Court Opinion

ID: 9597732
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:02:25.574531+00
Date Added: 2024-06-11T12:25:47.872482
License: Public Domain

WEIS, Circuit Judge,
concurring.
We remand essentially because the District Court’s ruling, constrained as it was by Rule 12(b)(6) of the Federal Rules of Civil Procedure, did not fully address all of the matters relevant to the contention that the Cardmember Agreement contains an unconscionable class-action waiver. Because all of the factors bearing on that issue are not pertinent to our limited review in this case, the question of uncon-scionability under New Jersey law remains open for consideration on remand. See Sands v. McCormick, 502 F.3d 263, 267 (3d Cir.2007) (when reviewing a motion to dismiss under Rule 12(b)(6), we must accept a plaintiffs factual allegations as true, but “need not credit a plaintiffs ‘bald assertions’ or ‘legal conclusions’ ”) (quoting Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir.1997)). Our opinion should be read with that understanding.
The parties may note that the New Jersey Supreme Court in Muhammad v. County Bank of Rehoboth Beach, Del., 189 N.J. 1, 912 A.2d 88 (2006), relied on several factors in striking the class-action ban explaining, however, that such a prohibition is not per se unconscionable. Id. at 96-97, 101; see also Delta Funding Corp. v. Harris, 189 N.J. 28, 912 A.2d 104, 115 (N.J.2006) (“under New Jersey law, [a] class-arbitration waiver in [an] arbitration agreement is not unconscionable per se”). Muhammad initially considered whether it was presented with an adhesion contract, including its subject matter, “the parties’ relative bargaining positions,” and the amount of “economic compulsion motivating the ‘adhering’ party.” Id. at 96-97 (quoting Rudbart v. N. Jersey Dist. Water Supply Comm’n, 127 N.J. 344, 605 A.2d 681, 687 (1992)).
Also relevant in Muhammad were “the public interests affected by the contract.” Id. at 97 (quoting Rudbart, 605 A.2d at 687). The opinion expressed concern over the consumer’s ability to obtain representation and counsel’s incentive to undertake the litigation. Id. at 99-100, 912 A.2d 88. Matters bearing on the Court’s appraisal included the lawsuit’s complexity, the amount of damages involved, and the availability of attorneys’ fees and statutory multipliers. Id. at 100, 912 A.2d 88. The size of potential damages was considered to be an important consideration and was used to limit the holding to “low-value” cases. Id. at 100 & n. 5, 912 A.2d 88; see also Harris, 912 A.2d at 115 (class-action arbitration ban was not unconscionable when the damages involved were much greater than those in Muhammad). Significantly, however, the Court did not define the critical limitation, “low-value.”
Complexity, or its lack, in the underlying claim may be an important factor to be explored.
*234When briefing the elements pertinent in Muhammad, the parties should consider that the case before us alleges a violation of New Jersey’s Consumer Fraud Act and its provisions for both treble damages and attorneys’ fees. N.J.S.A. 56:8-19. Under that statute, any counsel fees awarded include time reasonably spent preparing and prosecuting the case and need not necessarily be proportionate to the damages recovered. Silva v. Autos of Amboy, Inc., 267 N.J.Super. 546, 632 A.2d 291, 295-98 (1993). The New Jersey Supreme Court has explained that the legislature, intent on protecting consumers’ rights, included attorneys’ fees in the Act’s recovery provision “to attract competent counsel to counteract the community scourge of fraud by providing incentive for an attorney to take a case involving a minor loss to the individual.” Wanetick v. Gateway Mitsubishi, 163 N.J. 484, 750 A.2d 79, 82 (2000) (quoting Lettenmaier v. Lube Connection, Inc., 162 N.J. 134, 741 A.2d 591, 593 (1999)).
The parties might also consider whether a provision in the arbitration clause affects the public interests involved in the case. The pertinent excerpt reads, “should any portion of th[e] ‘Restrictions on Arbitration ’ provision be deemed invalid or unenforceable, then the entire Arbitration Provision (other than this sentence) shall not apply.” If the District Court strikes the class-action ban as unconscionable and is compelled to apply the agreement’s prohibition on that procedure, it is possible that the parties are not required to arbitrate and may, instead, proceed to court. The parties might address whether the potential loss of the arbitral forum affects the public interests involved.
Our opinion does not explore in depth the many issues often involved in a controversy over class-action arbitration, a procedure lacking the safeguards included in federal law governing judicial class-actions.
A number of law review articles have discussed the complexities underlying cases like the one before us. For two articles that present differing perspectives, see Jean R. Sternlight As Mandatory Binding Arbitration Meets the Class Action, Will the Class Action Survive?, 42 Wm. & Mary L.Rev. 1 (2000), and Jack Wilson “No-Class-Action Arbitration Clauses,” State-Law Unconscionability, and the Federal Arbitration Act: A Case for Federal Judicial Restraint and Congressional Action, 23 Quinnipiac L.Rev. 737 (2004). The parties might find these and similar articles helpful.