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Naacp of Camden County East v. Foulke Management Corp

August 2, 2011

NAACP OF CAMDEN COUNTY EAST, AND GERALDINE THOMAS, ON BEHALF OF THEMSELVES AND ALL SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
FOULKE MANAGEMENT CORP., DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-5711-07.

The opinion of the court was delivered by: Sabatino, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued October 4, 2010

Before Judges Lisa, Sabatino, and Alvarez.

The opinion of the court was delivered by SABATINO, J.A.D.

This appeal concerns the enforceability of arbitration provisions contained in various form documents that a consumer signed in connection with her purchase of a new motor vehicle from a New Jersey dealership. After making her purchase and disputing several charges that the dealership had billed her, the consumer and a local chapter of the National Association for the Advancement of Colored People ("NAACP") brought a class action against the dealership in the Law Division. Plaintiffs' complaint alleged that the dealership violated numerous statutory provisions and, in particular, that the arbitration provisions in the form documents were unenforceable.

After the court dismissed the NAACP chapter for lack of standing, the consumer moved for partial summary judgment on several grounds. The dealership cross-moved to dismiss the complaint and refer the dispute to binding arbitration. Following a plenary hearing, the trial court denied plaintiffs' motion and granted the dealership's cross-motion to refer the matter to arbitration.

For the reasons stated in this opinion, we affirm the trial court's disposition in part, reverse it in part, and remand for further proceedings. In particular, we uphold the court's specific ruling that the class action waiver provisions in the contract documents should not be invalidated on public policy grounds, a conclusion that is in keeping with the United States Supreme Court's recent decision in AT&T Mobility LLC v. Concepcion, 563 U.S. ___, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011). However, we also conclude that the disparate arbitration provisions in this case were too confusing, too vague, and too inconsistent to be enforced, and we therefore reverse the trial court's dismissal of the complaint directing the parties to binding arbitration. We also vacate, subject to further development of the facts, the court's dismissal of the NAACP chapter for lack of standing.

I.

This case arises out of the routine purchase of a new car, and a stack of form documents that the dealership required the consumer to sign before making that purchase. Because the parties each moved for summary judgment and the case was dismissed before trial, the record is not fully developed. We summarize the portions of the record most pertinent to our analysis of the legal issues raised on appeal.

Defendant, Foulke Management Corporation, owns and operates several motor vehicle dealerships in Southern New Jersey, including the Cherry Hill Triplex. On May 19, 2007, plaintiff Geraldine Thomas,*fn1 a resident of Clementon, went to the Cherry Hill Triplex, intending to purchase a vehicle. She was prompted to go there after seeing a television advertisement in which the dealership guaranteed financing, without any money down, regardless of a consumer's credit history.

Plaintiff is African-American and a member of the NAACP. She has ten years of formal schooling. At the time of her transaction with defendant, she was employed as a healthcare worker earning approximately ten dollars per hour. When she filed a certification with the trial court in July 2008, plaintiff was age sixty-five. By that point she had retired, supporting herself with Social Security benefits and a pension of $290 per month.

Plaintiff decided to trade in her 2002 Chevrolet Cavalier in order to purchase a new 2007 Kia Sportage. As displayed on the vehicle's window sticker, the manufacturer's suggested retail price ("MSRP") for the Sportage was $19,575. According to plaintiff, defendant's salesperson offered her a trade-in amount of $5,000 for her Cavalier, plus a $1,000 rebate. The salesperson allegedly told her that her monthly payments would be $398.47. Plaintiff agreed to those basic terms and signed numerous form documents, including: (1) a retail installment contract (the "RIC"); (2) a so-called GAP addendum (the "Addendum"); (3) a separate arbitration document (the "SAD"); (4) a general consumer notice (the "consumer notice"); (5) a motor vehicle retail order agreement (the "MVROA"); (6) a document containing certain waivers by the purchaser (the "waiver document"); and (7) a spot delivery agreement (the "spot delivery agreement"). The first three of these documents*fn2

contained arbitration provisions. We describe and quote relevant passages from each of them.

The RIC

The RIC contained language, in capitalized bold print and immediately above one of the buyer's signature lines, which stated:

BUYER ACKNOWLEDGES RECEIPT OF A TRUE AND COMPLETELY FILLED IN COPY OF THIS RETAIL INSTALLMENT CONTRACT. IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN IT, INCLUDING THE IMPORTANT ARBITRATION DISCLOSURES AND PRIVACY POLICY ON THE BACK OF THIS CONTRACT.

On the back of the RIC, under a heading entitled "Important Arbitration Disclosures," the following language appeared:

21. ARBITRATION. The following Arbitration provisions significantly affect your rights in any dispute with us. Please read the following disclosures and the arbitration provision that follows carefully before you sign the contract.

1. If either you or we choose, any dispute between you and us will be decided by arbitration and not the court.

2. If such dispute is arbitrated, you and we will give up the right to trial by a court or a jury trial.

3. You agree to give up any right you may have to bring a class-action lawsuit or class arbitration, or to participate in either as a claimant, and you agree to give up any right you may have to consolidate your arbitration with the arbitration of others.

4. The information that can be obtained in discovery from each other or from third persons in arbitration is generally more limited than in a lawsuit.

5. Other rights that you and/or we would have in court may not be available in arbitration.

Any claim or dispute, whether in contract, tort or otherwise (including any dispute over the interpretation, scope, or validity of this contract, arbitration section or the arbitrability of any issue), between you and us . . . which arises out of or relates to a credit application, this contract, or any resulting transaction or relationship arising out of this contract shall, at the election of either you or us . . . be resolved by a neutral, binding arbitration and not by a court action. Any claim or dispute is to be arbitrated on an individual basis and not as a class action. Whoever first demands arbitration may choose to proceed under the applicable rules of the American Arbitration Association . . . .

Whichever rules are chosen, the arbitrator shall be an attorney or retired judge . . . . If you demand arbitration first, you will pay the claimant's initial arbitration filing fees or case management fees required by the applicable rules up to $125, and we will pay any additional initial filing fee[s] . . . . The arbitrator shall decide who shall pay any additional costs and fees. [Emphasis added.]

By signing the RIC, defendant accepted the retail contract and assigned it to a third party financing company, DaimlerChrysler Financial Services Americas, LLC.*fn3

The Addendum

The four-page Addendum amended the RIC to provide optional "gap" insurance. Such gap insurance is designed to cover the difference between what the vehicle is worth at the time of a total loss and what the buyer still may owe on the purchase. The Addendum contained several arbitration provisions, which stated in relevant part:

Any controversy or dispute arising out of or relating in any way to this addendum . . . including for recovery of any claim under the addendum including the applicability of this arbitration clause and the validity of this addendum shall be resolved by neutral binding arbitration on an individual basis without resort to any form of class action . . . .

2. The cost of the arbitration shall be borne by us except that each party must bear the cost of filing and the cost of its own attorneys, experts and witness fees and expenses. . . . If the arbitrator holds that a party has raised a dispute without substantial justification, the arbitrator shall have the authority to order that the cost of the arbitration proceedings be borne by the other party.

3. It is understood and agreed that the arbitration shall be binding upon the parties, that the parties are waiving their right to seek remedies in court, including the right to a jury [trial]. You will not be able to participate as a representative or member of any class of claimants. An arbitration award may not be set aside in later litigation except upon the limited circumstances set forth in the Federal Arbitration Act . . . .

4. All statutes of limitations that would otherwise be applicable shall apply to any arbitration proceedings. [Emphasis added.]

According to its text, the Addendum applied to "the customer/borrower . . . and the dealer/creditor . . . or if assigned[,] with the assignee." It included a signature line for the "dealer/creditor."*fn4

The Addendum further included a provision indicating that it superseded "any prior agreement":

If any portion of this arbitration agreement provision is deemed invalid or unenforceable, the remaining portions of this arbitration provision shall nevertheless remain valid and in force. In the event of a conflict or inconsistency between this arbitration provision and the other provisions of this agreement or any prior agreement, this arbitration provision shall govern. [Emphasis added.]

This supersession provision did not define the term "any prior agreement."

The SAD

According to the SAD, which was signed by both plaintiff and a representative of the dealership,*fn5 plaintiff agreed to arbitrate "all claims and disputes between" the parties, which were to include:

Without limitation, all claims and disputes arising out of, in connection with, or relating to:

* [plaintiff's] purchase of any goods or services from [defendant];

* any previous purchase of goods or services from [defendant];

* all the documents relating to this or any previous purchase of goods or services from [defendant];

* any service contract or other after market products purchased in connection with this or any previous purchase;

* whether the claim or dispute must be arbitrated;

* the validity of this arbitration agreement;

* any negotiations between [plaintiff] and [defendant];

* any claim or dispute based on an allegation of fraud or misrepresentation, including fraud in the inducement of this or any other agreement;

* any claim or dispute based on a federal or state statute including, but not limited to the [Consumer Fraud Act] . . . and the Federal Truth in Lending Act;

* any claim or dispute based on an alleged tort; and

* any claim or dispute based on breach of contract.

The SAD further stated that it applied to:

[A]ny claim or dispute, including all the kinds of disputes listed above, between you and any of our employees or agents, any of our affiliate corporations, and any of their employees or agents and any third parties related to this transaction. [Emphasis added.]

Under yet another section, entitled "OTHER IMPORTANT AGREEMENTS," the SAD provided:

1. This [SAD] does not affect the applicability of any statute of limitations.

2. The Federal Arbitration Act applies to and governs this agreement.

5. If any term of this agreement is unenforceable, the remaining terms of this agreement are severable and enforceable to the ...


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