and application of the arbitration provision. Id. at 889.
Applying the standards outlined in Gilmer, the Gras court
held that there was no inherent conflict between the underlying
purposes of the NJCFA and arbitration. Id. at 891. Neither the
text nor the legislative history of the Act indicated any
intention by the New Jersey legislature to preclude arbitration
of NJCFA claims. Id. at 891-92.
The plaintiffs in Gras raised the same arguments raised by
the plaintiffs in this case, namely that the remedies under the
NJCFA could not be vindicated in arbitration and that
arbitration is inappropriate when plaintiffs are representatives
in a purported class action. The New Jersey Court found both of
these arguments unavailing. First, the Court found that all of
the purposes of the NJCFA, compensating the victim for loss,
punishing wrongdoers by awarding treble damages, and attracting
competent counsel to take on cases by awarding attorneys' fees,
were "objectives [that] can be vindicated in the arbitration
forum and a successful plaintiff can achieve all statutory
remedies in the same forum." Id. at 892. Second, the Court
found that the class action argument was ultimately
unpersuasive, because while there were some factors that favored
judicial resolution of claims forming the basis of a class
action lawsuit, there was no "legislative mandate or overriding
public policy in favor of class actions" in the NJFCA, and there
was a compelling public policy that favored the enforcement of
arbitration provisions that were bargained for in contracts.
Id. at 892-93.
The reasoning of the Gras court is persuasive. It is clear
from Gras that, as was the case with the federal statutes at
issue in Gilmer and its progeny, arbitration of claims arising
under the NJCFA is not incompatible with the broad remedial
purposes of the Act and does not preclude any plaintiff from
recovering a statutory remedy. Moreover, the plaintiffs have
advanced no argument, aside from the same issue raised and
rejected in Gras, why the rationale for permitting class
actions should trump the presumption of arbitrability created by
the FAA. The Gras court specifically rejected the class action
argument with respect to the NJCFA. Federal courts have also
consistently enforced arbitration provisions in the context of
class action lawsuits when federal statutory claims have been at
issue. See, e.g., Gilmer, 500 U.S. at 32, 111 S.Ct. 1647
(rejecting argument that arbitration procedures conflict with
purpose of Age Discrimination in Employment Act based on their
failure to allow for class action certification, because
arbitrators have power to fashion broad equitable relief that
has the same effect as class action lawsuit); Hale v. First USA
Bank, N.A., NO. 00 Civ. 5406, 2001 WL 687371, at *7 (S.D.N.Y.
June 19, 2001) (collecting cases that have rejected argument
that Congress intended to create a non-waivable right to bring a
Truth in Lending Act claim in the form of a class action or to
bar enforcement of arbitration provisions). Therefore,
Gilmer's presumption that statutory claims can be subject to
arbitration should be applied to Ironman's NJCFA claims and
those claims are subject to arbitration.
Ironman also argues that the arbitration provision should not
be enforced because the Purchase Agreement is a contract of
adhesion. This argument also fails.
Under the FAA, 9 U.S.C. § 2, "generally applicable contract
defenses, such as fraud, duress, or unconscionability, may be
applied to invalidate an arbitration agreement." Doctor's
Assoc., Inc. v.
Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902
(1996). In determining whether a generally applicable contract
defense may invalidate an arbitration agreement, a court looks
to state law. See Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107
S.Ct. 2520, 96 L.Ed.2d 426 (1987). The parties do not dispute
that the choice of law provision in the Purchase Agreement is
valid, and that this provision requires New Jersey law to be
applied to this argument.
Under New Jersey law, a contract is a contract of adhesion if
the terms of the agreement, "were presented to the public on
standardized printed forms, on a take-it-or-leave-it basis
without opportunity for purchasers to negotiate any of the
terms." Young v. Prudential Ins. Co. of America, Inc.,
297 N.J. Super. 605, 688 A.2d 1069, 1077 (1997). However, even if a
contract is technically a contract of adhesion, that is only the
beginning of the inquiry under New Jersey law. The court must
then determine whether the contract is enforceable and that
requires a determination and consideration not only of "the
take-it-or-leave-it nature or the standardized form of the
document, but also the subject matter of the contract, the
parties' relative bargaining position, the degree of economic
compulsion motivating the `adhering' party, and the public
interest affected by the contract" in determining whether to
enforce the contract. Id.; see also Gras, 346 N.J. Super. at
48, 786 A.2d 886.
Consideration of these factors indicates that the arbitration
provision should be enforced. Ironman has put forward no
evidence supporting its contention that the Purchase Agreement
is an unenforceable adhesion contract. While the provisions of
the Purchase Agreement were contained on a pre-printed form, the
Agreement covered the purchase of a significant
telecommunications system with a price in excess of $90,000.
Ironman was free to purchase such equipment from other sources,
and there is no evidence that Ironman was under any economic
compulsion to purchase the equipment from AT & T. The Ironman
executive responsible for the purchase of the equipment
acknowledged that he read and understood the terms and
conditions of the purchase, and indeed he signed the Purchase
Agreement in two places under explicit acknowledgments that he
understood all of the conditions. (Balik Dep. at 116, attached
as Ex. 0 of Tyrell Aff.; Purchase Agreement.) Ironman was
plainly a sophisticated purchaser and the executive consulted
his attorney on the terms of the Purchase Agreement because of
the size of the Purchase, before actually signing the Agreement.
(Balik Dep. at 121-22.) Considering all of the circumstances,
Ironman has presented no evidence that the arbitration provision
should not be enforceable. See Young, 688 A.2d at 1078.
Because Ironman has not demonstrated that the Purchase
Agreement was signed under circumstances creating an
unenforceable contract of adhesion, the provision requiring all
of Ironman's claims to be arbitrated is enforceable. See id.
(finding that even if contract is literally adhesion contract,
absent egregious circumstances, policies favoring arbitration
require enforcement of such provisions); see also Klos v.
Polskie Linie Lotnicze, 133 F.3d 164, 168-69 (2d Cir. 1997).
Finally, Ironman argues that the defendants' motion to compel
arbitration was waived because it was untimely. This argument is
also without merit.
A party waives its right to invoke arbitration when it engages
that results in prejudice to the opposing party. Doctor's
Associates, Inc. v. Distajo, 107 F.3d 126, 131 (2d Cir. 1997).
A party can suffer "substantial prejudice" to its legal
position, such as by the possibility that it will be required to
re-litigate a motion on which it prevailed. A party may also be
"prejudiced by the unnecessary delay or expense that results
when an opponent delays invocation of its contractual right to
arbitrate." Id. (quotations and citations omitted).
Ironman alleges that the defendants waived their ability to
invoke arbitration because they waited until the end of
discovery to make the present motion. However, the defendants
first made their motion to compel arbitration along with their
first motion to dismiss, and it was Ironman who alleged that the
Purchase Agreement did not cover the contractual relationship
between the defendants and Ironman. That argument was baseless
and it was refuted by the deposition testimony of the
plaintiff's agent who signed the Purchase Agreement. (See
Balik Dep. at 107-08, 131-32.) Discovery was necessary to
dispose of the plaintiff's meritless argument that the Lease
Agreement covered its dispute with the defendants. A
considerable amount of additional time was also expended while
the parties discussed a possible resolution of the case.
Finally, Ironman has provided no evidence of what prejudice, in
terms of its legal position, or in terms of expense or loss of
time, that it suffered by having to respond to an arbitration
demand that was filed near the close of discovery. In fact,
Ironman may have benefitted from being able to use any discovery
it received from the defendants.
Consequently, because any delay in this case was the fault of
Ironman and because Ironman did not suffer any prejudice from
the allegedly late filing of the motion to compel, the
defendants did not waive their right to compel arbitration.
Ironman's arguments that the arbitration clause should not be
enforced have no merit, and all the claims it raises against the
defendants are subject to arbitration. The FAA provides that a
district court, upon determining that an action before it is
subject to an enforceable arbitration provision, "shall . . .
stay the trial of the action until such arbitration has been had
in accordance with the terms of the agreement . . ."
9 U.S.C. § 3. Because all of Ironman's claims are subject to arbitration,
no useful purpose will be served by granting a stay of Ironman's
claims and thus its action against the defendants is dismissed.
See Seus v. John Nuveen & Co., Inc. 146 F.3d 175, 178 (3d Cir.
1998) ("If all the claims involved in an action are arbitrable,
the court may dismiss the action instead of staying it.");
Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th
Cir. 1992) (same); see also Mahant v. Lehman Bros., No. 99
Civ. 4421, 2000 WL 1738399, at *3-4 (S.D.N.Y. Nov. 22, 2000);
E. Fish Co. v. South Pac. Shipping Co., Ltd., 105 F. Supp.2d 234,
241-42 & n. 10 (S.D.N.Y. 2000); Aerotel, 99 F. Supp.2d at
374; Berger v. Cantor Fitzgerald Secs., 967 F. Supp. 91, 96
All of the remaining arguments of the parties are either moot
or without merit.
For the reasons explained above, the defendants' motion to
compel arbitration is granted, and Ironman's claims against the
defendants are dismissed without prejudice.