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Cole v. Jersey City Medical Center, 215 N.J. 165 (2013).  In Cole v. Jersey City Medical Center, 425 N.J. Super. 48 (App. Div. 2012), discussed here, the Appellate Division ruled that defendant, who had litigated this employment discrimination case for 21 months and then, three days before trial, sought to invoke an arbitration clause, was equitably estopped from doing so.  Today, in an opinion by Judge Cuff, the Supreme Court affirmed that decision, but ruled based on waiver, finding it unnecessary to address equitable estoppel.

“[W]hether a party has waived its arbitration right is a legal determination subject to de novo review.”  Though arbitration “is a favored means of dispute resolution,” the right to arbitrate can be waived.  Judge Cuff cited the familiar definition of waiver as “the intentional relinquishment of a known right,” and observed that waiver can occur either explicitly or implicitly.  Regardless, the waiver inquiry is “a fact-sensitive analysis,” a standard that has also been recognized by both the Appellate Division and by federal Circuit Courts of Appeal in the context of the Federal Arbitration Act.  Judge Cuff also cited cases from many other states that, similarly, employ a “totality of the circumstances” test, a standard that the Court’s opinion here adopted as well.

Judge Cuff offered a non-exclusive list of factors that are to be considered in evaluating whether a party has waived its right to arbitration.  These included: “(1) the delay in making the arbitration request; (2) the filing of any motions, particularly dispositive motions, and their outcome; (3) whether the delay in seeking arbitration was part of the party’s litigation strategy; (4) the extent of discovery conducted; (5) whether the party raised the arbitration issue in its pleadings, particularly as an affirmative defense, or provided other notification of its intent to seek arbitration; (6) the proximity of the date on which the party sought arbitration to the date of trial; and (7) the resulting prejudice suffered by the other party, if any.  No one factor is dispositive.  A court will consider an agreement to arbitrate waived, however, if arbitration is simply asserted in the answer and no other measures are taken to preserve the affirmative defense.”

Applying those factors here, it was an easy decision to find waiver.  Defendant had asserted 35 affirmative defenses, but had not listed arbitration as one of those defenses.  Defendant intensely litigated the case for 21 months, until three days before trial, including filing a motion for summary judgment.  Waiver was evident.

At least since Hudik-Ross, Inc. v. 1530 Palisade Ave. Corp., 131 N.J. Super. 159 (App. Div. 1974), cited in this opinion, the Appellate Division has recognized that unreasonable delay in asserting a right to arbitration can constitute a waiver.  The federal courts, in the cases cited by Judge Cuff and, more recently, in Bellevue Drug Corp. v. Caremark SPCS, 700 F.3d 109 (3d Cir. 2012), discussed here, followed suit.  Now the Supreme Court has defintively and correctly stated the law in this area, removing any lingering uncertainty.  Anyone who has the right to arbitrate and wishes to invoke that right now knows exactly what to do and, almost more importantly, what not to do.