New Jersey’s longstanding public policy favoring informed consent in agreements to arbitrate, as in any other contract, is still good law following the United States Supreme Court decision in Kindred Nursing Center, L.P. v. Clark, 581 U.S. ___, 137 S. Ct. 1421 (2017), said the New Jersey State Bar Association in its amicus curiae brief to the Supreme Court. The association submitted its position in the matter of Kernahan v. Home Warranty Administrator of Florida, Inc., et als., Docket No. 079680, arguing that an enforceable arbitration clause must be clear and unmistakable to be waivable, and that the prevailing case law found in Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430 (2014), was not abrogated by Kindred Nursing. The brief was written by George W. Conk and Timothy E. Dinan, on behalf of the NJSBA.
“The principles of New Jersey’s Arbitration Act parallel those of the FAA [Federal Arbitration Act],” said the association in its brief. “Like the Arbitration Act, the FAA expressly provides that an arbitration contract ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ 9 U.S.C.A. 2. Notably, the FAA limits state power regarding the formation, construction and enforcement of contracts in only one respect: State law must treat arbitration agreements on an ‘equal footing with other contracts.’ AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).”
In Kernahan, the Appellate Division refused to enforce a clause that is so confusing on its face that a reasonable consumer could not be expected to understand its import. The association described the arbitration clause as “misleadingly found in a condensed block of illegible type” and when enlarged into a readable font containing language that did not explicitly state in terms understandable to the ordinary consumer the waiver of rights of the consumer. The clause in question was held by the Appellate Division to be inadequate because it did not “at least in some general and sufficiently broad way convey that parties are giving up their right to bring claims in court or in front of a jury.”
The NJSBA urged the Supreme Court to affirm the Appellate Division and reinforced the notion that Kindred Nursing did not abrogate Atalese, rather, it reaffirmed the longstanding principles of law and equity regarding the enforcement of all contracts in New Jersey, including arbitration agreements.
NJSBA’s Town Hall: What Would You Do? Register Now!
Join the NJSBA in Trenton for this year’s Town Hall program, featuring lawmakers and legislative staffers as they talk candidly about how to effectively advocate for clients. Lobbyists will ask the tough questions and legislators and legislative staff will discuss the issues. The program then moves on to ethics. The program runs from 9 a.m. to 12 p.m. on March 22 at the Masonic Temple in Trenton. For more information and to register, go to www.njsba.com.
This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To learn more, visit njsba.com.