Janell Goffe v. Foulke Management Corp Sasha Robinson and Tijuana Johnson v. Mall Chevrolet (081258) (Camden County and Statewide)
208 A.3d 859
| N.J. | 2019Background
- Two consolidated consumer suits (Goffe; Robinson & Johnson) allege dealerships induced purchases by fraud/bait-and-switch and violated consumer-protection statutes; each purchaser signed a printed sales package that included a written arbitration agreement with a broad delegation clause.
- Robinson signed a Motor Vehicle Retail Order, an arbitration agreement, and a Spot Delivery Agreement after a salesperson promised a two-day rescission; she later tried to return the car and alleges coercion and not receiving copies of signed documents.
- Goffe signed identical forms after being told financing was approved; later financing allegedly was not approved and she rescinded, claiming she never agreed to the final terms and was not given copies.
- Trial courts granted motions to compel arbitration; Appellate Division reversed, applying Guidotti to allow limited discovery and hearings on contract formation and alleged statutory noncompliance (e.g., failure to provide copies under N.J.S.A. 56:8-2.22).
- Supreme Court of New Jersey reversed the Appellate Division: plaintiffs attacked the contract as a whole (fraud in inducement), not the arbitration clause or delegation provision specifically, so the arbitrator must decide enforceability and arbitrability under controlling FAA precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides validity of the sales contracts and related arbitrability disputes? | Plaintiffs: contracts are fraudulently induced or rescinded, so courts should resolve enforceability before compelling arbitration. | Defendants: arbitration clauses (including delegation) are clear; under the FAA arbitrability and contract-wide validity are for the arbitrator unless clause itself is specifically challenged. | Held: Because the challenge is to the contract as a whole, not the arbitration/delegation clause, arbitrator must decide validity and arbitrability. |
| Applicability of Guidotti (3d Cir.)/limited discovery before compelling arbitration | Plaintiffs/App. Div.: Guidotti requires limited discovery/evidentiary hearing when arbitrability or mutual assent is in dispute. | Defendants: Guidotti applies only when formation of the arbitration agreement itself is directly contested; it was misapplied. | Held: Guidotti was misapplied; it does not override Supreme Court severability precedent where the arbitration clause itself is not specifically challenged. |
| Effect of alleged statutory violation (failure to provide copies under N.J.S.A. 56:8-2.22) on arbitration | Plaintiffs: statutory noncompliance raises fact issues that must be resolved by courts before arbitration can be compelled. | Defendants: statutory claims go to the contract as a whole and therefore are for the arbitrator to decide. | Held: Statutory and CFA claims attacking the sales agreement must be arbitrated; court declines to decide remedies. |
| Whether signatures and lack of explanation negate assent to arbitration | Plaintiffs: they did not understand or consent to arbitration; documents weren’t explained or provided. | Defendants: signed, clear and conspicuous arbitration provisions establish assent; mere failure to explain or provide copies does not avoid the written agreement. | Held: Signatures on clear arbitration agreements rebut that argument; general claims of not understanding do not avoid enforcement absent a specific challenge to the arbitration clause. |
Key Cases Cited
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (fraud-in-the-inducement to the contract as a whole must be decided by arbitrator unless arbitration clause itself is specifically attacked)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (arbitration provision is severable; contract-wide challenges go to arbitrator)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (delegation clause delegating arbitrability is enforceable unless specifically challenged)
- Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir.) (summary-judgment/discovery approach when mutual assent to the arbitration agreement itself is genuinely disputed)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (courts must enforce parties’ clear delegation of arbitrability to arbitrator, even if argument seems wholly groundless)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (who decides arbitrability depends on parties’ agreement to delegate that question)
- Southland Corp. v. Keating, 465 U.S. 1 (FAA preempts state law and embodies national policy favoring arbitration)