Arthur Chassen v. Fidelity National Financial In ( 2016 )


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  •                                   PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    _____________
    No. 15-3789
    _____________
    ARTHUR CHASSEN; DEBORAH MEREDITH;
    JOEL OSTER; DENNIS SCRIMER; GLEN J. DALAKIAN;
    JACK HOFFMAN; DEBORAH HOFFMAN; KATHLEEN
    COOPER; RICHARD MURPHY, individually and on behalf
    of others similarly situated; AMI FELLER,
    Appellants
    v.
    FIDELITY NATIONAL FINANCIAL, INC., a Delaware
    corporation; FIDELITY NATIONAL TITLE INSURANCE
    COMPANY, a California corporation;
    CHICAGO TITLE INSURANCE COMPANY, a Missouri
    corporation; THE FIRST AMERICAN CORPORATION, a
    California corporation; FIRST AMERICAN TITLE
    INSURANCE COMPANY, a California corporation;
    LANDAMERICA FINANCIAL GROUP, INC., a Virginia
    corporation; TRANSNATION TITLE INSURANCE
    COMPANY, a Nebraska corporation; LAWYERS TITLE
    INSURANCE CORPORATION, a Nebraska corporation;
    STEWART INFORMATION SERVICES CORPORATION,
    a Delaware corporation; STEWART TITLE GUARANTY
    COMPANY, a Texas corporation; OLD REPUBLIC
    INTERNATIONAL CORPORATION, a Delaware
    corporation; OLD REPUBLIC TITLE INSURANCE
    GROUP, INC., a Delaware corporation; OLD REPUBLIC
    NATIONAL TITLE INSURANCE COMPANY, a Minnesota
    corporation; WEICHERT TITLE AGENCY
    On Appeal from the United States District Court
    for the District of New Jersey
    District Court No. 3-09-cv-00291
    District Judge: The Honorable Peter G. Sheridan
    Argued July 13, 2016
    Before: SMITH, ROTH, and RENDELL, Circuit Judges
    (Filed: September 8, 2016)
    Esther E. Berezofsky, Esq.
    Williams Cuker Berezofsky
    210 Lake Drive East
    Woodland Falls Corporate Park
    Suite 101
    Cherry Hill, NJ 08002
    Mark R. Cuker, Esq.
    Michael J. Quirk, Esq. [ARGUED]
    Williams Cuker Berezofsky
    1515 Market Street
    Suite 1300
    2
    Philadelphia, PA 19102
    Andrew R. Wolf, Esq.
    Henry P. Wolfe, Esq.
    The Wolf Law Firm
    1520 U.S. Highway 130
    Suite 101
    North Brunswick, NJ 08902
    Counsel for Appellant
    Derrick R. Freijomil, Esq.
    Michael R. O’Donnell, Esq. [ARGUED]
    Riker Danzig Scherer Hyland & Perretti
    One Speedwell Avenue
    Headquarters Plaza
    Morristown, NJ 07962
    Grant J. Ankrom, Esq.
    Jason E. Maschmann, Esq.
    Charles A. Newman, Esq.
    Denton US
    One Metropolitan Square
    211 North Broadway, Suite 3000
    St. Louis, MO 63102
    Frederick W. Alworth, Esq.
    Joshua R. Elias, Esq.
    3
    Gibbons
    One Gateway Center
    Newark, NJ 07102
    Kevin M. Fee, Jr., Esq.
    Gerard D. Kelly, Esq.
    Sidley Austin
    One South Dearborn Street
    Chicago, IL 60201
    Steven P. Benenson, Esq.
    Porzio Bromberg & Newman
    100 Southgate Parkway
    Morristown, NJ 07960
    Counsel for Appellees
    ________________
    OPINION
    ________________
    SMITH, Circuit Judge.
    “A waived claim or defense is one that a party has
    knowingly and intelligently relinquished.” Wood v. Milyard,
    
    132 S. Ct. 1826
    , 1832 n.4 (2012). How, then, can a party
    waive a right “in a situation in which no right existed[?]”
    Ackerberg v. Johnson, 
    892 F.2d 1328
    , 1333 (8th Cir. 1989).
    4
    The answer is: it cannot. Every circuit to have answered this
    question has held that “a litigant [need not] engage in futile
    gestures merely to avoid a claim of waiver.” Miller v. Drexel
    Burnham Lambert, Inc., 
    791 F.2d 850
    , 854 (11th Cir. 1986),
    abrogated on other grounds by Gulfstream Aerospace Corp.
    v. Mayacamas Corp., 
    485 U.S. 271
     (1988). We too adopt this
    position and therefore hold that futility can excuse the
    delayed invocation of the right to compel arbitration.
    Because we also conclude that any attempt to compel bipolar
    – that is, individual – arbitration in this case prior to the
    Supreme Court’s decision in AT&T Mobility LLC v.
    Concepcion, 
    563 U.S. 333
     (2011), would have been futile, we
    will remand with instructions that the District Court compel
    bipolar arbitration of all Plaintiffs’ arbitrable claims in
    accordance with its May 14, 2015, order and this opinion.
    I.
    Plaintiffs represent a putative class of New Jersey real
    estate purchasers and refinancers who were overcharged
    between $70 and $350 in fees stemming from the recording
    of their deeds and mortgage instruments. Plaintiffs allege that
    the settlement agents – title agents and attorneys who were, in
    turn, agents of the Defendants – intentionally charged
    Plaintiffs more than the county clerk charged for recording
    these documents and pocketed the difference. Plaintiffs
    further allege that the class claims add up to over $50 million,
    exclusive of treble damages and interest.
    5
    On January 22, 2009, Plaintiffs filed a complaint in the
    U.S. District Court for the District of New Jersey alleging
    both breach of contract and violation of New Jersey law. In
    response, Defendants sought to dismiss a number of these
    claims and raised several affirmative defenses. They did not,
    however, seek to compel arbitration based on the arbitration
    clauses present in their contracts with Plaintiffs. 1 While no
    explanation for this inaction was given, we conclude infra
    that an attempt to compel bipolar arbitration would have been
    futile under prevailing New Jersey law. Because arbitration
    was not sought, the case was litigated for two and a half years
    with the focus primarily on class certification. In that time,
    both sides conducted broad discovery and contested several
    substantive motions on their merits. Plaintiffs have also
    extensively documented their efforts in this case and note that
    they served over 130 non-party subpoenas and spent over
    $50,000 on experts before Defendants sought bipolar
    arbitration.
    However, on April 27, 2011, the Supreme Court in
    Concepcion held that the Federal Arbitration Act (FAA)
    preempted state laws that had previously prohibited a party
    from compelling bipolar arbitration in certain situations even
    when it was specifically agreed to by contract. 
    563 U.S. at
    1
    There are two arbitration clauses at issue here; some
    putative class members have claims under the 1987 Owner’s
    Policy while others have claims under the 1992 Loan Policy.
    For purposes of this analysis, the minor differences between
    the two are immaterial.
    6
    352. 2 Sensing an opportunity to ward off this potential class
    action, Defendants sent a letter to Plaintiffs on June 8, 2011,
    demanding enforcement of the arbitration agreements in light
    of this change in the law. 3 Plaintiffs rejected this arbitration
    demand and noted that the question of arbitration “might have
    been an interesting issue had you thought of it two and a half
    years ago when the case was filed . . . .” JA 816. Defendants
    then filed a motion in the District Court to compel bipolar
    arbitration on August 1, 2011. The District Court concluded
    2
    It cannot be disputed that Concepcion marked a change in
    our jurisprudence. See Litman v. Cellco P’ship, 
    655 F.3d 225
    , 230 (3d Cir. 2011) (“The specific question before us
    remains whether the FAA preempts the New Jersey Supreme
    Court’s ruling in Muhammad. As noted above, we had
    previously held that, pursuant to Homa, it did not. We now
    examine that decision anew and hold that Homa has been
    abrogated by Concepcion and that Muhammad is preempted
    by the FAA.”).
    3
    The dissent characterizes Defendants’ “about-face” as a
    “litigation tactic [intended] to derail the court proceedings.”
    Such a characterization would seem to apply regardless of
    when Defendants moved for arbitration, as arbitration by
    definition derails court proceedings. In addition, deciding
    whether to invoke an arbitration clause is certainly a litigation
    “tactic,” but tactical decision making alone does not counsel
    against enforcement of a valid arbitration agreement. Indeed,
    this general disapproval of arbitration clauses has been
    roundly rejected by the Supreme Court. Concepcion, 
    563 U.S. at 339
     (explaining that the FAA reflects a “liberal
    federal policy favoring arbitration.”).
    7
    that any attempt to compel bipolar arbitration prior to
    Concepcion would have been futile. Accordingly, the District
    Court granted the motion, stayed the case, and ordered bipolar
    arbitration.
    This decision, however, led to a barrage of motions for
    reconsideration that, as the District Court observed, “has
    come to resemble a ping pong match between the parties.”
    JA 42.      Ultimately, the District Court conducted an
    evidentiary hearing and found that all but two Plaintiffs had
    agreed to bipolar arbitration. Accordingly, over Plaintiffs’
    strong protest, it again compelled bipolar arbitration of the
    remaining claims.
    Three issues relating to this ruling were certified for
    interlocutory appeal pursuant to 
    28 U.S.C. § 1292
    (b):
    (a) Whether the [District] Court’s decision to
    allow Defendants to assert the affirmative
    defense of arbitration due to a change in law
    even though a substantial period of time elapsed
    between [D]efendant[s’] answer and filing of
    the motion to assert the defense was in error; (b)
    Whether Plaintiffs’ claims against Defendants
    alleging a violation of the New Jersey
    Consumer Fraud Act, N.J.S.A. §§ 56:8-1 et
    seq., are barred; and (c) any other issues arising
    out of the District Court’s decision concerning
    the arbitration of the claims.
    8
    JA 195-96 (internal citations omitted). Because we conclude
    that the District Court did not err in compelling bipolar
    arbitration, we need not address any other issues on appeal. 4
    II.
    We first consider whether, as an abstract matter, the
    futility of raising bipolar arbitration as a defense should
    excuse the delay in doing so. Generally, “[a] written
    provision in any . . . contract . . . to settle by arbitration a
    controversy thereafter arising out of such contract . . . shall be
    valid, irrevocable, and enforceable, save upon such grounds
    as exist at law or in equity for the revocation of any contract.”
    Federal Arbitration Act, 
    9 U.S.C. § 2
    . The Supreme Court
    has stated that this provision reflects a “‘liberal federal policy
    favoring arbitration.’” Concepcion, 
    563 U.S. at 339
     (quoting
    Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 
    460 U.S. 1
    , 24 (1983)). Thus “any doubts concerning the scope of
    arbitrable issues should be resolved in favor of arbitration,
    whether the problem at hand is the construction of the
    contract language itself or any allegation of waiver, delay, or
    a like defense to arbitrability.” Moses H. Cone, 
    460 U.S. at 24-25
    ; see also Volt Info. Scis., Inc. v. Bd. of Trs. of Leland
    Stanford Junior Univ., 
    489 U.S. 468
    , 476 (1989) (“There is
    no federal policy favoring arbitration under a certain set of
    4
    The District Court had jurisdiction pursuant to 
    28 U.S.C. § 1332
    (d)(2) and this Court has jurisdiction pursuant to 
    28 U.S.C. § 1292
    (b).
    9
    procedural rules; the federal policy is simply to ensure the
    enforceability, according to their terms, of private agreements
    to arbitrate.”). Given this strong preference to enforce
    arbitration agreements, we have concluded that a party waives
    the right to arbitrate “only where the demand for arbitration
    came long after the suit commenced and when both parties
    had engaged in extensive discovery.” PaineWebber Inc. v.
    Faragalli, 
    61 F.3d 1063
    , 1068-69 (3d Cir. 1995) (internal
    quotation marks and citation omitted).
    For example, in Ehleiter v. Grapetree Shores, Inc., we
    held that a defendant seeking to compel arbitration may waive
    the right to do so when the plaintiff demonstrates unfair
    prejudice arising from the defendant’s delay in raising
    arbitration as an affirmative defense. 
    482 F.3d 207
    , 223 (3d
    Cir. 2007). To guide this prejudice inquiry, in Hoxworth v.
    Blinder, Robinson & Co. we identified six nonexclusive
    factors that courts should consider when determining if the
    defense of arbitration has been waived: (1) the timeliness or
    lack thereof of the motion to arbitrate; (2) the extent to which
    the party seeking arbitration has contested the merits of the
    opposing party’s claims; (3) whether the party seeking
    arbitration informed its adversary of its intent to pursue
    arbitration prior to seeking to enjoin the court proceedings;
    (4) the extent to which the party seeking arbitration engaged
    in non-merits motion practice; (5) the party’s acquiescence to
    the court’s pretrial orders; and (6) the extent to which the
    parties have engaged in discovery. 
    980 F.2d 912
    , 926-27 (3d
    Cir. 1992).
    10
    None of these cases, however, dealt with a situation in
    which the prejudicial delay occurred solely because an
    attempt to raise the defense of arbitration earlier would have
    been futile. Accordingly, we believe that our analysis in a
    futility case cannot rely solely on Hoxworth because there,
    waiver was premised on the fact that the right in question
    indisputably existed and could have been raised earlier.
    Wood, 
    132 S. Ct. at 1832
     (defining waiver as the known
    relinquishment of a claim or defense). It makes no sense to
    consider, for example, whether a party “assent[ed] to the
    district court’s pretrial orders,” Hoxworth, 
    980 F.2d at 927
    ,
    when, at the time the orders were issued, the party had no
    grounds on which it could plausibly contest them. In other
    words, Hoxworth was simply not a futility case. Thus, its list
    of factors for determining prejudice is ill suited for our
    analysis here.
    Accordingly, we must look beyond Hoxworth to
    determine whether and when futility can excuse the delayed
    invocation of an arbitration clause as an affirmative defense.
    In so doing, we identify three primary reasons why we
    believe that adoption of the futility exception in this context is
    appropriate.
    First, we believe that in the arbitration context, the
    logic of our waiver analysis – in addition to its specific
    factors – is undercut to the extent that the delay we are
    considering was the result of futility. This suggests to us that
    the standard waiver analysis should not apply in the futility
    context. Cf. Moses H. Cone, 
    460 U.S. at 24-25
     (“[A]ny
    11
    doubts concerning the scope of arbitrable issues should be
    resolved in favor of arbitration, whether the problem at hand
    is the construction of the contract language itself or any
    allegation of waiver, delay, or a like defense to
    arbitrability.”). As we noted in Hoxworth, “‘where a party
    fails to demand arbitration during pretrial proceedings, and, in
    the meantime, engages in pretrial activity inconsistent with an
    intent to arbitrate, the party later opposing a motion to compel
    arbitration may more easily show that its position has been
    compromised, i.e., prejudiced.’” 
    980 F.2d at 926
     (quoting
    Price v. Drexel Burnham Lambert, Inc., 
    791 F.2d 1156
    , 1161
    (5th Cir. 1986)). In other words, one of the primary
    justifications for waiver is that the party attempting to raise it
    as a belated defense acted inconsistently with his earlier
    known right to do so. However, if an earlier attempt to assert
    the defense of arbitration would have been futile, this failure
    to take a futile action is not inconsistent with that defense.
    See Fisher, 791 F.2d at 697 (“[T]he Fishers have failed to
    demonstrate that Becker acted inconsistently with a known
    existing right to compel arbitration.”). Thus, applicability of
    the standard waiver analysis seems to miss the key fact that
    while there may be some prejudice resulting from the delay in
    raising a particular defense, that prejudice is attributable to a
    change in the applicable law, not to any negligent action on
    the part of either party.
    Second, we have recognized futility as an exception to
    both ripeness and administrative exhaustion. See Sammon v.
    N. J. Bd. of Med. Examiners, 
    66 F.3d 639
    , 641 (3d Cir. 1995)
    (engaging in a “futile gesture to establish ripeness” would be
    12
    unnecessary); Berger v. Edgewater Steel Co., 
    911 F.2d 911
    ,
    916 (3d Cir. 1990) (“Although the exhaustion requirement is
    strictly enforced, courts have recognized an exception when
    resort to the administrative process would be futile.”);
    Harrow v. Prudential Ins. Co. of Am., 
    279 F.3d 244
    , 249 (3d
    Cir. 2002) (“A plaintiff is excused from exhausting
    administrative procedures under ERISA if it would be futile
    to do so.”). We see no reason why this logic would not
    extend to the case at hand. Why would we require a party to
    make a “futile gesture” to prevent waiver when we do not
    require such gestures in other scenarios?
    Finally, as Plaintiffs’ admitted at oral argument, all
    four circuits to have considered this issue have undertaken
    similar analyses and come to the same conclusion. Fisher v.
    A.G. Becker Paribas Inc., 
    791 F.2d 691
    , 697 (9th Cir. 1986)
    (“Until the Supreme Court’s decision in Byrd, the arbitration
    agreement in this case was unenforceable. Therefore, the
    Fishers have failed to demonstrate that Becker acted
    inconsistently with a known existing right to compel
    arbitration.”); Miller, 
    791 F.2d at 854
     (“This circuit does not
    require a litigant to engage in futile gestures merely to avoid a
    claim of waiver.         Thus, appellees’ failure to request
    arbitration prior to the Byrd decision is irrelevant to the issue
    of waiver.”); Peterson v. Shearson/Am. Exp., Inc., 
    849 F.2d 464
    , 466 (10th Cir. 1988) (“There was no requirement that
    Shearson make a futile attempt to obtain arbitration on the
    federal claim given the state of the law; indeed, it would be
    difficult to argue that such an attempt had a basis in existing
    law.”); Ackerberg, 
    892 F.2d at 1333
     (“[W]e cannot find
    13
    waiver, the voluntary relinquishment of a known right, in a
    situation in which no right existed. . . . To find that the []
    defendants waived a right they did not have . . . is not only
    illogical, but also would encourage litigants, in order to avoid
    a finding of waiver, to file motions they knew to be futile.”).
    We therefore hold that futility can excuse the delayed
    invocation of the defense of arbitration.
    III.
    We next look at the futility exception in the context of
    this case. To do this, we first consider the existing bipolar
    and class arbitration case law and conclude that courts have
    typically treated each form of arbitration as substantively
    distinct.     We therefore conclude that each can be
    independently waived, thereby requiring that each receive a
    separate futility analysis. We next ask what it means for the
    assertion of a right to have been futile, concluding that the
    appropriate test is whether assertion of that right was almost
    certain to fail. Finally, we apply this framework and hold that
    here, a motion to compel bipolar arbitration prior to
    Concepcion was almost certain to fail.
    A.
    Plaintiffs contend that it would not have been futile for
    Defendants to have moved to enforce the arbitration clauses
    prior to Concepcion. Defendants, however, assert that this is
    14
    not the proper question. Instead, they suggest that the real
    question is whether they could have compelled bipolar
    arbitration prior to Concepcion. 5 We agree with Defendants
    that the latter question is the proper inquiry, largely because
    profound differences distinguish class and bipolar arbitration.
    Cf. David S. Clancy, Matthew M.K. Stein, An Uninvited
    Guest: Class Arbitration and the Federal Arbitration Act’s
    Legislative History, 63 Bus. Law. 55, 62 (2007) (“Class
    arbitration is very different from the arbitration contemplated
    by Congress when Congress passed the FAA, and it is
    different in ways that plainly matter: its characteristics are the
    opposite of those that impressed Congress about
    arbitration.”). In Opalinski v. Robert Half International, Inc.,
    we undertook a thorough review of Supreme Court and Third
    Circuit cases dealing with class and bipolar arbitration. 
    761 F.3d 326
     (3d Cir. 2014). In doing so, we concluded that
    bipolar and class arbitration are distinct at a fundamental,
    substantive level. They are thus not merely different
    adjudicative procedures that are easily interchanged:
    [W]e read the Supreme Court as characterizing
    the permissibility of classwide arbitration not
    solely as a question of procedure or contract
    interpretation but as a substantive gateway
    5
    Indeed, Plaintiffs acknowledge that “Defendants have not
    sought arbitration other than on an individual basis” and at
    one point in this litigation argued that the motion to compel
    such arbitration should be denied because it would not allow
    for class arbitration. ECF No. 221 at * 40.
    15
    dispute qualitatively separate from deciding an
    individual quarrel.       Traditional individual
    arbitration and class arbitration are so distinct
    that a choice between the two goes, we believe,
    to the very type of controversy to be resolved.
    
    Id. at 334
    . Indeed, we further noted that “[t]he [Supreme]
    Court’s line of post-Bazzle opinions . . . indicates that,
    because of the fundamental differences between classwide
    and bilateral arbitration, and the consequences of proceeding
    with one rather than the other, the availability of classwide
    arbitrability is a substantive gateway question . . . .” 
    Id. at 335
     (discussing Green Tree Fin. Corp. v. Bazzle, 
    539 U.S. 444
    , 459 (2003)). Accordingly, we held that – absent clear
    and unmistakable evidence of agreement to the contrary – the
    court, not the arbitrator, must decide whether a contract
    permits either bipolar or class arbitration. Id. at 330, 335.
    Indeed, the Supreme Court in Concepcion also
    highlighted three reasons why class arbitration is
    fundamentally different from bipolar arbitration. “First, the
    switch from bilateral to class arbitration sacrifices the
    principal advantage of arbitration—its informality—and
    makes the process slower, more costly, and more likely to
    generate procedural morass than final judgment.” 
    563 U.S. at 348
    . “Second, class arbitration requires procedural formality.
    The AAA’s rules governing class arbitrations mimic the
    Federal Rules of Civil Procedure for class litigation.” 
    Id. at 349
    . “Third, class arbitration greatly increases risks to
    defendants.” 
    Id. at 350
    . Indeed, as Concepcion concluded,
    “[a]rbitration is poorly suited to the higher stakes of class
    16
    litigation.” 
    Id.
     These differences make it clear why parties,
    to put it bluntly, care so much about whether the agreement to
    arbitrate permits class arbitration. They also make clear why
    having the right to compel class arbitration is not the same as
    having the right to compel bipolar arbitration. 6 We thus part
    ways with our dissenting colleague who believes that the
    “dispositive question here” is whether “it would have been
    futile in 2009 for [Defendants] to move to enforce the
    arbitration clauses.” By so broadening the dispositive inquiry
    in this case, it is no wonder she concludes that the futility
    exception does not apply. Had Defendants sought to enforce
    the arbitration clauses in 2009, they would have been, as we
    explain below, forced into class arbitration with near
    certainty. 7 Even the dissent begrudgingly acknowledges that
    6
    We recognize that both Concepcion and Opalinski were
    decided after this case was brought and thus were not
    available to Defendants when they had to decide whether to
    move for bipolar arbitration. That said, we believe that these
    cases fairly summarize the rather uncontroversial position that
    class arbitration differs greatly from bipolar arbitration. See
    Bazzle, 
    539 U.S. at 459
     (recognizing that parties who have
    agreed to bipolar arbitration cannot be forced into class
    arbitration because the two procedures are substantively
    distinct); EEOC v. Waffle House, Inc., 
    534 U.S. 279
    , 289
    (2002) (“[N]othing in the [FAA] authorizes a court to compel
    arbitration of any issues, or by any parties, that are not
    already covered in the agreement.”).           This was well
    understood in 2009 when the complaint was filed.
    7
    As discussed infra, the New Jersey Supreme Court made it
    clear that “it [is] unconscionable for defendants to deprive
    17
    they “might not have succeeded in getting what they wanted:
    individual arbitration.”      How, then, can we say that
    Defendants waived the right to individual arbitration by
    failing to seek to enforce an arbitration clause which almost
    certainly would have resulted in class arbitration? We
    believe that the right to individual arbitration is a distinct
    right separate from the right to class arbitration. We therefore
    hold that – whether or not class arbitration was permissible –
    a court must also determine whether it would have been futile
    to move for bipolar arbitration under the prevailing law. We
    turn, then, to that question.
    B.
    To determine whether Defendants’ motion to compel
    bipolar arbitration would have been futile, we must first
    define futility as understood in this context. Other courts to
    address this issue have concluded that futility does not mean
    something is absolutely impossible; nor does it mean
    something is merely improbable. See generally Garcia v.
    Wachovia Corp., 
    699 F.3d 1273
    , 1279 (11th Cir. 2012) (“The
    more lenient unlikely-to-succeed standard . . . would only
    encourage litigants to delay moving to compel arbitration
    until they could ascertain how the case was going in federal
    district court.” (internal citations and quotation marks
    omitted)). Instead, when asking whether arbitration would
    [plaintiff] of the mechanism of a class-wide action, whether
    in arbitration or in court litigation.” Muhammad, 189 N.J. at
    22.
    18
    have been futile, courts ask whether “it was almost certain
    . . . that a motion to compel arbitration would have been
    denied.” Id. (emphasis added); see also Miller, 
    791 F.2d at 854
     (“[A]ny motion to compel arbitration would almost
    certainly have been futile.”); Peterson, 
    849 F.2d at 466
    (“Because Shearson almost certainly could not have obtained
    an order for arbitration of the Rule 10b-5 claim prior to
    McMahon, it did not waive its right to arbitrate the claim.”). 8
    We agree, which requires us to ask whether a motion
    to compel bipolar arbitration filed by Defendants prior to
    Concepcion was almost certain to fail. We hold that it was.
    Then-existing New Jersey law prohibited courts from
    compelling bipolar arbitration in a certain subset of adhesive
    consumer contracts. Muhammad v. Cty. Band of Rehoboth
    Beach, DE, 
    189 N.J. 1
     (2006). Because we conclude that the
    contracts here fall within the subset of contracts for which
    compelled     bipolar    arbitration   would have been
    unconscionable under Muhammad, we hold that any attempt
    8
    We see no conflict between the “almost certain to fail”
    standard and the Eighth Circuit’s position that waiver is
    appropriate if “it should have been clear . . . that the
    arbitration agreement was at least arguably enforceable.” Se.
    Stud & Components, Inc. v. Am. Eagle Design Build Studios,
    LLC, 
    588 F.3d 963
    , 967 (8th Cir. 2009). If an arbitration
    clause is not at least arguably enforceable, it is almost certain
    to fail. These are, if not essentially the same standard,
    logically parallel.
    19
    to seek bipolar arbitration in this case prior to Concepcion
    was almost certain to fail.
    In Muhammad, the New Jersey Supreme Court held
    that “it was unconscionable for defendants to deprive
    Muhammad of the mechanism of a class-wide action, whether
    in arbitration or in court litigation.” 
    189 N.J. at 22
    . This was
    because “[t]he public interest at stake in [the plaintiff’s]
    ability and the ability of her fellow consumers effectively to
    pursue their statutory rights under this State’s consumer
    protection laws overrides the defendants’ right to seek
    enforcement of the class-arbitration bar in their agreement.”
    
    Id.
     Specifically, the court considered “the small amount of
    damages being pursued in this action involving complicated
    financial arrangements and multiple out-of-state entities.” 
    Id.
    It then went on to note that the small value of each claim – at
    most $600 – would make it difficult to pursue individually,
    even if recovery of attorney’s fees were permitted. 
    Id. at 21
    (“One may be hard-pressed to find an attorney willing to
    work on a consumer-fraud complaint involving complex
    arrangements . . . when the recovery is so small.”).
    Accordingly, the court concluded – after performing a fact
    intensive inquiry – that in a certain subset of adhesive
    contracts, a consumer cannot be compelled to submit to
    bipolar arbitration. This was primarily because the court
    concluded that individual plaintiffs were frequently
    discouraged from asserting meritorious claims by the
    relatively high costs inherent in doing so. Thus, as a policy
    matter, the court concluded that consumers in such situations
    20
    could not be forbidden from pursuing their claims in a class
    setting. 
    Id.
    Three years later in Homa v. American Express Co.,
    we also confirmed that this New Jersey policy was not
    preempted by the FAA. 
    558 F.3d 225
     (3d Cir. 2009). In
    Homa, a putative class of consumers alleged that American
    Express misrepresented the terms of the rewards program for
    one of its credit cards. 
    558 F.3d at 227
    . Like Muhammad,
    the claims at issue in Homa were small claims that were not
    generally worth litigating on an individual basis. 
    Id.
     The
    District Court in Homa, however, held that despite
    Muhammad, American Express could compel bipolar
    arbitration by enforcing the class arbitration waiver provision
    in its contracts. 
    Id. at 230-231
    . We read Muhammad
    differently and reversed. First, we noted that the District
    Court placed too much emphasis on language in Muhammad
    explaining that class-arbitration waivers are not per se
    unenforceable. 
    Id. at 230
    . We concluded that this focus on
    the lack of a per se rule inappropriately minimized the
    broader applicability of Muhammad and its conclusion that
    certain contracts barring class arbitration violated New
    Jersey’s public policy against exculpatory clauses. 
    Id.
    Second, we compared the facts of Homa to those in
    Muhammad and concluded that
    the contract at issue [in Homa] bears the
    hallmarks of a contract of adhesion—it was
    presented on a take-it-or-leave-it basis, . . . in a
    standardized printed form, without opportunity
    21
    for the adhering party to negotiate except
    perhaps on a few particulars and, as Appellant’s
    underlying claim implicates less than five
    percent of a cardholder’s overall credit card
    balance, predictably involves a small amount of
    damages . . . . [Thus,] the District Court should
    have denied the 12(b)(6) motion and concluded
    that, in light of Muhammad, at this stage the
    class-arbitration waiver at issue violates New
    Jersey’s fundamental public policy.
    
    Id. at 231
    . Thus, “we h[e]ld that, if the claims at issue are of
    such a low value as effectively to preclude relief if decided
    individually, then, under Muhammad, . . . the class-arbitration
    waiver is unconscionable.” 9 Here, however, because we
    9
    In a concurring opinion, Judge Weis also discussed some of
    the specific factors that New Jersey courts seemed to focus on
    when determining if a contract is unconscionable. This list,
    too, makes it clear that one of the key factors is the relatively
    small value of the individual claims: “[m]atters bearing on the
    Court’s appraisal included the lawsuit’s complexity, the
    amount of damages involved, and the availability of
    attorneys’ fees and statutory multipliers. The size of potential
    damages was considered to be an important consideration and
    was used to limit the holding to ‘low-value’ cases.” Homa,
    
    558 F.3d at 233
    . He did, however, express some doubt about
    our ability to determine with certainty how the New Jersey
    Supreme Court would rule if confronted with this case, and
    thus explained that the District Court should perform a more
    in depth application of Muhammad on remand. 
    Id. at 233-34
    .
    22
    know the value of the individual claims, we need not require
    the District Court to conduct further inquiry into this issue on
    remand.
    Applying Homa and Muhammad, we must undertake a
    fact specific inquiry into whether the contracts in this case
    have the same characteristics as those discussed above. See
    Rudbart v. N. Jersey Dist. Water Supply Comm’n, 
    605 A.2d 681
    , 687 (N.J. 1992) (“[I]n determining whether to enforce
    the terms of a contract of adhesion, courts have looked 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.”). If so, we can
    confidently conclude that any attempt by the Defendants to
    compel bipolar arbitration – and “deprive [Plaintiffs] of the
    mechanism of a class-wide action, whether in arbitration or in
    court litigation,” Muhammad, 
    189 N.J. at
    22 – was almost
    certain to fail.
    In doing so, we conclude that the contracts here
    contain the same characteristics as those in Muhammad and
    Homa. Therefore, a New Jersey court confronted with this
    case in 2009 would almost certainly have found Muhammad
    controlling and would have denied Defendants’ motion to
    compel bipolar arbitration. Specifically, we highlight three
    key similarities. First, the value of the individual claims in
    this case are small, between $70 and $350; the claims in
    Muhammad were all for less than $600. This suggests that it
    23
    would be, in most cases, impractical to bring an individual
    claim for relief. See Delta Funding Corp. v. Harris, 
    912 A.2d 104
    , 115 (N.J. 2006) (“Harris has adequate incentive to bring
    her claim as an individual action. Not only are her damages
    substantial, but the fact that her home is at stake in the
    foreclosure proceeding makes it likely that she would contact
    an attorney. The same cannot be said of low-value claims
    where individuals have little, if any, incentive to seek out an
    attorney.”). Second, there is little doubt that these contracts
    are adhesive consumer contracts; they were 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.” Muhammad,
    
    189 N.J. at 15
    . 10 Finally, it is likely that here, “without the
    availability of a class-action mechanism, many consumer-
    fraud victims may never realize that they may have been
    wronged.” 
    Id. at 20
    . Most consumers would lack the
    necessary motivation to spend time looking into the costs
    associated with filing records in their county. Because these
    10
    We recognize that Plaintiffs had the option to augment a
    few specific terms in the contract by, for example, asking for
    a pre-printed Arbitration Endorsement which would have
    required both parties to consent to arbitration. Based on the
    evidence presented to the District Court, this option was
    rarely, if ever, requested. Nonetheless, the ability to exercise
    this option in a real estate closing hardly provides support for
    the position that this is anything but a contract of adhesion.
    Indeed, Muhammad recognized that the ability to negotiate
    “on a few particulars” does not prevent a contract from being
    adhesive. 
    189 N.J. at 15
    .
    24
    similarities all evidence the same unconscionability concerns
    highlighted in Muhammad, we hold that any attempt by
    Defendants to compel bipolar arbitration prior to Concepcion
    would almost certainly have failed. 11
    Indeed, even the Plaintiffs at one point argued that
    under Muhammad, the contracts here would be
    unconscionable if read to prohibit class arbitration and
    compel bipolar arbitration. In a section of Plaintiffs’ response
    to Defendants’ motion to compel arbitration that is aptly titled
    “Under New Jersey Law Chosen by Defendants, a
    Requirement of Individual Arbitration of Plaintiffs’ Claims
    Would be Unconscionable,” the Plaintiffs explained that
    “[t]he factors identified by the Court in Muhammad as
    rendering the class action ban unconscionable are present
    here to the extent Defendants invoke their arbitration clause
    solely in order to prohibit any class action.” Pl.’s Br. in Opp.
    11
    While we readily acknowledge the concerns which the New
    Jersey Supreme Court has suggested necessitate a finding of
    procedural unconscionability, we need not opine on the public
    policy considerations inherent in deciding whether to enforce
    similar arbitration clauses because Congress has already made
    this difficult decision. As the Supreme Court made clear in
    Concepcion, “[t]he principle purpose of the FAA is to ensure
    that private arbitration agreements are enforced according to
    their terms.” 
    563 U.S. at 344
    . And because the Supreme
    Court has decided that the FAA preempts contrary state law,
    we need not address this issue further.
    25
    to Joint Mot. to Stay, ECF No. 221 at *39. 12 While not
    giving this inconsistency any real weight, we simply note its
    existence.
    12
    This further highlights the key error the dissent makes
    when suggesting that the lack of a class arbitration waiver
    meaningfully distinguishes this case from Muhammad. The
    dissent argues that in our case, it is unlikely that a New Jersey
    court would have held the arbitration clauses unconscionable
    because the clauses could have been read to permit class
    arbitration (due to their lack of a class-arbitration waiver).
    While this is true, the right question to ask when assessing
    futility here is not whether the arbitration clauses, as a whole,
    would have been unconscionable. The question is whether a
    motion to compel bipolar arbitration would have been futile
    prior to Concepcion. Indeed, practically speaking, the
    dissent’s approach to futility would lead to an absurd outcome
    in this case. In order to prevent waiver of Defendants’ now-
    existing right to compel bipolar arbitration, Defendants’
    lawyers would have had to seek to enforce an arbitration
    agreement that they knew – or should have known – would
    almost certainly be read to allow Plaintiffs to arbitrate as a
    class. Accordingly, had they pursued arbitration in 2009,
    they would have been exposing their clients to the very real
    possibility that a multi-million dollar class action case would
    be decided by an arbitral panel; a procedural outcome far less
    preferable for Defendants than a class action in federal court.
    See generally Concepcion, 
    563 U.S. at 350
     (“Arbitration is
    poorly suited to the higher stakes of class litigation.” );
    Jonathan R. Bunch, To Be Announced: Silence from the
    United States Supreme Court and Disagreement Among
    26
    IV.
    We next address two minor issues. First, having
    concluded that the futility exception applies, we go on to
    excuse the pre-Concepcion delay and analyze the post-
    Concepcion delay under Hoxworth. Second, we consider the
    scope of the arbitration clauses here and conclude that their
    breadth makes it clear they encompass the New Jersey
    Consumer Fraud Act (NJCFA) claims that are contested on
    appeal.
    A.
    Because any attempt to compel bipolar arbitration in
    this case prior to Concepcion was almost certain to fail, we
    will disregard Defendants’ pre-Concepcion delay 13 when
    Lower Courts Suggest an Uncertain Future for Class-Wide
    Arbitration, 2004 J. DISP. RESOL. 259, 272 (2004) (explaining
    that class arbitration often seems to “bring[] the burdens of
    litigation into the arbitral forum” without bringing any of the
    benefits along with it). It would be a cruel joke to tell
    Defendants that they waived their right to bipolar arbitration
    by not seeking to enforce an arbitration agreement that would
    have almost certainly led to class arbitration.
    13
    The length of the delay itself – if excused under the futility
    exception – is not relevant to our inquiry. Yet even were we
    to consider it, we note that delays of a similar length have
    been excused by the Eighth and Eleventh Circuits. See
    Benoay v. Prudential-Bache Sec., Inc., 
    805 F.2d 1437
    , 1440
    (11th Cir. 1986) (“Despite the fact that Bache and Stark’s
    motion to compel arbitration was made two and one-half
    27
    determining whether waiver is appropriate. See Miller, 
    791 F.2d at 854
     (“Subsequent to [the relevant change in the law],
    appellees delayed only two and a half months in making their
    request. Much of that delay is attributable to consolidation of
    the cases and appellant’s filing of an amended complaint. In
    light of these facts, we find no waiver of the right to
    arbitrate.”). 14 Plaintiffs also do not claim that they suffered
    any additional unfair prejudice apart from the costs associated
    with maintaining and prosecuting this case prior to
    Concepcion. See generally Fisher, 
    791 F.2d at 698
     (“The
    Arbitration Act requires district courts to compel arbitration
    even where the result would be the possibly inefficient
    maintenance of separate proceedings in different forums.”). 15
    years after initiation of the civil action, we conclude that the
    motion was timely in light of a change in law affecting the
    parties’ rights.”); Nesslage v. York Sec., Inc., 
    823 F.2d 231
    ,
    234 (8th Cir. 1987) (excusing two year delay).
    14
    We also believe that our decision to excuse the delay and
    its resulting expense to Plaintiffs here is supported by the
    “‘liberal federal policy favoring arbitration.’” Concepcion,
    
    563 U.S. at 339
     (quoting Moses H. Cone, 
    460 U.S. at 24
    ).
    We therefore leave it to courts in future cases to decide
    whether and how to apply futility outside of the arbitration
    context.
    15
    In In re California Title Insurance Antitrust Litigation, No.
    CIV. 08-1341, 
    2011 WL 2566449
     (N.D. Cal. June 27, 2011),
    a case practically identical to ours, Judge White concluded
    that the delay resulting from the belated invocation of
    arbitration as a defense was not unfairly prejudicial despite
    28
    Because we fully excused the pre-Concepcion delay,
    we consider only whether Defendants’ approximately three-
    month delay between April 27, 2011 (when Concepcion was
    decided) and August 1, 2011 (when Defendants filed their
    motion to compel arbitration) was prejudicial to Plaintiffs. In
    doing so, we look to the Hoxworth factors outlined supra for
    guidance and conclude that waiver would be inappropriate for
    three reasons. First, Defendants notified Plaintiffs on June 8,
    2011 – just over a month after Concepcion was decided – that
    they were demanding bipolar arbitration. This promptly put
    Plaintiffs on notice that a motion for arbitration was coming if
    the demand was rejected. Second, only three months passed
    the fact that the case had been going on for over three years.
    Specifically, he noted, “[t]here is nothing in the record to
    support Plaintiffs’ conclusory contention that granting the
    motion to compel arbitration would unfairly prejudice
    Plaintiffs.” Id. at *3 (internal citations and quotation marks
    omitted). He then noted that the trial date was still over a
    year away and that only limited substantive discovery had
    taken place. We too are not convinced by Plaintiffs’
    allegations of prejudice here and, in light of the FAA’s strong
    policy favoring arbitration, reject the argument that the
    litigation costs associated with a delay in this case can alone
    qualify as sufficient unfair prejudice to prevent application of
    the futility exception. Cf. Martin v. Yasuda, No. 15-55696,
    slip op. at *13 (9th Cir. July 21, 2016) (“A determination of
    whether ‘the right to compel arbitration has been waived must
    be conducted in light of the strong federal policy favoring
    enforcement of arbitration agreements.’” (quoting Fisher, 
    791 F.2d at 694
    )).
    29
    between the accretion of the right and Defendant’s motion to
    compel arbitration. This is not an unreasonable amount of
    time. Third, virtually no substantive or procedural litigation
    occurred during this delay. Hoxworth, 
    980 F.2d at 926-27
    . 16
    B.
    Finally, we note that the broad scope of the arbitration
    clauses here make it clear that we do not need to reach the
    viability of Plaintiffs’ NJCFA claims. 17 The 1987 Owner’s
    Policy states that “arbitration shall decide any matter in
    16
    We also summarily reject Plaintiffs’ argument that the
    Arbitration Endorsement was a mandatory addendum to every
    title insurance contract at issue here. Not only are the District
    Court’s findings on this issue compelling, but we are also
    reviewing the court’s factual findings for clear error, despite
    Plaintiffs attempt to dress up their argument as a matter of
    law by suggesting that the District Court ignored probative
    evidence. See N. River Ins. Co. v. CIGNA Reinsurance Co.,
    
    52 F.3d 1194
    , 1218 (3d Cir. 1995). The District Court here
    properly considered and weighed the competing evidence and
    found the Defendants’ position more compelling. This was
    not clearly erroneous.
    17
    The scope of an arbitration clause is decided by the court
    absent clear and unmistakable evidence that the parties agreed
    to submit this issue to the arbitrator. First Options of
    Chicago, Inc. v. Kaplan, 
    514 U.S. 938
    , 944 (1995);
    CardioNet, Inc. v. Cigna Health Corp., 
    751 F.3d 165
    , 171 (3d
    Cir. 2014). We find no language in the contracts suggesting
    an intent that this issue be submitted to the arbitrator.
    30
    dispute between you and the Company,” while the 1992 Loan
    Policy states that “[a]rbitrable matters include, but are not
    limited, to any controversy or claim between the company
    and the insured arising out of or relating to the policy . . . .”
    JA 33. As we held in CardioNet, when the plain language of
    an arbitration clause is clear, it controls. 751 F.3d at 173. We
    went further, however, and also concluded that if the
    language of the contract is ambiguous, “the presumption of
    arbitrability applies” because “[w]e must resolve ‘any doubts
    concerning the scope of arbitrable issues . . . in favor of
    arbitration.’” Id. (quoting Moses H. Cone, 
    460 U.S. at
    24-
    25). Thus, we have no doubt that the NJCFA claims raised
    here are subject to arbitration.
    V.
    For the reasons previously articulated, we will remand
    this case to the District Court with instructions to compel
    bipolar arbitration of Plaintiffs’ arbitrable claims in
    accordance with the District Court’s May 14, 2015, order and
    this opinion.
    31
    Chassen v. Fidelity National Financial, Inc. et al.
    No. 15-3789
    RENDELL, Circuit Judge, dissenting:
    The majority’s opinion is flawed for a clear and
    obvious reason: it relies on caselaw that has no application
    here. Therefore, I must respectfully dissent.
    In Muhammad v. County Bank of Rehoboth Beach, the
    New Jersey Supreme Court held that “the presence of the
    class-arbitration waiver in Muhammad’s consumer arbitration
    agreement render[ed] that agreement unconscionable.” 
    912 A.2d 88
    , 100 (N.J. 2006). Yet, despite the lack of a class
    arbitration waiver in the arbitration clauses here, the majority
    holds that a New Jersey court in 2009, at the outset of this
    case, would have found Muhammad controlling here. I reject
    that view, and urge you to read Muhammad and the actual
    arbitration clauses at issue here. Doing so will lead inexorably
    to one conclusion: this case is not Muhammad, and a motion
    by the Defendants in 2009 to compel arbitration thus would
    have been anything but futile. Moreover, the majority has
    expanded the concept of futility beyond what we as a court
    should recognize.
    In Muhammad, the New Jersey Supreme Court
    considered whether to compel arbitration under an arbitration
    agreement in a payday loan contract that in no uncertain
    terms prohibited class arbitration. Specifically, in multiple
    places, the agreement required Muhammad to resolve all
    1
    disputes related to her payday loan transaction “by binding
    individual (and not class) arbitration.” 
    Id. at 92
    . The court
    held these waivers unconscionable under New Jersey law.
    According to the court, by forcing Muhammad to waive class
    arbitration in her case, which involved a small amount of
    damages, the arbitration agreement operated as an
    exculpatory clause, effectively releasing the lender from
    liability for possible statutory violations. See 
    id.
     at 99–101.
    Unsurprisingly, then, courts applying New Jersey law
    considered Muhammad to be relevant only when analyzing
    the unconscionability of class arbitration waivers. In Homa v.
    American Express Co., for example, we examined an
    arbitration provision in a consumer agreement that required
    all claims to “be arbitrated on an individual basis . . . [with]
    no right or authority for any Claims to be arbitrated [as] a
    class action.” 
    558 F.3d 225
    , 227 (3d Cir. 2009). After
    comparing this class arbitration waiver to the “similar class-
    arbitration waiver” at issue in Muhammad, we deemed it
    unconscionable under New Jersey law. 
    Id.
     at 230–31; see
    also, e.g., Cohen v. Chase Bank, N.A., 
    679 F. Supp. 2d 582
    ,
    595 (D.N.J. 2010) (holding that the “the present class-action
    waiver” is unconscionable under Muhammad); Davis v. Dell,
    Inc., No. 07-630 (RBK), 
    2008 WL 3843837
    , at *4 (D.N.J.
    Aug. 15, 2008) (“This Court finds that this case is
    distinguishable from Muhammad, and the class action waiver
    does not act as an unconscionable exculpatory clause.”).
    Here, the arbitration clauses—which are situated in the
    Loan Policies and the Owners’ Policies—lack any sort of
    class arbitration waiver. The Loan Policies provide:
    2
    Unless prohibited by applicable law, either the
    Company or the insured may demand
    arbitration pursuant to the Title Insurance
    Arbitration Rules of the American Arbitration
    Association. Arbitrable matters may include,
    but are not limited to, any controversy or claim
    between the Company and the insured arising
    out of or relating to this policy, any service of
    the Company in connection with its issuance or
    the breach of a policy provision or other
    obligation. All arbitrable matters when the
    Amount of Insurance is $1,000,000 or less shall
    be arbitrated at the option of either the
    Company or the insured. All arbitrable matters
    when the Amount of Insurance is in excess of
    $1,000,000 shall be arbitrated only when agreed
    to by both the Company and the insured.
    Arbitration pursuant to this policy, and under
    the Rules in effect on the date the demand for
    arbitration is made or, at the option of the
    insured, the Rules in effect at Date of Policy,
    shall be binding upon the parties.
    J.A. 3981. And the Owners’ Policies provide: “If it is
    permitted in your state, you or the Company may
    demand arbitration. The arbitration shall be binding on
    both you and the Company. The arbitration shall
    decide any matter in dispute between you and the
    Company.” J.A. 3997. These clauses, quite obviously,
    do not even mention class arbitration, let alone outright
    prohibit it. If the Defendants had sought individual
    arbitration at the outset of the case, this silence might
    have been interpreted to mean that the parties simply
    3
    did not contemplate class arbitration. Or it might have
    been construed as permitting class arbitration. 1 Surely,
    it would not have been futile for them to move to
    enforce these clauses at that time.
    Because the arbitration clauses here sit far
    outside the reach of Muhammad, as they are devoid of
    a class arbitration waiver, “‘it should have been clear
    to the [Defendants in 2009] that the arbitration
    agreement[s] w[ere] at least arguably enforceable.’”
    Garcia v. Wachovia Corp., 
    699 F.3d 1273
    , 1278 (11th
    Cir. 2012) (quoting Se. Stud & Components, Inc. v.
    Am. Eagle Design Build Studios, LLC, 
    588 F.3d 963
    ,
    967 (8th Cir. 2009)). Indeed, the Defendants have cited
    not one case—let alone any controlling precedent in
    2009—in which a court applied Muhammad and held
    as unconscionable an arbitration agreement that
    contained no class arbitration waiver or prohibition.
    See 
    id.
     (“[A]bsent controlling . . . precedent
    foreclosing a right to arbitrate, a motion to compel
    arbitration will almost never be futile.”).
    The majority contends that it does not matter
    that the arbitration clauses here lacked class arbitration
    1
    The majority claims that, had the Defendants moved to
    enforce the arbitration clauses in 2009, “they would have
    been . . . forced into class arbitration with near certainty.”
    Majority Op. 18. I disagree. The majority bases that view on
    the flawed premise that these arbitration clauses implicated
    Muhammad. There simply is no class arbitration bar that
    would have been held unconscionable, and the clauses at
    issue could have been interpreted either way.
    4
    waivers. See Majority Op. 26 n.12. According to the
    majority, regardless of whether these clauses contained
    class arbitration waivers, given Muhammad, it would
    have been futile in 2009 for the Defendants to seek
    individual arbitration. It concludes that “a New Jersey
    court confronted with this case in 2009 would almost
    certainly have found Muhammad controlling and
    would have denied Defendants’ motion to compel
    [individual] arbitration.” Id. at 24.
    That conclusion is simply wrong. The
    majority’s analysis here fails to refer back to its own
    characterization of Muhammad as being animated by
    the explicit “class-arbitration bar,” or “class-arbitration
    waiver,” at issue there. Majority Op. 21, 22. This
    omission renders its conclusion not only arbitrary, but
    wrong.
    Furthermore, contrary to the majority’s
    position, the futility inquiry is not about disregarding
    the actual arbitration clauses at issue and asking the
    question—divorced from the arbitration clauses
    themselves—of whether “it would have been futile to
    move for [individual] arbitration under [Muhammad].”
    Id. at 19. No circuit court has ever framed the inquiry
    this way, and for good reason. As noted above, the
    futility inquiry sensibly focuses on the enforceability
    of the actual arbitration clauses—that is, would it
    have been futile in 2009 for the Defendants to move to
    enforce these clauses? See, e.g., Gutierrez v. Wells
    Fargo Bank, NA, 
    704 F.3d 712
    , 719 (9th Cir. 2012)
    (“Our [futility] analysis begins with the [arbitration
    agreement] between Wells Fargo and the class
    5
    members.”); Fisher v. A.G. Becker Paribas Inc., 
    791 F.2d 691
    , 697 (9th Cir. 1986) (“Until the Supreme
    Court’s decision in Byrd, the arbitration agreement in
    this case was unenforceable.”). 2 Here, the answer is
    no.
    But even if we were to pretend that these
    clauses contained class arbitration waivers so as to
    implicate Muhammad, a motion to compel individual
    arbitration in 2009 would have been far from futile. In
    Muhammad, the New Jersey Supreme Court did not
    hold that class arbitration waivers were “per se”
    unconscionable—far from it. 
    912 A.2d at 101
    . Rather,
    in holding that particular class arbitration waiver
    unconscionable, it articulated a “multi-factor analysis,”
    one that necessitated a “fact-sensitive examination,”
    for courts to apply when “evaluat[ing] claims of
    unconscionability.” 
    Id. at 97
    . A court must first
    determine whether the class arbitration waiver was part
    of a contract of adhesion. 
    Id.
     at 96–97. If so, it must
    next consider (1) “the subject matter of the contract”;
    (2) “the parties’ relative bargaining positions”; (3) “the
    degree of economic compulsion motivating the
    adhering party”; and (4) “the public interests affected
    by the contract.” 
    Id. at 97
     (internal quotation marks
    omitted).
    2
    The majority itself quotes this language from Fisher, see
    Majority Op. 14, but then analyzes the futility issue here in a
    manner totally divorced from the actual language of the
    arbitration clauses.
    6
    So, if we were to pretend Muhammad applied
    here, the Defendants could have easily argued that
    these arbitration clauses were not unconscionable.
    Most notably, they could have shown that these
    clauses were not part of contracts of adhesion, which
    would have obviated the need for the court to even
    consider the remaining factors. See 
    id.
     (“The
    determination that a contract is one of adhesion . . . is
    the beginning, not the end, of the inquiry . . . .”
    (internal quotation marks omitted)). As noted by the
    majority in a footnote, the Plaintiffs “had the option”
    to “ask[] for a pre-printed Arbitration Endorsement
    which would have required both parties to consent to
    arbitration.” Majority Op. 25 n.10. In other words, the
    Plaintiffs could have avoided being forced into
    arbitration. The Defendants thus could have
    established that these contracts were not ones of
    adhesion because the very terms at issue—the
    arbitration clauses—were optional, i.e., they were not
    “presented on a take-it-or-leave-it basis.” Muhammad,
    
    912 A.2d at 96
    ; see also Nino v. Jewelry Exchange,
    Inc., 
    609 F.3d 191
    , 201 (3d Cir. 2010) (holding that an
    arbitration agreement was part of a contract of
    adhesion and thus procedurally unconscionable
    because the defendant “presented the arbitration
    agreement to [the plaintiff] for signature on a take-it-
    or-leave-it basis” (internal quotation marks omitted)).
    How, then, could it possibly have been futile in light of
    Muhammad for the Defendants to move to compel
    individual arbitration in 2009? I am baffled by the
    majority’s conclusion that “there is little doubt” that
    the arbitration clauses at issue here were part of
    contracts of adhesion. Majority Op. 25.
    7
    The Defendants’ inaction in 2009, and their
    about-face to seek arbitration in 2011, were no doubt
    driven by litigation tactics to derail the court
    proceedings. At the outset of the case, they realized
    that moving to compel individual arbitration under the
    arbitration clauses here, which were silent as to class
    arbitration, could have exposed them to class
    arbitration—a situation they admitted they “would
    never ever open [themselves] up for.” Oral Arg. Tr.
    20:37–41, July 14, 2016. That prospect then became
    unlikely when the Court decided Stolt-Nielsen S.A. v.
    AnimalFeeds International Corp. and rejected the idea
    that “the parties’ mere silence on the issue of class-
    action arbitration constitutes consent to resolve their
    disputes in class proceedings.” 
    559 U.S. 662
    , 687
    (2010). Fueled by Stolt-Nielsen, they then seized the
    opportunity to cloak their delay under the veil of
    futility ostensibly afforded to them by AT&T Mobility
    LLC v. Concepcion, 
    563 U.S. 333
     (2011). But the
    previous uncertainty as to class arbitration does not
    mean that it would have been futile in 2009 for them to
    move to enforce the arbitration clauses, which is the
    dispositive question here. It just means that they might
    not have succeeded in getting what they wanted:
    individual arbitration.
    For these reasons, I respectfully dissent from
    the majority’s opinion. It would have been far from
    futile for the Defendants to move to enforce these
    arbitration clauses in 2009. We should therefore
    consider only whether their belated attempt to do so
    prejudiced the Plaintiffs under the factors from
    8
    Hoxworth v. Blinder, Robinson & Co., Inc., 
    980 F.2d 912
     (3d Cir. 1992). This analysis would undoubtedly
    lead to our finding that the Plaintiffs were prejudiced
    such that the Defendants waived their right to arbitrate.
    The Defendants did not just warm the bench for two
    and a half years before moving to compel arbitration.
    During that time, they repeatedly contested the merits
    of the Plaintiffs’ claims, engaged in substantial non-
    merits litigation, and participated in extensive
    discovery that cost the Plaintiffs over $57,000. Under
    Hoxworth, this would not even be a close call. See 
    id.
    at 925–26 (finding prejudice where the defendants
    waited eleven months to seek arbitration, participated
    in numerous pretrial proceedings, filed motions
    challenging the merits of the plaintiffs’ claims, and
    took depositions).
    9
    

Document Info

Docket Number: 15-3789

Judges: Smith, Roth, Rendell

Filed Date: 9/8/2016

Precedential Status: Precedential

Modified Date: 10/19/2024

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