NJ Justices Send Car Dealer Fraud Claims Back To Arbitration

On Wednesday, June 5, the New Jersey Supreme Court ruled in favor of enforcing arbitration agreements in car purchase agreements.  The case, Goffe v. Foulke Mgmt. Corp. (link to: https://www.njcourts.gov/attorneys/assets/opinions/supreme/a_3_4_18.pdf?c=hqF), reverses the New Jersey Court’s recent trend of setting state law limits to the enforceability of arbitration agreements.  Genova Burns represented the New Jersey Coalition of Automotive Retailers (“NJCAR”) as amicus curiae in support of the defendants before the Supreme Court.  Goffe was a consolidated appeal involving claims that allegedly fraudulent sales practices by two car dealerships induced customers to enter into agreements for the purchase of cars. The customers sued the dealerships alleging violations of the Consumer Fraud Act. The New Jersey Supreme Court held that when the parties agree to delegate the question of arbitrability to an arbitrator, the courts must honor this contract.  To avoid this, a party must challenge the enforceability of the arbitration provision itself – not the contract as a whole.  In this case, the Supreme Court found, the parties challenged the enforceability of the contracts as a whole under the Consumer Fraud Act, not of the arbitration provisions.