N.J. Supreme Court Rules That Consumer Arbitration Pact Is Invalid

The court found that the arbitration agreement failed to clearly and unambiguously advise that the plaintiff was giving up the right to pursue statutory claims in court.

The New Jersey Supreme Court unanimously held in Atalese v. U.S. Legal Services Group, L.P. that the absence of language in a consumer arbitration provision that clearly and unambiguously stated that the signer was waiving his or her right to seek relief in court rendered the agreement unenforceable.¹ The decision, made on September 23, represents a departure from federal precedent in this area and arises in the consumer context. Nonetheless, in an abundance of caution, companies drafting arbitration agreements applicable to New Jersey consumers and employees should consider preparing agreements that will pass muster under this decision, and companies with existing arbitration agreements applicable to New Jersey consumers and employees should review their agreements to determine whether any revisions