Patricia Atalese v. U.S. Legal Services Group, L.P. (072314), 219 N.J. 430

Background

Patricia Atalese contracted with USLSG for debt-adjustment services; contract included a 9-page arbitration provision.
Plaintiff filed CFA and TCCWNA claims in the Special Civil Part; USLSG moved to compel arbitration.
Trial court granted arbitration, finding the clause minimally sufficient to notify arbitration; relied on Curtis v. Cellco Partnership standard.
Appellate Division affirmed, holding lack of express waiver language did not bar enforcement; found language gave reasonable notice to arbitrate all claims.
Supreme Court granted certification and reversed, holding the arbitration provision unenforceable for not clearly notifying waiver of the right to sue; remanded.
Court emphasizes waivers of rights must be clear and unambiguous and explained in plain language understandable to a reasonable consumer.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Must arbitration clauses clearly inform waivers of the right to sue?	Atalese argues absence of explicit waiver language invalidates enforceability.	USLSG contends 'arbitration' is understood and Concepcion favors enforcing arbitration agreements.	Yes; clause unenforceable for lacking clear waiver language.
Does the clause meet the clear-and-unambiguous waiver standard under NJ law?	Waiver language not clearly signaling surrender of court access.	Language sufficiently private to arbitration, consistent with prior decisions.	No; standard not met; requires clear notice of giving up court rights.
Does FAA preemption affect the NJ waiver requirement?	Federal policy favors arbitration but not at the expense of consumer rights.	FAA requires enforcement of arbitration terms; state law cannot add undue barriers.	Arbitration favors do not override the need for a clear waiver; NJ law governs the waiver clarity.

Key Cases Cited

Curtis v. Cellco Partnership, 413 N.J. Super. 26 (App. Div. 2010) (waiver must be sufficiently clear and notice arbitration is exclusive remedy)
Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124 (2001) (clear and unmistakable waiver of rights required)
Martindale v. Sandvik, Inc., 173 N.J. 76 (2002) (upheld waiver-focused arbitration language showing right to a jury waived)
Knorr v. Smeal, 178 N.J. 169 (2003) (full knowledge and intentional surrender required for waiver)
Griffin v. Burlington Volkswagen, Inc., 411 N.J. Super. 515 (App. Div. 2010) (waiver language that arbitration replaces court processes upheld)
EPIX Holdings Corp. v. Marsh & McLennan Cos., 410 N.J. Super. 453 (App. Div. 2009) (language must clearly express waiver of rights)
Marchak v. Claridge Commons, Inc., 134 N.J. 275 (1993) (arbitration clause must clearly state its purpose to waive rights)
Leodori v. CIGNA Corp., 175 N.J. 293 (2003) (waivers of contractual rights assessed under general contract principles)
Dixon v. Rutgers, the State Univ. of N.J., 110 N.J. 432 (1988) (plainly expressed waiver of rights required)
Red Bank Reg’l Educ. Ass’n v. Red Bank Reg’l High Sch. Bd. of Educ., 78 N.J. 122 (1978) (clear and unmistakable waiver principle applied to statutory rights)
W. Jersey Title & Guar. Co. v. Indus. Trust Co., 27 N.J. 144 (1958) (waiver of legal rights requires clear, unequivocal act)
Foulke Mgmt. v. NAACP of Camden Cnty. E., 421 N.J. Super. 404 (App. Div. 2011) (mutual assent and clear waiver required for arbitration)