David N. Cinotti Co-Authors Article in New Jersey Law Journal, “The Federal Arbitration Act Might Preempt the New Jersey Legislature’s Recent Attempt to Control Infinite Arbitration Clauses”

David N. Cinotti, partner at Pashman Stein Walder Hayden P.C., recently co-authored an article with Hon. Glenn Berman (ret.), of counsel at Greenbaum Rowe Smith & Davis, in the New Jersey Law Journal titled, “The Federal Arbitration Act Might Preempt the New Jersey Legislature’s Recent Attempt to Control Infinite Arbitration Clauses.”

The article discusses whether the Federal Arbitration Act preempts New Jersey’s recent attempt to invalidate so-called “infinite arbitration clauses.”  Such clauses in consumer agreements purport to require arbitration of any disputes between the consumer and the company (not only those arising out of or related to the contract), and sometimes cover disputes between the consumer and affiliates of the contracting company as well.

“Infinite arbitration clauses raise issues concerning fairness and knowing consent. But Section 12-2a might have limited effect in preventing enforcement of such clauses in consumer agreements because FAA Section 2 arguably preempts the statute, unless, as explained, courts conclude that FAA Section 2 does not apply to the arbitration clause at issue. In addition, delegation provisions might sometimes require consumers to arbitrate the threshold issue of whether Section 12-2a renders an arbitration clause invalid,” Cinotti and Berman write.

To read the full article in New Jersey Law Journal, click here.