Appeals Court Distinguishes Supreme Court Ruling on Arbitration Clauses Barring Class-action Suits


The New Jersey Appellate Division ruled—despite the recent U.S. Supreme Court decision in AT&T Mobility LLC v. Concepcion — that binding arbitration clauses in consumer contracts that bar class-action suits still may be subject to challenge if they are poorly worded and contain contradictory language.

In Concepcion, the U.S. Supreme Court ruled that the Federal Arbitration Act (FAA) preempts state laws that nullify class-action waivers on public policy grounds. On August 2, 2011, the New Jersey Appellate Division in NAACP of Camden County East v. Foulke Management Corp., A-1230-09, distinguished Concepcion by stating that "the disparate arbitration provisions in this case were too confusing, too vague, and too inconsistent to be enforced." Thus, Foulke Management signifies that a putative class-action may proceed against the operator of a string of car dealerships whose sales contracts require buyers to waive their right to sue.

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