Georgia M. McGinty v. Jia Wen Zheng ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1368-23
GEORGIA M. MCGINTY,
a/k/a GEORGIA M. FRASER,
and JOHN FRANCIS MCGINTY,
Plaintiffs-Respondents,
v.
JIA WEN ZHENG, JERINSON M.
MEDRANO PERALTA, and
BRACHY FELIZDELAPAZ,
Defendants-Respondents,
and
UBER TECHNOLOGIES, INC.,
and RAISER, LLC,
Defendants-Appellants.
______________________________
Argued September 10, 2024 – Decided September 20, 2024
Before Judges Gilson, Firko, and Bishop-Thompson.
On appeal from the Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-1085-23.
Michael R. Huston (Perkins Coie LLP) of the Arizona
and District of Columbia bars, admitted pro hac vice,
argued the cause for appellants (Faegre Drinker Biddle
& Reath LLP, Jacob Taber (Perkins Coie LLP) of the
New York bar, admitted pro hac vice, Michael R.
Huston, and Samantha J. Burke (Perkins Coie LLP) of
the Arizona bar, admitted pro hac vice, attorneys;
Tracey Salmon-Smith, Jennifer G. Chawla, and Justin
M. Ginter, of counsel and on the briefs; Jacob Taber,
Michael R. Huston, and Samantha J. Burke, on the
briefs).
Michael C. Shapiro argued the cause for respondents
Georgia M. McGinty a/k/a Georgia M. Fraser and John
Francis McGinty (Stark & Stark PC, attorneys; Evan J.
Lide and Michael C. Shapiro, of counsel and on the
brief).
PER CURIAM
Defendants Uber Technologies, Inc. (Uber) and Raiser, LLC (Raiser)1
appeal from a November 22, 2023 order denying their motion to compel
arbitration and to dismiss the complaint filed by plaintiffs Georgia M. McGinty
and John Francis McGinty, her husband. We hold that the arbitration provision
contained in the agreement under review, which Georgia 2 or her minor daughter,
while using her cell phone agreed to, is valid and enforceable. We, therefore,
1
According to plaintiffs' complaint, Raiser is a subsidiary of Uber. Raiser sub-
licenses Uber's technology to independent drivers and pays them their wages.
2
Parties who share a last name with other parties are referred to by their first
names for ease of reference. By doing so, we intend no disrespect.
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reverse the portion of the order denying arbitration of the claims against Uber
and Raiser. We thus remand for entry of an order compelling plaintiffs' claims
against Uber and Raiser and staying the Law Division action against defendants
Jerinson M. Peralta and Brachy Felizdelapaz because the record does not
establish these defendants are bound by Uber's arbitration provision. Therefore,
the claims against Peralta and Felizdelapaz are stayed until completion of the
arbitration proceedings.
I.
We begin by reciting the relevant facts in the motion record. In June 2015,
Georgia signed up for an Uber account. Prior to requesting an Uber platform,
such as Uber Rides or Uber Eats, the user must agree to Uber's Terms of Use.
Throughout Georgia's relationship with Uber, she has agreed to Uber's Terms of
Use, including its Arbitration Agreement. The Terms of Use were modified on
January 18, 2021 (January Terms), and again on December 16, 2021 (December
Terms).
Uber's January Terms
On April 1, 2021, Georgia was presented with Uber's January Terms via
an in-app blocking interface, which amended her contract with Uber, including
her agreement to arbitrate personal injury claims. Uber's records show that
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Georgia placed a check in the box next to the statement "I have reviewed and
agree to the Terms of Use" and clicked the "Confirm" button related to the
January Terms. Georgia does not dispute that she agreed to the January Terms.
Uber's January Terms contain an arbitration provision, which includes
exceptions to arbitration, the governing rules and procedures for arbitration, how
to initiate an arbitration, a delegation clause, and a third-party beneficiary
clause. The January Terms specifically state: "You acknowledge and agree that
you and Uber are each waiving the right to a trial by jury."
Uber's December Terms
In December 2021, Uber revised its Terms of Use (December Terms). On
January 8, 2022, Georgia was presented with a pop-up blocking screen in her
Uber app presenting the updated December Terms. Uber's app was designed so
that a user— such as Georgia—could not continue using the account to access
Uber's services unless and until the updated Terms of Use were agreed to.
The in-app pop-up screen had a header that stated: "We've updated our
terms." Below, in large, clear type, it stated: "We encourage you to read our
updated Terms in full." Immediately underneath were two clickable hyperlinks
to Uber's Terms of Use and Privacy Notice, which were underlined and in bright
blue text. When the user clicked on the hyperlinks, they would display the then -
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operative Terms of Use and Privacy Notice for the user to review. The screen
also displayed an image of a blue pencil signing on a signature line marked by
an "X."
A checkbox was underneath the hyperlinks. The only other text on the
screen appeared next to the checkbox and read, in bold text: "By checking this
box, I have reviewed and agree to the Terms of Use and acknowledge the Privacy
Notice." It also stated: "I am at least [eighteen] years of age." Below the
checkbox was a button marked "Confirm."
Uber's digital records show that on January 8, 2022, Georgia logged into
her Uber account using her password, checked the box next to the statement "I
have reviewed and agree to the Terms of Use," and pressed "Confirm." In their
motion opposition, plaintiffs asserted that it was not Georgia but rather their
minor daughter who checked that box and clicked the "Confirm" button—even
though it required attesting to Uber that she was at least eighteen years old.
Plaintiffs claim that their daughter, while using Georgia's phone and with
Georgia's permission, confirmed her agreement to the December Terms before
ordering food for plaintiffs to be delivered to them through Uber Eats.
The December Terms to which Georgia agreed—either by herself or
through her daughter using her Uber account—contain an arbitration provision.
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That agreement provides disputes that may arise between Georgia and Uber,
including disputes concerning auto accidents or personal injuries, will be
resolved through binding arbitration "and not in a court of law." The agreement
also provides that any disputes over arbitrability would be delegated to the
arbitrator.
The first paragraph of the December Terms states in all capital letters:
"PLEASE READ THESE TERMS CAREFULLY, AS THEY CONSTITUTE A
LEGAL AGREEMENT BETWEEN YOU AND UBER." The first page of the
agreement contains the following paragraph, in all capital letters:
IMPORTANT: PLEASE BE ADVISED THAT THIS
AGREEMENT CONTAINS PROVISIONS THAT
GOVERN HOW CLAIMS BETWEEN YOU AND
UBER CAN BE BROUGHT, INCLUDING THE
ARBITRATION AGREEMENT (SEE SECTION 2
BELOW). PLEASE REVIEW THE ARBITRATION
AGREEMENT BELOW CAREFULLY, AS IT
REQUIRES YOU TO RESOLVE ALL DISPUTES
WITH UBER ON AN INDIVIDUAL BASIS AND,
WITH LIMITED EXCEPTIONS, THROUGH FINAL
AND BINDING ARBITRATION (AS DESCRIBED
IN SECTION 2 BELOW). BY ENTERING INTO
THIS AGREEMENT, YOU EXPRESSLY
ACKNOWLEDGE THAT YOU HAVE READ AND
UNDERSTAND ALL OF THE TERMS OF THIS
AGREEMENT AND HAVE TAKEN TIME TO
CONSIDER THE CONSEQUENCES OF THIS
IMPORTANT DECISION.
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The second page of the December Terms contains a bolded heading
entitled "Arbitration Agreement" in a font size substantially larger than the
surrounding text. The first sentence describes the effects of the Arbitration
Agreement: "By agreeing to the Terms, you agree that you are required to
resolve any claim that you may have against Uber on an individual basis in
arbitration as set forth in this Arbitration Agreement."
Section (2)(a), in large, bold font "Agreement to Binding Arbitration
Between You and Uber," states in relevant part that:
[Y]ou and Uber agree that any dispute, claim or
controversy in any way arising out of or relating to . . .
(ii) your access to or use of the Services at any time;
[or] (iii) incidents or accidents resulting in personal
injury to you or anyone else that you allege occurred in
connection with your use of Services . . . will be settled
by binding individual arbitration between you and
Uber, and not in a court of law.
[(emphasis added).]
The arbitration provision also stated that it is governed by the Federal
Arbitration Act (the FAA). 9 U.S.C. §§ 1-16.
Section 2(b) is titled "Exceptions to Arbitration" and states that,
"[n]otwithstanding the foregoing, this Arbitration Agreement shall not require
arbitration" of certain narrow types of claims: specifically, claims brought in
small-claims court; individual sexual-assault or sexual-harassment claims; and
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intellectual-property-right claims. The agreement clarifies that only those
specific types of claims "may be brought and litigated in a court of competent
jurisdiction."
Section 2(c) details the rules and procedure of an arbitration proceeding
under the agreement, such as what entity would administer the arbitration, what
rules apply, and how the arbitrator would be selected. Section 2(d) explains in
detail the process of initiating an arbitration.
The December Terms also delegate all threshold questions of arbitrability,
including the enforceability of the Arbitration Agreement, to the arbitrator:
Delegation Clause: Only an arbitrator, and not any
federal, state, or local court or agency, shall have
exclusive authority to resolve any dispute arising out of
or relating to the interpretation, applicability,
enforceability, or formation of this Arbitration
Agreement, including without limitation any claim that
all or any part of this Arbitration Agreement is void or
voidable. An arbitrator shall also have exclusive
authority to resolve all threshold arbitrability issues,
including issues relating to whether the Terms are
applicable, unconscionable, or illusory and any defense
to arbitration, including without limitation waiver,
delay, laches, or estoppel. . . .
The December Terms also contain an express third-party beneficiary
provision titled in bold and in an underlined font:
Application to Third[-]Parties: This Arbitration
Agreement shall be binding upon, and shall include any
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claims brought by or against any third parties, including
but not limited to your spouses, heirs, third-party
beneficiaries and assigns, where their underlying
claims arise out of or relate to your use of the Services.
To the extent that any third-party beneficiary to this
agreement brings claims against the Parties, those
claims shall also be subject to this Arbitration
Agreement.
The remaining sections of the December Terms address: (1) the services
offered by Uber; (2) rules for the rider's access and use of the services; (3) the
rider's agreement to pay for services and fees; (4) disclaimers, limitations of
liability, and indemnification; and (5) provisions governing choice of law,
notice, and assignment of rights.
The Accident
On March 31, 2022, plaintiffs were rear seat passengers in a vehicle
operated by defendant Uber driver Jia Wen Zheng. At the intersection of State
Highway 130 South and State Highway 522, Zheng ran a red light and t-boned
a vehicle operated by Peralta, which was owned by Felizdelapaz. As a result of
the collision, Zheng's vehicle sustained extensive damage.
Additionally, plaintiffs suffered serious physical, psychological, and
financial damages. Georgia sustained cervical and lumbar spine fractures, rib
fractures, a protruding hernia, traumatic injuries to her abdominal wall, pelvic
floor, and other physical injuries. She has undergone numerous surgeries and
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other invasive procedures. Georgia, a matrimonial attorney, was unable to work
between the date of the accident and April 1, 2023.
John sustained a fractured sternum and severe fractures to his left arm and
wrist. He underwent open reduction and internal fixation with a bone graft to
address the arm fractures, and has diminished use and sensation in his left wrist.
The Litigation
On February 23, 2023, plaintiffs filed a complaint against defendants in
the Law Division. Six months later, Uber filed a motion to compel arbitration
and to dismiss plaintiffs' complaint. Uber argued that Georgia first registered
for an Uber account in 2015 and has used her account numerous times for Uber
Rides and Uber Eats platforms. Uber maintained that when Georgia signed up
for an Uber account, she agreed to Uber's Terms of Use, including the
Arbitration Agreement. Therefore, she agreed to arbitrate any disputes with
Uber arising out of her use of Uber's services.
Uber claimed Georgia not only agreed to its Terms of Use on January 8,
2022, but she had also previously agreed to its Terms of Use on April 1, 2021,
using the "same in-app blocking interface." According to Uber, both the January
and December Terms amended Georgia's contract with Uber and confirmed her
agreement to arbitrate personal injury disputes.
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In opposition, plaintiffs asserted they had no recollection of seeing the
purported "clickbox" on January 8, 2022, and surmise it was clicked by their
daughter while they packed for an upcoming ski trip. At approximately 6:15
p.m. that evening, plaintiffs recalled their daughter asked if they could order
food from a particular restaurant. However, plaintiffs did not remember if their
daughter ordered food independently or if Georgia assisted, but both recall their
daughter hanging on to Georgia's cell phone after the order was placed to
monitor the progress of the delivery.
Uber contends the "Checkbox Consent" was activated when plaintiffs'
daughter was getting updates on the driver's progress because the application
was refreshed. After they finished eating, Georgia certified that she got her cell
phone back and tipped the driver. Georgia argued she and John never had the
opportunity to see the pop-up, and it was their daughter who intentionally or
unintentionally clicked on it while monitoring the delivery.
The motion court denied Uber's motion to compel arbitration, finding that
the Arbitration Agreement contained in the December Terms was unenforceable
under Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430 (2014). The court
noted that the Arbitration Agreement "fail[ed] to clearly and unambiguously
inform plaintiff of her waiver of the right to pursue her claims in a judicial
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forum." The court determined it was unclear that "arbitration is a substitute for
the right to seek relief in our court system," "and by agreeing to this provision,
the parties have waived their right to a court action."
In addition, the court held that the Arbitration Agreement "lacks any
specificity on what the resolution would look like or what the alternative to such
resolution might be." The court reasoned that Uber's January Terms previously
contained an express jury waiver provision, but the December Terms did not. A
memorializing order was entered. This appeal followed.
On appeal, Uber and Raiser essentially reiterate their arguments raised
before the trial court:
(1) Georgia formed an enforceable arbitration
agreement with Uber through the December Terms;
(2) Georgia cannot escape her agreement with Uber by
claiming that her daughter agreed to the December
Terms on her behalf;
(3) If the December Terms are invalid, the January
terms would still require arbitration of this dispute;
(4) The agreement is enforceable against John; and
(5) Uber did not waive its right to arbitrate with
plaintiffs.
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II.
"We review a trial court's order granting or denying a motion to compel
arbitration de novo because the validity of an arbitration agreement presents a
question of law." Santana v. SmileDirectClub, LLC, 475 N.J. Super. 279, 285
(App. Div. 2023) (citing Skuse v. Pfizer, Inc., 244 N.J. 30, 46 (2020)).
Similarly, "[t]he issue of whether a party waived its arbitration right is a legal
determination subject to de novo review." Cole v. Jersey City Med. Ctr., 215
N.J. 265, 275 (2013) (citing Manalapan Realty, L.P. v. Twp. Comm. of
Manalapan, 140 N.J. 366, 378 (1995)). "As a result, we 'need not give deference
to the [legal] analysis by the trial court.'" Santana, 475 N.J. Super. at 285
(alteration in original) (quoting Goffe v Foulke Mgmt. Corp., 238 N.J. 191, 207
(2019)). "Nonetheless, the factual findings underlying the waiver determination
are entitled to deference and are subject to review for clear error." Cole, 215
N.J. at 275 (citing Rova Farms Resort, Inc. v. Invs. Ins. Co. of Am., 65 N.J. 474,
483-84 (1974)).
"Under both the [FAA, 9 U.S.C. § 1-307,] and New Jersey law, arbitration
is fundamentally a matter of contract." Antonucci v. Curvature Newco, Inc.,
470 N.J. Super. 553, 561 (App. Div. 2022) (citing Rent-A-Center, W., Inc. v.
Jackson, 561 U.S. 63, 67 (2010); 9 U.S.C. § 2; NAACP of Camden Cnty. E. v.
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Foulke Mgmt. Corp., 421 N.J. Super. 404, 424 (App. Div. 2011)). The FAA
requires courts to "place arbitration agreements on equal footing with all other
contracts." Skuse, 244 N.J. at 47 (internal quotation marks omitted).
"Accordingly, 'the FAA "permits states to regulate . . . arbitration agreements
under general contract principles," and a court may invalidate an arbitration
clause "upon such grounds as exist at law or in equity for the revocation of any
contract."'" Antonucci, 470 N.J. Super. at 561 (quoting Atalese, 219 N.J. at
441).
In conducting our de novo review of a trial court's order granting or
denying a motion to compel arbitration, "we are mindful of the strong preference
to enforce arbitration agreements, both at the state and federal level." Hirsch v.
Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013) (citing Hojnowski v. Vans
Skate Park, 187 N.J. 323, 341-42 (2006)). Indeed, "the affirmative policy of
this State, both legislative and judicial, favors arbitration as a mechanism of
resolving disputes." Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 133 (2020)
(quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 92 (2002)). "Because of the
favored status afforded to arbitration, '[a]n agreement to arbitrate should be read
liberally in favor of arbitration.'" Garfinkel v. Morristown Obstetrics &
Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001) (alteration in original)
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(quoting Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993)). "That
favored status, however, is not without limits." Ibid.New Jersey has a long-standing policy of protecting the right to access its
courts. Article I, paragraph 9 of the New Jersey Constitution provides "[t]he
right of trial by jury shall remain inviolate." N.J. Const. art. I, ¶ 9. "Although
rights may be waived, courts 'indulge every reasonable presumption against
waiver of fundamental constitutional rights.'" Mazdabrook Commons
Homeowners' Ass'n v. Khan, 210 N.J. 482, 505 (2012) (quoting Johnson v.
Zerbst, 304 U.S. 458, 464 (1938)). "To be valid, waivers must be knowing,
intelligent, and voluntary." Ibid.The Supreme Court in Atalese intended "to assure that the parties know
that in electing arbitration as the exclusive remedy, they are waiving their time -
honored right to sue." Atalese, 219 N.J. at 444 (quoting Garfinkel, 168 N.J. at
132). Accordingly, the Court held that while "no prescribed set of words must
be included in an arbitration clause to accomplish a waiver of rights," an
enforceable arbitration clause "at least in some general and sufficiently broad
way, must explain that the plaintiff is giving up [his or] her right to bring [his
or] her claims in court or have a jury resolve the dispute." Id. at 447.
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"An arbitration agreement must be the result of the parties' mutual assent,
according to customary principles of state contract law." Skuse, 244 N.J. at 48.
"Thus, 'there must be a meeting of the minds for an agreement to exist before
enforcement is considered.'" Ibid. (quoting Kernahan v. Home Warranty Adm'r
of Fla., Inc., 236 N.J. 301, 319 (2019)) (internal quotation marks omitted). "An
arbitration provision is not enforceable unless the consumer has reasonable
notice of its existence." Wollen v. Gulf Stream Restoration & Cleaning, LLC,
468 N.J. Super. 483, 498 (App. Div. 2021) (citing Hoffman v. Supplements Togo
Mgmt., LLC, 419 N.J. Super. 596, 609 (App. Div. 2011)). "But a party may not
claim lack of notice of the terms of an arbitration provision for failure to read
it." Santana, 475 N.J. Super. at 286. "[A]s a general rule, 'one who does not
choose to read a contract before signing it cannot later relieve himself [or
herself] of its burdens.'" Skuse, 244 N.J. at 54 (quoting Riverside Chiropractic
Grp. v. Mercury Ins. Co., 404 N.J. Super. 228, 238 (App. Div. 2008)).
When reviewing a motion to compel arbitration, a court undertakes a two-
prong inquiry: (1) whether there is a valid and enforceable agreement to arbitrate
disputes; and (2) whether the dispute falls within the scope of the agreement.
Martindale, 173 N.J. at 86-87, 92. "Under state law, 'if parties agree on essential
terms and manifest an intention to be bound by those terms, they have created
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an enforceable contract.'" Flanzman, 244 N.J. at 135 (quoting Weichert Co.
Realtors v. Ryan, 128 N.J. 427, 435 (1992)).
New Jersey courts have recognized the validity of consumer web-based
contracts "for decades." Wollen, 468 N.J. Super. at 495. As we recently
confirmed in Santana, "[t]he enforceability of an internet consumer contract
often turns on whether the agreement is characterized as a 'scrollwrap,' 'sign -in
wrap,' 'clickwrap,' or 'browsewrap'—or a hybrid version of these electronic
contract types." 475 N.J. Super. at 286 (quoting Wollen, 468 N.J. Super. at 495-
96). Clickwrap agreements are "routinely enforced by the courts" because "[b]y
requiring a physical manifestation of assent, a user is said to be put on inquiry
notice of the terms assented to." Id. at 288-89 (alteration in original) (first
quoting Skuse, 244 N.J. at 55 n.2, then quoting Applebaum v. Lyft, Inc., 263 F.
Supp. 3d 454, 465 (S.D.N.Y. 2017)).
The Arbitration Agreement contained in the prior January Terms
explicitly mentioned the user was waiving his or her right to a jury trial. "You
acknowledge and agree that you and Uber are each waiving the right to a trial
by jury . . . ." The updated language in the December Terms states:
You and Uber agree that any dispute, claim or
controversy in any way arising out of or relating to . . .
(ii) your access to or use of the Services at any time,
[or] (iii) incidents or accidents resulting in personal
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injury that you allege occurred in connection with your
use of the Services … will be settled by binding
arbitration between you and Uber, and not in a court of
law.
[(emphasis added). 3]
Here, plaintiffs contend that because the arbitration provisions in the
December Terms did not expressly state that they were waiving their right to a
jury trial, the arbitration clause does not constitute an enforceable waiver of that
right.
In Garfinkel, the Court sustained the plaintiff's right to file a civil action
alleging employment discrimination because the arbitration clause provided that
"any controversy or claim arising out of, or relating to, this Agreement or the
breach thereof, shall be settled by arbitration." 168 N.J. at 128. That language
neither indicated arbitration was out of court nor the right to jury trial was
waived.
A year later, in Martindale, the Court refined its holding in Garfinkel. In
Martindale, the Court held that an arbitration agreement was broad enough to
3
See Atalese, 219 N.J. at 447 (holding that while "no prescribed set of words
must be included in an arbitration clause to accomplish a waiver of rights," an
enforceable arbitration clause "at least in some general and sufficiently broad
way, must explain that the plaintiff is giving up her right to bring her claims in
court or have a jury resolve the dispute." (emphasis added)).
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cover the waiver of Law Against Discrimination (LAD) claims even when LAD
was not expressly identified. 173 N.J. at 96. 4 Accordingly, the Court explained
we [do] not require a party to "refer specifically to the
LAD or list every imaginable statute by name to
effectuate a knowing and voluntary waiver of
rights. . . ." Instead, we instructed that "a waiver-of-
rights provision should at least provide that the
employee agrees to arbitrate all statutory claims arising
out of the employment relationship or its termination."
[Id. at 95 (quoting Garfinkel, 168 N.J. at 135).]
Following its decision in Martindale, the Supreme Court has emphasized
that arbitration provisions are to be construed consistent with their plain
language and it is not always necessary to expressly waive a jury trial or
statutory claims. See Arafa v. Health Express Corp., 243 N.J. 147, 171-72
(2020); accord Delaney v. Dickey, 244 N.J. 466, 480 (2020). Moreover, the
Court has repeatedly held that the thrust of the New Jersey Arbitration Act
(NJAA), N.J.S.A. 2A:23B-1 to -36—consistent with the FAA—is to favor
arbitration by placing "arbitration agreements on an equal footing with other
4
The LAD was amended effective March 18, 2019, to prohibit the waiver of
any substantive or procedural right or remedy related to a claim of
discrimination. That amendment applies prospectively. N.J.S.A. 10:5-12.7
(codifying L. 2019, c. 39, § 1); L. 2019, c. 39, § 6. The amendment to LAD
applies to arbitration agreements governed by New Jersey law but is pre-empted
when applied to an arbitration agreement governed by the FAA. See Antonucci,
470 N.J. Super. at 564-66.
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contacts[,] and enforce [the agreements] according to their terms." Atalese, 219
N.J. at 439 (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 338
(2011)). Governed by these standards, we are persuaded the court erred in
denying Uber's motion to compel arbitration.
Comparing the arbitration provisions in the matter under review to those
reviewed in Garfinkel and Martindale, we are convinced, based on the facts in
the motion record, the language here effectuated a waiver of plaintiffs' right to
a jury trial. While "jury" is no longer explicitly used in the updated December
Terms, magic words are not required for enforceability and the clause clearly
intimates that disputes are resolved through arbitration and no in out of court as
articulated in Atalese.
In that vein, we are satisfied there is no ambiguity when Georgia agreed
to resolve disputes related to Uber's services by binding arbitration "and not in
a court of law." The provision clearly and unambiguously evidences a waiver
of plaintiffs' right to pursue any claims against Uber in a court of law and
obligates plaintiffs to resolve their claims through binding arbitration .
Moreover, Georgia expressly agreed to binding arbitration in the January Terms
and acknowledged she waived her right to a jury trial. Atalese does not require
specific jury trial language to accomplish a waiver of rights. Id. at 444.
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Further, the December Terms unequivocally explain "[o]nly an arbitrator,
and not any federal, state, or local court" has authority to make determinations.
And, the December Terms provide how and by whom an arbitrable dispute will
be conducted.
III.
Next, Uber and Raiser contend that Georgia cannot escape her agreement
by claiming her minor daughter agreed to the December terms on her behalf.
Uber and Raiser assert actual and apparent authority was created when Georgia
gave her daughter the cell phone to use her Uber account. Additionally, Uber
and Raiser agree that the daughter's age regarding her capacity to enter a contract
is immaterial because the daughter did not enter the Terms of Use on her own
behalf; and under this basis, an infancy defense is inapplicable where the minor
misrepresents he or she is an adult.
Generally, "an agent may only bind his [or her] principal for such acts that
'are within his [or her] actual or apparent authority.'" N.J. Laws.' Fund for Client
Prot. v. Stewart Title Guar. Co., 203 N.J. 208, 220 (2010) (quoting Carlson v.
Hannah, 6 N.J. 202, 212 (1951)). "Actual authority occurs 'when, at the time of
taking action that has legal consequences for the principal, the agent reasonably
believes, in accordance with the principal's manifestations to the agent, that the
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principal wishes the agent so to act.'" Ibid. (quoting Restatement (Third) of
Agency: Actual Authority § 2.01 (Am. Law Inst. 2006)). Furthermore, implied
[actual] authority [exists when] "an agent is authorized to do what he [or she]
may reasonably infer 'the principal desires him [or her] to do' in light 'of the
principal's manifestations' and 'facts as he [or she] knows or should know them'
when he [or she] acts." Lampley v. Davis Mach. Corp., 219 N.J. Super. 540,
548-49 (App. Div. 1987) (quoting Lewis v. Travelers Ins. Co., 51 N.J. 244, 251
(1968)).
The scope of the agent's implied authority is limited to only what he or
she may reasonably draw from the principal's words and conduct, and the facts
then known to the agent. See Kisselbach v. Cnty. of Camden, 271 N.J. Super.
558, 565 (App. Div. 1994) (citing Lampley, 219 N.J. Super. at 548-49); see also
Newark Branch, NAACP v. Twp. of W. Orange, 786 F. Supp. 408, 424 (D.N.J.
1992) ("The focus is on the agent's reasonable perception of the principal's
manifestations toward him [or her]."). "And if the authorization is ambiguous,
the agent has authority to act in accordance with what he [or she] reasonably
believes to be the wish of the principal even though it is contrary to the
principal's actual intent." Lewis, 51 N.J. at 251 (citing Restatement (Second) of
Agency: Interpretation of Ambiguous Instructions § 44 (Am. Law Inst. 1958)).
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Importantly, "[t]he principal's unexpressed reservations and qualifications do
not reduce the agent's actual authority." See Restatement (Third) of Agency:
Creation of Actual Authority § 3.01 cmt. b (Am. Law Inst. 2006).
"Apparent authority arises 'when a third party reasonably believes the
actor has authority to act on behalf of the principal and that belief is traceable
to the principal's manifestations.'" Stewart Title, 203 N.J. at 220 (quoting
Restatement (Third) of Agency: Apparent Authority § 2.03 (Am. Law Inst.
2006)). "The doctrine of apparent authority 'focuses on the reasonable
expectations of third parties with whom an agent deals.'" Ibid. (quoting
Restatement (Third) of Agency: Agent Acts with Apparent Authority § 7.08 cmt.
b (Am. Law Inst. 2006)). In either case, "direct control of principal over agent
is not absolutely necessary; a court must examine the totality of the
circumstances to determine whether an agency relationship existed even though
the principal did not have direct control over the agent." Sears Mortg. Corp. v.
Rose, 134 N.J. 326, 338 (1993) (citing 2 C.J.S. Agency § 36 (1972)).
Georgia certified that her daughter was "capable," would frequently order
food, and she and John were preoccupied with packing, which supports the
inference that the daughter acted knowingly on Georgia's behalf. In summary,
the Arbitration Agreement is valid and delegates the threshold question of the
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scope of the arbitration to the arbitrator. Therefore, Georgia's reliance on her
daughter's minority to raise an infancy defense shall be determined by the
arbitrator. Goffe, 238 N.J. at 211.
IV.
Uber and Raiser next argue that even if the December Terms fail, the
January Terms control as constituting a prior existing contract and compel
arbitration. However, the December Terms explicitly state they superseded the
January Terms, and included a severability provision: "If any portion of this
Arbitration Agreement is found to be unenforceable or unlawful for any reason,
. . . the unenforceable or unlawful provision shall be severed from these Terms
. . . ."
We do not reach this issue because we have concluded that the December
Terms constitute an enforceable Arbitration Agreement.
V.
Uber and Raiser also argue that the arbitrator, not the court, determines
arbitrability here, and John is subject to arbitration as a third-party beneficiary.
Because it was Georgia's Uber account that ordered the vehicle involved in the
accident, Uber and Raiser claim John is a third-party beneficiary of her
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agreement with Uber. We agree with Uber and Raiser that the arbitrator should
determine this issue based on the Arbitration Agreement's delegation clause.
"The determining factor as to the rights of a third[-]party beneficiary is
the intention of the parties who actually made the contract." Broadway Maint.
Corp. v. Rutgers, State Univ., 90 N.J. 253, 259 (1982) (quoting Brooklawn v.
Brooklawn Hous. Corp., 124 N.J.L. 73, 76-77 (E. & A. 1940)). The December
Terms provide that arbitration is binding on third party-beneficiaries.5
Uber and Raiser contend that the December Terms state that the
"Arbitration Agreement shall be binding upon, and shall include any claims
brought by or against any third parties, including but not limited to your spouses,
heirs, third-party beneficiaries and assigns, where their underlying claims arise
out of or relate to your use of the Services," the agreement is enforceable against
John. See also Crystal Point Condo. Inc. v. Kinsale Ins. Co., 466 N.J. Super.
471, 482 (App. Div. 2021), rev'd on other grounds, 251 N.J. 437 (2022) ("Non[-
]signatories of a contract . . . may compel arbitration or be subject to arbitration
if the nonparty is . . . a third[-]party beneficiary to the contract.") (second
5
Per the December Terms, Uber and Raiser argue that John would also be bound
as Georgia's spouse.
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alteration in original) (quoting Mut. Benefit Life Ins. Co. v. Zimmerman, 783 F.
Supp. 853, 865 (D.N.J. 1992)).
Again, we are satisfied that this issue is a threshold arbitrability question.
The Arbitration Agreement delegated the threshold question of the scope of the
Agreement to the arbitrator. The arbitrator will therefore decide if John is
subject to arbitration as a third-party beneficiary.
VI.
Plaintiffs counter Uber and Raiser waived the Arbitration Agreement
because: (1) Uber's and Raiser's motion to compel arbitration was untimely; (2)
Uber's answer merely mentioned arbitration in its boilerplate defenses, which
did not fairly apprise plaintiffs that it intended to rely upon the Arbitration
Agreement; (3) Uber and Raiser have not served discovery responses; and (4)
Uber's tactics have prejudiced plaintiffs. We are unpersuaded.
[New Jersey] has a presumption against waiver of arbitration [which] can
be overcome only by clear and convincing evidence that the party seeking to
enforce the arbitration agreement first chose to seek relief in a different forum.
Spaeth v. Srinivasan, 403 N.J. Super. 508, 514 (App. Div. 2008). [Courts
consider various factors] to determine whether a "party's litigation conduct" is
"consistent with its reserved right to arbitrate the dispute:"
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(1) the delay in making the arbitration request; (2) the
filing of any motions, particularly dispositive motions,
and their outcomes; (3) whether the delay in seeking
arbitration was part of the party's litigation strategy; (4)
the extent of discovery conducted; (5) whether the party
raised the arbitration issue in its pleadings, particularly
as an affirmative defense, or provided other notification
of its intent to seek arbitration; (6) the proximity of the
date on which the party sought arbitration to the date of
trial; and (7) the resulting prejudice suffered by the
other party, if any. No one factor is dispositive.
[Cole, 215 N.J. at 280-281.]
Based on the totality of these factors, we conclude Uber and Raiser did
not waive arbitration. Uber and Raiser did not delay in moving to compel
arbitration; in fact, they pleaded the affirmative defense of contractual
arbitration in their answer. The record shows Uber's counsel then reached out
to plaintiffs' counsel in July 2023 to request that they agree to stay the litigation
in favor of arbitration, but plaintiffs refused to agree. Uber and Raiser then
promptly filed their motion to compel arbitration. Limited mandatory discovery
was conducted. No arbitration or trial date had been set when the motion to
compel arbitration was filed. Therefore, there was no delay or resulting
prejudice.
Reversed and remanded for entry of a new order. We do not retain
jurisdiction.
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