New Jersey Appellate Division Rejects Consumer’s Attempt to Declare Arbitration Provision Invalid Under New Jersey Plain Language Act

In a recent unpublished opinion, Maisano v. LVNV Funding, LLC, No. A-1775-18T2, 2019 WL 6341035 (App. Div. Nov. 27, 2019), the New Jersey Appellate Division upheld the trial court’s order compelling Maisano (the “consumer”) to arbitrate his claims against LVNV Funding, LLC (“defendant”), an entity that acquires outstanding credit card accounts and collects the balances. In this case, the consumer entered into a credit card agreement with Credit One (“Agreement”) and as a result of the consumer’s failure to make payments to Credit One, the consumer’s account was eventually written-off and sold. The subject account was assigned multiple times thereafter, ultimately ending up with the defendant.

In response to a claim brought by the defendant, the consumer filed a putative class action against defendant alleging, among other things, violations of the New Jersey Consumer Fraud Act and the New Jersey Plain Language Act (NJPLA). The defendant moved to dismiss and compel arbitration under the terms of the Agreement. The Agreement included a notice in capital letters with bold font that described the nature of arbitration, along with the scope and terms of the arbitration agreement. Based upon this provision, the trial court dismissed the consumer’s complaint and compelled arbitration.

On appeal, the consumer challenged the trial judge’s decision and argued that it was error for the judge to (1) rule that the arbitrator must determine the validity of the assignment of the consumer’s credit card debt to defendant; (2) find that the arbitration provision in the Agreement did not violate the NJPLA; and (3) consider inadmissible evidence in support of defendant’s motion. The Appellate Division addressed, and eventually rejected, all three of the consumer’s arguments.

Relying on a United States Supreme Court decision from January 2019, Henry Schein, Inc., v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019), the Appellate Division disposed of the first issue. The court noted that if particular disputes are appropriately delegated to an arbitrator, then “the disputes are within the exclusive determination of the arbitrator.” The Appellate Division held that the arbitrator must resolve the threshold question of arbitrability since the Agreement explicitly stated that claims concerning the “application, enforceability or interpretation of this Agreement, including this arbitration provision” are subject to arbitration. Even though the trial judge made a threshold determination on arbitrability, the Appellate Division explained this away by reasoning that Henry Schein was decided after the trial judge issued her decision.

The Appellate Division likewise rejected the consumer’s challenge under the NJPLA. Specifically, the Appellate Division held that the Agreement complied with the NJPLA because it clearly expressed the waiver of the consumer’s right to proceed in court and unequivocally mandated that the parties submit all disputes regarding the Agreement to arbitration.

Finally, based on the New Jersey Rules of Evidence, the court rejected the consumer’s third argument concerning the evidentiary issues raised by the consumer. In the end, the Appellate Division affirmed the trial court’s order compelling arbitration and remanded the case to the trial court for entry of an amended order to stay the case pending arbitration.

This case serves as a reminder that clear and unambiguous arbitration provisions are often one of the best defenses to putative class action claims.