On April 8, 2022, Justice Walsh of the Westchester County Commercial Division issued a decision in, Lobel v. CCAP Auto Lease, Ltd., 2022 NY Slip Op. 50256(U), holding that the FAA preempts the contrary GBL provision exempting consumer transactions from the reach of mandatory arbitration clauses, explaining:
It is well settled that courts enforce arbitration agreements which provide, as the Lease in this case expressly provides, that they are to be governed by the FAA. When an agreement to arbitrate falls within the scope of the FAA, federal law in the terms of the Arbitration Act governs the issue of arbitrability in either state or federal court. Furthermore, given that Article 30 of the Lease states that the arbitration shall be governed by the applicable consumer rules and procedures of the AAA, it is noteworthy that under the FAA, the court is required to enforce contract terms that specify the rules under which an arbitration will be conducted.
Section 2 of the FAA provides that agreements to arbitrate are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. The FAA strongly favors the enforcement of arbitration agreements, and the United States Supreme Court has described the FAA as being designed to promote arbitration, embodying a national policy favoring arbitration, and reflecting a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. As with the FAA, New York law also has a long and strong public policy favoring the enforcement of arbitration agreements.
With respect to any state policy to the contrary, GBL § 399-c provides in relevant part that no written contract for the sale or purchase of consumer goods to which a consumer is a party, shall contain a mandatory arbitration clause. The provisions of a mandatory arbitration clause shall be null and void. However, and contrary to Plaintiff’s argument that the Lease’s arbitration provision is null and void pursuant to GBL § 399-c, this provision of the GBL has expressly been held to be preempted by the FAA by both New York and federal courts.
(Internal quotations and citations omitted).