The Locks Law Firm, on behalf of the Consumers League of New Jersey, was granted leave to appear as amicus curiae before the New Jersey Supreme Court on Friday April 29, 2016 in the case Roach v. BM Motoring, LLC. The complaint in Roach alleges a used car dealer committed fraud by misrepresenting the condition of vehicles and charging illegal fees in the sale agreements. The contract for sale contained an arbitration provision, which required an arbitration “in accordance with the rules of the American Arbitration Association” and provided that the “Dealership shall advance both party’s filing, service, administration, arbitrator, hearing or other fees.”
The Plaintiff filed her claims with the American Arbitration Association (AAA). The dealership however, refused to pay the fees required by the contract, and the AAA rules. As a result, the AAA dismissed the case, and advised that it would no longer administer consumer disputes involving the car dealership. The Plaintiff then filed a complaint in the New Jersey Superior Court. The dealership responded by filing a motion, asking the Court to dismiss the case, and compel the parties to arbitrate the dispute, arguing for the first time that the AAA was “too expensive.” The Plaintiff objected, arguing defendant had breached the agreement, and could not try to enforce an agreement which it had already violated. The Trial Court ordered the parties to arbitrate the case before the AAA, and directed Defendant to request the AAA to lift its ban on hearing disputes involving the dealership. After the Court’s order the Plaintiff again filed in the AAA, and the dealership again refused to pay the AAA fees, leading to the AAA dismissing the matter yet again.
In an unpublished decision, the appellate division affirmed the order compelling the parties to return to the AAA. The appellate division termed the dealership’s original non-responsiveness to Plaintiff’s demand for arbitration “problematic” but found that it did not amount to a waiver or material breach of the agreement because once Plaintiff was forced to file in Court the defendant quickly responded with a motion to enforce the arbitration agreement.
The Plaintiff petitioned for certification, and Andrew Bell, Michael Galpern and James Barry of the Locks Law Firm, on behalf of the Consumers League of New Jersey, filed a brief in support of Plaintiffs petition for certification. The petition for certification and LLF’s request to appear as amicus curiae in the case were granted by the Court, who certified the question “Did defendant’s conduct constitute a breach of the parties Dispute Resolution Agreement, which contained an arbitration provision, or a waiver of defendant’s right to enforce the Agreement?”
The case involves important issues for consumers involved in transactions with businesses which use forced arbitration clauses in their contracts. Just like any other contract in New Jersey, ambiguous arbitration agreements must be construed in favor of the non-drafting party (the consumer), if a consumer initiates an arbitration proceeding in a proper forum under the contract, that choice of forum must be enforced by the Court. Similarly, if a business refuses to engage in the arbitration proceeding and as a result the arbitration is dismissed – the business cannot be permitted to later seek to enforce the arbitration agreement which it has breached. To hold otherwise would permit unscrupulous businesses not only to indefinitely delay proceedings by refusing to engage in the arbitration proceeding, then moving to enforce the arbitration agreement after plaintiffs filed in Court, but would also encourage Defendants to engage in forum shopping, refusing to participate in any arbitration proceedings unless done on its terms, before its preferred arbitrator regardless of the actual text of the contract which defendant drafted.
The Locks Law Firm previously appeared before the New Jersey Supreme Court in another case involving arbitration agreements, Morgan v. Sanford Brown Institute, which is still pending a decision. More information about that case is available here: https://www.lockslaw.com/blog/2015/12/15/on-arbitration-clauses/