Morgan v. Sanford Brown Institute

Morgan v. Sanford Brown Institute

Opinion

 [*294]  [**1171]  JUSTICE ALBIN delivered the opinion of the Court.

Last term, we held that ] an arbitration provision in a consumer contract that fails to explain in some minimal way that arbitration is a substitute for a consumer's right to pursue relief in a court of law is unenforceable. Atalese v. U.S. Legal Servs. Grp., 219 N.J. 430, 436, 99 A.3d 306 (2014), cert. denied,     U.S.    , 135 S. Ct. 2804, 192 L. Ed. 2d 847 (2015). Under the Federal Arbitration Act (FAA), 9 U.S.C.A. §§ 1-16, state law governs whether parties to a consumer contract have agreed to arbitrate their disputes. The formation of an agreement to arbitrate under state law requires that a consumer have some understanding that, by accepting arbitration, she is surrendering her common-law and constitutional right of access to [***8]  the courthouse. Because the term "arbitration" is not self-defining, an arbitration agreement must inform a consumer in some manner that she is waiving her right to seek relief in the judicial system.

Plaintiffs filed a lawsuit claiming that the misrepresentations and deceptive business practices of defendant Sanford Brown Institute and certain defendant administrators led them both to enroll in Sanford Brown's ultrasound technician program. The enrollment agreement signed by plaintiffs contained an arbitration provision that nowhere mentions that the two students were surrendering their right to resolve their legal claims in a judicial forum. The issue in this case is whether a judge or an arbitrator will decide whether the parties agreed to arbitrate the consumer-fraud and other claims raised in plaintiffs' complaint.

Defendants filed a motion to compel arbitration, but did not make clear that they wanted the arbitrator, rather than the court, to decide whether the parties agreed to arbitration. The trial court declined to submit the lawsuit to arbitration because the arbitration provision did not inform plaintiffs that they were waiving statutory remedies and because the provision [***9]  conflicted with the remedies available under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -195.

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