KOONS v. JETSMARTER, INC
3:18-cv-16723
D.N.J.Jul 15, 2019Background
- Plaintiff Anne Koons bought two JetSmarter memberships (one-year and three-year) after representatives (including Joshua Raia) made representations about flight availability (Teterboro, planned Philadelphia flights), complimentary services, and up to three-hour free flights.
- Membership Agreement (click‑wrap) contained a Dispute Resolution clause requiring exclusive, binding arbitration before the AAA in Broward County, Florida, and a Florida choice‑of‑law provision.
- Plaintiff alleges JetSmarter materially changed services (reduced flights from Teterboro, never established Philadelphia service), eliminated promised benefits, and raised flight costs; she sued asserting NJ Consumer Fraud Act, respondeat superior, and legal fraud claims.
- Defendants moved to compel arbitration and to dismiss; Plaintiff opposed, arguing arbitrability and enforceability were not clear from the pleadings.
- The Court considered the click‑wrap Membership Agreement on a Rule 12(b)(6) standard per Guidiotti and found the arbitration clause valid under Florida law; it compelled arbitration, held arbitrability delegated to the arbitrator, denied dismissal, and stayed the case pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law | New Jersey law applies because the contract was formed and damages occurred in NJ | Florida law governs per the Agreement's governing‑law clause and JetSmarter's Florida headquarters | Florida law applies; enforcing choice‑of‑law does not offend NJ public policy |
| Validity of arbitration clause | Arbitration agreement's enforceability unclear from pleadings; merits may render whole contract invalid | Click‑wrap assent created a clear, mutual arbitration agreement enforceable under Florida law | Arbitration clause is valid and enforceable under Florida law; click‑wrap assent is sufficient |
| Who decides arbitrability | Court should decide whether claims fall within arbitration | Agreement expressly delegates arbitrability (includes "including the validity of this clause") | Delegation clause valid; arbitrability is for the arbitrator to decide (Henry Schein principle) |
| Dismiss vs stay | (Plaintiff) Proceed in court or seek stay only if appropriate | Defendants sought dismissal or stay; argued dismissal proper if all issues arbitrable | Court denied dismissal, ordered a stay pursuant to FAA Section 3 and compelled arbitration |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (recognizes strong federal policy favoring enforcement of arbitration agreements)
- Guidiotti v. Legal Helpers Debt Resolution, LLC, 716 F.3d 764 (3d Cir.) (motions to compel arbitration may be decided under Rule 12(b)(6) when the complaint and relied‑upon documents make arbitrability apparent)
- Rent‑A‑Ctr., W., Inc. v. Jackson, 561 U.S. 63 (arbitration provisions are severable; challenges to whole contract generally go to arbitrator)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (same: courts decide only challenges to arbitration clause itself)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (delegation clauses must be enforced; courts may not decide arbitrability when parties have delegated it)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (establishes rule to resolve doubts about arbitrability in favor of arbitration)