Opinion ID: 4196860
Heading Depth: 3
Heading Rank: 1

Heading: A Court Should Decide Arbitrability

Text: Under New Jersey law, “the law presumes that a court, not an arbitrator, decides any issue concerning arbitrability.” 6 Morgan v. Sanford Brown Inst., 137 A.3d 1168, 1177 (N.J. 2016). To overcome this presumption, an arbitration clause must contain “‘clea[r] and unmistakabl[e]’ evidence ‘that the parties agreed to arbitrate arbitrability.’” Id. (alterations in original) (quoting First Options, 514 U.S. at 944). “Silence or ambiguity in an agreement does not overcome the presumption that a court decides arbitrability.” Id. at 1178. The Supreme Court of New Jersey applied these principles in Morgan v. Sanford Brown Institute. In that case, students sued a for-profit, post-secondary education institute under the New Jersey Consumer Fraud Act; and the institute moved to dismiss the complaint on the ground that the students signed the following arbitration agreement with the institute: “[A]ny objection to arbitrability or the existence, scope, validity, construction, or enforceability of this Arbitration Agreement shall be resolved pursuant to this paragraph (the ‘Arbitration Agreement’).” Id. at 1182. In Morgan, the court found that the arbitration clause did not strip the court of its authority to decide arbitrability. It supported its conclusion with two arguments. First, “[t]he paragraph does not explain that an arbitrator will decide whether the parties agreed to arbitrate legal claims, including statutory violations . . . .” Id. at 1179. Second, the institute conceded the issue in the lower court: “Defendants did not argue to the motion court that it lacked jurisdiction to decide whether the parties agreed to arbitration because that role was for the arbitrator alone.” Id. For the same reasons, we find that the parties here did not agree to arbitrate arbitrability. First, the arbitration clause here falls below the standard set by Morgan. In Morgan, the arbitration clause referenced arbitrability but did not clearly 7 delegate this issue to an arbitrator: “[A]ny objection to arbitrability or the existence, scope, validity, construction, or enforceability of this Arbitration Agreement shall be resolved pursuant to this paragraph (the ‘Arbitration Agreement’).” Id. at 1182. Here, the arbitration clause fails to mention arbitrability, let alone the venue for deciding it: In a dispute between Dancer and Club under this Agreement, either may request to resolve the dispute by binding arbitration. THIS MEANS THAT NEITHER PARTY SHALL HAVE THE RIGHT TO LITIGATE SUCH CLAIM IN COURT OR TO HAVE A JURY TRIAL – DISCOVERY AND APPEAL RIGHTS ARE LIMITED IN ARBITRATION. ARBITRATION MUST BE ON AN INDIVIDUAL BASIS. THIS MEANS NEITHER YOU NOR WE MAY JOIN OR CONSOLIDATE CLAIMS IN ARBITRATION, OR LITIGATE IN COURT OR ARBITRATE ANY CLAIMS AS A REPRESENTATIVE OR MEMBER OF A CLASS. App. 42. Second, like in Morgan, the Defendant conceded in the trial court that courts must decide issues of arbitrability: When confronted with a motion to stay or dismiss under the [Federal Arbitration Act], the Court engages in a limited review to determine whether: (1) there is a valid, enforceable agreement to arbitrate; (2) the claims at issue 8 fall within the scope of the agreement to arbitrate; and, (3) the moving party has waived arbitration. 9 U.S.C. § 3 . . . . Motion to Dismiss in Favor of Arbitration or, in the Alternative, to Stay Pending Arbitration at 6, Alissa Moon et al. v. Breathless, Inc., No. 2:15-cv-06297-SDW-LDW (D.N.J. Sept. 24, 2015), ECF No. 12-2 (emphasis added). Having established our power to decide the arbitration clause’s scope, we now turn to this issue.