Arbitration Clauses Extending To Non-Signatory Affiliates: Are They Enforceable?

A recent decision of the New Jersey Appellate Division considered the enforceability of arbitration agreements by non-signatories. In Foti v. Toyota Motor Sales, U.S.A., Inc., the plaintiff filed a putative class action complaint against defendant alleging violations of New Jersey's Truth-In-Consumer Contract, Warranty and Notice Act ("TCCWNA"), as well as the state's Lemon Law (N.J.S.A. 56:12-29 to -49). The panel determined, among other things, that by signing a lease agreement, plaintiff agreed to arbitrate her dispute not only with the underlying signatories of the lease, but with any of its affiliates.

Plaintiff entered into a written lease agreement with Classic Imports, Inc. ("Classic") to lease a 2014 Toyota Corolla. The lease agreement specifically defined "lessor" as including Classic, its anticipated assignee, Toyota Lease Trust ("TLT"), and any future assignee. The agreement also stated that the lease would be serviced by Toyota Motor Credit Corporation