New Jersey Appellate Court Upholds Class Waiver & Arbitration Provision

The New Jersey Supreme Court has noted that both “federal and state policies favor[] arbitration.” Nevertheless, the High Court’s Atalese v. Legal Servs. Grp. decision—rejecting the enforceability of an arbitration clause—continues to raise questions about whether New Jersey state courts view such provisions with more skepticism than other jurisdictions. In this regard, the Appellate Division’s recent decision in Signor v. GWC Warranty Corp. provides some welcome guidance.

In Signor, the trial court refused to dismiss and compel arbitration of class claims grounded in a particular automobile service contract. The contract contained an arbitration provision with language including:

  • ARBITRATION PROVISION: READ THE FOLLOWING ARBITRATION PROVISION (“Provision”) CAREFULLY, IT LIMITS CERTAIN RIGHTS, INCLUDING YOUR RIGHT TO OBTAIN RELIEF OR DAMAGES THROUGH COURT ACTION.
  • Any and all claims, disputes, or controversies of any nature whatsoever . . . shall be resolved by binding arbitration before a single arbitrator.
  • You agree that any arbitration proceeding will only consider Your Claims. Claims by, or on behalf of, other individuals will not be arbitrated in any proceeding that is considering Your Claims.
  • You and We understand and agree that because of this Provision neither You nor Us will have the right to go to court except as provided above and to have a jury trial or to participate as any member of a class of claimants to any Claim.
  • Under this provision, you waive your right to seek relief in a judicial forum.

Despite the apparent clarity of this language, the trial court “found the arbitration clause was not a clear and unambiguous waiver of the right to bring a class action,” in part because it was “‘buried’ on the eleventh page of the contract.” The Appellate Division disagreed, finding that the provision “is clearly a waiver of the parties’ right to pursue claims in court, either on an individual or a class action basis.” The court noted that the contract “is only eleven pages in length, and the words ‘ARBITRATION PROVISION’ appear in capitalized, bold, and underlined letters.” As such, the Signor court distinguished the Third Circuit’s decision in Noble v. Samsung Electronics Am., Inc., upon which the trial court relied, where the arbitration clause was contained on page 97 of 143, a far cry from the 11 pages of the service agreement at issue in Signor.

In the end, wrote the Appellate Division, “[a]rbitraton is fundamentally a matter of contract.” The parties in Signor had agreed to a “clear and unambiguous” arbitration clause. It was no more complicated than that.

Joshua S. Levy is an Associate in the Gibbons Commercial & Criminal Litigation Department.
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