NJ Supreme Court Tightens Proof Requirements of Arbitration Agreement

In its recent decision in Gerald Fazio Jr. v. Altice USA, the New Jersey Supreme Court continued its trend of enforcing strict contract formation requirements in consumer contract cases, serving as a counterbalance to the liberal enforcement of arbitration clauses required under federal law. The plaintiff, Gerald Fazio Jr., is a quadriplegic man who had difficulty breathing, rendering him unable to wear a mask. He sued Altice for disability discrimination after Altice would not allow him into a store for not wearing a mask during the COVID-19 pandemic.

At issue in the case was whether Altice could enforce an arbitration clause in its Customer Service Agreement with Fazio by relying on its “routine” business practice of sending these agreements via email, rather than providing direct evidence that the Customer Service Agreement was specifically sent to Fazio. Although the Supreme Court agreed that evidence of a specific, repeated business practice can be admissible to prove that a business acted in conformity with that practice, it found that Altice failed to show with enough specificity the “how or when or from” the emails containing customer service agreements were sent. Without these key details, Altice could not rely on this routine business practice as evidence that Fazio received the arbitration clause. And since Altice had no direct proof that Fazio received the arbitration clause, it could not compel him to arbitration.

For businesses, the Court’s decision sends a clear message: if you intend to rely on arbitration clauses to resolve disputes, you must ensure that your records show specific proof that your customers or employees received the agreement and assented to its terms. The clearer the indication of assent, an individual signature or electronic acknowledgment, the less uncertainty there will be in enforcing the agreement. Businesses cannot rely on their routine practices without being able to show a level of specificity about the “repeated behavior response to a specific factual stimulus” that would satisfy the court that the practice acted in conformity with that practice. And even then, routine practice creates a presumption that may be rebutted.

For more information on this decision or enforcement of arbitration clauses, contact Partner Lawrence Bluestone, Esq., who specializes in Complex Commercial Litigation via email here or call 973.533.0777.