IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

DAWN GUIDOTTI, on behalf of 

herself and other class 

members similarly situated,

Plaintiff,

v.

LEGAL HELPERS DEBT RESOLUTION, 

L.L.C., et al.,

Defendants.

 

HONORABLE JEROME B. SIMANDLE

Civil Action

No. 11-1219 (JBS/KMW)

OPINION

 

APPEARANCES:

Joseph Michael Pinto, Esq.

POLINO AND PINTO, P.C.

720 East Main Street, Suite 1C

Moorestown, NJ 08057

Counsel for Plaintiff

Shaji M. Eapen, Esq.

MORGAN, MELHUISH & ABRUTYN, ESQS.

651 W. Mt. Pleasant Avenue, Suite 200

Livingston, NJ 07039

and

Richard W. Epstein, Esq.

Meredith H. Leonard, Esq.

Rebecca F. Brattner, Esq.

GREENSPOON MARDER, P.A.

200 East Broward Boulevard, Suite 1500

Ft. Lauderdale, FL 33301

Counsel for Global Client Solutions, L.L.C., Rocky Mountain 

Bank and Trust of Colorado Springs, Colorado, and Eclipse 

Servicing, Inc.

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 1 of 38 PageID: 3627
SIMANDLE, Chief Judge:

INTRODUCTION

This matter comes before the Court by way of Defendant

Global Client Solutions, L.L.C.’s (hereinafter, “Global”) and 

Rocky Mountain Bank and Trust’s (hereinafter, “RMBT” and, 

collectively, “Defendants”) renewed motion to compel arbitration 

of Plaintiff Dawn Guidotti’s (hereinafter, “Plaintiff”) claims 

in accordance with the arbitration provision of Defendants’

Account Agreement and Disclosure Statement (hereinafter, the 

“AADS”).1 [Docket Item 155.]

In this putative class action involving, at one time, 

twenty-two defendants, Plaintiff generally alleges that she 

contracted with various law firm and bank defendants in hopes 

that such entities would negotiate with creditors to settle her 

consumer debts without forcing Plaintiff into bankruptcy. 

Rather than settling her outstanding financial obligations, 

however, Plaintiff alleges that the various defendants conspired

to fleece her (and those similarly situated) of her remaining 

assets, without engaging in any debt negotiations on Plaintiff’s 

behalf.

1 On June 4, 2014, Defendants moved to strike Plaintiff’s 

statement of material facts in opposition to the pending motion. 

[Docket Item 164]. For the reasons stated below, Defendants’ 

motion to strike will be granted in part and denied in part.

2

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 2 of 38 PageID: 3628
Defendants performed a distinct function in this overall 

scheme, by purportedly maintaining and operating a “special bank 

account” out of which Plaintiff would pay the various defendants 

with whom Plaintiff contracted for “legal and debt negotiation”

services, and into which Plaintiff would deposit funds 

ultimately intended “to be paid to her settling creditors.” 

Guidotti v. Legal Helpers Debt Resolution, L.L.C., 866 F. Supp. 

2d 315, 322 (D.N.J. 2011) (citation omitted). Plaintiff’s 

Complaint specifically identifies RMBT as the financial 

institution with which she opened this special purpose account,

and Global as the “agent” processing the automatic fund 

transfers into, and/or automatic payments out of, such account.

(Id.)

The Court has, on multiple occasions and in connection with 

various agreements, compelled Plaintiff to arbitrate her claims 

against certain defendants in this litigation. See, e.g., 

Guidotti, 866 F. Supp. 2d at 342 (granting the nine “Law Firm 

Defendants’ motion to compel arbitration), vacated & remanded on 

other grounds, 716 F.3d 764 (3d Cir. 2013); Guidotti v. Legal 

Helpers Debt Resolution, L.L.C., No. 11-1219, 2012 WL 3262435 

(D.N.J. Aug. 7, 2012) (granting the motion of defendants J.G. 

Debt Solutions, L.L.C. and Joel Gavalas to compel arbitration). 

With respect to Defendants, however, the Court’s December 

20, 2011 decision concluded that Plaintiff “signed and returned” 

3

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 3 of 38 PageID: 3629
her Special Purpose Account Application (hereinafter, the 

“SPAA”)—a document which referenced the AADS—prior to receiving 

the actual terms contained in the AADS, including its 

arbitration provision. See Guidotti, 866 F. Supp. 2d at 334. 

Consequently, though “the SPAA clearly and unambiguously 

referred to the AADS” by name, the Court found that Plaintiff 

could not be compelled to arbitrate her claims because she

lacked sufficient “knowledge of the existence of the arbitration 

clause or its specific conditions, even if she assented to its 

incorporation.” Id. at 336.

In vacating the Court’s December 20, 2011 Order, the Court 

of Appeals found that a genuine issue of material fact precluded 

a summary disposition, reliant upon the pleadings, on the issue 

of the parties’ agreement, if at all, to arbitrate. Guidotti, 

716 F.3d at 780. The Court of Appeals specifically questioned 

whether Plaintiff’s “unsworn claim” that the AADS did not 

accompany the documents indisputably received by Plaintiff in 

September 2009 sufficed to “outright” substantiate such 

assertion, particularly given Plaintiff’s near-contemporaneous

execution of the SPAA. Id. at 769, 779-80. The Court of Appeals 

therefore remanded this action for additional evidentiary 

development on the validity of the agreement to arbitrate, and 

clarified Third Circuit law that any renewed motion to compel 

4

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 4 of 38 PageID: 3630
arbitration be entertained under the summary judgment standard

of Rule 56, Fed. R. Civ. P. Id. at 780.

Following seven months of additional factual discovery

[Docket Items 146, 148, & 150], Defendants, armed with a more 

robust factual record, now renew their motion to compel 

arbitration. [Docket Item 155.] 

The principal issues presented by the pending motion are

whether genuine issues of material fact exist on the parties’ 

agreement, if at all, to arbitrate, and whether the nature of 

the arbitration clause renders such provision substantively 

and/or procedurally unconscionable. For the reasons that 

follow, the Court will deny Defendants’ motion to compel 

arbitration.2

BACKGROUND

A. Rule 56.1 Statements

Plaintiff filed two statements of material fact in 

opposition to Defendants’ motion: one identified as Plaintiff’s 

response to Defendants’ statement of material facts [Docket Item 

157-2], and the other entitled Plaintiff’s certified statement 

of material facts in opposition to Defendants’ motion. [Docket 

Item 157-3.] 

2 The Court conducted oral argument on the pending motions on 

October 6, 2014.

5

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 5 of 38 PageID: 3631
Defendants move to strike Plaintiff’s certified statement 

of material facts on the basis that Plaintiff’s statement 

contravenes Local Civil Rule 56.1(a) by setting forth 

argumentative and conclusory statements without appropriate 

citations to record evidence, and by impermissibly relying upon 

hearsay statements. (Defs.’ Br. at 2-3 [Docket Item 164-1].) 

Defendants also argue that Plaintiff lacks personal knowledge 

for the vast majority of the assertions set forth in her 

statement, the accuracy of which Plaintiff certified under 

penalty of perjury. (Id. at 9-15.) 

Local Civil Rule 56.1(a) generally permits the opponent of 

summary judgment to “furnish a supplemental statement of 

disputed material facts, in separately numbered paragraphs 

citing to the affidavits and other documents submitted in 

connection with the motion,” to the extent necessary “to 

substantiate the factual basis for opposition.” L. CIV. R. 

56.1(a). Plaintiff’s eighty-eight paragraph certified statement 

of material facts sets forth lengthy factual assertions, many of 

which lack citations to affidavits or other documents submitted 

in connection with Plaintiff’s submission. [Docket Item 13-3.] 

Moreover, much of Plaintiff’s supplemental statement concerns 

the legal relevance and weight to be afforded such facts, the 

inclusion of which the Court finds inappropriate in connection 

with a Rule 56.1(a) supplemental statement. See L. CIV. R. 

6

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 6 of 38 PageID: 3632
56.1(a) (“Each statement of material facts shall be a separate 

document (not part of a brief) and shall not contain legal 

argument or conclusions of law.”). Finally, the Court agrees

with Defendants that Plaintiff’s certified statement fails to 

set forth verbatim recitations or accurate paraphrases of the 

deposition testimony of Jennifer Kelly and Brent Hampton. 

Rather, Plaintiff’s certified statement clearly editorializes 

such testimony. (Compare, e.g., Certified Statement of Material 

Facts (hereinafter, “CSMF”), ¶ 37, with Kelly Dep. at 34:25-

35:19.) The Court, accordingly, will grant Defendants’ motion 

to strike, and will disregard Plaintiff’s submission to the 

extent it states legal arguments or conclusions of law, and to 

the extent Plaintiff failed to appropriately support her factual 

assertions through record citations, contrary to Local Civil 

Rule 56.1(a). 

The Court need not, however, entirely disregard Plaintiff’s 

certified statement to the extent that such statement otherwise 

comports with Local Civil Rule 56.1(a) by setting forth, in 

part, substantiating citations for Plaintiff’s factual 

averments. Defendants’ motion to strike will, therefore, be 

denied to the extent Defendants urge the Court to entirely 

disregard Plaintiff’s certified statement. Rather, all 

statements will be considered to the extent permissible under 

Federal Rule of Civil Procedure 56 and Local Civil Rule 56.1. 

7

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 7 of 38 PageID: 3633
However, to the extent either party failed to make clear any 

dispute of material fact in their respective Rule 56.1 

statements by citing to contrary evidence in the record, the 

Court assumes that the opponent has no evidence raising a 

genuine dispute with respect to the stated fact. The Court will

therefore deem any such fact undisputed for purposes of the 

pending motion. See L. CIV. R. 56.1(a) (“[A]ny material fact not 

disputed shall be deemed undisputed for purposes of the summary 

judgment motion.”). Having so concluded, the Court turns the 

facts of this litigation, as derived from the parties’ 

voluminous exhibits and their 56.1 statements.

B. Factual Background

In September 2009, Plaintiff provided defendants JG Debt 

Solutions and Eclipse Financial, Inc. (hereinafter, “Eclipse”)

with certain non-public, personally identifying biographical and 

financial information, in order to determine Plaintiff’s 

eligibility for a debt resolution program. (Defs.’ Statement of 

Material Facts (hereinafter, “SMF”) at ¶ 1; Pl.’s Responsive 

Statement of Material Facts (hereinafter, “RSMF”) at ¶ 1.) In 

light of Plaintiff’s interest in the debt resolution program, 

Eclipse emailed Plaintiff the relevant program documents, 

through the DocuSign system, on September 21, 2009.3 (Kelly 

3 For the reasons stated below, the Court rejects Defendants’ 

assertion that Eclipse emailed the program documents directly to 

8

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 8 of 38 PageID: 3634
Dec., Attach. 1 (“[Agreement] was emailed to DocuSign.”); Kelly 

Dep. at 21:1-14 (describing the DocuSign process).) Though 

Plaintiff has no recollection of receiving such documents by 

email, or signing such documents through DocuSign (Giudotti Dep.

at 62:10-16), the DocuSign “Certificate of Completion” reflects 

that Plaintiff received on September 21, 2009, and 

electronically signed on September 22, 2009, ten documents, 

including Defendants’ SPAA. (Pl.’s App., Pa000022 (DocuSign 

Envelope ID: 92E83CC3-FEA5-41CD-9AE7-16FBD3A4E289, Pa000012-

Pa000021 (reflecting the same DocuSign Envelope ID).) In the 

SPAA, DocuSign’d by Plaintiff on September 22, 2009, Plaintiff 

“acknowledged” receipt of the AADS, and further acknowledged

that the SPAA fully incorporates “by reference” the binding

terms and conditions of the AADS. (Id. at Pa000021 (emphasis in 

original).) In accordance with such conditions, the SPAA 

authorized Defendants “to initiate” monthly “debits” from 

Plaintiff’s checking account in the amount of $348.68 “until 

further notice.” (Pl.’s App., Pa 000021.)

Following Plaintiff’s execution of the program documents, 

Joel Gavalas, the owner of defendant J.G. Debt Solutions, Inc., 

contacted Plaintiff on September 24, 2009 to confirm her 

understanding of the debt settlement program, including her 

Plaintiff, in addition to sending such documents through 

DocuSign.

9

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 9 of 38 PageID: 3635
special purpose account with Defendants. (Kelly Dec., Attach. 

2.) Mr. Gavalas further directed Plaintiff to anticipate a 

“Welcome package” from Legal Helpers containing “important” 

documents concerning Plaintiff’s obligations under the debt 

resolution program. (See id. at 14:1-14.)

On September 29, 2009, Eclipse emailed Plaintiff, through 

the DocuSign system, substantively identical, but partially

revised program documents. (Defs.’ SMF at ¶¶ 12-13; Pl.’s RSMF 

at ¶ 10; Pl.’s App., Pa000001; Kelly Dec., Attach. 1 

(“[Agreement] was emailed to Docusign.”).) Though Plaintiff

recalls receiving such documents electronically through DocuSign 

on September 30, 2009 (Pl.’s RSMF at ¶¶ 12-13), she “didn’t take 

the time to review each page or [to] read any other documents.” 

(Guidotti Dep. at 63:16-20.) Instead, she “just pointed and 

clicked” on those portions of the documents that required an 

electronic signature, and promptly “sent them back.” (Id.; 

49:1-12; 66:6-7; 68:23-25; 69:14-23.) 

The revised program documents, however, included an 

identical copy of Defendants’ SPAA, in which Plaintiff similarly

“acknowledged” receipt of the AADS, and further acknowledged 

that the SPAA fully incorporates “by reference” all of the 

AADS’s terms and conditions. (Pl.’s App., Pa000011 (emphasis in 

original).) In accordance with such conditions, the revised 

SPAA authorized Defendants “to initiate” monthly “debits” from 

10

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 10 of 38 PageID: 3636
Plaintiff’s checking account in the revised amount of $353.62 

“until further notice.” (Pl.’s App., Pa000021.) Despite such 

terms, Plaintiff did not review the SPAA’s fine print, nor did 

she take note of the language incorporating by reference the 

AADS. (Defs.’ SMF at ¶ 20; Pl.’s RSMF at ¶ 20.) 

In light of Plaintiff’s execution of the SPAA, Global,

identified by the SPAA as the “service agent” and “processor”

for all activity related to Plaintiff’s special purpose account

(id.), mailed Plaintiff a “welcome” letter dated September 29, 

2009. (Pl.’s App., Pa000024.) In the letter, receipt of which 

Plaintiff acknowledges (Pl.’s RSMF at ¶ 16), Global directed 

Plaintiff to “carefully” review the packet “in its entirety” 

because “it contain[ed] important information regarding [her] 

account.” (Pl.’s App., Pa000024 (emphasis in original).) 

Global further stated that “detailed information” concerning 

Plaintiff’s special purpose account could be found in the AADS 

appended to the welcome package. (Pl.’s App., Pa000024; Defs.’ 

SMF, Ex. 5 to Guidotti Dep.) The appended AADS stated that it

“contain[ed] the terms, conditions, and disclosures” that 

governed Plaintiff’s special purpose account, and specifically 

included an Arbitration and Application of Law provision, 

providing that

In the event of a dispute or claim relating in any way 

to [the AADS] or [Global’s] services, [Plaintiff] 

agree[s] that such dispute shall be resolved by 

11

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 11 of 38 PageID: 3637
binding arbitration in Tulsa[,] Oklahoma utilizing a 

qualified independent arbitrator of Global’s choosing. 

The decision of an arbitrator will be final and 

subject to enforcement in a court of competent 

jurisdiction.

(Pl.’s App., Pa000026-27.) 

Shortly thereafter, Legal Helpers Debt Resolution, LLC

(hereinafter, “Legal Helpers”), the debt resolution law firm 

responsible for the negotiations concerning Plaintiff’s 

outstanding debts, mailed its own twenty-nine page “Welcome 

Packet” to Plaintiff, which included, among an array of program 

documents, an unexecuted version of Plaintiff’s revised SPAA

(reflective of upwardly adjusted monthly debit of $353.62) and

an additional and identical copy of the incorporated AADS. 

(Defs.’ SMF at ¶ 22; Pl.’s RSMF at ¶ 22; Ex. 6 to Guidotti Dep.) 

Plaintiff received such documents “around October 19, 2014[,]” 

but again only “glanced” through the majority of the documents,

choosing instead to file the documents, without additional 

review, “in the folder” containing the remainder of Plaintiff’s 

program “papers.” (Guidotti Dep. at 84:18-86:3.)

In accordance with the SPAA and AADS, Global administered

two special purpose accounts on Plaintiff’s behalf. (Defs.’ SMF 

at ¶ 23; Pl.’s RSMF at ¶ 23; Pl.’s App., Pa000383-395.) The 

initial transfers into Plaintiff’s accounts, however, did not 

occur until December 30, 2009, at which time Global transferred

(in accordance with the SPAA) $120.34 from Plaintiff’s personal

12

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 12 of 38 PageID: 3638
bank account into Plaintiff’s initial special purpose account

(Defs.’ SMF at ¶ 25; Pl.’s RSMF at ¶ 25; Pl.’s App., Pa000383), 

an amount similarly transferred into Plaintiff’s second special 

purpose account on March 22, 2010.4 (Defs.’ SMF at ¶ 25.) 

“Somewhere around” February 2010, Plaintiff then received a 

follow-up “welcome” packet from Global dated February 3, 2010. 

(Guidotti Dep. at 97:8-15; Pl.’s App., Pa000057.) In this

welcome package, Global again advised Plaintiff to pay 

“careful[]” attention to the “detailed information” concerning 

her special purpose accounts, and directed Plaintiff, in 

particular, to review the AADS appended to Global’s 

correspondence. (Pl.’s App., Pa000057.) Upon receipt of 

Global’s “welcome” letter, Plaintiff “[g]lanced at the front 

page and put it in [her program] folder.” (Guidotti Dep. at 

97:16-18.)

4 The Court rejects Plaintiff’s assertion that the first relevant 

transfer under the SPAA occurred on October 2, 2009, at which 

time Legal Helpers debited the sum of $461.05 from Plaintiff’s 

personal bank account. (See Pl.’s Opp’n at 15; Pl.’s App., 

Pa000437.) The SPAA, on its face, only concerns Global’s 

authorization to deduct certain sums from Plaintiff’s personal 

bank account. (See, e.g., Pl.’s App., PA000021 (authoring RMBT, 

“through its agent Global, to initiate debt entries”).) The 

Legal Helpers’ retainer agreement, by contrast, authorizes Legal 

Helpers to initiate separate deductions from Plaintiff’s 

personal bank account for “all legal fees and service costs[.]” 

(Id. at Pa000042.) The October 2, 2009 deduction clearly 

occurred in accordance with the retainer agreement, not the 

SPAA. (See PA000440 (reflecting an “ACH Debit” by “GCS” in the 

amount of $120.34 and a separate “ACH Debit” by “Legal Helper’s” 

in the amount of $233.28).)

13

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 13 of 38 PageID: 3639
On February 4, 2010, Global commenced regular fund 

transfers (in the amount of $353.62 per month) from Plaintiff’s 

personal bank account into her special purpose account. (Defs.’ 

SMF at ¶ 27.) Plaintiff’s participation in the program 

continued throughout the remainder of that year, during which 

time Plaintiff received, by mail, monthly account statements

from Global. (Ex. 9 to Guidotti Dep.) In early 2011, however, 

Plaintiff closed her special purpose accounts with Defendants 

and Global, accordingly, remitted the balance of her accounts in 

March 2011. (Pl.’s RSMF at ¶¶ 30-31; Ex. 13 to Guidotti Dep.) 

C. Procedural History

Defendants removed this action from the Superior Court of 

New Jersey, Burlington County, on March 3, 2011. [Docket Item 

1.] Plaintiff thereafter filed an Amended Complaint in this 

federal litigation on March 17, 2011. [Docket Item 4.] In her 

Amended Class Action Complaint, Plaintiff generally alleges that 

Defendants defrauded Plaintiff, and those similarly situated, by 

advertising, marketing, and performing “unlawful” debt 

adjustment and negotiation services, and by “engaging in the 

unauthorized practice of law in the State of New Jersey.” 

(First Am. Class Compl. [Docket Item 4], 2, 10.)

In lieu of an answer, Defendants filed their initial motion 

to compel arbitration on May 23, 2011. [Docket Item 27.] In 

their initial motion, as here, Defendants argued that the

14

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 14 of 38 PageID: 3640
“unequivocal” language of the AADS, including its “valid and 

enforceable” arbitration provision, required that Plaintiff “be 

compelled to arbitration.” (Defs.’ Br. [Docket Item 27-1], 7-

8.) Plaintiff, however, asserted in opposition that she never 

agreed to arbitrate disputes between herself and Defendants,

particularly because Plaintiff did not receive the AADS prior to 

executing the SPAA, and because the SPAA’s incorporation of the 

AADS “did not have a reasonably clear and ascertainable 

meaning.” (Pl.’s Opp’n [Docket Item 48], 27-28.) 

In the Court’s December 20, 2011 decision denying 

Defendants’ initial motion, the Court found the record 

sufficient to conclude that Defendants’ initial collection of 

documents did not include the AADS. Guidotti, 866 F. Supp. 2d at 

333. The Court therefore determined that the formation of the 

parties’ contractual relationship (through Plaintiff’s 

electronic signature on the SPAA) occurred prior to Plaintiff’s 

receipt of the AADS, including its arbitration clause. Id. at 

334. In addition, the Court found, in reliance upon Alpert v. 

Goldberg, 983 A.2d 604 (N.J. Super. Ct. App. Div. 2009), the 

AADS “not properly incorporated into the SPAA,” because

Plaintiff, “the party to be bound,” had neither knowledge of the 

existence of the arbitration clause, nor possession of its 

specific provisions. Id. at 336. Consequently, because the 

SPAA failed to properly incorporate the AADS, the Court 

15

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 15 of 38 PageID: 3641
concluded that such provision could not compel Plaintiff to 

arbitrate. Id. 

On January 17, 2012, Defendants filed a notice of appeal 

pursuant to Section 16 of the Federal Arbitration Act 

(hereinafter, the “FAA”) [Docket Item 104], and the Court

thereafter granted Defendants’ motion to stay the litigation as 

to them pending disposition of their appeal. [Docket Items 137 

& 138.] On May 28, 2013, the Court of Appeals found the record 

“insufficient” to demonstrate the absence of issues of fact 

concerning whether the parties’ agreed to arbitrate. Guidotti, 

716 F.3d at 767, 780. In so holding, the Court of Appeals

acknowledged its “inconsistent pronouncements” concerning the 

standard governing motions to compel arbitration, and therefore 

endeavored, through its Opinion, “to clarify the standards to be 

applied to such motions, and the circumstances” under which 

district courts should apply the standards for a motion to 

dismiss, Rule 12(b)(6), Fed. R. Civ. P., as opposed to the 

standard for summary judgment found in Rule 56, Fed. R. Civ. P. 

Guidotti, 716 F.3d at 767, 773. 

In that regard, the Court of Appeals articulated a 

spectrum. Specifically, in “light of both the FAA's insistence 

that private agreements be honored and the judicial 

responsibility to interpret the parties' agreement, if any, to 

arbitrate[,]” the court determined that a motion to compel 

16

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 16 of 38 PageID: 3642
arbitration should only be considered “‘without the inherent 

delay of discovery’” under a Rule 12(b)(6) standard, where the 

face of the complaint (or the documents relied upon in the 

complaint) demonstrates, with sufficient clarity, the parties’ 

agreement to arbitrate. Guidotti, 716 F.3d at 774-75 (citation 

omitted). Where, however, arbitrability is not apparent on the 

face of the complaint, or where the non-movant proffers “enough 

evidence” to place the validity of arbitration agreement in

issue, the Court of Appeals concluded that “a ‘restricted 

inquiry into factual issues’ will be necessary to properly 

evaluate” the presence, if at all, of “a meeting of the minds on 

the agreement to arbitrate[.]” Id. at 775. 

Here, the Court of Appeals found it “significant” that

neither party was able to furnish a copy of the AADS reflecting 

Plaintiff’s electronic signature and, accordingly, concluded 

that Plaintiff proffered “enough evidence” in opposition to 

Defendants’ motion to “trigger the application of the summary 

judgment standard” to the issue of arbitration. Id. at 779. 

The Court of Appeals therefore found a Rule 12(b)(6) inquiry too 

restrictive in its ability to account for Plaintiff’s proffer, 

because “no reading” of Plaintiff’s Complaint, taken solely on 

its face, “could rightly relieve” Plaintiff of the binding 

arbitration provision of the AADS. Id. at 778. Mindful of the 

controverted evidence, the Court of Appeals concluded that the 

17

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 17 of 38 PageID: 3643
Court should have, prior to resolving the initial motion, 

permitted “limited discovery” and entertained the initial motion

under a summary judgment standard and, accordingly, remanded the 

matter for such consideration. Id. at 780.

In accordance with the Court of Appeal’s mandate, the 

parties engaged in seven months of limited factual discovery 

[Docket Items 146, 148, & 150], and the pending, renewed motion 

to compel arbitration followed.

STANDARD OF REVIEW

Here, the Court must, in accordance with Federal Rule of 

Civil Procedure 56, delve into “a ‘restricted inquiry into 

factual issues’” in order to determine whether the parties 

engaged in a meeting of the minds on an agreement to arbitrate. 

Guidotti, 716 F.3d at 774 (citation omitted). The Court will, 

accordingly, only grant Defendants’ motion to compel arbitration 

if the Court finds no genuine factual dispute as to the validity 

of the agreement. FED. R. CIV. P. 56(a). In so considering, the 

Court must view the evidence in the light most favorable to 

Plaintiff, and must provide Plaintiff with the benefit of all 

reasonable inferences. Scott v. Harris, 550 U.S. 372, 378 

(2007); Halsey v. Pfeiffer, 750 F.3d 273, 287 (3d Cir. 2014). 

18

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 18 of 38 PageID: 3644
Discussion

D. Federal Arbitration Act, 9 U.S.C. §§ 1-16

The FAA directs courts to compel arbitration of claims 

arising out of a valid agreement to arbitrate and reflects “the 

national policy favoring arbitration agreements.” Buckeye Check 

Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006). Indeed, 

the FAA makes such agreements “‘valid, irrevocable, and 

enforceable, save upon such grounds as exist at law or in equity 

for the revocation of any contract.’” AT&T Mobility LLC v. 

Concepcion, 131 S.Ct. 1740, 1744 (quoting 9 U.S.C. § 2).

The preference for arbitration, however, is not without 

limits. Rather, because arbitration constitutes “‘a matter of 

contract between the parties,’ a judicial mandate to arbitrate 

must be predicated upon the parties’ consent.” Guidotti, 716 

F.3d at 771 (quoting Par–Knit Mills, Inc., 636 F.2d at 54). 

Consequently, in order to compel arbitration, the Court 

must therefore engage in a two-step inquiry into whether: “(1) a 

valid agreement to arbitrate exists, and [whether] (2) the 

particular disputes falls within the scope of that agreement.” 

Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 160 

(3d Cir. 2009) (citing Trippe Mfg. Co. v. Niles Audio Corp., 401 

F.3d 529, 532 (3d Cir. 2005)). 

19

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 19 of 38 PageID: 3645
E. State Law Contract Principles

In determining whether the parties entered into a valid 

agreement to arbitrate, courts “turn to ‘ordinary state law 

principles that govern the formation of contracts.’” Kirleis v. 

Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 160 (3d Cir. 

2009) (quoting First Options of Chic., Inc. v. Kaplan, 514 U.S. 

938, 944 (1995)). Consequently, the Court notes that New Jersey 

courts have long favored arbitration as a means of resolving 

disputes and are guided by the national policy and State 

interest preferring arbitration when interpreting such

agreements.5 Delta Funding Corp. v. Harris, 912 A.2d 104, 110 

(N.J. 2006); Martindale v. Sandvik, Inc., 800 A.2d 872, 877 

(N.J. 2002). “Arbitration’s favored status does not mean that 

every arbitration clause, however phrased, will be enforceable.” 

Atalese v. U.S. Legal Servs. Grp., L.P., 99 A.3d 306, 312 (N.J. 

2014). Rather, an “agreement to arbitrate, like any other 

contract, ‘must be the product of mutual assent,” and “requires 

‘a meeting of the minds.’” Id. at 312-13 (citations omitted). 

Mutual assent to arbitrate, in turn, requires that the parties 

have full knowledge and “understanding of the terms to which 

5 On the record on November 6, 2014, the parties conceded that 

New Jersey law applies for the purposes of the pending motion to 

compel arbitration.

20

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 20 of 38 PageID: 3646
they have agreed.” Atalese, 99 A.3d at 313. Indeed, the New 

Jersey Supreme Court has explained:

In respect of specific contractual language, “[a] 

clause depriving a citizen of access to the courts 

should clearly state its purpose. The point is to 

assure that the parties know that in electing 

arbitration as the exclusive remedy, they are waiving 

their time-honored right to sue.” [Marchak v. Claridge 

Commons, Inc., 633 A.2d 531, 535 (N.J. 1993)]. As we 

have stressed in other contexts, a party's waiver of 

statutory rights “must be clearly and unmistakably 

established, and contractual language alleged to 

constitute a waiver will not be read expansively.” 

[Red Bank Reg’l Educ. Ass’n v. Red Bank Reg’l High 

Sch. Bd. Of Educ., 393 A.2d 267, 276 (N.J. 1978)].

Garfinkel v. Moga, 773 A.2d 665, 670 (N.J. 2001).

F. The AADS Fails to Constitute a Valid Agreement to 

Arbitrate

Defendants’ arguments concerning the validity of the AADS 

as a binding agreement to arbitrate are threefold: first, 

Defendants argue that Plaintiff received the AADS in connection 

with Plaintiff’s initial and/or revised SPAA; additionally, and 

in the alternative, Defendants assert that the SPAA lawfully 

incorporated the AADS; and finally, Defendants argue that 

Plaintiff manifested assent to the AADS through her continued 

use of her special purpose account.

The Court readily dispenses with Defendants’ first and 

second arguments, because factual disputes clearly preclude a 

finding in Defendants’ favor on the question of whether the AADS 

accompanied the various initial collections of documents. 

21

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 21 of 38 PageID: 3647
Notably, though the record well-documents Defendants’ 

transmission of the SPAA through the DocuSign system, Defendants 

have produced no evidence similarly reflecting Plaintiff’s near 

contemporaneous receipt of such documents by direct email. 

Moreover, neither the deposition testimony nor the purportedly 

contemporaneous file notes dispel any doubt concerning

Plaintiff’s receipt of the AADS by separate email.6 The Court 

6 The Court therefore rejects Defendants’ assertion that New 

Jersey law deems the SPAA and the AADS a single contract, 

regardless of whether the AADS accompanied the SPPA, or even 

whether Plaintiff ever received the AADS. (Defs.’ Br. at 27 

(citations omitted).) Though New Jersey law recognizes that 

“two or more writings may constitute a single contract even 

though they do not refer to each other[,]” whether such writings 

are to be construed as a single contract depends solely upon the 

parties’ intent. Van Orman v. Am. Ins. Co., 680 F.2d 301, 306 

(3d Cir. 1982); see also Lawrence v. Tandy & Allen, 100 A.2d 

891, 894-95 (N.J. 1953) (same). Defendants have not demonstrated 

such intent in this instance. Nor is the Court persuaded by 

Defendants’ reliance upon N.J. MetroMall Urban Renewal Inc. v. 

City of Elizabeth, 26 N.J. Tax 276 (N.J. Tax 2003), Carfagno v. 

Ace, Ltd., No. 04-6183, 2005 WL 1523530 (D.N.J. June 28, 2005), 

and Days Inn Worldwide, Inc. v. Prudent Lodging of Kalamazoo, 

LLC, No. 11-2493, 2011 WL 3329526 (D.N.J. Aug 1, 2011). In all 

three cases, the courts generally found the defendants’ failures

to provide the precise arbitration provisions in connection with 

the initial agreements insignificant to the issue of enforcing 

such provisions, given the initial agreements’ “clear and 

unambiguous” reference to “final and binding” arbitration. 

Carfago, 2005 WL 1523530, *10 (finding “no merit to the 

argument” that an arbitration clause “should be held invalid 

because the arbitration policy was not made available to each of 

the four [plaintiffs] before signing” their employment 

agreement, given the employment agreement’s “clear and 

unambiguous language” that any dispute “would be resolved 

‘EXCLUSIVELY’ through final and binding arbitration”); Days Inn, 

2011 WL 3329526, at *2 (finding plaintiff’s allegation that he 

“‘never saw’” the license agreement insufficient to excuse 

performance, given the guaranty agreement’s “explicit reference 

22

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 22 of 38 PageID: 3648
similarly rejects, principally for the unaltered reasons stated 

in the Court’s December 20, 2011 Opinion, Defendants’ 

alternative argument concerning the sufficiency of the SPAA’s 

incorporation of the AADS. Rather, genuine issues of fact 

clearly persist concerning whether Plaintiff had the AADS at the 

time she signed the SPAA, and it is axiomatic that an agreement 

cannot be found properly incorporated, if the provisions of such 

agreement are not known by the party to be bound at the time of 

acknowledgment.7 Alpert, Goldberg, Butler, Norton & Weiss, P.C.

to specific sections of the” license agreement); N.J. Metromall, 

22 N.J. Tax at 286 (reading multiple contracts in unison, in 

light of a clear “understanding by the parties” in support of

such construction). The SPAA, by contrast, contains no 

similarly clear and unambiguous reference. (See, e.g., Pl.’s 

App., Pa000011.) Nor is there any support for counsel for 

Defendants’ assertion that the SPAA constituted an application, 

rather than an agreement. Indeed, the SPAA, by its very terms, 

indicates that it serves as the Agreement between the parties, 

and Plaintiff executed no other documents in connection with the 

serviced rendered by Defendants. (See, e.g., Pl.’s App., 

Pa000021 (noting that Plaintiff applied for “and agree[d] to 

establish a special purpose account” with Defendants, and 

further acknowledged that such “Application is subject to 

[Defendants’] customer identification program, as required [by] 

the USA Patriot Act and other applicable laws”).)

7 Nor does the Court agree with Defendants’ reliance upon Willis 

v. Debt Care USA, Inc., No. 11-430, 2012 WL 5844695 (D. Or. Nov. 

19, 2012). In Willis, under facts similar to this litigation, 

the district court considered whether a substantively identical 

SPAA properly incorporated the AADS’s arbitration provision. 

Id. at *4. In finding proper incorporation, the district court 

stated, citing Oregon law, that it could locate no authority 

that prohibited incorporation of another writing solely because 

“the other writing [was] not simultaneously delivered[.]” Id. 

Such finding, however, occurred after a “‘summary [bench] 

trial’” on the issue of whether the parties agreed to arbitrate, 

not in the context of a summary judgment motion. Id. at *1. 

23

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 23 of 38 PageID: 3649
v. Quinn, 983 A.2d 604, 617 (N.J. Super. Ct. App. Div. 2009);8

see also Nova Corp. v. Joseph Stadelmann Elec. Contractors, 

Inc., No. 07-1104, 2008 WL 746672, at *3 (D.N.J. Mar. 18, 2008) 

(“‘Incorporation by reference is proper where the underlying 

contract makes clear reference to a separate document, the 

identity of the separate document may be ascertained, and 

incorporation of the document will not result in surprise or 

hardship.’”) (citations omitted). Affording Plaintiff the 

benefit of all reasonable inferences, and given the demonstrable 

absence of clear evidence, the Court finds these arguments

without merit.

Moreover, even if the Court assumed that Plaintiff received 

the AADS and/or that the SPAA sufficiently incorporated the 

AADS, the Court concludes that the arbitration provision of the

AADS fails, on its face, for two reasons. First, the Court 

finds the provision’s failure to contain a clear expression of a 

Moreover, the law in New Jersey, as illustrated by Alpert, 

clearly differs in material respects and, in any event, an 

unpublished decision from another district (applying another 

state’s law) does not constitute binding authority on this 

Court. 

8 In addition to recapitulating their arguments concerning the 

purportedly distinguishable features of Alpert, Defendants argue 

that the standard applicable to the pending motion, as opposed 

to the standard applied to the initial motion, dictates a 

contrary conclusion. (Defs.’ Br. at 28 n.115.) The Court’s 

legal interpretation of Alpert remains unaltered regardless of 

the standard of review applicable to the pending motion, and no 

amount of discovery could affect the Court’s construction of 

Alpert’s crystalline language concerning New Jersey’s law of 

incorporation by reference. See Alpert, 983 A.2d at 617-18. 

24

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 24 of 38 PageID: 3650
waiver of rights nullifies any mutual assent that Plaintiff may 

otherwise have manifested. Second, the Court finds the terms of 

such provision substantively unconscionable and, therefore, 

unenforceable. For these reasons, the Court also rejects 

Defendants’ third argument.

1. The AADS Lacks the Clarity Required under New Jersey 

State Law

Defendants argue that Plaintiff’s continued use of her 

special purpose account upon receipt of the AADS amply reflected

Plaintiff’s assent to the AADS’s provisions. (See Defs.’ Reply 

at 11-14.) Plaintiff counters, however, that the arbitrative 

provision fails to contain clear and unambiguous language

concerning Plaintiff’s waiver of her right to sue. (See Pl.’s 

Ltr. Br. at 2.) In that regard, the Court finds Atalese v. U.S. 

Legal Services Group, L.P., 99 A.3d 306, 312 (N.J. 2014)

instructive.

In Atalese, plaintiff, an individual consumer, contracted 

with defendant for debt-adjustment services. Id. at 309. The 

parties’ agreement contained an arbitration provision for the 

resolution of any dispute arising out of the agreement, but, as 

here, nowhere indicated that such provision waived plaintiff’s 

statutory right to seek court relief. Id. In her civil 

complaint, plaintiff alleged that defendant violated New 

Jersey’s Consumer Fraud, N.J.S.A. §§ 56:8–1 to –20, and Truth–

25

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 25 of 38 PageID: 3651
in–Consumer Contract, Warranty and Notice, N.J.S.A. §§ 56:12–14 

to –18, Acts, by promising to negotiate with all of plaintiff’s 

creditors, but settling instead “only a single debt” in exchange 

for an approximately $5,000 fee. Id. Defendant, relying upon 

the arbitration provision in the parties’ service contract, 

moved to compel arbitration. Id. at 310. The Superior Court of 

New Jersey found the provision “‘minimally’” sufficient to put 

plaintiff on notice of the arbitration requirement, and

compelled arbitration. The New Jersey Appellate Division

affirmed, finding the arbitration clause provided the “‘parties 

reasonable notice of the requirement to arbitrate all claims 

under the contract,” and that “a reasonable person, by signing 

the agreement, [would have understood] that arbitration is the 

sole means of resolving contractual disputes.’” Id. at 311.

The New Jersey Supreme Court, however, reversed, finding 

the language of the service agreement insufficient to “clearly 

and unambiguously signal to plaintiff” that, by executing the 

arbitration provision, she surrendered “her right to pursue her 

statutory claims in court.” Id. at 316. Indeed, the clause 

merely stated that either party may submit any dispute to 

“‘binding arbitration,’” but provided no explanation concerning 

arbitration, nor language, sufficiently plain, to advise 

plaintiff that such provision relinquished her right to sue or 

otherwise secure court relief. Id. at 315.

26

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 26 of 38 PageID: 3652
Rather, the Atalese court stated that an enforceable 

waiver-of-rights clause requires a clear and unmistakable 

expression that the provision waives the individual’s timehonored right to sue. Id. at 314. In so holding, the Court 

noted that “[n]o particular form of words” accomplish the 

requisite “clear and unambiguous” waiver of rights, but 

concluded that arbitration clauses—and other contractual 

clauses—pass muster only when phrased in language understandable

to the reasonable consumer. Id. 

In addition, the Atalese court recognized the FAA’s 

prohibition against a state subjecting an “‘arbitration 

agreement to more burdensome requirements than’” other 

contractual provisions, but stressed that a clarity requirement 

in contractual language fails to constitute a requirement 

“specific to arbitration provisions.” Id. at 312-13. Rather,

the court noted that New Jersey contract law requires, overall,

that any waiver-of-rights provisions “‘be clearly and 

unmistakably established.’” Id. at 313-15 (quoting Garfinkel, 

773 A.2d at 670). The court therefore emphasized that its 

decision imposed “no greater burden on an arbitration agreement 

than any other agreement waiving constitutional or statutory 

rights.” Id. at 316.

27

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 27 of 38 PageID: 3653
Application of the sensible and binding contract principles

enunciated in Atalese compel a clear conclusion in this 

instance: the arbitration provision of the AADS fails. Indeed, 

as in Atalese, the arbitration provision requires Plaintiff to 

submit to binding arbitration, but provides no clear and 

unequivocal indication that such provision waives Plaintiff’s 

right to seek relief in Court. (See, e.g., (Pl.’s App., 

Pa000026-27.) Indeed, the provision nowhere references that it 

effectuates a waiver of Plaintiff’s right to sue. (Id.)

Moreover, the clause provides no explanation concerning the 

nature of an arbitration proceeding, nor an indication 

concerning how arbitration differs from a traditional court 

proceeding. (Id.) Rather, in fine print on the second page of 

a substantively dense document, the arbitration provision 

obligates, without explanation, resolution by arbitration of all 

disputes. (Id.) Such provision, however, plainly fails to 

advise Plaintiff of its effect, namely, that it bars her from

seeking court relief. Such failure nullifies any mutual assent 

that may have otherwise been manifested by Plaintiff with 

respect to the AADS. See Atalese, 99 A.3d at 316 (“Mutual 

assent to an agreement requires mutual understanding of its 

terms.”) Indeed, “‘[a]n effective waiver requires a [consumer] 

to have full knowledge of [her] legal rights’” before she 

relinquishes them, and Plaintiff could not, given the language 

28

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 28 of 38 PageID: 3654
of the provision, have had such knowledge in this instance. Id.

(citation omitted).

In so concluding, the Court rejects Defendants’ assertion 

that the FAA preempts the application of the Atalese rule. (See

Defs.’ Ltr. Br. [Docket Item 171].) In AT&T Mobility LLC v. 

Concepcion, 131 S.Ct 1740 (2011), the Supreme Court noted that

Section 2 of the FAA “permits agreements to arbitrate to be 

invalidated by ‘generally applicable contract defenses.’” Id.

at 1746 (citation omitted). The FAA, accordingly, permits 

states to regulate arbitration agreements in accordance with 

general contract principles, and to invalidate such provisions 

“upon such grounds as exist at law or in equity for the 

revocation of any contract.’” 9 U.S.C. § 2. The FAA, however, 

preempts state-based defenses that apply only to arbitration, 

“that derive their meaning from the fact” that they arise in 

connection with an agreement to arbitration, and/or that, in 

practice, disproportionately impact arbitration agreements. 

Concepcion, 131 S.Ct. at 1746-47.

The Atalese rule, by contrast, results in no such effect. 

Indeed, the Atalese court specifically noted that New Jersey 

contract law “repeatedly” recognizes that a waiver of rights, in 

whatever contractual context, requires a clear and unmistakable 

expression. Atalese, 99 A.3d at 314. In so holding, the New 

Jersey Supreme Court relied upon an array of jurisprudence in 

29

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 29 of 38 PageID: 3655
contexts unconnected with arbitration, in order to demonstrate 

that then-existing New Jersey Law required that an effective 

waiver of rights, in whatever context, be plainly expressed.9 

See, e.g., id. at 313-14. Moreover, application of the Atalese

rule does not uniquely disfavor or disproportionately impact 

arbitration. Rather, it requires that a consumer contract’s 

provision waiving rights, including an agreement to arbitrate,

be stated in sufficiently clear terms and, if so stated, permits 

courts to compel arbitration. The Court therefore finds Atalese

consistent with the FAA, as construed by the Supreme Court in 

Concepcion, and, accordingly, follows its rationale in this 

instance. 

Moreover, even if the Court found Atalese preempted by the 

FAA, the Court would still find, as stated below, the 

arbitration provision of the AADS substantively unconscionable. 

See Concepcion, 131 S.Ct. at 1746 (noting that Section 2 of the 

FAA “permits agreements to arbitrate to be invalidated by 

9 The Court therefore finds Defendants’ reliance upon Mortensen 

v. Bresnan Communications, LLC, 722 F.3d 1151 (9th Cir. 2013), 

unpersuasive. In Mortensen, the Ninth Circuit found Montana’s 

“reasonable expectations/fundamental rights rule” preempted by 

the FAA, because such rule specifically “arose from state court 

consideration of adhesive arbitration agreements,” and because 

the rule applied, in primary part, only to such agreements. Id.

at 1161. In articulating the Atalese rule, by contrast, the New 

Jersey Supreme Court relied upon existing New Jersey law that 

arose in contexts separate and distinct from arbitration. 

Atalese, 99 A.3d at 313-14 (citing cases, among others, in the 

labor-relations, licensing, and Condominium Act contexts) 

30

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 30 of 38 PageID: 3656
“‘generally applicable contract defenses, such as fraud, duress, 

or unconscionability’”) (emphasis added).

2. The Arbitration Provision is Substantively

Unconscionable to the Extent it Enables Defendants 

to Exercise Complete Control over the Arbitration 

Process

Defendants’ submissions give short shrift to the issue of 

unconscionability. (Defs.’ Br. at 32-34; Defs.’ Reply at 15.) 

Rather, Defendants primarily argue, in reliance upon Spinetti v. 

Serv. Corp. Int’l, 324 F.3d 212 (3d Cir. 2003), that the Court 

should “simply sever” any unconscionable terms, while enforcing 

“the remainder of the arbitration agreement.” (Defs.’ Br. at 

34.) Plaintiff, by contrast, argues, in reliance upon Newton v. 

Am. Debt Servs., 549 F. App’x 692 (9th Cir. 2013), that the 

arbitration provision must fail as unconscionable.10 (Pls.’ 

Opp’n at 23-31.) 

For the most part, unconscionability under New Jersey law 

looks for “‘two factors: (1) unfairness in the formation of the 

10 Plaintiff’s arguments concerning unconscionability pertain, in 

primary part, to the specific arbitration provision of the AADS. 

(See generally Defs.’ Br. at 23-31.) Because substantive 

federal arbitration law views arbitration provisions as 

“severable from the remainder of the contract[,]” Buckeye Check 

Cashing, Inc., 546 U.S. at 445-46, the Court need not address 

any other elements of the AADS, because the Court’s disposition 

of the pending motion renders unnecessary any inquiry into the

AADS’s “Limitation of Liability” and “Attorneys Fees and Costs”

provisions. The Court notes, however, that Newton found such 

provisions substantively unconscionable. 594 F. App’x at 694.

31

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 31 of 38 PageID: 3657
contract, and (2) excessively disproportionate terms.’”11

Travelodge Hotels, Inc. v. Honeysuckle Enters., Inc., 357 F. 

Supp. 2d 788, 801 (D.N.J. 2005) (quoting Sitogum Holdings, Inc. 

v. Ropes, 800 A.2d 915, 921 (N.J. Super. Ct. Ch. Div. 2002) 

(citations omitted)). The first factor—procedural 

unconscionability—considers defects in the formation, namely,

the parties’ “age, literacy, lack of sophistication,” and the 

presence of “hidden or unduly complex contract terms, bargaining 

tactics, and the particular setting existing during the contract 

formation process.” Id. The second factor—substantive 

unconscionability—simply suggests “the exchange of obligations 

so one-sided as to shock the court’s conscience.” Sitogum 

Holdings, Inc., 800 A.2d at 921. In the event an analysis of 

such factors dictates unconscionability, courts have broad 

discretion to fashion an appropriate remedy. See Pyo v. Wicked 

Fashions, Inc., No. 09-2422, 2010 WL 1380982, at *4 (D.N.J. Mar. 

31, 2010). The court may, for example, deem the agreement 

unenforceable in its entirety, may strike the unconscionable 

11 In somewhat parallel fashion, New Jersey law directs a court, 

in determining whether to enforce the terms of a contract of 

adhesion, to look “‘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.’” Muhammad v. Cnty. Bank of Rehoboth Beach, Del., 912 

A.2d 88, 97 (N.J. 2006) (quoting Rudbart v. North Jersey Dist. 

Water Supply Comm’n, 605 A.2d 681, 687 (N.J. 1992)).

32

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 32 of 38 PageID: 3658
provision and enforce the remainder of the agreement, or may

limit the application of the unconscionable provision in order 

to avoid an unconscionable result. See id. (citing N.J.S.A. § 

12A:2-302). Moreover, the Court may under Section 5 of the FAA, 

“designate and appoint an arbitrator” under certain conditions. 

9 U.S.C. § 5

In arguing that the arbitration provision of the AADS fails 

as procedurally unconscionable, Plaintiff asserts that her 

unequal “bargaining position” resulted in a provision of

adhesion. (Pl.’s Opp’n at 28-29.) The Court finds these 

arguments unpersuasive. While a disparity in bargaining power 

clearly exists between the parties (one being a sophisticated 

nationwide business and the other a private individual 

consumer), such disparity will not alone render a contract 

unconscionable. See Gilmer v. Interstate/Johnson Lane Corp., 500 

U.S. 20, 33 (1991) (finding “[m]ere inequality in bargaining 

power” insufficient, without more, to find arbitration 

agreements unenforceable). New Jersey courts similarly conclude

that a contract need not be found unenforceable solely because 

of its purportedly adhesive nature. Gras, 786 A.2d at 889 

(noting that, “the mere fact that a contract is adhesive does 

not render it unenforceable”). Moreover, Plaintiff has not 

shown economic compulsion in the formation of the contract. 

33

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 33 of 38 PageID: 3659
Rather, the record reflects that Plaintiff contracted with 

Defendants on her volition. (See Pl.’s RSMF at ¶¶ 1-4.) 

Nor did Defendants leave Plaintiff without option in 

agreeing to be bound by the arbitration provision of the AADS. 

To the contrary, Defendants (ultimately) afforded Plaintiff the 

opportunity to review the plain language of such provision, and

specifically enabled Plaintiff to terminate the agreement, 

without penalty, “at any time” by providing the required written 

notice. (Pl.’s App., PA000026.) Given the strong presumption 

of the enforceability of arbitration agreements, and the absence 

of unfair circumstances, the Court does not find the arbitration 

provision of the AADS procedurally unconscionable. See Ohai v. 

Verizon Commc’ns., Inc., No. 05-729, 2005 WL 6563176, at *5 

(D.N.J. Oct. 28, 2005) (finding an arbitration clause not 

procedurally unconscionable, despite its adhesive nature, and 

the parties’ “unequal bargaining power”).

In arguing substantive unconscionability, Plaintiff argues 

that the Court should follow the rationales set forth in Newton 

v. Am. Debt Servs., 549 F. App’x 692 (9th Cir. 2013) and Davis 

v. Global Client Solutions, LLC, 765 F. Supp. 2d 937 (W.D. Ky. 

2011), both of which found the AADS’s arbitration provision

substantively unconscionable. (Defs.’ Br. at 29.) The Court 

agrees.

34

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 34 of 38 PageID: 3660
In Newton, a case involving the same Defendants, the Ninth 

Circuit found the AADS’s arbitration clause substantively 

unconscionable on four bases, two of which directly relate to 

this litigation. 594 F. App’x at 694. The Newton court 

specifically found that, “the arbitration forum provision 

require[d] [plaintiff], who reside[d] in [another state], to 

arbitrate in Tulsa, Oklahoma—Global Client Solutions’[]

headquarters” and “reserve[d] the selection of an arbitrator 

solely to Defendants.” Id. (internal citations omitted). In 

Davis, another case involving the same Defendants, the district 

court found the AADS’s arbitration provision substantively 

unconscionable because it served as a “substantive waiver” of 

plaintiffs’ rights to pursue all available remedies, and because 

it provided Defendants the sole right to select an appropriate 

arbitrator. 765 F. Supp. 2d at 942. 

The disputed arbitration provision in this instance

contains aspects identical to those found unconscionable in 

Newton and Davis. The arbitration provision specifically 

provides that

In the event of a dispute or claim relating in any way 

to this Agreement or our services, you agree that such 

dispute shall be resolved by binding arbitration in 

Tulsa[,] Oklahoma utilizing a qualified independent 

arbitrator of Global’s choosing. The decision of an 

arbitrator will be final and subject to enforcement in 

a court of competent jurisdiction.

35

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 35 of 38 PageID: 3661
(Pl.’s App., Pa000027 (emphasis added).) Here, as in Newton and 

Davis, the Court finds that the arbitration provision fails for 

two reasons. First, the arbitration clause requires that 

Plaintiff arbitrate her claims in Tulsa, Oklahoma, the home of 

Defendants’ headquarters, thereby providing Defendants an unfair 

advantage at Plaintiff’s expense. See Newton v. Am. Debt 

Servs., Inc., 854 F. Supp. 2d 712, 726 (N.D. Cal. 2012), aff’d, 

549 F. App’x 692. Second, the arbitration clause gives 

Defendants the unilateral right to select the “qualified 

independent arbitrator[.]” (Pl.’s App., Pa000027.) Even if the 

first infirmity, the inconvenience of the designated forum for 

arbitration, fails, by itself, to render the arbitration clause 

substantively unconscionable, see Thomas v. Jenny Craig, Ing., 

No. 10-2287, 2010 WL 3076861 (D.N.J. Aug. 4, 2010), when coupled 

with the second infirmity, the ability to solely select the 

purportedly independent arbitrator, the arbitration provision

enables Defendants to exercise complete control over the 

arbitration process. For that reason, the Court finds the 

arbitration provision so one-sided as to be substantively 

unconscionable. 

Moreover, the Court does not find Defendants’ willingness 

to disclaim unconscionable provisions in the wake of this 

lawsuit sufficient to render an otherwise unconscionable 

provision conscionable. Rather, as in Newton, the Court finds 

36

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 36 of 38 PageID: 3662
any such offer suggestive of Defendants’ intent “to maintain a 

systematic effort to impose unconscionable arbitration 

provisions.” 854 F. Supp. 2d at 727. The Court therefore

follows Newton and Davis, and likewise finds Defendants’ 

arbitration provision substantively unconscionable and, 

therefore, unenforceable.12 

12 Given the pervasive nature of arbitration provision’s 

unconscionable elements (two of the three sentences), the Court 

cannot, reasonably, sever only those offending portions, for 

doing so would leave only “a mere agreement to arbitrate,” and 

would entail an extensive reformation of the arbitration 

agreement. Newton, 549 F. App’x at 695 (affirming the district 

court’s choice not to sever unconscionable portions of an 

arbitration agreement); see also Hall v. Treasure Bay Virgin 

Islands Corp., 371 F. App’x 311, 314 (3d Cir. 2010) (finding 

severance inappropriate where “unconscionable provisions 

‘permeate the agreement’” and affirming the district court’s 

decision finding the entire arbitration agreement 

unenforceable). Moreover, Section 5 of the FAA does not revive 

an otherwise unconscionable arbitration provision. Rather, it 

envisions the designation of an appropriate arbitrator only in 

the event that an otherwise enforceable arbitration provision 

fails to so designate. See 9 U.S.C. § 5; Coup v. Scottsdale 

Plaza Resort LLC, 823 F. Supp. 2d 931, 953 (D. Ariz. 2011) 

(rejecting defendants’ argument that the court’s ability to 

appoint an arbitrator under Section 5 sufficed, by itself, to 

overcome plaintiffs’ arguments concerning substantive 

unconscionability). Here, even if the Court appointed such an 

arbitrator, the parties would still be left with an empty 

agreement to arbitrate devoid of additional terms, and the FAA

does not empower the Court to fill the significant void left by 

the unconscionable terms.

37

 

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 37 of 38 PageID: 3663
CONCLUSION

For all of these reasons, Defendants’ renewed motion to 

compel arbitration will be denied. An accompanying Order will 

be entered.

December 3, 2014 s/ Jerome B. Simandle

Date JEROME B. SIMANDLE

Chief U.S. District Judge

38

Case 1:11-cv-01219-JBS-KMW Document 173 Filed 12/03/14 Page 38 of 38 PageID: 3664