent waiver of Defendants’ nowexisting right to compel bipolar arbitration, Defendants’

lawyers would have had to seek to enforce an arbitration 

agreement that they knew – or should have known – would 

almost certainly be read to allow Plaintiffs to arbitrate as a 

class. Accordingly, had they pursued arbitration in 2009, 

they would have been exposing their clients to the very real 

possibility that a multi-million dollar class action case would 

be decided by an arbitral panel; a procedural outcome far less 

preferable for Defendants than a class action in federal court. 

See generally Concepcion, 563 U.S. at 350 (“Arbitration is 

poorly suited to the higher stakes of class litigation.” ); 

Jonathan R. Bunch, To Be Announced: Silence from the 

United States Supreme Court and Disagreement Among 

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IV.

We next address two minor issues. First, having 

concluded that the futility exception applies, we go on to

excuse the pre-Concepcion delay and analyze the postConcepcion delay under Hoxworth. Second, we consider the 

scope of the arbitration clauses here and conclude that their 

breadth makes it clear they encompass the New Jersey 

Consumer Fraud Act (NJCFA) claims that are contested on 

appeal.

A.

Because any attempt to compel bipolar arbitration in 

this case prior to Concepcion was almost certain to fail, we 

will disregard Defendants’ pre-Concepcion delay13 when 

 

Lower Courts Suggest an Uncertain Future for Class-Wide 

Arbitration, 2004 J. DISP. RESOL. 259, 272 (2004) (explaining 

that class arbitration often seems to “bring[] the burdens of 

litigation into the arbitral forum” without bringing any of the 

benefits along with it). It would be a cruel joke to tell

Defendants that they waived their right to bipolar arbitration 

by not seeking to enforce an arbitration agreement that would 

have almost certainly led to class arbitration.

13 The length of the delay itself – if excused under the futility 

exception – is not relevant to our inquiry. Yet even were we 

to consider it, we note that delays of a similar length have 

been excused by the Eighth and Eleventh Circuits. See 

Benoay v. Prudential-Bache Sec., Inc., 805 F.2d 1437, 1440 

(11th Cir. 1986) (“Despite the fact that Bache and Stark’s 

motion to compel arbitration was made two and one-half 

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determining whether waiver is appropriate. See Miller, 791 

F.2d at 854 (“Subsequent to [the relevant change in the law], 

appellees delayed only two and a half months in making their 

request. Much of that delay is attributable to consolidation of 

the cases and appellant’s filing of an amended complaint. In 

light of these facts, we find no waiver of the right to 

arbitrate.”).14 Plaintiffs also do not claim that they suffered 

any additional unfair prejudice apart from the costs associated 

with maintaining and prosecuting this case prior to 

Concepcion. See generally Fisher, 791 F.2d at 698 (“The 

Arbitration Act requires district courts to compel arbitration 

even where the result would be the possibly inefficient 

maintenance of separate proceedings in different forums.”).15

 

years after initiation of the civil action, we conclude that the 

motion was timely in light of a change in law affecting the 

parties’ rights.”); Nesslage v. York Sec., Inc., 823 F.2d 231, 

234 (8th Cir. 1987) (excusing two year delay).

14 We also believe that our decision to excuse the delay and 

its resulting expense to Plaintiffs here is supported by the 

“‘liberal federal policy favoring arbitration.’” Concepcion, 

563 U.S. at 339 (quoting Moses H. Cone, 460 U.S. at 24). 

We therefore leave it to courts in future cases to decide

whether and how to apply futility outside of the arbitration 

context.

15 In In re California Title Insurance Antitrust Litigation, No. 

CIV. 08-1341, 2011 WL 2566449 (N.D. Cal. June 27, 2011), 

a case practically identical to ours, Judge White concluded 

that the delay resulting from the belated invocation of 

arbitration as a defense was not unfairly prejudicial despite 

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29

Because we fully excused the pre-Concepcion delay, 

we consider only whether Defendants’ approximately threemonth delay between April 27, 2011 (when Concepcion was 

decided) and August 1, 2011 (when Defendants filed their 

motion to compel arbitration) was prejudicial to Plaintiffs. In 

doing so, we look to the Hoxworth factors outlined supra for 

guidance and conclude that waiver would be inappropriate for 

three reasons. First, Defendants notified Plaintiffs on June 8, 

2011 – just over a month after Concepcion was decided – that 

they were demanding bipolar arbitration. This promptly put 

Plaintiffs on notice that a motion for arbitration was coming if 

the demand was rejected. Second, only three months passed 

 

the fact that the case had been going on for over three years. 

Specifically, he noted, “[t]here is nothing in the record to 

support Plaintiffs’ conclusory contention that granting the 

motion to compel arbitration would unfairly prejudice 

Plaintiffs.” Id. at *3 (internal citations and quotation marks 

omitted). He then noted that the trial date was still over a 

year away and that only limited substantive discovery had 

taken place. We too are not convinced by Plaintiffs’ 

allegations of prejudice here and, in light of the FAA’s strong 

policy favoring arbitration, reject the argument that the 

litigation costs associated with a delay in this case can alone 

qualify as sufficient unfair prejudice to prevent application of 

the futility exception. Cf. Martin v. Yasuda, No. 15-55696, 

slip op. at *13 (9th Cir. July 21, 2016) (“A determination of 

whether ‘the right to compel arbitration has been waived must 

be conducted in light of the strong federal policy favoring 

enforcement of arbitration agreements.’” (quoting Fisher, 791 

F.2d at 694)).

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between the accretion of the right and Defendant’s motion to 

compel arbitration. This is not an unreasonable amount of 

time. Third, virtually no substantive or procedural litigation 

occurred during this delay. Hoxworth, 980 F.2d at 926-27.16

B.

Finally, we note that the broad scope of the arbitration 

clauses here make it clear that we do not need to reach the 

viability of Plaintiffs’ NJCFA claims.

17 The 1987 Owner’s 

Policy states that “arbitration shall decide any matter in 

 16 We also summarily reject Plaintiffs’ argument that the 

Arbitration Endorsement was a mandatory addendum to every 

title insurance contract at issue here. Not only are the District 

Court’s findings on this issue compelling, but we are also 

reviewing the court’s factual findings for clear error, despite 

Plaintiffs attempt to dress up their argument as a matter of 

law by suggesting that the District Court ignored probative 

evidence. See N. River Ins. Co. v. CIGNA Reinsurance Co., 

52 F.3d 1194, 1218 (3d Cir. 1995). The District Court here 

properly considered and weighed the competing evidence and 

found the Defendants’ position more compelling. This was 

not clearly erroneous.

17 The scope of an arbitration clause is decided by the court 

absent clear and unmistakable evidence that the parties agreed 

to submit this issue to the arbitrator. First Options of 

Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); 

CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 171 (3d 

Cir. 2014). We find no language in the contracts suggesting 

an intent that this issue be submitted to the arbitrator.

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31

dispute between you and the Company,” while the 1992 Loan 

Policy states that “[a]rbitrable matters include, but are not 

limited, to any controversy or claim between the company 

and the insured arising out of or relating to the policy . . . .” 

JA 33. As we held in CardioNet, when the plain language of 

an arbitration clause is clear, it controls. 751 F.3d at 173. We 

went further, however, and also concluded that if the 

language of the contract is ambiguous, “the presumption of 

arbitrability applies” because “[w]e must resolve ‘any doubts 

concerning the scope of arbitrable issues . . . in favor of 

arbitration.’” Id. (quoting Moses H. Cone, 460 U.S. at 24-

25). Thus, we have no doubt that the NJCFA claims raised 

here are subject to arbitration.

V.

For the reasons previously articulated, we will remand 

this case to the District Court with instructions to compel 

bipolar arbitration of Plaintiffs’ arbitrable claims in 

accordance with the District Court’s May 14, 2015, order and 

this opinion.

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1

Chassen v. Fidelity National Financial, Inc. et al.

No. 15-3789

RENDELL, Circuit Judge, dissenting:

The majority’s opinion is flawed for a clear and 

obvious reason: it relies on caselaw that has no application 

here. Therefore, I must respectfully dissent. 

In Muhammad v. County Bank of Rehoboth Beach, the 

New Jersey Supreme Court held that “the presence of the 

class-arbitration waiver in Muhammad’s consumer arbitration 

agreement render[ed] that agreement unconscionable.” 912 

A.2d 88, 100 (N.J. 2006). Yet, despite the lack of a class 

arbitration waiver in the arbitration clauses here, the majority 

holds that a New Jersey court in 2009, at the outset of this 

case, would have found Muhammad controlling here. I reject 

that view, and urge you to read Muhammad and the actual

arbitration clauses at issue here. Doing so will lead inexorably 

to one conclusion: this case is not Muhammad, and a motion 

by the Defendants in 2009 to compel arbitration thus would 

have been anything but futile. Moreover, the majority has 

expanded the concept of futility beyond what we as a court 

should recognize. 

In Muhammad, the New Jersey Supreme Court 

considered whether to compel arbitration under an arbitration 

agreement in a payday loan contract that in no uncertain

terms prohibited class arbitration. Specifically, in multiple 

places, the agreement required Muhammad to resolve all 

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2

disputes related to her payday loan transaction “by binding 

individual (and not class) arbitration.” Id. at 92. The court 

held these waivers unconscionable under New Jersey law. 

According to the court, by forcing Muhammad to waive class 

arbitration in her case, which involved a small amount of 

damages, the arbitration agreement operated as an 

exculpatory clause, effectively releasing the lender from 

liability for possible statutory violations. See id. at 99–101.

Unsurprisingly, then, courts applying New Jersey law 

considered Muhammad to be relevant only when analyzing 

the unconscionability of class arbitration waivers. In Homa v. 

American Express Co., for example, we examined an 

arbitration provision in a consumer agreement that required 

all claims to “be arbitrated on an individual basis . . . [with] 

no right or authority for any Claims to be arbitrated [as] a 

class action.” 558 F.3d 225, 227 (3d Cir. 2009). After 

comparing this class arbitration waiver to the “similar classarbitration waiver” at issue in Muhammad, we deemed it 

unconscionable under New Jersey law. Id. at 230–31; see 

also, e.g., Cohen v. Chase Bank, N.A., 679 F. Supp. 2d 582, 

595 (D.N.J. 2010) (holding that the “the present class-action 

waiver” is unconscionable under Muhammad); Davis v. Dell, 

Inc., No. 07-630 (RBK), 2008 WL 3843837, at *4 (D.N.J. 

Aug. 15, 2008) (“This Court finds that this case is 

distinguishable from Muhammad, and the class action waiver 

does not act as an unconscionable exculpatory clause.”).

Here, the arbitration clauses—which are situated in the 

Loan Policies and the Owners’ Policies—lack any sort of 

class arbitration waiver. The Loan Policies provide: 

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3

Unless prohibited by applicable law, either the 

Company or the insured may demand 

arbitration pursuant to the Title Insurance 

Arbitration Rules of the American Arbitration 

Association. Arbitrable matters may include, 

but are not limited to, any controversy or claim 

between the Company and the insured arising 

out of or relating to this policy, any service of 

the Company in connection with its issuance or 

the breach of a policy provision or other 

obligation. All arbitrable matters when the 

Amount of Insurance is $1,000,000 or less shall 

be arbitrated at the option of either the 

Company or the insured. All arbitrable matters 

when the Amount of Insurance is in excess of 

$1,000,000 shall be arbitrated only when agreed 

to by both the Company and the insured. 

Arbitration pursuant to this policy, and under 

the Rules in effect on the date the demand for 

arbitration is made or, at the option of the 

insured, the Rules in effect at Date of Policy, 

shall be binding upon the parties.

J.A. 3981. And the Owners’ Policies provide: “If it is 

permitted in your state, you or the Company may 

demand arbitration. The arbitration shall be binding on 

both you and the Company. The arbitration shall 

decide any matter in dispute between you and the 

Company.” J.A. 3997. These clauses, quite obviously, 

do not even mention class arbitration, let alone outright 

prohibit it. If the Defendants had sought individual 

arbitration at the outset of the case, this silence might 

have been interpreted to mean that the parties simply 

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4

did not contemplate class arbitration. Or it might have 

been construed as permitting class arbitration.1 Surely, 

it would not have been futile for them to move to 

enforce these clauses at that time. 

Because the arbitration clauses here sit far 

outside the reach of Muhammad, as they are devoid of 

a class arbitration waiver, “‘it should have been clear 

to the [Defendants in 2009] that the arbitration 

agreement[s] w[ere] at least arguably enforceable.’”

Garcia v. Wachovia Corp., 699 F.3d 1273, 1278 (11th 

Cir. 2012) (quoting Se. Stud & Components, Inc. v. 

Am. Eagle Design Build Studios, LLC, 588 F.3d 963, 

967 (8th Cir. 2009)). Indeed, the Defendants have cited 

not one case—let alone any controlling precedent in 

2009—in which a court applied Muhammad and held 

as unconscionable an arbitration agreement that 

contained no class arbitration waiver or prohibition. 

See id. (“[A]bsent controlling . . . precedent 

foreclosing a right to arbitrate, a motion to compel 

arbitration will almost never be futile.”). 

The majority contends that it does not matter 

that the arbitration clauses here lacked class arbitration 

 1 The majority claims that, had the Defendants moved to 

enforce the arbitration clauses in 2009, “they would have 

been . . . forced into class arbitration with near certainty.” 

Majority Op. 18. I disagree. The majority bases that view on 

the flawed premise that these arbitration clauses implicated 

Muhammad. There simply is no class arbitration bar that 

would have been held unconscionable, and the clauses at 

issue could have been interpreted either way. 

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waivers. See Majority Op. 26 n.12. According to the 

majority, regardless of whether these clauses contained 

class arbitration waivers, given Muhammad, it would 

have been futile in 2009 for the Defendants to seek 

individual arbitration. It concludes that “a New Jersey 

court confronted with this case in 2009 would almost 

certainly have found Muhammad controlling and 

would have denied Defendants’ motion to compel 

[individual] arbitration.” Id. at 24. 

That conclusion is simply wrong. The 

majority’s analysis here fails to refer back to its own 

characterization of Muhammad as being animated by 

the explicit “class-arbitration bar,” or “class-arbitration 

waiver,” at issue there. Majority Op. 21, 22. This 

omission renders its conclusion not only arbitrary, but 

wrong.

Furthermore, contrary to the majority’s 

position, the futility inquiry is not about disregarding 

the actual arbitration clauses at issue and asking the 

question—divorced from the arbitration clauses 

themselves—of whether “it would have been futile to 

move for [individual] arbitration under [Muhammad].” 

Id. at 19. No circuit court has ever framed the inquiry 

this way, and for good reason. As noted above, the 

futility inquiry sensibly focuses on the enforceability 

of the actual arbitration clauses—that is, would it 

have been futile in 2009 for the Defendants to move to 

enforce these clauses? See, e.g., Gutierrez v. Wells 

Fargo Bank, NA, 704 F.3d 712, 719 (9th Cir. 2012)

(“Our [futility] analysis begins with the [arbitration 

agreement] between Wells Fargo and the class 

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6

members.”); Fisher v. A.G. Becker Paribas Inc., 791 

F.2d 691, 697 (9th Cir. 1986) (“Until the Supreme 

Court’s decision in Byrd, the arbitration agreement in 

this case was unenforceable.”).2 Here, the answer is 

no. 

But even if we were to pretend that these 

clauses contained class arbitration waivers so as to 

implicate Muhammad, a motion to compel individual 

arbitration in 2009 would have been far from futile. In

Muhammad, the New Jersey Supreme Court did not 

hold that class arbitration waivers were “per se” 

unconscionable—far from it. 912 A.2d at 101. Rather, 

in holding that particular class arbitration waiver 

unconscionable, it articulated a “multi-factor analysis,” 

one that necessitated a “fact-sensitive examination,” 

for courts to apply when “evaluat[ing] claims of 

unconscionability.” Id. at 97. A court must first 

determine whether the class arbitration waiver was part 

of a contract of adhesion. Id. at 96–97. If so, it must 

next consider (1) “the subject matter of the contract”; 

(2) “the parties’ relative bargaining positions”; (3) “the 

degree of economic compulsion motivating the 

adhering party”; and (4) “the public interests affected 

by the contract.” Id. at 97 (internal quotation marks 

omitted).

 2 The majority itself quotes this language from Fisher, see

Majority Op. 14, but then analyzes the futility issue here in a 

manner totally divorced from the actual language of the 

arbitration clauses. 

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7

So, if we were to pretend Muhammad applied

here, the Defendants could have easily argued that 

these arbitration clauses were not unconscionable. 

Most notably, they could have shown that these 

clauses were not part of contracts of adhesion, which 

would have obviated the need for the court to even 

consider the remaining factors. See id. (“The 

determination that a contract is one of adhesion . . . is 

the beginning, not the end, of the inquiry . . . .” 

(internal quotation marks omitted)). As noted by the 

majority in a footnote, the Plaintiffs “had the option”

to “ask[] for a pre-printed Arbitration Endorsement 

which would have required both parties to consent to 

arbitration.” Majority Op. 25 n.10. In other words, the 

Plaintiffs could have avoided being forced into 

arbitration. The Defendants thus could have 

established that these contracts were not ones of 

adhesion because the very terms at issue—the 

arbitration clauses—were optional, i.e., they were not 

“presented on a take-it-or-leave-it basis.” Muhammad, 

912 A.2d at 96; see also Nino v. Jewelry Exchange, 

Inc., 609 F.3d 191, 201 (3d Cir. 2010) (holding that an 

arbitration agreement was part of a contract of 

adhesion and thus procedurally unconscionable 

because the defendant “presented the arbitration 

agreement to [the plaintiff] for signature on a take-itor-leave-it basis” (internal quotation marks omitted)). 

How, then, could it possibly have been futile in light of 

Muhammad for the Defendants to move to compel 

individual arbitration in 2009? I am baffled by the 

majority’s conclusion that “there is little doubt” that 

the arbitration clauses at issue here were part of 

contracts of adhesion. Majority Op. 25.

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8

The Defendants’ inaction in 2009, and their 

about-face to seek arbitration in 2011, were no doubt 

driven by litigation tactics to derail the court 

proceedings. At the outset of the case, they realized 

that moving to compel individual arbitration under the 

arbitration clauses here, which were silent as to class 

arbitration, could have exposed them to class 

arbitration—a situation they admitted they “would 

never ever open [themselves] up for.” Oral Arg. Tr. 

20:37–41, July 14, 2016. That prospect then became 

unlikely when the Court decided Stolt-Nielsen S.A. v. 

AnimalFeeds International Corp. and rejected the idea 

that “the parties’ mere silence on the issue of classaction arbitration constitutes consent to resolve their 

disputes in class proceedings.” 559 U.S. 662, 687 

(2010). Fueled by Stolt-Nielsen, they then seized the 

opportunity to cloak their delay under the veil of 

futility ostensibly afforded to them by AT&T Mobility 

LLC v. Concepcion, 563 U.S. 333 (2011). But the

previous uncertainty as to class arbitration does not 

mean that it would have been futile in 2009 for them to 

move to enforce the arbitration clauses, which is the 

dispositive question here. It just means that they might 

not have succeeded in getting what they wanted: 

individual arbitration. 

For these reasons, I respectfully dissent from 

the majority’s opinion. It would have been far from 

futile for the Defendants to move to enforce these 

arbitration clauses in 2009. We should therefore 

consider only whether their belated attempt to do so 

prejudiced the Plaintiffs under the factors from 

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9

Hoxworth v. Blinder, Robinson & Co., Inc., 980 F.2d 

912 (3d Cir. 1992). This analysis would undoubtedly 

lead to our finding that the Plaintiffs were prejudiced 

such that the Defendants waived their right to arbitrate. 

The Defendants did not just warm the bench for two 

and a half years before moving to compel arbitration. 

During that time, they repeatedly contested the merits 

of the Plaintiffs’ claims, engaged in substantial nonmerits litigation, and participated in extensive 

discovery that cost the Plaintiffs over $57,000. Under 

Hoxworth, this would not even be a close call. See id.

at 925–26 (finding prejudice where the defendants 

waited eleven months to seek arbitration, participated 

in numerous pretrial proceedings, filed motions 

challenging the merits of the plaintiffs’ claims, and 

took depositions). 

Case: 15-3789 Document: 003112401608 Page: 40 Date Filed: 09/08/2016