New Jersey Appellate Court Deems Verizon’s Arbitration Clause Unenforceable

New Jersey Appellate Court Deems Verizon’s Arbitration Clause Unenforceable

Josiah Contarino

Case: Achey v. Cellco Partnership d/b/a Verizon Wireless, Docket No. A-3639-21 (May 1, 2023)

On May 1, 2023, the New Jersey Appellate Division ruled that an arbitration provision in Verizon’s customer agreement was unenforceable. Order at 2–3. The class action lawsuit regarding an undisclosed administrative charge of $1.95 per month is therefore set to continue in court (although Verizon may petition the New Jersey Supreme Court and request that it review the Appellate Division’s decision).

The Appellate Division wrote that the “the arbitration agreement is unenforceable in its entirety as it is permeated by provisions which are unconscionable and violative of New Jersey public policy.” Id. at 3. Specifically, the Appellate Division found the arbitration clause unconscionable because it effectively limited (through a bell-weather provision) how many plaintiffs a single law firm could represent in claims against Verizon. Id. at 13–15. Followed to its logical conclusion, some of the plaintiffs in the case “would be required to wait 145 years to file their claims” and, because no tolling provision existed, may be time-barred in any event. Id. at 7, 14.

The Appellate Division found the arbitration clause violated the plaintiffs’ statutory rights under the New Jersey Consumer Fraud Act and was unconscionable because it barred consumer claims “aris[ing] from statements not memorialized in the contract itself and barr[ed] customers from using any evidence in arbitration other than the contract itself.” Id. at 15. Finally, the Appellate Division found the arbitration clause substantively unconscionable because it shortened the time within which a claim must be brought to 180 days. Id. at 18.

According to the Appellate Division, the “cumulative effect” of these unconscionable terms in the arbitration provision rendered the arbitration agreement unenforceable for a lack of mutual assent. Id. (citation and internal quotation marks omitted).

Josiah Contarino is a senior associate at Dhillon Law Group Inc. where he practices commercial litigation, First Amendment, defamation, and election law matters in state and federal courts.

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