Schiffer v. Slomin's, Inc.
40 Misc. 3d 884
Nassau County District Court2013Background
- Plaintiff Schiffer (and co-claimant Raviv) sued Slomin’s in small claims court for $5,000 arising from an alarm/security system installation and alleged sales practices (fraud, breach of contract/warranty).
- Slomin’s included a concealed arbitration clause in paragraph 15 of its standard alarm contract requiring arbitration administered by Arbitration Services, Inc.
- Trial court originally denied Slomin’s motion to compel arbitration, holding the clause violated N.Y. Gen. Bus. Law § 399-c (which bans mandatory arbitration clauses in consumer-goods contracts).
- On reargument, Slomin’s asserted the Federal Arbitration Act (FAA) preempts § 399-c and moved again to compel arbitration, relying primarily on U.S. Supreme Court FAA precedents (e.g., AT&T Mobility v. Concepcion).
- The record included an affidavit asserting Slomin’s interstate business activities, but the court found that affidavit insufficiently tied the specific contract at issue to interstate commerce.
- The court adhered to its prior denial: it concluded the Slomin’s homeowner contract did not affect interstate commerce and therefore was not governed by the FAA; § 399-c therefore rendered the arbitration clause unenforceable and the case must proceed to trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FAA preempts N.Y. Gen. Bus. Law § 399-c | § 399-c protects consumers and forbids mandatory arbitration for consumer goods; it should apply | FAA and Supreme Court precedent (Concepcion) preempt state statutes that prohibit arbitration clauses | FAA does not apply here because the contract does not affect interstate commerce; § 399-c governs and precludes arbitration |
| Whether the Slomin’s contract "affects interstate commerce" under FAA §2 | Contract is a local consumer/home-installation transaction, not in the flow of interstate commerce | Slomin’s nationwide operations and interstate sourcing/monitoring create sufficient nexus | Insufficient nexus shown; single-home installation/monitoring in Nassau County does not affect interstate commerce for FAA coverage |
| Enforceability of the arbitration clause under § 399-c | Clause is null and void under § 399-c as a mandatory arbitration clause in a consumer-goods contract | If FAA applies, federal law would preempt § 399-c and make clause enforceable | Clause is unenforceable under § 399-c because FAA does not apply to this contract |
| Procedural relief requested (compel arbitration/stay) | Plaintiff opposes stay and arbitration; seeks judicial resolution in small claims/civil court | Slomin’s sought dismissal of plaintiff Raviv’s claim, stay of action, and order compelling Schiffer to arbitrate | Court denied Slomin’s requests and directed parties to proceed to trial on the merits |
Key Cases Cited
- Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (United States 1995) (interprets "involving commerce" broadly but requires a transaction affecting interstate commerce for FAA §2 to apply)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (United States 2011) (FAA preempts state rules that categorically prohibit certain arbitration agreements)
- Matter of Diamond Waterproofing Sys., Inc. v. 55 Liberty Owners Corp., 4 N.Y.3d 247 (N.Y. 2005) (New York Court of Appeals requires a contract to affect interstate commerce before FAA applies)
- Ayzenberg v. Bronx House Emanuel Campus, Inc., 93 A.D.3d 607 (N.Y. App. Div. 2012) (App. Div. held FAA applied without detailed explanation; court here declines to follow dicta)
- GAF Corp. v. Werner, 66 N.Y.2d 97 (N.Y. 1985) (cited regarding state court consideration of arbitration motions)
- Foley v. Roche, 68 A.D.2d 558 (N.Y. App. Div. 1979) (authority permitting leave to reargue)