NEW JERSEY SETS HIGH STANDARD FOR CONSUMER ARBITRATION CLAUSES, REQUIRING CLEAR AND UNAMBIGUOUS WAIVER OF JUDICIAL PROCEEDINGS

摘要

In Atalese v. US Legal Services Group (WL 4689318 N.J., Sept. 23, 2014) (bit.ly/ZtfbW4), the Supreme Court of New Jersey found an arbitration agreement unenforceable because it failed to notify the plaintiff that, by entering into the agreement, she was surrendering her right to seek relief in a judicial forum. In that case, the arbitration agreement provided that "[i]n the event of any claim or dispute between Client and the USLS ... related to this agreement or related to any performance of any services related to this Agreement, the claim or dispute shall be submitted to binding arbitration upon the request of either party upon the service of that request on the other party. . . ." The court held that the plaintiff had not waived her right to sue in court by signing the agreement because "[a]n effective waiver requires a [consumer] to have full knowledge of [her] legal rights" before she relinquishes them. The clause was unenforceable against the plaintiff because the plaintiff was "an average member of the public and may not know-without some explanatory comment-that arbitration is a substitute for the right to have one's claim adjudicated in a court of law'' The court emphasized that while no prescribed set of words must be included in a consumer arbitration clause to accomplish a waiver of rights, the words used must be dear and unambiguous that a consumer is choosing to arbitrate disputes rather than having them resolved in a court of law. This will assure reasonable notice to the consumer, while imposing no greater burden on an arbitration agreement than on any other agreement waiving constitutional or statutory rights.