In ordering arbitration of a warranty dispute, a federal district court in New Jersey rejected the claimant’s allegation of bias by pointing out that the National Arbitration Forum, the designated administrator, "has been repeatedly held up as a fair and reasonable forum."

In Davis v. Dell, Inc., Civ. No. 07-630 (RBK), 2008 WL 3843837 (D. N.J. Aug. 15, 2008), Davis purchased an LCD television through Dell’s website. As part of the checkout process, Davis checked a box agreeing to various terms and conditions, including an arbitration agreement and a class action waiver.

After the original television and a replacement unit did not perform to his satisfaction, Davis filed a class action lawsuit against Dell for the television’s alleged faulty manufacture. Dell moved to compel arbitration. Over Davis’ objections, the trial court stayed proceedings and compelled individual arbitration of the dispute.

On appeal, Davis argued that the Texas choice of law provision in the terms and conditions violated fundamental public policy under New Jersey law preserving the right of consumers to bring class action lawsuits. The Court noted that there was no such public policy favoring consumer class actions in New Jersey. See, e.g., Halprin v. Verizon Wireless Servs., LLC, 2008 WL 961239, at *5 (D. N.J. Apr. 8, 2008) ("There is, in fact, no such fundamental public policy."); Homa v. Am. Express Co., 496 F.Supp.2d 440, 448 (D. N.J. 2007) ("application of that law [enforcing class action waivers] does not violate any fundamental public policy of New Jersey").

Furthermore, the Court found no evidence that a claimant would be dissuaded from pursuing individual claims for the price of a television set – $1,000 to $3,000 – in the same way that a claimant might be discouraged from the recovery of smaller, less apparent individual claims. See, e.g., Muhammad v. County Bank of Rehoboth Beach, 912 A.2d 88, 100 (N.J. 2006) (finding a class action waiver unconscionable under New Jersey law when the estimated individual recovery sought by each claimant was as little as $60).

Finally, the Court characterized the accusations of bias levied at the National Arbitration Forum (FORUM), the designated arbitration administrator, were based on mere "conclusory allegations." Also, as the Court noted, the FORUM "has been repeatedly held up as a fair and reasonable forum," and there was "no evidence whatsoever that Davis would be unfairly treated by any [FORUM] arbitrator." See also Vera v. First USA Bank, N.A., Civ. A. No. 00-89, 2001 WL 640979, at *1 (D. Del. Apr. 19, 2001); Marsh v. First USA Bank, N.A., 103 F.Supp.2d 909, 926 (N.D. Tex. 2000).