On March 29, 2022, the First Department issued a decision in Fritschler v. Draper Mgt., LLC, 2022 NY Slip Op. 02087, holding that in an arbitration under the AAA rules, it is for the arbitrator, not the court, to decide whether a claim is covered by the agreement to arbitrate, explaining:
Where the parties explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties’ intent to delegate such issues to an arbitrator. Here, plaintiff Fritschler and defendant Doctor’s Associates, LLC (DAL) evidenced their intent to delegate the issue of arbitrability to the arbitrator by incorporating the AAA (and/or the substantively identical ADRC) rules into the Franchise Agreements’ broad arbitration clauses.
Plaintiffs’ arguments that there was no binding agreement to arbitrate because the Franchise Agreements were procured by fraud, lack of mutuality, were not supported by consideration, and/or were unconscionable are not persuasive. Because these issues implicate whether the parties formed a valid contract to arbitrate, they were properly decided by the court in the first instance. Any argument that plaintiff Fritschler did not form a binding agreement is contradicted by the allegations of the complaint. Furthermore, plaintiffs do not allege that there were any specific misrepresentations regarding the arbitration clauses themselves. Fritschler’s supposed subjective misunderstanding of the plain terms of the agreements does not amount to fraud.
(Internal quotations and citations omitted).