Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Consumer Contracts topic
No spam. Unsubscribe anytime.
Committee advances bill to limit cross‑entity arbitration clauses in consumer contracts
Summary
A 53 22, advanced May 15, would prevent arbitration agreements with one part of a corporation from being applied automatically to other corporate arms. Proponent Adam Letterman cited McGinty v. Uber; the committee released the bill with a recorded no vote from one member concerned about business competitiveness.
The Consumer Affairs Committee voted May 15 to release Assembly Bill A 53 22, legislation that would restrict the ability of corporations to extend an arbitration agreement signed with one corporate arm to other related companies. The committee heard proponent testimony from Adam Letterman, president of the New Jersey Association for Justice, who said the bill would protect consumers who unknowingly sign arbitration agreements through apps or streaming services and would ensure arbitration clauses apply only to the specific corporate entity the consumer contracted with.
"By engaging in those transactions and many others, consumers of New Jersey and throughout the country regularly are required to give up their constitutional right to see justice in the courts and are forced to submit the dispute with a vendor or institution to arbitration," Letterman told the committee. He cited an appellate decision, McGinty v. Uber, in which a New Jersey couple were blocked from pursuing court remedies after their daughter accepted updated terms of service on a delivery app. "A 53 22 would rightfully end this practice," he said.
Committee members pressed Letterman about whether arbitration can be a faster, less costly alternative to litigation and whether New Jersey would become an outlier that might deter business. Letterman responded that while arbitration can be appropriate by agreement, in practice large corporations’ repeated relationships with arbitration providers can create an uneven playing field and that the Supreme Court’s arbitration jurisprudence does not prevent a legislative limit on cross‑entity application of arbitration clauses. He agreed to provide the committee with the McGinty decision for review.
Opposition slips from the New Jersey State Chamber of Commerce (Mike Eglinton) and the New Jersey Civil Justice Institute (Alex Daniel) were entered into the record without testimony. On roll call, Assemblyman Rumpf registered a brief statement explaining his intent to vote no because of concerns about unintended consequences and state competitiveness; other members voted yes and the bill was released to the next stage.
The committee’s action sends A 53 22 to further legislative consideration; staff agreed to provide the McGinty appellate decision to members for context.
