SUPERIOR COURT OF NEW JERSEY 

 APPELLATE DIVISION 

 DOCKET NO. A-3346-22

 A-3372-22 

MARIA AGUIRRE, 

ANDREA PALACIOS, 

and LORENA VARAS, 

 Plaintiffs-Respondents, 

v.

CDL LAST MILE SOLUTIONS, 

LLC, ANTHONY CURCIO, and 

KATTY PONCE, 

 Defendants-Appellants, 

and 

SUBCONTRACTING 

CONCEPTS, LLC, d/b/a SCI, 

 Defendant. 

______________________________ 

MARIA AGUIRRE, 

ANDREA PALACIOS, 

and LORENA VARAS, 

 Plaintiffs-Respondents, 

NOT FOR PUBLICATION WITHOUT THE 

APPROVAL OF THE APPELLATE DIVISION 

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the 

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
2 A-3346-22

v.

CDL LAST MILE SOLUTIONS, 

LLC, ANTHONY CURCIO, and 

KATTY PONCE, 

 Defendants, 

and 

SUBCONTRACTING 

CONCEPTS, LLC, d/b/a SCI, 

 Defendant-Appellant. 

______________________________ 

Argued January 9, 2024 – Decided February 26, 2024 

Before Judges Natali and Puglisi. 

On appeal from the Superior Court of New Jersey, Law 

Division, Bergen County, Docket No. L-1172-23. 

Theodore M. Eder argued the cause for appellants CDL

Last Mile Solutions, LLC, Anthony Curcio and Katty 

Ponce, in A-3346-22 (Weber Gallagher Simpson 

Stapleton Fires & Newby LLP, attorneys; Theodore M.

Eder, of counsel and on the briefs). 

Peter Paul Perla, Jr., argued the cause for appellant 

Subcontracting Concepts, LLC d/b/a SCI, in A-3372-

22 (PRB Attorneys at Law, LLC, attorneys; Peter Paul 

Perla, Jr., of counsel and on the briefs). 

Scott Simpson (Menken Simpson & Rozger LLP) of the 

New York bar, admitted pro hac vice, argued the cause 

for respondents (Newman, Simpson & Cohen, LLP, 

attorneys; Scott Simpson, Raya F. Saksouk (Menken 
3 A-3346-22

Simpson & Rozger LLP) of the New York bar, admitted

pro hac vice, Jason J. Rozger, Daniel Jay Cohen, and 

Daniel C. Stark, on the briefs). 

PER CURIAM 

In this consolidated appeal, defendants CDL Last Mile Solutions, LLC 

(CDL), Anthony Curcio, and Katty Ponce (collectively, the CDL defendants), 

and defendant Subcontracting Concepts, LLC d/b/a SCI (SCI), challenge two

Law Division orders that denied their respective motions to compel arbitration 

and to dismiss the putative class action complaint filed by plaintiffs Maria 

Aguirre, Andrea Palacios, and Lorena Varas. We affirm for the following 

reasons. 

First, we conclude New Jersey law applies, rather than New York law as 

identified in the agreements, because (a) New Jersey has a materially greater 

interest than New York in the arbitrability of disputes related to the agreements 

at issue here, (b) New Jersey law would apply absent any choice of law 

provision, and (c) New York law is contrary to New Jersey's fundamental public 

policy of ensuring any waiver of the right to a jury trial is knowing, intelligent, 

and voluntary. On that point, we conclude the arbitration agreements here are 

unenforceable because they fail to adequately "explain that the plaintiff[s] [are] 

giving up [their] right to bring [their] claims in court or have a jury resolve the 
4 A-3346-22

dispute," as required by Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 

430, 447 (2014). 

As we further detail below, we do not reach the applicability of the 

interstate employment contract exemption to the Federal Arbitration Act (FAA), 

9 U.S.C. §§ 1-16, because, even assuming the FAA applies, it permits states to 

regulate contracts, including those containing arbitration provisions, using 

generally applicable state law such as that set forth in Atalese. Finally, in light 

of our decision finding the arbitration agreement unenforceable, we conclude 

the class action waiver, which by its express terms applies only to arbitration 

proceedings, is inapplicable under these circumstances. 

I.

We begin by reciting the relevant facts in the motion record. CDL is a 

Delaware LLC, specializing in "logistics and last-mile delivery services." It is 

headquartered in New York and operates a warehouse in Bergen County. 

Plaintiffs, residents of New Jersey, work as delivery drivers for CDL, make 

deliveries exclusively in New Jersey, and report to the Bergen County 

warehouse. 

SCI is a Delaware LLC, headquartered in New York, that "provides thirdparty administrative support for courier and logistics companies." Since 2012, 
5 A-3346-22

SCI has provided services to CDL, including payroll processing and delivery 

driver onboarding. 

Defendant Curcio is the owner, manager, and president of CDL and a New 

York resident. Defendant Ponce is a CDL dispatcher at the Bergen County 

warehouse who is alleged to have "authority to hire, fire, and discipline . . . 

drivers" and "to assign or reassign their delivery routes." 

 On March 2, 2023, plaintiffs filed a putative class action complaint 

seeking damages, injunctive and declaratory relief, and attorneys' fees and costs. 

The complaint alleges the class includes at least one hundred people, identified 

as "all delivery drivers who performed work for [d]efendants in the [s]tate of 

New Jersey from March 2, 2017, until [d]efendants cease their unlawful acts." 

Plaintiffs claimed, first, defendants misclassified the class members as 

independent contractors to avoid paying overtime wages in violation of the New 

Jersey Wage and Hour Law, N.J.S.A. 34:11-56a4(b) (WHL), and second, 

defendants unlawfully deducted from the class members' wages in violation of 

the New Jersey Wage Payment Law, N.J.S.A. 34:11-4.4 (WPL). 

Plaintiffs further alleged drivers hired to work for CDL are "required to 

sign an independent contractor agreement with SCI," entitled "Owner/Operator 

Agreement" (the Agreements). CDL is not a party to the Agreements and while 
6 A-3346-22

not directly named, is referred to in the Agreements as the "logistics broker" or 

"customer." The Agreements signed by each plaintiff contain the following 

arbitration clause: 

In the event of any dispute, claim, question, or 

disagreement arising from or relating to this agreement 

or the breach thereof, or service agreement between

Owner/Operator and SCI's clients or any permiss[i]ble 

statutory disputes, the parties hereto shall use their best 

efforts to settle the dispute, claim, question, or 

disagreement. . . . If resolution of the dispute is not 

reached within [sixty] days . . . disputes that are within 

the jurisdictional maximum for small claims will be

settled in small claims court where the Owner/Operator 

resides. 

All other disputes, claims, questions, or differences 

beyond the jurisdictional maximum for small claims 

courts and have not passed the statute of limitations 

within the locality of the Owner/Operator's residence 

will be finally settled by arbitration under the policies 

of the Federal Arbitration Act and New York State's

Arbitration provisions. . . . 

Neither you nor SCI shall be entitled to join or 

consolidate claims in arbitration by or against other 

individuals or entities, or arbitrate any claim as a 

representative member of a class . . . .

[(Emphasis supplied).] 

The Agreements also state they "shall be governed by the laws of the State 

of New York." At the end of each of the Agreements, just above the signature 

area, an all-caps notice informs: "THIS CONTRACT CONTAINS A BINDING 
7 A-3346-22

ARBITRATION PROVISION AND CLASS-ACTION WAIVER WHICH

AFFECTS YOUR LEGAL RIGHTS AND MAY BE ENFORCED BY THE 

PARTIES." A separate "Independent Contractor Acknowledgement Form" 

requires acknowledgement of the following: 

You understand you may opt out of the Arbitration 

provisions within the Owner Operator Agreement by 

notifying SCI in writing, within ten (10) days of the 

date below . . . . The writing should contain the name 

and contact information of each person opting out, and 

a clear statement indicating you are opting out of 

arbitrate [sic]. By not opting out you are subject to the 

dispute resolution provisions contained in the Owner 

Operator Agreement. 

The CDL defendants and SCI each moved to dismiss under Rule 4:6-2 and 

to compel arbitration. The CDL defendants contended the court should apply 

New York law, consistent with the choice of law provision, in determining the 

enforceability of the arbitration clause in the Agreements, but also argued the 

clause would be enforceable under either New York or New Jersey law. SCI 

argued the court should apply the FAA as provided in the Agreements, as the 

exemption for employment contracts involving interstate commerce set forth in 
8 A-3346-22

9 U.S.C. § 1 did not apply.1 In the alternative, it joined the CDL defendants in

contending New York law should control. 

Plaintiffs responded by arguing New Jersey law applied, as New York law 

concerning enforceability of arbitration agreements was contrary to New Jersey 

public policy regarding what is required to establish a waiver of the right to a 

jury trial. Under New Jersey law, plaintiffs argued, the Agreements did not 

include "clear and unambiguous language" explaining the right being waived 

and therefore were unenforceable. 

On June 27, 2023, the court issued two nearly-identical orders denying the 

CDL defendants' and SCI's motions to compel arbitration and to dismiss the 

complaint, accompanied by a rider in which it detailed its reasoning. First, the 

court explained "[c]ourts should generally apply state-law contract principles to 

determine whether the parties agreed to arbitrate." It then applied New Jersey 

law to the question of enforceability of the arbitration clause. 

Under Atalese, 219 N.J. at 447, it noted while "no prescribed set of words 

must be included in an arbitration clause to accomplish a waiver of rights," a 

valid clause "must explain that the plaintiff is giving up her right to bring her 

1

 9 U.S.C. § 1 provides, in part, "nothing [in the FAA] shall apply to contracts 

of employment of . . . any other class of workers engaged in foreign or interstate 

commerce." 
9 A-3346-22

claims in court or have a jury resolve the dispute." Here, the court found "the 

arbitration clause is devoid of any language that would put the plaintiffs, without 

extensive knowledge of arbitration, on notice that they were waiving their right 

to a jury trial or having their disputes settled in court by signing the agreement." 

It noted the language of the clause "does not 'unmistakably' establish that 

arbitration involves waiver to a jury trial." 

The court reasoned, as stated in Atalese, 219 N.J. at 442, "an average 

member of the public may not know—without some explanatory comment—that 

arbitration is a substitute for the right to have one's claim adjudicated in a court 

of law." Further, the court found "Atalese establishes that 'arbitration' is not 

self-defining, and the provision in this case goes no further in defining the term." 

It also determined the admonition at the end of the contract "does nothing to 

broaden the scope of the class-arbitration waiver itself" as it failed to provide "a 

clear explanation of what rights the plaintiffs were waiving." 

The court rejected defendants' argument that the Agreements "did not need 

to explicitly state that the arbitration provision would waive the plaintiffs' right 

to a jury trial because plaintiffs were acting as representatives of their business 

when signing the contract, rather than as individuals." It found the plaintiffs 

were individual delivery drivers and use of a separate legal entity "does not 
10 A-3346-22

imply that they possess the business acumen to comprehend the implications of 

arbitration." Additionally, the court noted "there is no case law to support the 

notion that businesses are not entitled to the same clarity in arbitration 

provisions as individuals." 

In conclusion, the court found "New Jersey case law requiring an 

unambiguous waiver of the right to go to court and have a jury decide your 

dispute had existed for years, yet the arbitration clauses in the three most recent 

contracts signed by the plaintiffs are devoid of these fundamental requirements." 

Because an arbitration clause lacking these requirements is unenforceable under 

Atalese, 219 N.J. at 436, the court determined the plaintiffs could not be 

compelled to arbitrate and the class-action waivers tied directly to the arbitration 

clause were moot. 

The court thereafter submitted a written amplification pursuant to Rule 

2:5-1(d), in which it further explained its decision to apply New Jersey law. It 

noted defense counsel cited in their moving papers, and the parties discussed at 

oral argument, an unpublished federal district court case involving "a contract 

enormously similar to the contracts in the case at hand," Easterday v. USPack 
11 A-3346-22

Logistics, LLC, No. 15-07559 (D.N.J. Dec. 4, 2020).

2

 After reviewing the 

federal judge's and magistrate's decisions in that case, the court "chose to follow 

the Third Circuit's precedent in Roadway [Package System, Inc. v. Kayser, 257 

F.3d 287, 288-89 (3d Cir. 2001)] wherein the Third Circuit found general choice 

of law provisions shed little light on what law will govern arbitration 

provisions." Therefore, it reasoned, "the choice of law provision in the contracts 

in this case is not instructive as to the choice of law for the arbitration clauses." 

The court explained it also found a conflict existed between New York 

and New Jersey law "with regards to the enforceability of arbitration provisions 

when the provisions are silent as to waiving the right to a jury trial." After 

conducting a choice of law analysis using the most significant relationship test, 

the court "found the contacts overwhelmingly relate to New Jersey." It thus 

concluded New Jersey law applied. These consolidated appeals followed. 

II. 

We review an order compelling or declining to compel arbitration de 

novo. Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 207 (2019). As the 

enforceability of arbitration provisions is a question of law, no deference is owed 

2

 Easterday is a non-precedential, unpublished opinion and as such, does not 

inform our decision. See R. 1:36-3.
12 A-3346-22

to the trial court's interpretation. Ibid. In such a review, we remain "mindful of 

the strong preference to enforce arbitration agreements, both at the state and 

federal level." Hirsch v. Amper Fin. Svcs., LLC, 215 N.J. 174, 186 (2013). 

Similarly, we review de novo choice-of-law determinations. Cont'l Ins. Co. v. 

Honeywell Int'l., Inc., 234 N.J. 23, 46 (2018). 

 Before us, both the CDL defendants and SCI contend the court erred in 

denying their motions to dismiss and compel arbitration. In support, they reprise 

their arguments: (1) the FAA or New York law, as provided in the Agreements, 

should control; (2) the Agreements are enforceable under federal, New York, or 

New Jersey law; and (3) the Agreements' class action waiver is also applicable. 

As an initial matter, we conclude the court's reliance on Roadway 

Package, 257 F.3d at 288-89, was misplaced. In that case, the Third Circuit 

concluded "the presence of a generic choice-of-law clause tells us little (if 

anything) about whether contracting parties intended to opt out of the FAA's 

default standards and incorporate ones borrowed from state law." Id. at 296. In 

this case, however, the Agreements contain not only a generic choice-of-law 

clause, but specify New York law applies to arbitration as well. Nevertheless, 

"it is well-settled that appeals are taken from orders and judgments and not from 

opinions, oral decisions, informal written decisions, or reasons given for the 
13 A-3346-22

ultimate conclusion." Hayes v. Delamotte, 231 N.J. 373, 387 (2018) (quoting 

Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199 (2001)). 

 Our analysis begins with a determination as to which state's law controls. 

The CDL defendants contend the court must apply New York law, consistent 

with the Agreements' choice of law provision. In this regard, they correctly 

note, under North Bergen Rex Transportation v. Trailer Leasing Co., 158 N.J. 

561, 568-69 (1999), New Jersey courts uphold a contract's choice of law 

provision unless: 

(a) the chosen state has no substantial relationship to 

the parties or the transaction and there is no other 

reasonable basis for the parties' choice, or (b) 

application of the law of the chosen state would be

contrary to a fundamental policy of a state which has a 

materially greater interest than the chosen state in the 

determination of the particular issue and which . . . 

would be the state of the applicable law in the absence 

of an effective choice of law by the parties. 

[Ibid.] 

Here, the CDL defendants argue a substantial relationship to New York 

exists because it is undisputed CDL and SCI are New York companies. 

Additionally, they contend application of New York law would not be contrary 

to any fundamental policy of New Jersey. In support, they rely upon Grandvue 

Manor, LLC v. Cornerstone Contracting Corp., 471 N.J. Super. 135 (App. Div. 
14 A-3346-22

2022), which they argue demonstrates any difference between New York and 

New Jersey law is "slight." The CDL defendants also note "a party may not be 

compelled to arbitrate a dispute unless there is evidence which affirmatively 

establishes that the parties clearly, explicitly, and unequivocally agreed to 

arbitrate the dispute" under In re AT&S Transp., LLC v. Odyssey Logistics & 

Tech. Corp., 803 N.Y.S.2d 118 (App. Div. 2005), a standard they characterize 

as "exactly the same as New Jersey." Even assuming a difference in the law of 

the two states, the CDL defendants assert such difference "does not rise to the 

level of being offensive or repugnant to the public policy of New Jersey." SCI 

joins the CDL defendants, noting "[i]t is well-settled that a parties' choice of law 

provision must be honored" under North Bergen Rex Transportation, 158 N.J. 

at 568. 

Plaintiffs respond by arguing the court properly found the New York 

choice-of-law provision "was void as against New Jersey public policy" which 

aims to protect "'average' individuals in asymmetric negotiations (particularly 

when a waiver of rights is involved.)" They contend New York "does not require 

courts to conduct a substantive inquiry into whether the arbitration agreement 

contains a fair and effective waiver of rights in the sense contemplated by 

Atalese." Further, they maintain New Jersey has a materially greater interest in 
15 A-3346-22

this matter than New York, as plaintiffs live in New Jersey, report to a New 

Jersey warehouse, make deliveries exclusively in New Jersey, signed the 

Agreements in New Jersey, suffered injuries in New Jersey, and their claims 

involve vindication of their rights as New Jersey workers under the New Jersey 

WHL and WPL. In contrast, they contend the only connections to New York 

are CDL's, SCI's, and Curcio's residences there. We agree. 

Generally, "when parties to a contract have agreed to be governed by the 

laws of a particular state, New Jersey courts will uphold the contractual choice 

if it does not violate New Jersey's public policy." Grandvue, 471 N.J. Super. at

142 (quoting Instructional Sys., Inc. v. Computer Curriculum Corp., 130 N.J. 

324, 341 (1992)). New Jersey follows the approach set forth in section 187 of 

the Restatement (Second) of Conflict of Laws and will apply the law of the state 

chosen by the parties unless: 

(a) the chosen state has no substantial relationship to 

the parties or the transaction and there is no other 

reasonable basis for the parties' choice, or 

(b) application of the law of the chosen state would be 

contrary to a fundamental policy of a state which has a 

materially greater interest than the chosen state in the 

determination of the particular issue and which would 

be the state of the applicable law in the absence of an 

effective choice of law by the parties. 
16 A-3346-22

[Grandvue, 471 N.J. Super. at 142 (quoting 

Instructional Sys., 130 N.J. at 341-42).] 

Here, New York has a substantial relationship to the parties because CDL, 

Curcio, and SCI are residents of that state. See Instructional Sys., 130 N.J. at 

342 (finding section 187(a) inapplicable because California had a substantial 

relationship to the parties as defendant was headquartered there). Thus, section

187(a) is inapplicable and for New Jersey law to apply, (1) New Jersey must 

have "a materially greater interest than [New York] in the determination of" the 

Agreements' arbitrability, (2) New Jersey law must be applicable in the absence 

of an effective choice of law, and (3) the application of New York law must be 

"contrary to a fundamental policy" of New Jersey. Grandvue, 471 N.J. Super. 

at 142 (quoting Instructional Sys., 130 N.J. at 342). 

We are convinced, based on the facts in the motion record, New Jersey 

has a "materially greater interest" with respect to disputes under the Agreements 

than New York. Ibid. (quoting Instructional Sys., 130 N.J. at 342). Indeed, 

New York has little to no connection to this matter beyond CDL's, SCI's, and 

Curcio's residences there. Meanwhile, plaintiffs live and work in New Jersey, 

CDL operates a warehouse in New Jersey, the Agreements were executed in 

New Jersey, and plaintiffs' claims implicate the New Jersey WHL and WPL and 

involve alleged wage injuries suffered in New Jersey. These same facts, 
17 A-3346-22

combined with plaintiffs' choice of New Jersey as forum, strongly support the 

application of New Jersey law absent the choice of law provision. 

Further, we are also satisfied the application of New York law here would 

be "contrary to a fundamental policy" of New Jersey. Ibid. (quoting 

Instructional Sys., 130 N.J. at 342). It is undisputed both New Jersey and New 

York favor arbitration as a means of dispute resolution. See Flanzman v. Jenny 

Craig, Inc., 244 N.J. 119, 133 (2020) (noting "the affirmative policy of [New 

Jersey], both legislative and judicial, favors arbitration as a mechanism of 

resolving disputes" (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 92 

(2002))); Ferrarella v. Godt, 15 N.Y.S.3d 180, 183 (App. Div. 2015) (holding 

"[t]he announced policy of [New York] favors and encourages arbitration as a 

means of conserving the time and resources of the courts and the contracting 

parties" (quoting In re Nationwide Gen. Ins. Co. v. Inv'rs. Ins. Co. of Am., 332 

N.E.2d 333, 335 (N.Y. 1975))).

New Jersey has a long standing policy of protecting the right to access its 

courts. Article I, paragraph 9 of the New Jersey Constitution provides "[t]he 

right of trial by jury shall remain inviolate." "Although rights may be waived, 

courts 'indulge every reasonable presumption against waiver of fundamental 

constitutional rights.'" Mazdabrook Commons Homeowners' Ass'n v. Khan, 210 
18 A-3346-22

N.J. 482, 505 (2012) (quoting Johnson v. Zerbst, 304 U.S. 458, 464 (1938)). "To 

be valid, waivers must be knowing, intelligent, and voluntary." Ibid. 

In that vein, our Supreme Court in Atalese intended "to assure that the 

parties know that in electing arbitration as the exclusive remedy, they are 

waiving their time-honored right to sue." 219 N.J. at 444 (quoting Garfinkel v. 

Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001)). 

Accordingly, as we detail further below in section III, the Court held an 

enforceable arbitration clause "at least in some general and sufficiently broad 

way, must explain that the plaintiff is giving up her right to bring her claims in 

court or have a jury resolve the dispute." Id. at 447. 

In contrast, to determine whether the parties agreed to arbitrate, New York 

courts "perform the initial screening process designed to determine in general 

terms whether the parties have agreed that the subject matter under dispute 

should be submitted to arbitration." Grandvue, 471 N.J. Super. at 144 (quoting 

Nationwide, 332 N.E.2d at 335). The court's inquiry ends "[o]nce it appears that 

there is, or is not a reasonable relationship between the subject matter of the 

dispute and the general subject matter of the underlying contract." Ibid. 

(quoting Nationwide, 332 N.E.2d at 335); see also Ferrarella, 15 N.Y.S.3d at 

183 (holding "[o]nce it is determined that the parties have agreed to arbitrate the 
19 A-3346-22

subject matter in dispute, the court's role has ended"). Further, "New York 

courts interfere 'as little as possible with the freedom of consenting parties' to 

submit disputes to arbitration." Ibid. (quoting In re 166 Mamaroneck Ave. Corp. 

v. 151 E. Post Rd. Corp., 575 N.E.2d 104, 107 (N.Y. 1991)). 

Protecting individuals' rights to sue and to a jury trial, and ensuring any 

waiver of those rights is knowing, intelligent, and voluntary are unquestionably 

fundamental policies of New Jersey. Contrary to New Jersey law in this respect, 

New York law does not specifically require an arbitration clause explain that 

agreement thereto involves waiving the right to a jury trial, and defendants have 

cited no precedent to the contrary. Therefore, we are satisfied application of 

New York law in this circumstance would be contrary to a fundamental policy 

of New Jersey and accordingly apply New Jersey law.

We are convinced Grandvue does not compel a different result. First, 

contrary to the CDL defendants' contention, in that case we affirmed the trial 

court's application of New Jersey law, not New York law. Grandvue, 471 N.J. 

Super. at 142, 146. Next, while we acknowledge certain superficial similarities 

between the facts of Grandvue and those before us, at bottom we conclude these

circumstances are distinguishable. Grandvue involved a contract for 

construction of a $10 million home in New York, id. at 139-40, while the 
20 A-3346-22

Agreements here concern the terms of delivery services provided by plaintiffs 

in New Jersey. As we detail below in section III, plaintiffs here are not the 

"sophisticated" parties involved in Grandvue. Id. at 146. 

III. 

 Next, the CDL defendants and SCI maintain the arbitration provision of 

the Agreements is enforceable even under New Jersey law and controls the 

disputes at issue. In support, they note the court must examine "whether the 

agreement to arbitrate all, or any portion of a dispute is 'the product of mutual 

assent, as determined under customary principles of contract law,'" under Arafa 

v. Health Express Corp., 243 N.J. 147, 171 (2020). Further, defendants assert 

the court must "preserve the parties' intent to arbitrate" under Arafa and the New 

Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -36 (NJAA). They argue the 

arbitration clause in the Agreements "clearly and unambiguously describe[s] the 

entire dispute resolution process," and plaintiffs were given the opportunity to 

opt-out of arbitration. Further, the CDL defendants assert plaintiffs are 

sophisticated negotiators who operate their own businesses, and there was no 

evidence plaintiffs did not understand what they were waiving. 

 Plaintiffs respond the arbitration clause in the Agreements fails to meet 

the requirements of Atalese as it "do[es] not distinguish between arbitration and 
21 A-3346-22

litigation," "explain what arbitration is," "indicate how arbitration is different 

from a proceeding in a court of law," or mention the words jury or waiver, except 

in the context of the class action waiver. Relying upon Moon v. Breathless Inc., 

868 F.3d 209, 214 (3d Cir. 2017), they argue an enforceable arbitration 

agreement must (1) "identify the substantive areas it purports to cover," (2) 

"reference the types of claims waived," and (3) "explain the difference between 

arbitration and litigation using clear and unambiguous language to inform the 

parties of their legal rights and their intent to surrender those rights." Plaintiffs 

argue the arbitration clause in the Agreements here fails all three prongs, as it 

does not explain which areas and claims are covered, nor does it clearly explain 

the rights to be waived. 

 Plaintiffs also dispute the CDL defendants' claim of their sophistication, 

contending they are delivery drivers performing manual labor with "extremely 

limited control over [their] work." Even though some plaintiffs may work 

through their own business entity, they contend this does not change the nature 

of the work they perform or their relationships to CDL and SCI. Additionally, 

they note their agreement to "two intrinsically unconscionable contract terms," 

requiring them to waive "their statutory rights to attorney's fees and punitive 
22 A-3346-22

damages," demonstrates their lack of sophistication and the disparity in 

bargaining power between plaintiffs and SCI. We agree with plaintiffs. 

 The NJAA "is nearly identical to the FAA and enunciates the same 

policies favoring arbitration." Arafa, 243 N.J. at 167. "[T]he NJAA will apply 

unless preempted even without being explicitly referenced in an arbitration 

agreement." Id. at 169. However, "[a]rbitration's favored status does not mean 

that every arbitration clause, however phrased, will be enforceable." Atalese, 

219 N.J. at 441. 

"An agreement to arbitrate, like any other contract, 'must be the product 

of mutual assent, as determined under customary principles of contract law.'" 

Id. at 442 (quoting NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421 

N.J. Super. 404, 424 (App. Div. 2011)). Accordingly, to be enforceable, an 

arbitration agreement must clearly state that the parties are agreeing to arbitrate 

and are giving up the right to pursue a claim in court. In that regard, our 

Supreme Court has explained: 

Mutual assent requires that the parties have an 

understanding of the terms to which they have agreed. 

"An effective waiver requires a party to have full 

knowledge of his [or her] legal rights and intent to 

surrender those rights." Knorr v. Smeal, 178 N.J. 169, 

177 (2003). "By its very nature, an agreement to 

arbitrate involves a waiver of a party's right to have [his 
23 A-3346-22

or] her claims and defenses litigated in court." NAACP 

of Camden Cnty. E., 421 N.J. Super. at 425. 

[Ibid. (citations reformatted).] 

Like other waivers of statutory or constitutional rights, the Court noted 

"because arbitration involves a waiver of the right to pursue a case in a judicial 

forum, 'courts take particular care in assuring the knowing assent of both parties 

to arbitrate, and a clear mutual understanding of the ramifications of that 

assent.'" Id. at 442-43 (quoting NAACP of Camden Cnty. E., 421 N.J. Super. at 

425). "Although an arbitration clause need not identify 'the specific 

constitutional or statutory right guaranteeing a citizen access to the courts' that 

are being waived, it must 'at least in some general and sufficiently broad way' 

convey that parties are giving up their right to bring their claims in court or have 

a jury resolve their dispute." Barr v. Bishop Rosen & Co., Inc., 442 N.J. Super. 

599, 606 (App. Div. 2015) (quoting Atalese, 219 N.J. at 447); see also Moon, 

868 F.3d at 214 (distilling New Jersey jurisprudence and concluding valid 

arbitration agreement must "identify the substantive area that the arbitration 

clause covers," "reference the types of claims waived," and "explain the 

difference between arbitration and litigation"). "An arbitration agreement that 

fails to 'clearly and unambiguously signal' to parties that they are surrendering 

their right to pursue a judicial remedy renders such an agreement 
24 A-3346-22

unenforceable." Barr, 442 N.J. Super. at 606 (quoting Atalese, 219 N.J. at 444, 

448). 

As we explained in County of Passaic v. Horizon Healthcare Services, 

Inc., 474 N.J. Super. 498, 503-04 (App. Div. 2023), the concern described in 

Atalese regarding those who might not be "aware of the fact that an agreement 

to arbitrate may preclude the right to sue in a court or invoke the inestimable 

right of trial by jury . . . vanishes when considering individually-negotiated 

contracts between sophisticated parties—often represented by counsel at the 

formation stage—possessing relatively similar bargaining power." In other 

words, "an express waiver of the right to seek relief in a court of law to the 

degree required by Atalese is unnecessary when parties to a commercial contract 

are sophisticated and possess comparatively equal bargaining power." Id. at 

504.

We are satisfied, applying Atalese and its progeny, the arbitration clause 

in the Agreements is unenforceable. Although the clause implies some claims 

will be resolved in "small claims court" while others will go to arbitration, it 

falls short of the "clear and unambiguous" explanation of rights waived required 

by Atalese, 219 N.J. at 445. The Agreements do not explain what the 

"jurisdictional maximum for small claims" is, what arbitration is, or that by 
25 A-3346-22

agreeing to it, plaintiffs gave up their right to litigate their claims in court. As 

our Supreme Court recognized, "[t]he meaning of arbitration is not self-evident 

to the average consumer, who will not know, 'without some explanatory 

comment[,] that arbitration is a substitute for the right to have one's claim 

adjudicated in a court of law.'" Morgan v. Sanford Brown Inst., 225 N.J. 289, 

308 (2016) (second alteration in original) (quoting Atalese, 219 N.J. at 442). 

While the Agreements describe the procedure arbitration will follow, such 

as the number of arbitrators on the panel and where it will occur, they do not 

define arbitration and lack the crucial disclosure that it will replace litigation or 

a jury trial. An average consumer or delivery driver is not likely to understand, 

absent further explanation, what arbitration is, how it differs from litigation in 

court or that it involves no judge or jury, nor are they likely able to distinguish 

which claims fall within the "jurisdictional maximum for small claims" to be 

litigated in court. The ability to opt-out of arbitration does nothing to further 

clarify its meaning. 

We find defendants' reliance on Arafa misplaced as each of the two 

arbitration agreements involved in that case clearly complied with Atalese. 

Arafa, 243 N.J. at 171-72. Specifically, one agreement stated "[t]he parties 

voluntarily agree to waive any right to a trial by jury in any suit filed hereunder 
26 A-3346-22

and agree to adjudicate any dispute pursuant to" further detailed arbitration 

clauses, and the other provided "BY AGREEING TO ARBITRATE ALL SUCH 

DISPUTES, THE PARTIES TO THIS AGREEMENT AGREE THAT ALL 

SUCH DISPUTES WILL BE RESOLVED THROUGH BINDING 

ARBITRATION BEFORE AN ARBITRATOR AND NOT BY WAY OF A 

COURT OR JURY TRIAL." Id. at 155, 158 (emphasis supplied, caps in 

original). Here, the Agreements fail to explain that agreeing to arbitration means 

waiving the right to a jury trial, or even to mention the words "jury trial" at all. 

Finally, the record reflects the Agreements were not the product of a 

sophisticated negotiation, contrary to defendants' contentions. It appears none 

of the plaintiffs were represented by counsel, nor did the terms of the 

Agreements substantially differ among the plaintiffs, suggesting the Agreements 

were similar to "take-it-or-leave-it" contracts of adhesion. See Muhammad v. 

Cnty. Bank of Rehoboth Beach, 189 N.J. 1, 15 (2006) (noting "the essential 

nature of a contract of adhesion is that it is 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" (quoting 

Rudbart v. N. Jersey Dist. Water Supply Comm'n., 127 N.J. 344, 353 (1992))). 

This also indicates unequal bargaining power between the parties. Accordingly, 
27 A-3346-22

the Agreements are closer to consumer contracts, as in Atalese, than commercial 

contracts, as in County of Passaic or Grandvue. 

The parties in County of Passaic were a municipality and a health 

insurance company with a seventeen-year relationship involving multiple 

contracts. 474 N.J. Super. at 501, 504. Both were represented by counsel, and 

the record in that case reflected negotiation of several contracts. Id. at 504-05. 

Thus, we concluded the parties were sophisticated and possessed relatively 

equal bargaining power. Id. at 501, 504. Similarly, in Grandvue, we deemed 

the contractor corporation and couple who, through an LLC, contracted for 

construction of a $10 million home were sophisticated. 471 N.J. Super. at 139-

40, 146. Further, unlike the Agreements before us, the arbitration clause we 

upheld in that case clearly delineated that the parties had a choice between 

arbitration or "[l]itigation in a court of competent jurisdiction." Id. at 140. 

Plaintiffs are clearly not the type of parties we had in mind in County of 

Passaic, 474 N.J. Super. at 503-04. The record is devoid of evidence 

demonstrating any of them were represented by counsel or engaged in individual 

negotiation of the Agreements. The record demonstrates plaintiffs are

individual delivery drivers who perform manual labor for CDL under CDL's 

rules. That one of the plaintiffs worked through an LLC does not change the 
28 A-3346-22

nature of the work she performed or the disparity in bargaining power between 

plaintiffs and SCI. 

Because the Agreements were not the product of a sophisticated 

negotiation and the arbitration clause therein does not clearly and 

unambiguously explain the parties are waiving their rights to bring their claims 

in court or to have a trial by jury, the court correctly found the arbitration 

agreement is unenforceable. 

IV. 

 SCI contends the court erred by failing to analyze the Agreements' 

arbitration clauses under the FAA. It notes the FAA exemption in 9 U.S.C. § 1 

does not apply here because the Agreements are not contracts of employment or 

interstate commerce as "[p]laintiffs did not provide their delivery services to 

SCI." Plaintiffs assert they are transportation workers engaged in interstate 

commerce and thus clearly fall within the section 1 exemption. They also 

contend the term "contracts of employment" as used in the section 1 exemption 

includes independent contractors under New Prime Inc. v. Oliveira, 586 U.S. __, 

139 S. Ct. 532 (2019). 

Under Shetiwy v. Midland Credit Management, 959 F. Supp. 2d 469, 473 

(S.D.N.Y. 2013), SCI argues a court determining arbitrability under the FAA 
29 A-3346-22

must consider "(1) whether the parties have entered into a valid agreement to 

arbitrate, and, if so, (2) whether the dispute at issue comes within the scope of 

the arbitration agreement." SCI concludes if both parts of the test are answered 

in the affirmative, as here, the court has no discretion and must order arbitration. 

We are not persuaded. 

Although the FAA "contains no express pre-emptive provision, nor does 

it reflect a congressional intent to occupy the entire field of arbitration," it 

generally "preempts state laws that treat arbitration agreements differently from 

other contracts." Grandvue, 471 N.J. Super. at 145 (quoting Arafa, 243 N.J. at 

164-65). Accordingly, an arbitration clause "cannot be invalidated by state-law 

'defenses that apply only to arbitration or that derive their meaning from the fact 

that an agreement to arbitrate is at issue.'" Atalese, 219 N.J. at 441 (quoting 

AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)). 

However, the FAA "specifically permits states to regulate contracts, 

including contracts containing arbitration agreements[,] under general contract 

principles." Grandvue, 471 N.J. Super. at 145 (alteration in original) (quoting 

Arafa, 243 N.J. at 165). In other words, "New Jersey may 'regulate agreements, 

including those that relate to arbitration, by applying its contract-law principles 

that are relevant in a given case.'" Skuse v. Pfizer, Inc., 244 N.J. 30, 47 (2020) 
30 A-3346-22

(quoting Leodori v. Cigna Corp., 175 N.J. 293, 302 (2003)). "[S]tate contractlaw principles generally govern a determination whether a valid agreement to 

arbitrate exists." Waskevich v. Herold Law, P.A., 431 N.J. Super. 293, 298 

(App. Div. 2013) (quoting Hojnowski v. Vans Skate Park, 187 N.J. 323, 342 

(2006)). 

The Supreme Court's opinion in Atalese does not in any way conflict with 

the FAA as it "does not disfavor or discriminate against arbitration agreements," 

but rather "reaffirmed principles long embedded in [New Jersey] jurisprudence." 

Kernahan v. Home Warranty Adm'r of Fla., Inc., 236 N.J. 301, 330 (2019) 

(Albin, J., concurring).3 As Justice Albin explained, the United States Supreme 

Court's FAA jurisprudence "do[es] not bar an undemanding state-law 

requirement that allows consumers a minimal understanding that in choosing 

arbitration they will not have access to a judicial forum." Id. at 334. Thus, in 

light of our conclusion the Agreements do not comply with the general contract 

principles set forth in Atalese, we need not, and do not, decide whether the FAA 

applies to the Agreements. 

3

 In Kernahan, 236 N.J. at 328, Justice Albin specifically considered and 

rejected the argument that Atalese conflicted with the United States Supreme 

Court's holding in Kindred Nursing Centers L.P. v. Clark, 581 U.S. 246, 248 

(2017), a position not advanced by defendants here in their briefs or at oral 

argument. 
31 A-3346-22

We are satisfied Arafa does not compel a different result. In that case, the 

plaintiffs argued (1) there had been no "meeting of the minds" with respect to 

arbitration because the terms of the agreement provided it would be governed 

by solely the FAA, but the agreement was exempt from the FAA under 9 U.S.C. 

§1, and (2) the court could not apply the NJAA in place of the FAA absent 

express intent of the parties to do so. Arafa, 243 N.J. at 160-61. The Court was 

therefore required to examine the FAA exemption to resolve the issues before 

it. Id. at 166. Further, we note each of the arbitration agreements at issue in 

Arafa expressly informed the parties their assent thereto constituted a waiver of 

their right to a trial by jury, as required under Atalese. Id. at 172.

V.

Finally, the CDL defendants assert "the FAA preempts states from 

invalidating class action waiver clauses contained within arbitration agreements 

on public policy or unconscionability grounds." Plaintiffs respond the class 

action waiver was limited to arbitration and is thus unenforceable. We agree 

with plaintiffs. 

The Agreements state "[n]either you nor SCI shall be entitled to join or 

consolidate claims in arbitration by or against other individuals or entities, or 

arbitrate any claim as a representative member of a class or in a private attorney 
32 A-3346-22

general capacity." (Emphasis added). Nothing in this language is ambiguous—

it clearly states the limitation applies to arbitration, with no reference to 

litigation in court. In light of our decision finding the arbitration agreement 

unenforceable, we conclude the class action waiver is inapplicable under these 

circumstances. 

To the extent we have not addressed any of the parties' arguments, it is 

because we conclude they lack sufficient merit to warrant extended discussion 

in a written opinion. R. 2:11-3(e)(1)(E). 

Affirmed.