Arbitration Provision Bounced Again, Even After Kindred Nursing Decision.

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

As readers of this blog know, arbitration provisions in consumer contracts are difficult to enforce in New Jersey. (Click here or here for a refresher.) There was some belief that the U.S. Supreme Court's recent decision in Kindred Nursing Centers Ltd. P'ship v. Clark might change this, but it does not appear, at least not yet, that it has. In a recent case, Defina v. Go Ahead and Jump 1, LLC d/b/a Sky Zone Indoor Trampoline Park, the Appellate Division was asked to revisit, in light of Kindred Nursing, its prior decision refusing to enforce an arbitration provision in a contract between a trampoline park and one of its customers. The Appellate Division did so, but affirmed its prior decision, holding that Kindred Nursing did not require New Jersey courts to change the manner in which they approach arbitration provisions.

I wrote about Defina in its first go-around with the Appellate Division — Bounce Around The (Court)Room: Trampoline Park's Arbitration Provision Deemed Unenforceable. The underlying facts of the case are unfortunate. A child fractured his ankle while playing "Ultimate Dodgeball" at a trampoline park. Before entering the facility, the child's father signed a document entitled, "Participation Agreement, Release and Assumption of Risk." The document contained an arbitration provision, which provided:

If there are any disputes regarding this agreement, I on behalf of myself and/or my child(ren) hereby waive any right I and/or my child(ren) may have to a trial and agree that such dispute shall be brought within one year of the date of this Agreement and will be determined by binding arbitration before one arbitrator to be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. I further agree that the arbitration will take place solely in the state of Texas and that the substantive law of Texas shall apply.

Notwithstanding this provision, the child's parents sued the trampoline park in state court, alleging tort claims for simple negligence and gross negligence, and statutory claims for alleged violations of the Consumer Fraud Act and the Truth in Consumer Contract, Warranty and Notice Act.

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Bounce Around The (Court)Room: Trampoline Park’s Arbitration Provision Deemed Unenforceable

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

In the interest of full disclosure, I have taken my kids to the Sky Zone Trampoline Park near our home and we have always had a great time. For those who have never been, these types of places are full of trampolines, but not your parents' trampolines (assuming your parents had trampolines and your experience with them was slightly better than the children of Springfield). They are huge facilities where you can "free jump," play dodge ball on trampolines, use trampolines to dunk a basketball, jump off trampolines into foam pits, etc. As you might expect, before you are allowed to jump, you need to sign a waiver, usually electronically either before you get to the facility or when you get there. I have done this on behalf of myself and my kids and of course, being a lawyer, read each word carefully as my kids were excitedly asking me, on a seemingly endless loop, when we could start jumping. In a recent decision, Defina v. Go Ahead and Jump 1, LLC d/b/a Sky Zone Indoor Trampoline Park, the Appellate Division considered whether the arbitration provision contained in this waiver was enforceable. It ruled that it was not, which is perhaps not surprising given the recent trend in New Jersey courts regarding the enforceability of arbitration agreements. (I wrote about this trend here and here.)

In Defina, plaintiff was a minor who, through her parents, sued Sky Zone for injuries allegedly suffered at the facility. Before using the facility, plaintiff's father signed a "Participation Agreement, Release and Assumption of Risk." Among other things, the agreement required parties to release, discharge, and hold Sky Zone harmless for any claims arising out of Sky Zone's "ordinary negligence." The waiver did not preclude lawsuits arising out of Sky Zone's alleged gross negligence or willful and wanton misconduct, but it did require that those claims be arbitrated pursuant to a separate arbitration provision, which provided:

If there are any disputes regarding this agreement, I on behalf of myself and/or my child(ren) hereby waive any right I and/or my child(ren) may have to a trial and agree that such dispute shall be brought within one year of the date of this Agreement and will be determined by binding arbitration before one arbitrator to be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. I further agree that the arbitration will take place solely in the state of Texas and that the substantive law of Texas shall apply.

The arbitration provision also provided that anyone who ignored the provision and sued in court would be liable to Sky Zone for $5,000 in liquidated damages. Finally, the agreement also contained a provision, in bold type, which provided that, by signing the agreement, an individual "may be found by a court of law to have waived [his or her] right to maintain a lawsuit against [Sky Zone]."

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Today at SCOTUS – [Insert Bad Fish Pun Here]

by: Peter J. Gallagher (@pjsgallagher)

In an interesting case this morning at the US Supreme Court, the Justices will be asked to determine whether a fish is a “tangible object.” No. Really. That is the issue in Yates v. United States.

The Sarbanes-Oxley Act, which was passed in the wake of the Enron scandal, makes it a crime to “destroy, mutilate, conceal, or cover up any record, document, or tangible object” with the intent to obstruct a federal investigation. It is unlikely that Congress had fish in mind when it passed the Act, but this is nonetheless the federal law that was used to convict John Yates — captain of the Miss Katie, a commercial fishing boat out of Cortex, Florida — for throwing 72 red grouper that were allegedly below the legal limit back into the ocean.

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Ignoring The 800 Pound Elephant Is OK! Wal-Mart Need Not Be Identified As Tenant In Public Notice For Planning Board Application

by: Matthew J. Schiller

In Shakoor Supermarkets, Inc. v. Old Bridge Township Planning Board, the Appellate Division concluded that an applicant proposing to construct a 150,000 square foot Wal-Mart Superstore need not specify that the occupant of the retail space would be a Wal-Mart. Rather, the Appellate Division deemed that the published public notice gave an accurate description of the property’s proposed use under the application and that technical details need not be provided.

The objector challenged the Planning Board approval citing Perlmart of Lacey, Inc. v. Lacey Twp. Planning Bd., 295 N.J. Super. 234, 234 (App. Div. 1996), in which the Appellate Division deemed a public notice for a proposed K-Mart insufficient. The Appellate Division in Perlmart stated that “while the notice informed that certain variances and minor and major site plan approvals were being sought ‘for the creation of commercial lots’ in a commercial zone, it does not tell the public of the nature of that use, i.e., a conditional use K-Mart shopping center.” The Appellate Division disagreed with the objector in Shakoor, stating that Perlmart did not hold that it was necessary for the applicant to actually identify K-Mart as the retailer in its application, but rather, that a notice should provide a “common sense description of the nature of the application, such that the ordinary layperson could understand its potential impact upon him or her.” The notice need not be “exhaustive” to support this standard.

The notice at issue in Shakoor identified the proposed use as “a main retail store of 150,000 s.f.” The Appellate Division concluded that the description adequately informed laypersons that a major “big box” store was proposed for the site and alerted them to possible concerns, such as traffic, commonly associated with those stores, and that such concerns were expressed at the hearings by members of the public. Further, the Appellate Division concluded that the multiple proposed retail uses did not constitute a legitimate cause for “heightened concern” to the public that would require a more in depth description beyond those associated with a 150,000 square foot retail store.

Therefore, so long as a proposed use is described in terms that permit ordinary laypersons to understand how the property will be used and sufficiently alerted as to its potential impact upon him or her, it will likely be deemed sufficient.