SYLLABUS
This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the
Clerk for the convenience of the reader. It has been neither reviewed nor approved by the
Court. In the interest of brevity, portions of an opinion may not have been summarized.
Janell Goffe v. Foulke Management Corp. (A-3/4-18) (081258)
Argued February 25, 2019 -- Decided June 5, 2019
LaVECCHIA, J., writing for the Court.
This consolidated appeal involves claims that fraudulent sales practices by two car
dealerships induced consumers to enter into agreements for the purchase of cars. The
question is whether plaintiffs may avoid being compelled to arbitrate those claims.
Plaintiffs challenge the formation and validity of their sales agreements on the
bases that the dealerships’ fraudulent practices and misrepresentations induced them to
sign the transactional documents and that the agreements are invalid due to violations of
statutory consumer fraud requirements. As part of the overall set of documents, plaintiffs
signed arbitration agreements. Those agreements contained straightforward and
conspicuous language that broadly delegated arbitrability issues -- issues of whether a
particular matter is subject to arbitration or can be decided by a court -- to an arbitrator.
Plaintiff Sasha Robinson contacted Mall Chevrolet in Cherry Hill about buying a
car and allegedly was told that, if she purchased from the dealership, she would have two
days within which to change her mind, return it, and get her money back. Robinson
moved ahead with the car purchase transaction that day. She signed several documents,
including one that set forth the price of the new car, various fees, the price of the trade-in,
and the deposit amount. That document included an agreement to arbitrate “all claims
and disputes arising out of . . . [the] purchase of any goods,” including disputes as to
“whether the claim or dispute must be arbitrated.” When Robinson sought to return the
Malibu, she was told that the representation about being able to rescind the deal was a
mistake and that she was bound by the documents she signed. She alleges that the
representatives attempted to “coerce” her into signing purchase documents.
Janell Goffe went to Cherry Hill Mitsubishi in response to an Internet
advertisement for a Buick. Goffe was told that she could obtain the car that day if she
traded in her 2006 Infiniti, paid $250 that day, and then later paid $750. She was told
that financing on the Buick was approved. Goffe went ahead with the proposed deal and
signed several documents -- including an arbitration agreement -- identical in form to
those that Robinson signed. When Goffe returned later with the remainder of the down
payment, she was informed that financing had not been approved and that she could
1
retain the Buick only if she agreed to a larger down payment and higher monthly
payments. Goffe refused and cancelled the deal.
Each trial court determined the arbitration agreements to be enforceable and
entered orders compelling plaintiffs to litigate their various claims challenging the overall
validity of the sales contracts in the arbitral forum. The Appellate Division reversed
those orders. 454 N.J. Super. 260 (App. Div. 2018). The Court granted defendants’
petitions for certification. 235 N.J. 202 (2018); 235 N.J. 200 (2018).
HELD: The trial courts’ resolution of these matters was correct and consistent with clear
rulings from the United States Supreme Court that bind state and federal courts on how
challenges such as plaintiffs’ should proceed. Those rulings do not permit threshold
issues about overall contract validity to be resolved by the courts when the arbitration
agreement itself is not specifically challenged. Here, plaintiffs attack the sales contracts
in their entirety, not the language or clarity of the agreements to arbitrate or the broad
delegation clauses contained in those signed arbitration agreements. The Supreme
Court’s precedent compels only one conclusion: an arbitrator must resolve plaintiffs’
claims about the validity of their sales contracts as well as any arbitrability claims that
plaintiffs may choose to raise.
1. In applying the Federal Arbitration Act (FAA), the United States Supreme Court has
provided substantial guidance on the question of whether arbitration should be compelled
in situations such this. Section two of the FAA provides that agreements to arbitrate any
controversy arising out of a commercial contract “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. New Jersey case law acknowledges the preeminence of the
national policy established by Congress through the FAA as well as the Supreme Court’s
holdings interpreting and implementing that policy. (pp. 22-24)
2. The United States Supreme Court has held that when a plaintiff raises a claim of fraud
in the inducement of a contract as a whole -- rather than fraud in the making of the
arbitration agreement itself -- the FAA requires that the dispute be resolved by the
arbitrator. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967).
The Court held that “if the claim is fraud in the inducement of the arbitration clause itself
-- an issue which goes to the ‘making’ of the agreement to arbitrate -- the federal court
may proceed to adjudicate it. But the statutory language does not permit the federal court
to consider claims of fraud in the inducement of the contract generally.” Ibid. The
Court’s determination recognized that arbitration agreements are severable from the rest
of the contract and that the arbitration agreement may be valid separate and apart from
the contract as a whole, provided that a party has not challenged the arbitration agreement
itself. In Buckeye Check Cashing, Inc. v. Cardegna, the Court determined that “as a
matter of substantive federal arbitration law, an arbitration provision is severable from
the remainder of the contract,” and that “unless the challenge is to the arbitration clause
2
itself, the issue of the contract’s validity is considered by the arbitrator in the first
instance.” 546 U.S. 440, 445-46 (2006). The Court therefore concluded that because the
respondents in that case challenged the contract, “but not specifically its arbitration
provisions,” a challenge to those provisions “should therefore be considered by an
arbitrator, not a court.” Id. at 446. Similarly, in Rent-A-Center, West, Inc. v. Jackson,
the Court held as valid a provision in a contract that delegated to the arbitrator the
question of arbitrability under circumstances in which the plaintiff challenged only the
validity of the contract as a whole, rather than mounting a challenge to the validity of the
delegation provision specifically. 561 U.S. 63, 72 (2010). The Supreme Court of New
Jersey has acknowledged the legitimacy and applicability of the Rent-A-Center holding
to delegation provisions in New Jersey arbitration agreements. (pp. 24-28)
3. Here, plaintiffs have not attacked the language or clarity of the arbitration agreement
or its delegation clause. Rather, they have continuously maintained that the contract was
the product of fraudulent inducement and that the arbitration agreement -- within that
sales contract -- is thus also invalid. The disputed facts that plaintiffs allege go to
whether the dealerships performed a bait-and-switch related to enticing plaintiffs to enter
into the contract as a whole. Plaintiffs have not raised a specific claim attacking the
formation of the arbitration agreement that each signed. Federal precedent instructs that
the arbitration agreements here be severed from the rest of the agreement, whose totality
Goffe and Robinson contest on a number of grounds. Goffe and Robinson must arbitrate
their claims as to the enforceability of the overall sales contract. The Court does not
opine on the merits of any of those claims. (pp. 28-31)
4. Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir. 2013), a
case on which the Appellate Division relied, was misapplied here. In Guidotti, the
dispositive issue was whether a document that included an arbitration clause was
included in the initial package of documents emailed to the plaintiff and, thus, whether
there was mutual assent to arbitrate. Id. at 769, 780. The Third Circuit determined under
the summary judgment standard that there was a genuine issue of material fact regarding
whether the parties agreed to arbitrate and remanded to the District Court for limited
discovery. Id. at 780. Guidotti is in line with federal case law that allows a court to
decide matters that relate directly to the formation of the arbitration agreement.
However, because plaintiffs here challenge the contract as a whole rather than the
arbitration agreement itself, the Guidotti summary judgment standard does not apply in
this instance. (pp. 31-35)
The judgment of the Appellate Division is REVERSED and the trial courts’
orders compelling arbitration are REINSTATED.
CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON,
FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE
LaVECCHIA’s opinion.
3
SUPREME COURT OF NEW JERSEY
A-3/4 September Term 2018
081258
Janell Goffe,
Plaintiff-Respondent,
v.
Foulke Management Corp. t/a Cherry Hill Triplex/Cherry Hill
Mitsubishi and Antonio (Tony) Salisbury,
Defendants-Appellants.
Sasha Robinson and Tijuana Johnson,
Plaintiffs-Respondents,
v.
Mall Chevrolet, Inc.,
Defendant-Appellant.
On certification to the Superior Court,
Appellate Division, whose opinion is reported at
454 N.J. Super. 260 (App. Div. 2018).
Argued Decided
February 25, 2019 June 5, 2019
Laura D. Ruccolo argued the cause for appellants
(Capehart & Scatchard, attorneys; Laura D. Ruccolo, of
counsel and on the briefs).
1
Charles N. Riley argued the cause for respondents
(Charles N. Riley, on the briefs).
Jennifer Borek argued the cause for amicus curiae New
Jersey Coalition of Automotive Retailers (Genova Burns,
attorneys; Jennifer Borek, of counsel and on the brief,
and Matthew I.W. Baker, on the brief).
Joseph A. Osefchen argued the cause for amicus curiae
NAACP Camden County East (DeNittis Osefchen Prince,
attorneys; Joseph A. Osefchen and Stephen P. DeNittis,
on the briefs).
William D. Wright argued the cause for amicus curiae
New Jersey Association for Justice (The Wright Law
Firm, attorneys; William D. Wright, on the brief).
Andrew M. Milz submitted a brief on behalf of amici
curiae Consumers League of New Jersey and National
Association of Consumer Advocates (Flitter Milz,
attorneys; Andrew M. Milz, of counsel and on the brief,
Cary L. Flitter and Jody Thomas Lopez-Jacobs, on the
brief).
JUSTICE LaVECCHIA delivered the opinion of the Court.
This consolidated appeal involves claims that fraudulent sales practices
by two car dealerships induced consumers to enter into agreements for the
purchase of cars. The essential question on appeal, though, is whether
plaintiffs may avoid being compelled to arbitrate those claims.
Plaintiffs challenge the formation and validity of their sales agreements
on the bases that the dealerships’ fraudulent practices and misrepresentations
2
induced them to sign the transactional documents and that the agreements are
invalid due to violations of statutory consumer fraud requirements. As part of
the overall set of documents, plaintiffs signed arbitration agreements. Those
agreements contained straightforward and conspicuous language about
arbitration and broadly delegated arbitrability issues to an arbitrator.
Trial court orders in those individual matters compelled plaintiffs to
litigate their various common law and statutory claims challenging the overall
validity of the sales contracts in the arbitral forum. Each trial court
determined the arbitration agreements to be enforceable. The Appellate
Division reversed those orders.
We hold that the trial courts’ resolution of these matters was correct and
consistent with clear rulings from the United States Supreme Court that bind
state and federal courts on how challenges such as plaintiffs’ should proceed.
Those rulings do not permit threshold issues about overall contract validity to
be resolved by the courts when the arbitration agreement itself is not
specifically challenged.
Supreme Court holdings treat an arbitration agreement as severable and
enforceable, notwithstanding a plaintiff’s general claims about the invalidity of
the contract as a whole. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U.S. 395, 403-04 (1967); see also Buckeye Check Cashing, Inc. v. Cardegna,
3
546 U.S. 440, 445-46 (2006). The same approach pertains to issues of
arbitrability. In order to be decided by a court, an arbitrability challenge -- a
challenge as to whether a particular matter is subject to arbitration or can be
decided by a court -- must be directed at the delegation clause itself (which
itself constitutes an arbitration agreement subject to enforcement); a general
challenge to the validity of the agreement as a whole will not suffice to permit
arbitration to be avoided. Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 72
(2010).
We thus approach the instant matter mindful of our obligation to comply
with the Supreme Court’s holdings on the severability doctrine that applies to
arbitration agreements. Plaintiffs assert common law and statutory violation
theories that allegedly invalidate their overall sales agreements or otherwise
render them unenforceable. While we do not address the merits of those
claims, it is clear to us that plaintiffs attack the sales contracts in their entirety,
challenging their formation process and arguing that they are, at best,
unenforceable. They do not challenge the language or clarity of the
agreements to arbitrate or the broad delegation clauses contained in those
signed arbitration agreements. In this setting, the Supreme Court’s precedent
compels only one conclusion. On the question of who gets to decide plaintiffs’
general claims about the validity of their sales contracts, we hold that an
4
arbitrator must resolve them, as well as any arbitrability claims that plaintiffs
may choose to raise under these delegation clauses.
I.
A.
Plaintiffs Robinson and Goffe each signed several documents in
connection with their respective car purchases from defendant car dealerships. 1
The common forms used by the dealerships2 allow for a singular description of
the documents in issue, although we recite the alleged purchase experience of
each plaintiff.
1.
On November 5, 2016, plaintiff Sasha Robinson contacted Mall
Chevrolet in Cherry Hill about buying a car and allegedly was told that, if she
purchased from the dealership, she would have two days within which to
1 We summarize the facts as presented in the plaintiffs’ complaints, signed
certifications, and documentary exhibits.
2 The cases involve two dealerships -- Mall Chevrolet, Inc., and Foulke
Management Corp. -- that are both located in Cherry Hill. According to
defendants, the dealerships “are two separate corporate entities” and “[t]here
are simply no facts to connect Mall Chevrolet . . . to Foulke Management.”
Plaintiffs contend that the two dealerships are “closely connected” and
controlled by a “common president Charles W. Foulke Jr.” They have
submitted a copy of Mall Chevrolet’s articles of incorporation, signed by
Foulke, in support of their contention.
5
change her mind, return it, and get her money back. Later that day, she went
to the dealership and discussed purchasing a 2016 Chevrolet Malibu. Mall
Chevrolet employees told Robinson that -- in addition to trading in a Chevrolet
Cruze that she jointly owned with her mother, Tijuana Johnson -- she would
have to provide a $1000 deposit for the Malibu and that her monthly car
payment on the remaining loan would be $549. Robinson says she was told
that Johnson would be required to co-sign in order to complete the transaction.
Robinson moved ahead with the car purchase transaction that day,
signing several documents. Johnson’s signature does not appear on any of
them.
One document Robinson signed is a two-page Motor Vehicle Retail
Order (MVRO). Among other things, the MVRO lists the date of the sale,
Robinson’s address, email, phone numbers, the salesperson who worked with
her, the car she was purchasing, and the one she was trading in. The MVRO
lays out the financial terms of the transaction, including the price of the new
car, various fees, the price of the trade-in, and the deposit amount.
Robinson signed the MVRO in multiple places. Above her second
signature, the MVRO states:
Customer agrees that this Order on the face and on the
reverse side and any attachments to it includes all the
terms and conditions. . . . THIS ORDER SHALL
NOT BECOME BINDING UNTIL ACCEPTED BY
6
DEALER OR HIS AUTHORIZED
REPRESENTATIVE. Customer by execution of this
Order acknowledges that they have read the terms and
conditions and have received a true copy of the Order.
I am 18 years of age or older and of full legal capacity
to enter into this contract. I ACKNOWLEDGE
THAT I HAVE RECEIVED, READ,
UNDERSTAND AND HAVE SIGNED THE
ARBITRATION AGREEMENT WHICH APPLIES
TO THIS TRANSACTION. CUSTOMER AGREES
THAT CUSTOMER WILL BRING ANY CLAIMS
CUSTOMER MAY HAVE HAD AGAINST
DEALER, EXCEPT FOR UCC CLAIMS BUT,
INCLUDING CLAIMS UNDER THE NEW
JERSEY CONSUMER FRAUD ACT, WITHIN 180
DAYS FROM THE DATE OF THIS AGREEMENT
AND IF NOT BROUGHT WITHIN 180 DAYS ALL
CLAIMS WILL BE TIME BARRED. UCC
CLAIMS MUST BE BROUGHT WITHIN ONE
YEAR.
Robinson also signed an arbitration agreement. The agreement is
detailed but, in relevant part, states:
In consideration of the mutual promises made in this
agreement, you and we agree that either you or we have
an absolute right to demand that any dispute be
submitted to an arbitrator in accordance with this
agreement. If either you or we file a lawsuit . . . or other
action in a court, the other party has the absolute right
to demand arbitration following the filing of such
action.
ARBITRATION: Arbitration is a method of resolving
disputes between parties without filing a lawsuit in
court. . . .
DISPUTES COVERED: This agreement applies to all
claims and disputes between you and us. This includes,
7
without limitation, all claims and disputes arising out
of, in connection with, or relating to:
your purchase of any goods or services from us;
any previous purchase of goods or services from
us;
....
whether the claim or dispute must be arbitrated;
the validity of this arbitration agreement;
any negotiations between you and us;
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 N.J.
Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. and
the Federal Truth in Lending Act;
....
WAIVER OF RIGHT TO JURY TRIAL: You and we
expressly waive all right to pursue any legal action to
seek damages or any other remedies in a court of law,
including the right to a jury trial.
ARBITRATION RULES: Arbitration will be
conducted under the . . . protocol of the American
Arbitration Association . . . .
....
OTHER IMPORTANT AGREEMENTS:
1. The Federal Arbitration Act applies to and governs
this agreement . . . .
....
8
4. If any term of this agreement is unenforceable, the
remaining terms of this agreement are severable and
enforceable . . . .
....
10. CUSTOMER AGREES TO WAIVE THE
APPLICABLE STATUTE OF LIMITATIONS AS
FOLLOWS: CUSTOMER AGREES THAT IT WILL
BRING ANY AND ALL CLAIMS CUSTOMER MAY
HAVE AGAINST DEALER, EXCEPT FOR CLAIMS
FOR BREACH OF CONTRACT UNDER THE NEW
JERSEY UNIFORM COMMERCIAL CODE, BUT
INCLUDING CLAIMS UNDER THE NEW JERSEY
CONSUMER FRAUD ACT WITHIN 180 DAYS
FROM THE DATE OF THIS AGREEMENT. IF
CLAIMS ARE NOT BROUGHT WITHIN 180 DAYS
THE CLAIMS WILL BE TIME BARRED. ALL
CLAIMS UNDER THE NEW JERSEY CODE FOR
BREACH OF CONTRACT MUST BE BROUGHT
WITHIN ONE YEAR AFTER THE CAUSE OF
ACTION ACCRUES.
Then, in larger font, and above a place for Robinson’s signature, the
agreement states: “READ THIS ARBITRATION AGREEMENT
CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING
YOUR RIGHT TO MAINTAIN A COURT ACTION.” Under Robinson’s
signature, the agreement states: “You acknowledge that you have received a
completed copy of this agreement.” Robinson initialed next to the
acknowledgement.
Robinson signed one more time at the bottom of the agreement, beneath
the following statement:
9
I, AS THE UNDERSIGNED, HEREBY
ACKNOWLEDGE THAT THE ATTACHED
CONDITIONAL SALES OR LEASE CONTRACTS
WERE FULLY COMPLETED AND EXPLAINED TO
ME PRIOR TO MY AFFIXING MY SIGNATURE ON
THE CONTRACT. I IMMEDIATELY RECEIVED A
COPY OF THE CONTRACTS ALONG WITH THIS
ARBITRATION AGREEMENT, AND
ACKNOWLEDGE THAT I FULLY UNDERSTAND
THE CONTENTS THEREIN.
A third document Robinson signed is a “Spot Delivery Agreement.” 3 It
identifies the 2016 Chevrolet Malibu as the vehicle purchased. Robinson
signed the document; the line for a second “customer” is blank.
The spot delivery agreement states, in relevant part:
It is my understanding and agreement that I am taking
possession and delivery of the above described vehicle
prior to financing being finalized. I understand that the
Dealership is not financing this transaction. I further
understand that financing for the purchase of the
vehicle has not been finalized and is subject to approval
by an outside financing source. This is known as “Spot
Delivery”. I understand that this Spot Delivery
Agreement is for the purpose of allowing me to take
possession of the vehicle, subject to the following terms
and conditions, until a final decision regarding my
request for financing is made.
....
2. I fully understand that, should the Dealership be
unable to obtain an approval from an outside financing
3
The spot delivery agreement was not presented to the trial court. It became
part of the record on appeal after the Appellate Division granted Mall
Chevrolet’s motion to supplement the record.
10
source . . . I will be required to obtain financing myself
or surrender the vehicle to the Dealership at the
Dealership’s option. . . .
....
By signing below, I acknowledge that I have been given
the opportunity to read this Spot Delivery Agreement
and fully understand and agree to be bound by the terms
and conditions set forth herein. This Spot Delivery
Agreement is hereby incorporated by reference into any
other purchase documents which I may execute.
After signing the above documents, Robinson charged the $1000 deposit
to her debit card and handed over the keys to her Chevrolet Cruze. Before
driving home in the Malibu, Robinson was advised that she would have to
return to the dealership with Johnson on the following Monday to finish
signing the documents.
Robinson returned with Johnson to the dealership on Monday and
declared that she no longer wanted the Malibu because it was too expensive.
Mall Chevrolet’s representatives told her that she could not return the Malibu,
that the representation about being able to rescind the deal within two days
was a mistake, and that she was bound by the documents she signed. Robinson
alleges that the representatives attempted in various ways to “coerce” her into
signing the purchase documents even though she demanded her $1000 deposit
back. That said, Robinson was able to leave with her former car after Mall
11
Chevrolet eventually relented, returned the Chevrolet Cruze to her, and
promised a return of her deposit. 4
In this action, Robinson alleges that Mall Chevrolet did not give her a
copy of any documents that she signed during the transaction. She further
alleges that no one from the dealership had signed the MVRO or arbitration
agreement when she saw the documents on Monday, November 7, and that
they “had to be signed after we left the dealership on Monday.”
Mall Chevrolet’s finance manager submitted to the trial court a
certification in which he asserts that he explained the MVRO and arbitration
agreement to Robinson before she signed and that she acknowledged that she
understood their terms. He does not assert that he gave Robinson a copy of the
documents that she signed.
2.
On October 7, 2016, plaintiff Janell Goffe went to Cherry Hill
Mitsubishi in response to an Internet advertisement for a Buick listed for
4
According to Robinson, after she and Johnson called an attorney and
threatened to call the police, Mall Chevrolet’s employees backed off their
initial positions. They inspected the Malibu before agreeing to return the
Chevrolet Cruze and deposit. Mall Chevrolet continued to contact Robinson
thereafter seeking to persuade her to buy a car from them. At some point, the
dealership told Robinson that she had damaged the Malibu and that it would
retain a portion of her deposit. Robinson did not receive the return of any
deposit monies until shortly after she filed her complaint in Superior Court.
12
$15,800. A sales representative, Antonio Salisbury, worked with her on the
deal. Essentially, Goffe was told that she could obtain the car that day if she
traded in her 2006 Infiniti, paid $250 that day, and then $750 on October 21.
She was told that financing on the Buick was approved through Global
Lending Services and that the monthly loan payments would be $390. In
going forward with the purchase, she was told to cancel her insurance on her
Infiniti and that automobile insurance on the Buick would be made available
through the dealership.
Goffe did go ahead that day with the proposed deal. She paid $250,
cancelled the insurance on her trade-in, and purchased insurance for the Buick
through the dealership. The dealership provided temporary registration on the
vehicle and Goffe drove the Buick off the lot.
To proceed with the transaction, Goffe signed several documents --
including an arbitration agreement -- identical in form to those that Robinson
signed. Goffe signed the documents in the same places as Robinson, signaling
that she read, understood, and received copies of the documents. And, like
Robinson, Goffe asserts that she was not given copies of any documents that
she signed.
In a certification submitted in the present action, Goffe contends that she
“did not know what arbitration was and did not agree to arbitrate or allow an
13
arbitrator to decide any disputes including the validity and enforcement of the
arbitration agreement.” She also states that no one ever explained the content
of the documents to her and that Salisbury held the documents as she signed
them and did not give them to her to read. 5
When Goffe returned to the dealership two weeks later with the
remainder of the down payment, Salisbury informed her that financing had not
been approved, contrary to what he originally told her, and that she could
retain the Buick only if she agreed to a larger down payment and higher
monthly payments. Goffe refused and cancelled the deal. The dealership
returned the traded-in vehicle but did not immediately return Goffe’s initial
$250 down payment. The down payment was returned after she commenced
this lawsuit.
B.
Robinson and Goffe filed substantially similar six-count complaints.
Each alleges statutory violations of the New Jersey Consumer Fraud Act
(CFA), N.J.S.A. 56:8-1 to -210; the Truth in Consumer Contract Warranty and
Notice Act, N.J.S.A. 56:12-14 to -18; the Plain Language Act, N.J.S.A. 56:12-
5
In her certification, Goffe also disputes that she signed the Spot Delivery
Agreement, claiming that it is not her signature on the document. She further
claims that any signature of hers that does appear on any form was obtained
only through “trickery and misrepresentation.”
14
1 to -13; the Truth in Lending Act, 15 U.S.C. §§ 1601 to 1667f, as well as
common law fraud. Plaintiffs, who are represented by the same counsel, claim
that Mall Chevrolet and Cherry Hill Mitsubishi respectively engaged in
deceptive and unconscionable practices, including misrepresentations and
concealment in the buying process. Robinson’s complaint includes her
mother, Johnson, as a co-plaintiff.
Defendants moved to dismiss the claims in each case and to compel
arbitration based on the arbitration agreements. The trial courts granted the
motions and compelled arbitration.
The Robinson trial court determined that the language of the forms that
Robinson signed was unambiguous and the parties therefore entered into a
binding contract. The court concluded that, based on the signed arbitration
agreement and the “strong presumption in favor of arbitration,” all of
Robinson’s claims must be resolved in arbitration.6
The Goffe trial court similarly concluded that enforcing the arbitration
agreement was appropriate. Further, Goffe’s claim that “she was not given an
6
Mall Chevrolet filed a motion to dismiss Johnson’s claims for failure to state
a claim at the same time that it moved to compel Robinson to arbitrate her
claims. Mall Chevrolet argued that Johnson failed to state a claim because she
did not have standing as she did not sign the documents or pay a deposit. The
trial court did not address whether Johnson had standing, resolving the matter
purely on the basis of the arbitration issue.
15
opportunity to read the arbitration agreement or was not given a copy of the
arbitration agreement or didn’t understand the arbitration agreement” was held
to be “legally insufficient” to avoid arbitration.
Goffe filed a cross-motion for limited discovery. Relying on Guidotti v.
Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir. 2013), she
argued that motions to compel arbitration should be “viewed as a summary
judgment motion and the non-movant must be given an opportunity to conduct
limited discovery on the narrow issue concerning the validity of the arbitration
agreement.” She argued that she was entitled to “all pertinent documents
surrounding the transaction” “that could support [her] allegations of fraud.”
The trial court rejected her reasoning and denied the motion.
C.
Plaintiffs appealed and the Appellate Division consolidated the cases.7
In a published opinion, the panel reversed the orders that granted defendants’
7
Mall Chevrolet cross-appealed arguing, as it did before the trial court, that
Johnson has no cognizable CFA claim because she has no standing to sue.
Addressing the merits of Johnson’s CFA claim, the panel determined that
Johnson alleged an ascertainable loss sufficient to survive a motion to dismiss,
and so she has standing to bring her CFA claims. Goffe v. Foulke Mgmt.
Corp., 454 N.J. Super. 260, 282-83 (App. Div. 2018). The panel also held that
she could not be compelled to arbitrate her claims because she did not sign the
contract. Id. at 281. We do not address whether Johnson should be compelled
to arbitrate her claims -- CFA or otherwise -- because the issue is not raised in
Mall Chevrolet’s petition for certification and because, at oral argument, Mall
16
motions to compel arbitration. Goffe v. Foulke Mgmt. Corp., 454 N.J. Super.
260 (App. Div. 2018). The panel’s decision contains a number of conclusions,
which are set forth below.
First, the panel determined that “[s]tanding alone . . . the particular
arbitration provisions included within the parties’ sales contracts are capable
of being enforced,” because of the “clear and conspicuous expression of . . .
intent” to arbitrate all claims and to waive the parties’ rights to jury trials. Id.
at 271. Nonetheless, the panel determined that “[t]he circumstances
surrounding the execution of the documents in question raise[d] legitimate
questions about the enforceability of defendants’ otherwise acceptable
arbitration provisions.” Id. at 272.
Next, the panel addressed the procedure that should be followed in order
to resolve whether the arbitration provision should be enforced. The panel was
persuaded that the Third Circuit’s decision in Guidotti established the proper
approach to resolving disputes over contract enforceability, which must
precede an order compelling arbitration. Id. at 272-73. Relying on Guidotti
and applying a summary judgment review standard, the Appellate Division
held that the trial court should have conducted an evidentiary hearing to
Chevrolet asserted that it does not challenge the Appellate Division’s holding
that Johnson can bring her claims in court.
17
resolve, as a threshold matter, genuine and material disputes over “whether the
parties entered into an enforceable contract.” Id. at 273-74.
The panel identified several issues that, it believed, required evidential
development. As one example, it cited the disagreement over whether
Robinson’s deal was dependent on Johnson’s participation as a co-signer. Id.
at 273.
The panel also concluded that there was a genuine issue, in both cases,
regarding the import of compliance with N.J.S.A. 56:8-2.22 of the CFA, which
requires a seller to provide a consumer with a copy of the executed contract
when consummating a consumer agreement. The panel acknowledged that no
reported decision in our State has considered “the effect of a violation of
N.J.S.A. 56:8-2.22” on the enforceability of a consumer agreement; however,
the panel determined that the trial court should have conducted a hearing to
resolve the issue because Robinson and Goffe both alleged that “they were not
given copies of the[ir] documents.” Id. at 274-75. In so concluding, the
Appellate Division disagreed that an arbitrator should decide the CFA issue,
even though the arbitration provision specifically identifies CFA claims as
being subject to arbitration. Id. at 275. The panel reasoned that whether the
dealerships gave copies of the documents to plaintiffs in compliance with
18
N.J.S.A. 56:8-2.22 “is a question of disputed fact” that must be settled before
arbitration can be compelled. Ibid.
The panel also determined there was a genuine issue of fact, in both
cases, regarding whether cancellation of the purchase agreement and
subsequent return of deposit monies resulted in rescission of the arbitration
agreement. Ibid. The panel reasoned that issues related to the parties’
decision to cancel the sales contract cannot be addressed through arbitration
because, if there was a rescission of the purchase agreement, then the
arbitration provision was rescinded as well. Id. at 276.
Last, the panel addressed the broad arbitrability provisions in the
arbitration agreement. The court acknowledged that parties can agree to
arbitrate arbitrability issues under the holding in Rent-A-Center. Id. at 278.
But, in this matter, the panel determined that there were more fundamental
questions about whether the parties entered into binding contracts, which
required resolution before the arbitrability provision could have effect. Id. at
277-78.
Due to the multiple issues it viewed as requiring resolution, the
Appellate Division directed the respective trial courts, on remand, to
implement the Guidotti approach and to “permit limited discovery and, if
necessary, evidentiary hearings.” Id. at 279.
19
We granted defendants’ petitions for certification. 235 N.J. 202 (2018);
235 N.J. 200 (2018). We also granted amicus curiae status to the New Jers ey
Coalition of Automotive Retailers (NJCAR), supportive of defendants, and to
the New Jersey Association for Justice, the Consumers League of New Jersey
and the National Association of Consumer Advocates, who are generally
supportive of plaintiffs. NAACP Camden County East appeared as amicus
curiae before the Appellate Division and relied on its appellate brief before
this Court. Its arguments are supportive of plaintiffs’ efforts to avoid
compelled arbitration in settings where fraud in the inducement of a contract is
involved.
II.
The central issue in this case is whether plaintiffs should be compelled
to address their claims before an arbitrator.
Before this Court, plaintiffs and the amici who support them continue to
focus on the reasons they believe their overall sales agreement is invalid --
either in its formation or because it was effectively rescinded through the
contract’s cancellation. As they did before the Appellate Division, they argue
that the arbitration agreement, which is a part of the overall invalid sales
agreement between the parties, may not be enforced.
20
Defendants argue that the panel misread Guidotti and, consequently,
expanded its holding. Defendants factually distinguish Guidotti and contend
that it does not apply when the challenge at issue is not specifically to the
arbitration provision. They argue that “the question of the enforceability of
this Arbitration Agreement is a question for the arbitrator to decide and not the
Court.” NJCAR, in support of defendants, adds clarification about the nature
of spot delivery agreements which, it contends, undermines the rescission issue
raised by the Appellate Division and remanded for factual development .8
III.
A.
We apply a de novo standard of review when determining the
enforceability of contracts, including arbitration agreements. Hirsch v. Amper
8
Specifically, NJCAR says the Appellate Division erred when it held that the
arbitration agreements may have been rescinded when plaintiffs failed to
achieve financing. It claims that the panel demonstrated a misunderstanding of
the character of “spot-delivery vehicle transactions,” which allow a consumer
to take possession of a vehicle prior to the finalization of financing terms but
forces the consumer to relinquish the vehicle if financing falls through.
NJCAR argues that it is illogical to characterize spot delivery agreements as
“rescinded” when vehicles are returned because that flawed reasoning could
apply “any time parties have fully performed their obligations under a contract
that explicitly requires the return of another’s property if a certain condition is
met during performance.” It adds that the return of a vehicle, as contractually
obligated, “is . . . an acknowledgement that the [person] remain[s] bound,” not
a rescission.
21
Fin. Servs., LLC, 215 N.J. 174, 186 (2013). The enforceability of arbitration
provisions is a question of law; therefore, it is one to which we need not give
deference to the analysis by the trial court or Appellate Division. Morgan v.
Sanford Brown Inst., 225 N.J. 289, 303 (2016) (citing Atalese v. U.S. Legal
Servs. Grp., L.P., 219 N.J. 430, 445-46 (2014)).
B.
In applying the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 to 16, the
United States Supreme Court has provided substantial guidance on the
question of whether arbitration should be compelled in situations such as we
address in this case.
The FAA constitutes the supreme law of the land regarding arbitration.
Southland Corp. v. Keating, 465 U.S. 1, 10 (1984) (“In enacting [section two
of the FAA], Congress declared a national policy favoring arbitration and
withdrew the power of the states to require a judicial forum for the resolution
of claims which the contracting parties agreed to resolve by arbitration.”).
Reflecting the “fundamental principle that arbitration is a matter of contract,”
Rent-A-Center, 561 U.S. at 67, section two of the FAA provides:
A written provision in . . . a contract evidencing a
transaction involving commerce to settle by arbitration
a controversy thereafter arising out of such contract . . .
shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the
revocation of any contract.
22
[9 U.S.C. § 2.]
Thus, Congress intended “to place arbitration agreements upon the same
footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.
20, 24 (1991). It is the FAA’s “principal purpose” to “‘ensur[e] that private
arbitration agreements are enforced according to their terms.’” AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011) (alteration in original)
(quoting Volt Info. Scis., Inc. v. Bd. of Trs., 489 U.S. 468, 478 (1989)). To
make that so, the FAA provides remedies. First, section three provides that a
party may request a stay of an in-court action of “any issue referable to
arbitration under an agreement in writing for such arbitration.” 9 U.S.C. § 3.
And, section four provides a federal remedy for a party “aggrieved by the
alleged failure, neglect, or refusal of another to arbitrate under a written
agreement for arbitration,” and directs the federal court to order arbitration
once it is satisfied that an agreement for arbitration has been made and has not
been honored. 9 U.S.C. § 4.
New Jersey case law acknowledges the preeminence of the national
policy established by Congress through the FAA as well as the Supreme
Court’s holdings interpreting and implementing that policy. See, e.g., Morgan,
225 N.J. at 304-06; Martindale v. Sandvik, Inc., 173 N.J. 76, 84-85 (2002).
23
Hence, in this matter, as in others, we look to the Supreme Court’s decisions to
guide us in the enforcement of arbitration agreements according to their terms.
Importantly, with respect to the type of situation that has arisen in this
matter, the Supreme Court has provided guidance. We turn to that case law as
our starting point.
C.
The United States Supreme Court has held that when a plaintiff raises a
claim of fraud in the inducement of a contract as a whole -- rather than fraud in
the making of the arbitration agreement itself -- the FAA requires that the
dispute be resolved by the arbitrator. Prima Paint, 388 U.S. at 403-04.
In Prima Paint, the plaintiff brought suit alleging that the defendant “had
fraudulently represented that it was solvent and able to perform its contractual
obligations, whereas it was in fact insolvent and intended to file a [bankruptcy]
petition.” Id. at 398. The defendant moved to compel arbitration based on the
arbitration provision in the contract between the parties. Ibid.
The Court framed the central issue in the case as “whether a claim of
fraud in the inducement of the entire contract is to be resolved by the federal
court, or whether the matter is to be referred to the arbitrators.” Id. at 402.
The Court held that
if the claim is fraud in the inducement of the arbitration
clause itself -- an issue which goes to the “making” of
24
the agreement to arbitrate -- the federal court may
proceed to adjudicate it. But the statutory language
does not permit the federal court to consider claims of
fraud in the inducement of the contract generally.
[Id. at 403-04 (footnote omitted).]
The Court reasoned that “it is inconceivable that Congress intended the
rule [in section four of the FAA] to differ depending upon which party to the
arbitration agreement first invokes the assistance of a federal court.” Id. at
404. The Court’s determination recognized that arbitration agreements are
severable from the rest of the contract and that the arbitration agreement may
be valid separate and apart from the contract as a whole, provided that a party
has not challenged the arbitration agreement itself. Id. at 403-04.
The Court reaffirmed the Prima Paint rule more recently in Buckeye, 546
U.S. 440, as well as in Rent-A-Center, 561 U.S. at 70 (“[A] party’s challenge
to another provision of the contract, or to the contract as a whole, does not
prevent a court from enforcing a specific agreement to arbitrate.”).
In Buckeye, the plaintiffs signed contracts that contained arbitration
agreements. 546 U.S. at 442. They thereafter brought a putative class action
in state court “alleging that Buckeye charged usurious interest rates and that
the Agreement violated various Florida lending and consumer-protection laws,
rendering it criminal on its face.” Id. at 443. Relying in large part on Prima
Paint, the Court determined that “as a matter of substantive federal arbitration
25
law, an arbitration provision is severable from the remainder of the contract,”
and that “unless the challenge is to the arbitration clause itself, the issue of the
contract’s validity is considered by the arbitrator in the first instance.” Id. at
445-46. The Court therefore concluded that “because respondents challenge
the Agreement, but not specifically its arbitration provisions, those provisions
are enforceable apart from the remainder of the contract. The challenge should
therefore be considered by an arbitrator, not a court.” Id. at 446.
The Buckeye decision was based on the premise that a challenge to the
validity of the arbitration agreement is different from a challenge to “the
contract as a whole, either on a ground that directly affects the entire
agreement (e.g., the agreement was fraudulently induced), or on the ground
that the illegality of one of the contract’s provisions renders the whole contract
invalid.” Id. at 444. In the former scenario, the challenge is to the actual
formation of the arbitration agreement; in the latter scenarios, the challenge is
to the validity of the contract as a whole. Ibid.
Similarly, in Rent-A-Center, the Court held as valid a provision in a
contract that delegated to the arbitrator the question of arbitrability under
circumstances in which the plaintiff challenged only the validity of the
contract as a whole, rather than mounting a challenge to the validity of the
delegation provision specifically. 561 U.S. at 72. In Rent-A-Center, the Court
26
reaffirmed an earlier holding in First Options of Chicago, Inc. v. Kaplan9 to the
same effect and added that a party opposing a motion to compel arbitration on
an arbitrability issue must specifically challenge the delegation clause itself
rather than assert a general challenge to the validity of the contract as a whole .
Ibid. Relying on Prima Paint and Buckeye, the Court explained that section
two of the FAA “states that a ‘written provision’ ‘to settle by arbitration a
controversy’ is ‘valid, irrevocable, and enforceable’ without mention of the
validity of the contract in which it is contained.” Id. at 70. Thus, it follows
that the arbitration agreement may be valid even if the underlying contract is
not. Ibid. As a result, because the plaintiff in that case challenged only the
validity of the contract as a whole, the delegation of authority to the arbitrator
to resolve disputes relating to the enforceability of the agreement was valid.
Id. at 72-73.
Our Court has acknowledged the legitimacy and applicability of the
Rent-A-Center holding to delegation provisions in New Jersey arbitration
agreements. See Morgan, 225 N.J. at 303. And, Rent-A-Center’s well-
understood import is firmly part of the federal precedent implementing the
FAA at this time. Just this year, in Henry Schein, Inc. v. Archer & White
9
In First Options, the Supreme Court held that determining who has the
power to decide arbitrability -- the arbitrator or the court -- turns on whether
the parties agreed to arbitrate that matter. 514 U.S. 938, 943 (1995).
27
Sales, Inc., 568 U.S. ___, 139 S. Ct. 524 (2019), the Supreme Court reaffirmed
the Rent-A-Center holding, adding that when the parties’ contract delegates
the question of the arbitrability of a particular dispute to an arbitrator, a court
may not override the contract, even if the court thinks that the argument that
the arbitration agreement applies to a dispute is “wholly groundless.” Id. at
___, 139 S. Ct. at 528-29.
IV.
A.
Based on that line of cases, we have no doubt that the arbitration
agreements in plaintiffs’ contracts -- acknowledged by the Appellate Division
to be clear and conspicuous -- are entitled to enforcement.
Plaintiffs do not dispute the validity of the arbitration agreement itself
nor do they dispute the delegation provision within it that delegates the
question of arbitrability to the arbitrator. They have not attacked the language
or clarity of the arbitration agreement or its delegation clause. Rather, they
have continuously maintained that the contract was the product of fraudulent
inducement and that the arbitration agreement -- within that sales contract -- is
thus also invalid.
Plaintiffs seek to distinguish their claims by emphasizing their position
that there was no mutual assent to arbitrate their claims because the arbitration
28
agreements they signed were “the product of fraud and trickery . . . and were
not voluntarily and knowingly agreed to.” However, the disputed facts that
plaintiffs allege go to whether the dealerships performed a bait-and-switch
related to enticing plaintiffs to enter into the contract as a whole. Specifically,
Goffe claims that the dealership lied about the fact that she had been approved
for financing in order to get her to agree to the deal and sign the contracts .
Robinson argues that the dealership represented to her that the contracts would
not be enforceable until Johnson co-signed them. They have not raised a
specific claim attacking the formation of the arbitration agreement that each
signed.
Moreover, the argument that either plaintiff did not understand the
import of the arbitration agreement and did not have it explained to her by the
dealership is simply inadequate to avoid enforcement of these clear and
conspicuous arbitration agreements that each signed. Borough of West
Caldwell v. Borough of Caldwell, 26 N.J. 9, 24-25 (1958) (stating the basic
principle that an enforceable contract exists where a written agreement is
“sufficiently definite in its terms that the performance to be rendered by each
party can be ascertained with reasonable certainty”).
Federal precedent instructs that the arbitration agreements here be
severed from the rest of the agreement, whose totality Goffe and Robinson
29
contest on a number of grounds. Goffe and Robinson must arbitrate their
claims as to the enforceability of the overall sales contract. As a result, their
various statutory and common law claims, including their CFA claims, which
allege that defendants failed to give plaintiffs copies of the contracts they
signed, in violation of N.J.S.A. 56:8-2.22, should be decided by the
arbitrator.10 Under these circumstances, we do not opine on the merits of any
of these claims, including the question of remedy for any alleged violation of
N.J.S.A. 56:8-2.22. In the same vein, plaintiffs’ claims that they rescinded
their contracts is also a question for the arbitrator. To the extent that plaintiffs
seek to argue that the cancellation of their purchases is the factual and legal
equivalent of a rescission, that argument still goes to the enforceability of t he
sales agreement as a whole. Again, it is not a specific challenge to the
10
We note that the agreements in this case limit the time period for purchasers
to assert claims under the CFA: “If such claims are not brought within 180
days the claims will be time barred.” The Appellate Division raised concerns
about the same clause in NAACP of Camden County East v. Foulke Mgmt.
Corp., 421 N.J. Super. 404, 432 (App. Div. 2011), and pointed out that the
provision “is at odds with the six-year statute of limitations generally
applicable to CFA claims arising out of sale of merchandise,” ibid. (citing
N.J.S.A. 2A:14-1); see also Rodriguez v. Raymours Furniture Co., Inc., 225
N.J. 343, 347 (2016) (finding that a private agreement to shorten the Law
Against Discrimination’s two-year limitations period to six months
undermined and thwarted the legislative scheme and was therefore
unenforceable). Because the issue was not directly raised in this appeal, we do
not address it further at this time.
30
arbitration agreement that avoids enforcement of the severed arbitration
agreement.
B.
Importantly, the Third Circuit Court of Appeals decision in Guidotti,
relied upon by the Appellate Division, was misapplied here. In that case, the
Third Circuit determined that different standards of review should apply to a
motion to compel arbitration depending on whether or not it is apparent that
there was an agreement to arbitrate between the parties. Guidotti, 716 F.3d at
776. Specifically, the Third Circuit held that if “based on ‘the face of the
complaint, and documents relied upon in the complaint’” it is apparent that the
parties’ claims are subject to an enforceable arbitration agreement, the motion
to compel arbitration should be considered under a Fed. R. Civ. P. 12(b)(6)
motion to dismiss standard. Ibid. (quoting Somerset Consulting, LLC v.
United Capital Lenders, LLC, 832 F. Supp. 2d 474, 482 (E.D. Pa. 2011)). On
the other hand,
if the complaint and its supporting documents are
unclear regarding the agreement to arbitrate, or if the
plaintiff has responded to a motion to compel
arbitration with additional facts sufficient to place the
agreement to arbitrate in issue, then “the parties should
be entitled to discovery [under Rule 56] on the question
of arbitrability before a court entertains further briefing
on [the] question.”
31
[Ibid. (second alteration in original) (quoting Somerset
Consulting, 832 F. Supp. 2d at 482).]
In Guidotti, the dispositive issue was whether an account agreement
document, which included an arbitration clause, was included in the initial
package of documents emailed to the plaintiff. Id. at 769. The Third Circuit
determined that there was a genuine issue of material fact regarding whether
the parties agreed to arbitrate because the plaintiff disputed that she actually
received the emailed document containing the arbitration agreement. Id. at
780. For that reason, the court analyzed the case under the summary judgment
standard and remanded to the District Court for limited discovery on the
specific challenge to the mutuality of assent to the arbitration agreement before
it would determine whether her underlying dispute was arbitrable. Ibid.
While the plaintiff in Guidotti disputed the validity of the arbitration
agreement itself, 11 plaintiffs here make general assertions that their contracts
were unenforceable. Unlike the Guidotti plaintiff, they do not claim not to
have seen the arbitration agreement, for their signatures are on the written
documents. They do not dispute the validity of the arbitration agreement or its
11
The plaintiff’s factual claim focused on the arbitration agreement, which
she asserted she never saw. Id. at 769. She claimed not to have received the
document that allegedly was emailed to her and could therefore not have
agreed to it. Ibid.
32
delegation clause other than to say that it is invalid as a result of the invalidity
of the contract as a whole. In fact, the Appellate Division held that if it were
not for the issues regarding the enforceability of the contract itself, the
arbitration agreements would be enforceable as the agreements met New
Jersey standards for evidencing “clear and conspicuous expression[s] of [the]
intent” of the parties to arbitrate. Goffe, 454 N.J. Super. at 271.
In our view, the Appellate Division misapprehended and consequently
misapplied Guidotti.
We reviewed all published decisions that cite Guidotti. Of the cases that
concern arbitration disputes,12 no case has ever used the Guidotti standard in
the way the Appellate Division did here. Specifically, no case applied the
Guidotti summary judgment standard to delay or avoid enforcement of an
arbitration agreement when a plaintiff challenged a motion to compel
arbitration on grounds that the contract as a whole was invalid. 13
12
We note that many of the cases cite Guidotti only as a reference for a
motion to dismiss or a summary judgment standard of review and do not even
deal with arbitration agreements. See, e.g., Keyes v. Sessions, 282 F. Supp. 3d
858, 865 (M.D. Pa. 2017) (citing Guidotti for the summary judgment standard
of review in a case involving a Second Amendment challenge).
13
Indeed, in Somerset Consulting -- a case cited and used by the Guidotti
court in reaching its own determination, 716 F.3d at 772 n.4 -- the Eastern
District of Pennsylvania relied upon Prima Paint and Buckeye, addressing the
plaintiffs’ substantive challenge to the arbitration provision at issue only after
determining that the challenge was to the arbitration provision, rather than the
33
In fact, in only one case that cites Guidotti -- Allstate Insurance Co. v.
Toll Brothers, Inc., 171 F. Supp. 3d 417 (E.D. Pa. 2016) -- did a plaintiff
challenge a motion to compel arbitration by arguing that the contract as a
whole was invalid. In that case, the defendants moved to compel arbitration.
Id. at 421. Allstate, the plaintiff, opposed the motion, arguing in part that the
parties never formed an agreement to arbitrate because the buyers did not
receive any consideration for entering into the Agreement of Sale. Id. at 422.
Relying on Buckeye and Prima Paint, the Eastern District of Pennsylvania
rejected the contention, reasoning that the argument that there was no
consideration called the entire agreement into question, not specifically the
arbitration clause within it. Id. at 422-23. The District Court concluded this
part of its analysis by citing Guidotti for the proposition that because the
plaintiff failed to show that the arbitration clause was unconscionable,
discovery on the question of arbitrability was unnecessary. Id. at 434 n.25.
Accordingly, the District Court stayed the action pending arbitration. Id. at
436.
contract as a whole. 832 F. Supp. 2d at 486-87. The Guidotti court’s reliance
on Somerset Consulting supports that the Third Circuit did not intend for its
holding in Guidotti to apply where there is a challenge to the contract as
whole, like in plaintiffs’ case here.
34
We do not suggest that there is not a place for Guidotti in our arbitration
jurisprudence. The decision is in line with federal case law that allows a court
to decide matters that relate directly to the formation of the arbitration
agreement. However, because plaintiffs here challenge the contract as a whole
rather than the arbitration agreement itself, we hold that the Guidotti summary
judgment standard does not apply in this instance. Rather, based on the
complaint and the certifications provided to the trial court, it is apparent to us
that the parties’ claims are subject to an enforceable arbitration agreement.
Therefore, the arbitration agreement is severable and enforceable. Plaintiffs
must arbitrate their claims. Before the arbitrator, plaintiffs can raise any
arbitrability issues consistent with the delegation clauses in these agreements.
V.
The judgment of the Appellate Division is reversed. We reinstate the
orders compelling plaintiffs to arbitrate the merits of their claims.
CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON,
FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE
LaVECCHIA’s opinion.
35