NJ Supreme Court bars class action arbitration

Associate Justice Barry Albin - the NJ Supreme Court's most progressive voice
The New Jersey Supreme Court today closed the courthouse doors to two groups of trucking company employees, the New Jersey Law Journal today reported.

In New Prime Inc. v. Oliveira 139 S. Ct. 532, 539 (2019) the Supreme Court opened the door a crack for workers seeking justice.  It found in an opinion by Neil Gorsuch that the 9 USC 1 of the Federal Arbitration Act broadly excluded transportation workers from its scope.  Both salaried and hourly workers and independent contractors are now treated as employees and therefore not covered by the FAA which preempts of state law.  In two cases consolidated for review New Jersey transportation workers sought to enforce state wage and hour laws - seeking overtime pay, etc.  New Prime exempted them from the Federal Arbitration Act.  But the New Jersey Supreme Court has found that workers knowingly waived their rights both to go to court and to a class action remedy in any forum. They are compelled to pursue individual arbitration, a costly and generally impractical remedy for modest claims.

In Arafa v. Health Express the court found the employment agreement called for arbitration under the FAA.  But since the FAA now does not extend to such pharmaceutical delivery drivers [and may not in the companion Colon case] the workers' wage and hour claims defaulted to the New Jersey Arbitration Act although it was not mentioned in the employment contract.  

By acceptance of the terms of employment the workers had also "knowingly and voluntarily" waived their right to arbitrate on a class-wide basis.  Associate Justice Albin was the sole dissenter on the class action issue.  He embraced the New Jersey precedent in  Muhammad v. County Bank of Rehoboth Beach, DE, 189 N.J. 1 (2006), in which the Court found unconscionable a class-arbitration waiver embedded in a consumer contract of adhesion.  

While the majority did not overrule the Muhammad case its finding that the waiver was voluntary and knowing meant that Muhammad did not apply here.
The only solution available now for New Jersey workers would be a legislative fix that clarified New Jersey contract law to exclude transportation workers who in the "gig economy" are powerless or give workers an effective right to opt out of mandatory arbitration provisions in contracts of employment.