Licitra v. Gateway, Inc

In Licitra v. Gateway, Inc., 189 Misc.2d 721 (Sup. Ct. Richmond Co. 2001), the court refused to dismiss a Small Claims action based on an arbitration clause in the consumer contract at issue, holding that enforcement of the clause would frustrate the public policies embodied in the small-claims provisions of the Civil Court Act. The court identified numerous ways in which enforcement of the arbitration clause would deny the claimant benefits the Legislature had intended a small-claims litigant to enjoy. Among those were the imposition of a higher filing fee for even a "documentary" hearing, and a still higher filing fee for a "participatory" hearing (provided as a matter of right in Small Claims Court upon filing of the basic filing fee); the possibility that the case would be heard in a location less convenient for the claimant (possibly as far away as South Dakota); more demanding pleading requirements; and the requirement that judgment be based on the "preponderance of the evidence," rather than the "substantial justice" standard applicable in Small Claims Court. (Id., 734.)