BACON et al v. AVIS BUDGET GROUP, INC. et al
MEMORANDUM OPINION. Signed by Judge Kevin McNulty on 6/9/17. (cm, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ABIGAIL BACON, et al.,
Civ. No. 16-5939 (KM) (JBC)
AVIS BUDGET GROUP, INC., and
PAYLESS CAR RENTAL, INC.,
The plaintiffs have filed a putative class action against car rental
companies Avis Budget Group, Inc. (“Avis”) and an Avis subsidiary, Payless
Auto Rental, Inc. (“Payless”). Essentially the complaint alleges that the
defendant rent-a-car companies routinely charge customers’ credit and debit
cards for ancillary products and services that the customers have not
authorized, and in some cases, have specifically declined. The plaintiffs assert
claims under New Jersey, Florida, and Nevada consumer protection and unfair
trade practices statutes, for injunctive relief, for unjust enrichment, and for
conversion. (See Compi.)’ Plaintiffs propose to certify a class action comprising
Certain record items repeatedly cited are abbreviated as follows:
Complaint, ECF No. 1
Def. Br. = Memorandum of Law in Support of Motion to Compel Arbitration Filed on
Behalf of Defendants Avis Budget Group, Inc. and Payless Car Rental, Inc., ECF No.
Def. Cert. = Certification of Kellie A. Lavery in Support of Defendants Avis Budget
Group, Inc. and Payless Car Rental, Inc.’s Motion to Compel Arbitration, ECF No. 162
Presently before the court are two motions to compel arbitration: one
submitted by Payless (joined by Avis) (ECF No. 16), and another submitted
jointly by Avis and Payless (ECF no. 17). (See Def. Br. 7.) The first, Payless
motion deals with plaintiff Arcadia Lee, who rented a car for use in Costa Rica;
the second, joint motion deals with the remaining plaintiffs, whose rentals
occurred in New Jersey, Nevada, or Florida (the “U.S. Plaintiffs”). Both motions
seek an order compelling the plaintiffs to arbitrate their claims on an individual
basis, as well as dismissal of the Complaint or stay of this action pending
arbitration. Because the defendants’ motions present issues of fact, I will deny
them as presented and order discovery.
A. The U.S. Plaintiffs’ Rental Agreements and Rental Jackets
The six U.S. Plaintiffs signed one-page rental agreements (the “U.S.
Agreements”) for Payless cars. Each plaintiff’s signature appears immediately
below the final paragraph of the U.S. Agreement which states, in part, “I have
received&agree to all notice s&terms here and in the rental jacket.” (Spacing sic
in original). The Defendants attach copies of the U.S. Agreements as exhibits to
certifications submitted with their opening briefs. Also attached are copies of
Payless Br. = Memorandum of Law in Support of Motion to Compel Arbitration Filed
on Behalf of Defendant Payless Car Rental, Inc., ECF No. 17-1
Payless Cert. = Certification of Kellie A. Lavery in Support of Defendant Payless Car
Rental, Inc.’s Motion to Compel Arbitration, ECF No. 17-2
Opp. = Memorandum of Law in Opposition to Defendants’ Motion to Compel
Arbitration, ECF No. 21
Payless Reply = Reply Memorandum of Law in Support of Defendant Payless Car
Rental, Inc.’s Motion to Compel Arbitration, ECF No. 22
Sur-Reply = Sur-Reply In Response to Defendants’ Motions to Compel Arbitration,
ECF No. 29
These plaintiffs are Abigail Bacon, Jeannine DeVries, Lisa Geary, Richard
Alexander, Yvonne Wheeler, and George Davidson.
the “rental jackets” mentioned in the Agreements (the “U.S. Rental Jackets”).
(Payless Cert. Exs. A—F)
Each U.S. Agreement is essentially a one-page receipt. It itemizes charges
and fees, lists basic identification information about the customer and the
rented vehicle, and identifies pickup details for the rented vehicle. (Id.)
The U.S. Agreements’ Rental Jackets, so called, are not actually titled as
such, but bear the title “Rental Terms and Conditions.” Each includes some 31
paragraphs of terms and conditions in small but legible print. The terms and
conditions are substantially the same across all six U.S. Rental Jackets. Each
includes an arbitration provision, which states, in relevant part:
Dispute Resolution: Except as otherwise provided
below, in the event of a dispute that cannot be
resolved informally through the pre-dispute resolution
procedure, all disputes between you and Payless
arising out of, relating to or in connection with your
rental of a vehicle from Payless and these rental terms
and conditions shall be exclusively settled through
binding arbitration through the American Arbitration
Association (“AAA’) pursuant to the AAA’s thencurrent rules for commercial arbitration. There is no
judge or jury in arbitration. Arbitration procedures are
simpler and more limited than rules applicable in
court and review by a court is limited. YOU AND
PAYLESS AGREE THAT ANY SUCH ARBITRATION
SHALL BE CONDUCTED ON AN INDIVIDUAL BASIS
I properly consider the rental agreements and rental jackets appended to the
defendants’ briefs because the plaintiffs refer to them in the Complaint and they are
integral to the plaintiffs’ claims. (See, e.g., Compl. ¶J 50, 59, 60—62, 74—76, 89, 101,
104—105, 115, 117, 133) In re Asbestos Products Liability Litigation (No. VI), 822 F.3d
125, 134 n.7 (3d Cir. 2016); Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)
(“However, an exception to the general rule is that a ‘document integral to or explicitly
relied upon in the complaint’ may be considered ‘without converting the motion to
dismiss into one for summary judgment.’ “) (quoting In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)); Pension Ben. Guar. Corp. v. White Consol.
Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (“We now hold that a court may
consider an undisputedly authentic document that a defendant attaches as an exhibit
to a motion to dismiss if the plaintiffs claims are based on the document.”).
AND NOT IN A CLASS, CONSOLIDATED OR
REPRESENTATIVE ACTION. Notwithstanding any
provision in these terms to the contrary, if the class
action wavier in the prior sentence is deemed invalid or
unenforceable, however, neither you nor we are
entitled to arbitration.
Most of the U.S. Plaintiffs allege that they received the U.S. Rental
Jackets only after they had signed the U.S. Rental Agreements.
B. Lee’s Costa Rica Rental Agreement and Rental Jacket
Lee rented a car in Costa Rica from Payless’s licensee, Las Cuatro Vias,
S.A. (“LCV”). (Compi.
¶ 139) Lee also signed a one-page, receipt-like agreement
(the “Costa Rica Agreement”), which bears a Payless logo and LCV’s title and
address at the top of the page. The Costa Rica Agreement states: “By signing
below, you agree to the terms and conditions of this Agreement, and you
acknowledge that you have been given an opportunity to read this Agreement
before being asked to sign.” (Def. Cert. Ex. G, p.2) Just underneath that
sentence, Lee’s signature appears.
The Costa Rica Agreement does not refer to a rental jacket or to any
other “rental agreement.” (The Defendants append a copy of the Costa Rica
Agreement as Exhibit G to the certification submitted with their brief. (Id.))
Within that Exhibit G, on the page following the Costa Rica Agreement, is a
document that bears the title “Rental Agreement.” This document comprises 21
paragraphs in English and 21 paragraphs in Spanish on a single page. (I will
call it the “Costa Rica Rental Jacket”.) The writing is so small that it is nearly
Specifically, the Complaint alleges that Alexander, DeVries, and Geary did not
receive a copy of their U.S. Rental Jackets until after they had signed their U.S.
Agreements. (Compi. ¶f 61—63, 74—77, 104—106) As to Davidson, the allegations are
unclear about the timing. (Id. ¶j 88—89) There are no allegations either way as to
Wheeler’s receipt of the U.S. Rental Jacket. (See id. ¶J 111—127.) The Complaint
expressly alleges that Bacon never received a copy of Payless’s “Terms and Conditions”
(i.e., the U.S. Rental Jacket) at all. (Id. ¶ 134).
I refer to this document as a “Jacket” for consistency with the U.S. Rental
Jackets; the term “jacket” does not actually appear anywhere in the Costa Rica
Agreement or the Costa Rica Rental Jacket.
illegible, at least in the Court’s copy. The first English paragraph, titled
“Parties,” explains that only Lee and LCV are parties to the Costa Rica
Agreement. (See id.
The Costa Rica Rental Jacket includes a “Dispute resolution” clause,
which purports to commit disputes to arbitration in Costa Rica:
Every controversy or dispute that may be related to
this agreement or its performance, liquidation or
interpretation shall be resolved in accordance with
the following procedure: 1) The parties shall resort
to conciliation mechanisms in accordance with the
Conciliation Regulations of the
Conciliation and Arbitration of the Chamber of
Commerce of Costa Rica. If the Parties have not
reached a conciliation agreement within fifteen
business day following the conciliation request, the
controversy or dispute shall be resolved by means
of 2) Arbitration proceedings, in accordance with
the Arbitration regulation of said center, to which
unconditionally. The Arbitration Panel shall be
composed of one member and resolve pursuant to
(Def. Cert. Ex. G, p.2,
The plaintiffs allege that Lee did not receive a copy of the Costa Rica
Rental Jacket until after she had signed the Costa Rica Agreement. (Compl.
150) The plaintiffs also allege that the version of the Costa Rica Rental Jacket
furnished to Lee was a non-English copy (i.e., a version different from the
bilingual one the defendants include in Exhibit 0 to their certification). (Id.)
Avis is a New Jersey-headquartered company that operates Payless
rental locations throughout the United States. (Id.
13) The Complaint alleges
that Avis acquired Payless as a wholly owned subsidiary in 2013. (Compl.
11, 24) By that time, the plaintiffs say, Payless customers had lodged
“thousands of on-line complaints” against Payless for its deceptive practices.
The plaintiffs do not allege that they ever dealt directly with Avis.
Rather, citing a number of Avis’s and Payless’s public statements, they allege
that Avis and Payless “combined operations, and [that] at all times material to
this litigation, Avis directed and controlled the daily activities of Payless and
totally dominated it, to the extent that Payless manifested no separate
corporate interest of its own and functioned solely to achieve the purposes of
27) The plaintiffs therefore contend that Avis and Payless,
through their agents or personnel, together carried out the alleged deceptive
practices, “act[ing] in concert with
each other” and as “seamlessly
integrated” companies. (Id. ¶j 29—3 1)
This Circuit’s case law has meandered somewhat in defining the proper
standard of review of a motion to compel arbitration. The upshot, however, is
fairly clear. Where the issue can be decided without evidence, it will be, based
on an application of the familiar Rule 12(b)(6) standard to the face of the
pleadings. Failing that, however, the Court will permit discovery and decide the
issue on a summary judgment standard, pursuant to Rule 56. If there is a
genuine issue of fact, summary judgment will be denied and the issues will be
Because arbitration is a “matter of contract” between two parties, “a
judicial mandate to arbitrate must be predicated upon the parties’ consent.”
Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 771 (3d Cir.
2013) (quoting Far—Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51,
54 (3d Cir. 1980)). Pursuant to the Federal Arbitration Act (“FAA”), a court may
enforce a contract to arbitrate, but only if the court is satisfied that the
“making of the agreement” to arbitrate is not “in issue.” Id.
In Guidotti v. Legal Helpers Debt Resolution, the Third Circuit stated the
approach a court must take on a motion to compel arbitration. The judiciary
must balance the competing goals of the FAA: the speedy and efficient
resolution of disputes, and the enforcement of private agreements. Id. at 773.
Reconciling sometimes murky precedent in light of those competing interests,
the Guidotti court reasoned that where “the affirmative defense of arbitrability
of claims is apparent on the face of a complaint (or.
in the complaint),
documents relied upon
the FAA would favor resolving a motion to compel
arbitration under a motion to dismiss standard without the inherent delay of
discovery.” Id. at 773-74. Such an approach “appropriately fosters the FAA’s
interest in speedy dispute resolution. In those circumstances, ‘[t]he question to
becomes whether the assertions of the complaint, given the
required broad sweep, would permit adduction of proofs that would provide a
recognized legal basis’ for rejecting the affirmative defense.” Id. at 774 (quoting
Leone v. Aetna Cas. & Sur. Co., 599 F.2d 566, 567 (3d Cir. 1979).
“In many cases, however, a more deliberate pace is required, in light of
both the FAA’s insistence that private agreements be honored and the judicial
responsibility to interpret the parties’ agreement, if any, to arbitrate.” Id.
[The Rule 12(b)(6) standard will not be appropriate]
when either the motion to compel arbitration does not
have as its predicate a complaint with the requisite
clarity to establish on its face that the parties agreed
to arbitrate or the opposing party has come forth with
reliable evidence that is more than a naked assertion
that it did not intend to be bound by the arbitration
agreement, even though on the face of the pleadings it
appears that it did. Under the first scenario,
arbitrability not being apparent on the face of the
complaint, the motion to compel arbitration must be
denied pending further development of the factual
record. The second scenario will come into play when
the complaint and incorporated documents facially
establish arbitrability but the non-movant has come
forward with enough evidence in response to the
motion to compel arbitration to place the question in
issue. At that point, the Rule 12(b)(6) standard is no
longer appropriate, and the issue should be judged
under the Rule 56 standard.
Under either of those scenarios, a restricted inquiry
into factual issues will be necessary to properly
evaluate whether there was a meeting of the minds on
the agreement to arbitrate and the non-movant must
be given the opportunity to conduct limited discovery
on the narrow issue concerning the validity of the
arbitration agreement. In such circumstances, Rule 56
furnishes the correct standard for ensuring that
arbitration is awarded only if there is an express,
unequivocal agreement to that effect.
Id. at 774—76 (citations and quotations omitted).
Thus, where the complaint and supporting documents are unclear as to
an agreement to arbitrate, or where a plaintiff responds to a motion to compel
with additional facts sufficient to place the issue of arbitrability “in issue,” then
the parties should be entitled to discovery. After limited discovery, a court may
then “entertain a renewed motion to compel arbitration” and should review
such a motion under the summary judgment standard. Id. at 776.
If summary judgment is unwarranted in light of material factual disputes
regarding an agreement’s enforceability, a court should then proceed to trial
“regarding ‘the making of the arbitration agreement or the failure, neglect, or
refusal to perform the same,’ as Section 4 of the FAA envisions.” Id. (quoting
Somerset Consulting, LLC v. United Capital Lenders, LLC, 832 F. Supp. 2d 474,
482 (E.D. Pa. 2011)). In every instance, “[b]efore a party to a lawsuit can be
ordered to arbitrate and thus be deprived of a day in court, there should be an
express, unequivocal agreement to that effect.” Id. (quoting Par—Knit Mills, 636
F.2d at 54).
A. The Framework On Motions to Compel Arbitration
Federal law is decidedly pro-arbitration. The FAA’s purpose is “to reverse
the longstanding judicial hostility to arbitration agreements that had existed at
English common law and had been adopted by American courts, and to place
arbitration agreements upon the same footing as other contracts.” Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S. Ct. 1647 (1991). Thus
the statute makes agreements to arbitrate “valid, irrevocable, and enforceable,”
§ 2, subject only to traditional principles of contract formation and
interpretation. The FAA provides that contract provisions manifesting the
intent of the parties to settle disputes in arbitration shall be binding, allows for
the stay of federal court proceedings in any matter that is referrable to
arbitration, and permits both federal and state courts to compel arbitration if
one party has failed to comply with an agreement to arbitrate. 9 U.S.C.
§ 2, 3,
cumulatively, those provisions “manifest a liberal federal policy favoring
arbitration agreements.” Gilmer, 500 U.S. at 24, 111 S. Ct. 1647 (quotations
omitted). Thus, “as a matter of federal law, any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone
Mem’lHosp. v. Mercury Constr. Corp., 460 U.S. 1, 24—25, 103 S. Ct. 927 (1983).
The Supreme Court has recently given new content to that strong federal
pro-arbitration policy. It is not much of an exaggeration to say that the Court
implied that the states were promulgating facially neutral rules that are in fact
intended to discriminate against agreements to arbitrate vis-à-vis other
preempts any state rule discriminating on
its face against arbitration—for example, a “law
prohibit[ing outright the arbitration of a particular
And not only that: The Act also
type of claim.”
displaces any rule that covertly accomplishes the same
objective by disfavoring contracts that (oh so
coincidentally) have the defining features of arbitration
Kindred Nursing Centers Ltd. P’shzp v. Clark, 137 S. Ct. 1421, 1426 (2017)
(quoting AT & TMobility LLC v. Concepcion, 563 U.S. 333, 341, 131 S. Ct.
1740). Any consideration of State law, then, must bear in mind the Kindred
The fact remains, however, that arbitration is a creature of contract.
Before referring any controversy to arbitration, the Court must determine
whether the parties have indeed agreed to arbitrate it. Green Tree Fin. Corp. v.
Bazzle, 539 U.S. 444, 452, 123 S. Ct. 2402 (2003). That determination has
three subparts: (1) whether the parties agreed to arbitrate; (2) whether the
dispute is within the scope of the agreement; and (3) whether Congress
nevertheless intended the dispute to be non-arbitrable. Sarbak v. Citigroup
Global Markets, Inc., 354 F. Supp. 2d 531, 536—37 (D.N.J. 2004).
Because the parties point to no Congressional prohibition, only the first
and second subparts are at issue here. As to the first, courts are to apply
traditional principles of state contract law, while also keeping in mind “the
strong federal policy in favor of arbitration.” John Hancock Mut. Life Ins. Co. v.
Olick, 151 F.3d 132, 137 (3d Cir. 1998). The second question is a matter of
federal law. Century Indem. Co. v. Certain Underwriters at Lloyd’s, London, 584
F.3d 513, 524 (3d Cir. 2009).
B. The Parties’ Arguments
An initial overview of the parties’ arguments is helpful here. In broad
strokes, the defendants argue that the arbitration provisions in all of the U.S.
and Costa Rica Rental Jackets (collectively, the “Rental Jackets”) are
enforceable and that the plaintiffs’ claims fall within the scope of the
arbitration provisions. Further, they argue that the arbitration provisions
require the plaintiffs to bring their claims on an individual, rather than classwide basis. They also argue, under principles of agency and equitable estoppel,
that non-signatory Avis can enforce the arbitration provisions in the U.S.
Rental Jackets and that both Avis and Payless, as non-signatories, can enforce
the arbitration provision in the Costa Rica Rental Jacket.
The upshot, the defendants conclude, is that all of the plaintiffs must
submit their claims against Avis and Payless in arbitration, and on an
individual basis—Lee in Costa Rica and the U.S. Plaintiffs in the United States.
The plaintiffs urge me to stop the defendants at square one. As they see
it, the U.S. Agreements and the Costa Rica Agreement (collectively, the
“Agreements”) do not effectively incorporate by reference the Jackets or the
terms and conditions therein, including the arbitration clauses. I agree that the
incorporation-by-reference issue precedes all others. If plaintiffs are correct,
there is no agreement to arbitrate at all, so issues of interpretation are moot.
C. Choice of Law
The cars were rented in New Jersey, Nevada, Florida, and Costa Rica. A
choice-of law issue therefore arises.
“[l]n a diversity action, a district court must apply the choice of law rules
of the forum state to determine what law will govern the substantive issues of a
case.” Warriner v. Stanton, 475 F.3d 497, 499—500 (3d Cir. 2007) (citing Klaxon
Co. v. StentorElec. Mfg. Co., 313 U.S. 487, 496,61 S. Ct. 1020 (1941)). New
Jersey uses the most-significant-relationship test, which consists of two
prongs. Maniscalco v. Brother Int’l Corp. (USA), 793 F. Supp. 2d 696, 704
(D.N.J. 2011), aff’d, 709 F.3d 202 (3d Cir. 2013).
First, the court must determine whether a conflict actually exists
between the potentially applicable laws. P.V. v. Camp Jaycee, 197 N.J. 132,
143, 962 A.2d 453, 460 (2008) (“Procedurally, the first step is to determine
whether an actual conflict exists. That is done by examining the substance of
the potentially applicable laws to determine whether there is a distinction
between them.”) (internal quotations omitted). “[I]f no conflict exists, the law of
the forum state applies.” Snyder v. Farnam Companies, Inc., 792 F. Supp. 2d
712, 717 (D.N.J.2011) (quotingP.V., 197 N.J. at 143, 962 A.2d at 453).
Second, if a conflict exists, the court must determine “which state has
the ‘most significant relationship’ to the claim at issue by weighing the factors”
in the applicable section of the Restatement (Second) of Conflict of Laws. For
contract claims, the applicable Restatement section is
§ 188. Gilbert Spruance
Co. v. Pennsylvania Mfrs. Ass’n Ins. Co., 134 N.J. 96, 102, 629 A.2d 885, 888
(1993). “If the place of negotiating the contract and the place of performance
are in the same state, the local law of this state will usually be applied
Restatement (Second) of Conflict of Laws
§ 188 (1971); see also Spence -Parker
v. Delaware River& Bay Auth., 616 F. Supp. 2d 509, 523 (D.N.J. 2009).
1. The U.S. Agreements and Rental Jackets
The parties agree that, as to the U.S. Agreements and Rental Jackets, the
potentially applicable state laws are those of New Jersey, Nevada, and Florida.
I first look for any relevant conflict between local and foreign law. When there is
no conflict between forum law and foreign law, the Court should default to
forum law—here, the law of New Jersey. Snyder, 792 F. Supp. 2d at 717
(quoting P.V., 197 N.J. at 143, 962 A.2d at 453).
Two issues are most pertinent to these motions to compel arbitration:
whether the language of the arbitration provisions requires the party to submit
to arbitration, and whether such language may be incorporated by reference
from another document. As to waiver language, New Jersey requires an
arbitration clause that is “sufficiently clear to place a consumer on notice that
he or she is waiving a constitutional or statutory right” to a trial and a jury.
Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 443, 99 A.3d 306, 313
(2014). Lurking in the background, however, is the issue of whether New
Jersey’s pre-Kindred standard might “fail to put arbitration agreements on an
equal plane with other contracts,” which would be grounds for FAA
preemption. Kindred Nursing Centers Ltd. P’shp, 137 S. Ct. at 1426_27.6
But I set that aside because, as stated above, the threshold issue is
incorporation by reference; unless the Agreements incorporate the Jackets,
there is no agreement to arbitrate. As to incorporation by reference, New Jersey
contract law requires that an extrinsic document “be described in such terms
that its identity may be ascertained beyond doubt and the party to be bound by
Kindred does not directly address the issue here, and therefore does not
overrule pre—Kindred New Jersey Supreme Court case law, which has disclaimed any
such discriminatory intent. Nevertheless, Kindred seems to signal a more aggressive
approach to FAA preemption that considers the effect of state laws governing
agreements to arbitrate. Compare Guidotti v. Legal Helpers Debt Resolution, L.L. C., 639
F. Appx 824, 827 (3d Cir. 2016) (where District Court below held an arbitration clause
unenforceable under Atalese’s clear waiver rule and New Jersey’s doctrine of
unsconscionability, acknowledging the “important and challenging question” of
whether the District Court’s grounds “remain viable as not preempted by the [FAA],”
but vacating with instruction on remand to resolve a factual dispute that might render
those grounds unnecessary) with Atalese, 219 N.J. at 443—44 (“The requirement that a
contractual provision be sufficiently clear to place a consumer on notice that he or she
is waiving a constitutional or statutory right is not specific to arbitration provisions.
Rather, under New Jersey law, any contractual waiver-of-rights provision must reflect
that [the party] has agreed clearly and unambiguously to its terms.” (internal
quotation marks omitted) (collecting cases not related to arbitration provisions)).
the terms must have had ‘knowledge of and assented to the incorporated
terms.”’ Alpert, Goldberg, Butler, Norton & Weiss, P.C. u. Quinn, 410 N.J. Super.
510, 533, 983 A.2d 604, 617 (App. Div. 2009) (quoting 4 Williston on Contracts
§ 30:25 (Lord ed. 1999)). That standard, drawn from the authoritative Williston
treatise, is based on fundamental principles of offer, acceptance, and mutual
assent, It would not seem to be vulnerable to the Kindred objection that it
singles out agreements to arbitrate or treats them differently from other
The parties seem to agree that New Jersey and Nevada law do not
appreciably diverge as they relate to this case. Nevada’s law does not seem to
be well developed as to incorporation by reference, and neither party has come
forward with any Nevada case sufficient to displace forum law. Therefore, as to
Bacon, who rented a car in New Jersey, and as to Alexander, DeVries, and
Davidson, who rented cars in Nevada, I will apply the law of the forum, New
That leaves Florida, where Geary and Wheeler rented cars. As to general
contract principles, Florida law is similar to that of New Jersey. “Under New
Jersey law, a binding contract requires four things: an offer and acceptance,
consideration, a meeting of the minds, and sufficiently definite terms.” Noble v.
Samsung Elecs. Am., mc, No. 16-1903, 2017 WL 838269, at *2 (3d Cir. Mar. 3,
2017) (citations omitted). Under Florida law, those commonplace requisites of a
binding contract are similar.
The specific focus here, however, is whether there was “mutual assent” to
incorporate the arbitration clauses in the rental jackets. As to incorporation by
See Gibson v. Courtois, 539 So. 2d 459, 460 (Fla. 1989) (“Mutual assent is an
absolute condition precedent to the formation of the contract.”); Buck-Leiter Palm Ave.
Dev., LLC v. City of Sarasota, 212 So. 3d 1078, 1082 (Fla. Dist. Ct. App. 2017)
(contract was formed where “the parties agreed upon essential and definite terms and
that the parties intended for [the agreement] to be a binding contract.”); Nowlin v.
NationstarMortg., LLC, 193 So. 3d 1043, 1045 (Fla. Dist. Ct. App. 2016) (“A contract is
made when the three elements of contract formation are present: offer, acceptance,
and consideration. No person or entity is bound by a contract absent the essential
elements of offer and acceptance.” (quoting 11 Fla. Jur.2d Contracts § 25 (2016)).
reference of extrinsic documents or terms, Florida and New Jersey law may
diverge somewhat, in that the Florida standard is arguably less strict. The
incorporated document must be “sufficiently described,” begging the question
of what is “sufficient.” Florida law does not, however, expressly state that the
incorporated matter be identified “beyond doubt,” as under New Jersey law.
See Quinn, supra.
Having found at least an arguable conflict between New Jersey and
Florida law, I consider the state-interests analysis, applying the Restatement
factors. Those factors include where the contract was negotiated, where it was
executed, where it was performed, the location of the contract’s subject matter,
and “the domicile, residence, nationality, place of incorporation, and place of
business of the parties.” Restatement (Second) of Conflict of Laws
§ 188 (1971).
Geary and Wheeler negotiated and executed the U.S. Agreements in
Florida. They rented and picked up the cars from Payless locations in Florida.
¶J 97, 111) When “the place of negotiating the contract and the place
of performance are in the same state, the local law of this state will usually be
applied.” Restatement (Second) of Conflict of Laws
§ 188 (1971). Nothing
displaces that rule of thumb. Geary resides in Wisconsin and Wheeler resides
in Illinois. (id.
¶J 17, 19) Payless is incorporated in Nevada, but maintains its
principal place of business in New Jersey and conducts business from rental
locations worldwide. (Id.
¶J 20—22) Neither party argues that New Jersey has a
significantly greater interest than Florida solely by virtue of its being Payless’s
principal place of business. Nor do the remaining factors point strongly to any
To incorporate by reference a collateral document, the
incorporating document must (1) specifically provide “that
it is subject to the incorporated [collateral] document’” and
(2) the collateral document to be incorporated must be
‘sufficiently described or referred to in the incorporating
agreement”’ so that the intent of both parties may be
Spicer u. Tenet Florida Physician Servs., LLC, 149 So. 3d 163, 166 (Fla. Dist. Ct. App.
other state but Florida. I therefore apply to Geary’s and Wheeler’s claims the
law of Florida, where the contract was negotiated, executed, and performed.
2. The Costa Rica Agreement and Rental Jacket
The defendants offer no choice of law analysis for the Costa Rica
Agreement and Rental Jacket. They cite United States Supreme Court
precedent, or alternatively New Jersey law, for the proposition that Lee
effectively agreed to arbitrate her claims in Costa Rica. The plaintiffs argue
only that as a matter of common sense, the Costa Rica Rental Jacket is not
incorporated into the Costa Rica Agreement. Plaintiffs do not propose any
alternative to the defendants’ approach.
The obvious contenders would be the laws of New Jersey and the laws of
Costa Rica. Neither party gave notice that it intended to raise an issue of Costa
Rican law. See Fed. R. Civ. P. 44.1. On this motion, neither party argues that
Costa Rica law applies. Therefore, the parties have waived the issue. See Bel
Ray Co. v. Chemrite (Pty) Ltd., 181 F.3d 435, 440—41 (3d Cir. 1999) (“The
parties therefore generally carry both the burden of raising the issue that
foreign law may apply in an action, and the burden of adequately proving
foreign law to enable the court to apply it in a particular case. Where parties
fail to satisfy either burden the court will ordinarily apply the forum’s law.”
(citations omitted)); Neely v. Club Med Management Services, Inc., 63 F.3d 166,
180 (3d Cir. 1995) (“[L]ike a plaintiffs need to prove one or more of the specific
statutory elements of his or her claims, choice of law issues may be waived.”);
Guiuan v. Villaflor, No. CIV. 7-6064, 2012 WL 3526681, at *2 n.4 (D.N.J. Aug.
15, 2012) (“Failure to provide [Rule 44.11 notice is grounds for waiver and
empowers a court to apply the law of the forum.”); but see Huber v. Taylor, 469
F.3d 67, 76 n. 12 (3d Cir. 2006) (noting inconsistent rulings by Third Circuit
regarding whether choice-of-law issues are waivable, but declining to reach
The defendants select New Jersey law based on the fact that Lee, along with
Bacon and members of a putative “Unauthorized Add-Ons Subclass”, brings a claim
under the New Jersey Consumer Fraud Act. (See Def. Br. 18; Compl. ¶J 208-224)
Accordingly, I will apply New Jersey law to interpret the Costa Rica
Agreement and Rental Jacket.
D. Whether the Parties Agreed To Arbitrate
New Jersey and Florida law, then, govern the issue of whether the
Agreements signed by the plaintiff customers effectively incorporated the
arbitration clauses in the Jackets. Ordinary principles of state contract law
determine the validity of an arbitration agreement. First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920 (1995).
As to the issue of mutual assent, I essentially decide as follows: The
Rental Jackets are separate from the Agreements that the customers signed.
The relevant arbitration language appears only in the Rental Jackets, not in the
Agreements. There can be no mutual assent with respect to terms in a
document that the parties do not understand to be part of the contract. The
question whether these parties so understood the terms poses issues of fact—
such as whether the Jackets were available for the customers’ inspection when
they signed the Agreements. On a Rule 12(b)(6) standard, I can go no further;
to decide the arbitrability issues I will require a factual record and a summary
judgment motion. See Section II, supra.
1. New Jersey Law
New Jersey requires a high degree of certainty before a separate
document will be deemed to be incorporated by reference in a contract:
In order for there to be a proper and enforceable
incorporation by reference of a separate document, the
document to be incorporated must be described in
such terms that its identity may be ascertained beyond
doubt and the party to be bound by the terms must
have had “knowledge of and assented to the
Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510,
533, 983 A.2d 604, 617 (App. Div. 2009) (quoting 4 Williston on Contracts
30:25 (Lord ed. 1999)). Here, that means the Court can find that the parties
agreed to arbitrate only if (a) the Agreements describe the Rental Jackets in
such a way that it is clear beyond doubt that they were incorporated in the
Agreements, and (b) that the plaintiffs knew of, and assented to, the arbitration
provisions in the Rental Jackets.
The plaintiffs contend they never agreed to arbitrate because the
Agreements do not validly incorporate the Rental Jackets. Because their
argument relies heavily on Quinn, supra, I discuss that case here. The Quinn
defendants were clients of the plaintiff law firm who refused to pay certain late
fees. The retainer letters signed by the clients referred to fees, but did not
explicitly mention those particular late fees. One of the retainer letters
purported to incorporate extrinsic “billing practices” and “policies”: “Details on
any of these items and our policies will be provided to you upon request; whether
or not you request them, you will be bound by our standard billing practices and
firm policies in these and other regards, so feel free to ask.” 410 N.J. Super. at
520 (italic emphasis added by the N.J. court). The clients did not inquire at the
time about those “practices” and “policies.” It was not until the billing dispute
arose that the firm sent the clients a copy of the firm’s “master retainer”
agreement, which did disclose the late fees.
The firm argued that the reference to “standard billing practices and firm
policies” in the retainer letter incorporated by reference the master retainer.
The trial court agreed and awarded summary judgment to the firm, but the
Appellate Division reversed. The Appellate Division reasoned first that the
extrinsic document was not clearly identified. The retainer letters’ general
reference to policies and procedures “contained no document dates or an
identifiable publication number,” for example; the master retainer was “in no
way specific or identifiable such that the [firm’s] practices and policies [could]
be ascertained beyond doubt.” Quinn, 410 N.J. Super. at 535 (internal
quotation marks omitted). Accordingly, “there [was] no indication that the
terms of the proposed incorporated document were known or assented to by
defendants.” Id. at 535. “To the contrary,” the court continued, “it [was] without
dispute that defendants were not shown and did not see the [master retainer]
document until” months later. Id.
Surely this case has some factual parallels to Quinn. But every contract
must be examined “in light of the common usage and custom, and
consider[ingj the circumstances surrounding its execution
Pacfico, 190 N.J. 258, 267, 920 A.2d 73, 78 (2007); see also Marchcik v.
Claridge Commons, Inc., 134 N.J. 275, 282, 633 A.2d 531, 535 (1993) (“When
reading a contract, our goal is to discover the intention of the parties.
Generally, we consider the contractual terms, the surrounding circumstances,
and the purpose of the contract.”); Oakwood Hills Co. v. Horacio Toledo, Inc.,
599 So. 2d 1374, 1376 (Fla. Dist. Ct. App. 1992) (“[T]he court may consider the
conduct of the parties through their course of dealings to determine the
meaning of a written agreement.”).
I therefore consider that the Quinn contract, unlike this one, was an
attorney retainer agreement. The case took pains to explicate the special
relationship between attorney and client, and the court’s supervisory role with
respect to attorney ethics. 410 N.J. Super. at 529.’° I am mindful that the
attorney-client relationship is very different from a one-shot commercial
transaction between a car rental company and its customer, which does not
involved a relationship of trust or confidence. Nevertheless, the courts have
repeatedly applied Quinn outside the attorney-client context, rejecting attempts
to distinguish it on that basis, and confirming that the principles it sets forth
are rooted in the general contract law of New Jersey.” Standing on that
The Quinn court also determined that the firm, on the same facts, had violated
Rule 1.5(b) of the Rules of Professional Conduct, which “requires an attorney to
present a client the attorney has not regularly represented, in writing, at the time of
retention, all of the fees and costs for which the client will be charged, as well as the
terms and conditions upon which the fees and costs will be imposed.” Id. at 532.
See, e.g., Blue Sky 1, LLC v. Jaguar Land Rover N. Am., LLC, No. 16-207 (ES)
(SCM), 2016 WL 6803081, at *9 (D.N.J. Nov. 16, 2016) (in dispute between car
dealership and consulting firm, asset purchase agreement did not incorporate
consulting agreement, under Quinn); Guidotti v. Legal Helpers Debt Resolution, L.L.C.,
866 F. Supp. 2d 315, 335 (D.N.J. 2011) (applying and declining to distinguish Quinn
“on the basis of the fact that the plaintiff seeking to impose the incorporated terms
was an attorney” because the Quinn “court was clear that the proposition regarding
incorporation of absent terms by reference was a question of general contract law, not
specific to the attorney-client relationship.”), vacated on other grounds, 716 F.3d 764
foundation, then, I look to persuasive case law from other jurisdictions that
deals more specifically with vehicle rental contracts like the one here.
As to the issue of incorporation by reference, the plaintiffs point to State
ex rel. U-Haul Co. of W. Virginia v. Zakaib, 232 W. Va. 432, 443, 752 S.E.2d
586, 597 (2013). The Zakaib plaintiffs were renters of U-Haul equipment. Some
of these renters signed a one-page rental contract that stated “I acknowledge
that I have received and agree to the terms and conditions of this Rental
Contract and the Rental Contract Addendum.” Others, after viewing a rental
contract on an electronic terminal, clicked “accept” in response to the prompt
“By clicking Accept, I agree to the terms and conditions of this Rental Contract
and Rental Contract Addendum.” Id. at 436—37. In either case, the renter did
not actually receive a copy of the “Rental Contract Addendum” until after he or
she had signed the rental contract. Id. at 437.
The Addendums in Zakaib were fashioned into cardstock pamphlets that
held documents and displayed advertisements and instructions for returning
rented equipment. Id. The Addendum contained the title “Rental Contract
Addendum” (the same terminology used in the incorporation language of the
Contract). The text of the Addendum included the following guidance:
“Additional Terms and Conditions for EQUIPMENT Rental, Place Rental
Contract documents in this folder & keep available throughout your move.” Id.
When the Zakaib plaintiffs sued U-Haul for assessing hidden charges, UHaul moved to compel arbitration, based on an arbitration clause in the
Addendum. The trial court denied the motion. The Supreme Court of West
Virginia announced a standard for incorporation by reference (“unmistakable
beyond doubt”) akin to that of New Jersey.’ Applying that standard, it
(3d Cir. 2013); see also James v. Glob. TelLink Corp, 852 F.3d 262, 266 (3d Cir. 2017)
(citing Quinn for the principle that incorporation by reference requires the party bound
by the terms to have had knowledge and assented to the terms).
Specifically, the Supreme Court of West Virginia held:
[[I]n the law of contracts, parties may incorporate by
reference separate writings together into one agreement.
However, a general reference in one writing to another
affirmed the trial court’s ruling that the Agreement did not effectively
incorporate the arbitration clause in the Addendum:
The reference to the Addendum is quite general with
no detail provided to ensure that U—Haul’s customers
were aware of the Addendum and its terms, including
its inclusion of an arbitration agreement. The lack of a
detailed description is compounded by the fact that
the Addendum itself was designed to look more like a
rather than a legally
services, and drop-off procedures,
binding contractual agreement. Finally, and most
troubling to this Court, is the fact that U—Haul’s practice
was to provide customers a copy of the Addendum only
after the Rental Agreement had been executed. Under
these circumstances, there simply is no basis upon
which to conclude that a U—Haul customer executing
the Rental Agreement possessed the requisite
knowledge of the contents of the Addendum to
establish the customers consent to be bound by its
terms, which terms include the arbitration agreement
sought to be enforced by U—Haul in this case
Id. at 444 (italic emphasis added).
Payless attempts to distinguish Zakaib, countering that the U.S.
Agreements’ reference to “terms&conditions” and “rental jackets” is clearer
than the West Virgina contract’s reference to the “Addendum,” and that the
U.S. Jackets were not camouflaged as brochures. The real rub, however, is the
factor that the Zakaib court found critical—that the Addendum was not
provided until after the renter had signed the Agreement. That factor is
document is not sufficient to incorporate that other
document into a final agreement. To uphold the validity of
terms in a document incorporated by reference, (1) the
writing must make a clear reference to the other document
so that the parties’ assent to the reference is unmistakable;
(2) the writing must describe the other document in such
terms that its identity may be ascertained beyond doubt;
and (3) it must be certain that the parties to the agreement
had knowledge of and assented to the incorporated
document so that the incorporation will not result in
surprise or hardship.
Id. at 444.
allegedly present here as well. According to the complaint, the customers—i.e.,
the plaintiffs, or most of them— did not receive the Jacket until after they had
signed the Agreement.
The Zakaib holding is buttressed by another case brought against Avis
itself. Kenner v. Avis Rent A Car Sys., Inc., 254 A.D.2d 704, 704—05, 678
N.Y.S.2d 213 (1998), involved an indemnification rather than an arbitration
provision. As to the incorporation-by-reference issue, however, it is pertinent.
There, Avis claimed that the relevant indemnification provision, which
appeared only in a rental jacket, was incorporated in the plaintiff’s rental
agreement by reference. The New York appellate court applied a rule of
incorporation similar to New Jersey’s and affirmed the trial court’ denial of
Avis’s motion for summary judgment:
[T]he indemnification provision was contained in a
separate jacket or folder that was admittedly not
provided to plaintiff until after he signed the rental
agreement. The doctrine of incorporation by reference
requires that the paper to be incorporated into the
written instrument by reference must be so described
in the instrument that the paper may be identified
“beyond all reasonable doubt” (Matter of Board of
Commrs., 52 NY 131, 134). There is a triable issue of
fact whether the oblique reference in the rental
agreement to an otherwise unidentified “rental
document jacket” meets that exacting standard (cf.,
Shark Information Servs. Corp. v Crum & Forster
Commercial Ins., 222 AD2d 251, 252) and thus
whether the rental document signed by plaintiff gave
him sufficient notice of the indemnification provisions
included in the contents of the separate jacket
Id. at 704—705. Our case, like Kenner allegedly involves the Avis agreement’s
“oblique” reference to a rental jacket, which in any event was not furnished
until after the agreement was signed.
Payless does not try to distinguish Kenner but undertakes to bury it in
contrary authority. For example, in Lucas v. Hertz Corp., 875 F. Supp. 2d 991,
998—99 (N.D. Cal. 2012), the plaintiffs rented a car in Costa Rica, at which time
they signed a rental agreement that stated: “I have read the conditions on this
Contract as set forth in the FOLDER JACKET CR001 and its addendum
DCLAOO1, DCLOO2, DCLAOO3, the contents of which I fully understand as
explained to me, therefore I accept the conditions and execute this document in
full conformity.” Id. at 995. The court granted Hertz’s motion to compel
As described above, the car rental agreement
specifically referenced the folder jacket and the terms
and conditions found in it and required Mr. Martin to
acknowledge that he read and understood them. It
also required him to agree that he accepted those
terms and conditions and executed the car rental
agreement in full conformity with them. Mr. Martin
declares that he either was never given a copy of the
folder jacket or was given it after he signed the rental
agreement, but this representation is immaterial
because the terms of an incorporated document must
only have been easily available to him; they need not
have actually been provided.
Id. at 998—99 (citations omitted; emphasis added).
The plaintiffs argue that the court’s decision in Lucas hinged on
California’s laxer standard for incorporation by reference. And indeed,
California law does not seem to adopt either the New Jersey “beyond doubt”
standard or the requirement that the customer actually know of the particular
relevant term contained in the incorporated document. Rather, California
requires that the reference be “clear and unequivocal” and that the
incorporated document, if not actually known, be “easily available.” The
difference is not night-and-day, obviously, but it is significant. And Quinn itself,
Lucas summarized California law as thus:
“For the terms of another document to be incorporated into the
document executed by the parties[, (1) ] the reference must be clear and
unequivocal, [(2) ] the reference must be called to the attention of the
other party and he must consent thereto, and [ (3) ] the terms of the
incorporated document must be known or easily available to the
Id. at 98 (emphases added) (citing Shaw v. Regents of University of California, 58
Cal.App.4th 44, 54, 67 Cal.Rptr.2d 850 (1997)).
the case from which the parties draw the New Jersey standard, expressly
distinguishes California law. Quinn string-cites federal and out-of-state cases
that had adopted the Williston-derived requirement that it be beyond doubt
that the customer knew of and assented to the incorporated terms. 410 N.J.
Super. at 533—35. At the end of the string cite, Quinn adds a “but see” citation
to a California case stating an “availability” standard similar to that later
summarized in Lucas. Wolschlager v. Fid. Nat’l Title Ins. Co., 111 Cal. App. 4th
784, 4 Cal. Rptr. 3d 179, 184-85 (2003) (“For the terms of another document to
be incorporated into the document executed by the parties the reference must
be clear and unequivocal, the reference must be called to the attention of the
other party and he must consent thereto, and the terms of the incorporated
document must be known or easily available to the contracting parties.”)). Thus
Quinn itself drew a distinction between its own standard and the California
imputed-knowledge standard of cases such as Lucas, supra. See also n. 13,
New Jersey’s focus on the parties’ knowledge of the incorporated terms,
as opposed to general knowledge of the existence of the incorporated
document, is also telling. To me it suggests that the Rental Jackets were
incorporated by reference into the Agreements only as to those plaintiffs, if any,
who had knowledge of the relevant term—i.e., the arbitration provision—at the
time they signed the Rental Agreements. True, the U.S. Agreements’ reference
to “all notice s&terms here and in the rental jacket” may have made the
existence of some other terms obvious.’ Still, when they signed the U.S.
The defendants also urge me to consider, inter alia, Benson v. Budget Rent A
Car Sys. Inc., No. 08-CV-4512, 2011 WL 4528334, at *4 (E.D. Pa. Sept. 2, 2011), in
which a federal court in the Eastern District of Pennsylvania held on summary
judgment that a rental agreement similar to the U.S. Plaintiffs’ incorporated a rental
jacket. There, however, the court noted that the customer “received and read” the
rental jacket. That fact is at issue on this motion to dismiss.
The Costa Rica Agreement does not call attention to the existence of another
document whatsoever and thus clearly fails to incorporate the Costa Rica Rental
Jacket. Lee alleges in any event that she did not receive the Jacket until after she had
signed the Costa Rica Rental Agreement. (Compi. ¶ 150)
Agreements, most or all of the U.S. Plaintiffs allegedly did not clearly know
what those terms, including the arbitration clause, consisted of. Such facts, if
proven, may be fatal to a claim of incorporation.
New Jersey’s incorporation-by-reference rule is in tension—but not, I
think, in conflict—with the hornbook principle that “a party accepting an offer
has an absolute duty to read and understand the terms of an offer, and failure
to do so will not diminish the force and effect of the resulting contract.” 66 VMD
Assocs., LLC v. Melick-Tully & Assocs., P.C., No. A-4008-09T3, 2011 WL
3503160, at *6 (N.J. Super. Ct. App. Div. Aug. 11, 2011). Under New Jersey
law, for example, a defendant has no obligation to alert a plaintiff to the
existence of an un-hidden arbitration provision in a document; “[f]ailing to read
a contract does not excuse performance unless fraud or misconduct by the
other party prevented one from reading.” Gras v. Assoc’s First Capital Corp.,
346 N.J. Super. 42, 56, 786 A.2d 886 (App. Div. 2001) (internal quotation and
At most, however, this hornbook principle suggests that knowledge may
be imputed under limited circumstances. For knowledge to be imputed,
however, the renter must have been given the incorporated document or
specifically directed to it in such a way that that there was a real opportunity to
read its terms. I would not impute knowledge where a plaintiff has merely been
told that some other document, location and contents unknown, which will be
furnished after the contract is signed, is incorporated by reference.
This is just another way of saying that effective incorporation by
reference requires that, in advance of signing the contract, the renter must
have been able to identify beyond doubt the precise document that is referred
to, and to ascertain the contents of the relevant terms. Otherwise, a party
cannot truly be said to have assented to the incorporated terms.’
Other cases cited by the defendants cite are distinguishable, as the plaintiffs
urge (see Sur-Reply 2—4). Principally, those other cases did not address incorporation
by reference at all; involved plaintiffs that had read or been given the opportunity to
With all of these principles in mind, I find that I cannot, on a motion to
dismiss standard, grant defendants’ motion to compel arbitration of the claims
of Bacon, DeVries, Alexander, Davidson, and Lee. The complaint alleges, albeit
with varying degrees of clarity, that all five of these plaintiffs received the
Rental Jackets for the first time after they had signed the Agreements. (Compl.
¶j 63, 77, 89, 134, 150)17 The Costa Rica Jackets contain no reference to any
external terms and conditions. And the U.S. Agreements, while referring in
general to extrinsic terms and conditions, did not reveal the arbitration clauses
or any other terms contained in the U.S. Rental Jackets. “[Ajrbitrability not
being apparent on the face of the complaint, the motion to compel arbitration
must be denied pending further development of the factual record.” Guidotti,
716 F.3d at 774.
Discovery might yield facts supporting the arbitrability of the U.S.
Plaintiffs’ claims. For example, if the defendants could show that the U.S.
Plaintiffs received, or were specifically directed to, the U.S. Jackets before
signing the U.S. Agreements, I might be inclined to grant a motion for partial
review the incorporated terms; or involved plaintiffs that had been specifically made
aware of an arbitration waiver in the incorporated document.
Still others involved a contract between two sophisticated merchants who could
be presumed to understand standard industry practices. Cf Standard Bent Glass
Corp. v. Glassrobots Oy, 333 F.3d 440, 447 n. 10 (3d Cir. 2003) (fmding that a sales
agreement incorporated accepted industry guidelines by reference even though the
guidelines were not provided to the plaintiffs, but noting that “[i]f the matter here
involved a non-merchant individual as the product buyer, or if the reference to
arbitration had been buried, the analysis might very well be different.
appropriate to require a merchant to exercise a level of diligence that might not be
appropriate to expect of a non-merchant.”); see also G & G Builders, Inc. v. Lawson,
238 W. Va. 280, 794 S.E.2d 1, 9—10 (2016) (“Standard Bent Glass clearly suggest[s]
that transactions between experienced business entities are to be viewed differently
from those that do not, particularly when the business entity against whom
arbitration is sought was already familiar with the arbitration requirements, either
through previous business dealings between the parties or industry practice.”). These
car rental agreements, by contrast, involve transactions between a sophisticated
commercial entity and an ordinary consumer.
The allegations concerning Davidson are more equivocal than those concerning
Bacon, DeVries, and Alexander. Construing the Complaint in the light most favorable
to the plaintiffs, however, I read it to allege that Davidson was not provided with a
copy of the U.S. Rental Jacket until after he had signed the U.S. Agreement.
summary judgment and to compel arbitration. As it stands now, however, the
defendants’ motion must be denied under the New Jersey standards that apply
to the New Jersey, Nevada, and Costa Rica transactions. Discovery should go
forward as to all, so that the matter can be postured for summary judgment.
See Section II, supra.
2. Florida Law
The plaintiffs concede that Florida’s incorporation- by-reference standard
is not, on its face, as exacting as New Jersey’s. In particular, they point to
Florida’s lack of a “beyond doubt” standard. Nevertheless, the plaintiffs argue,
they cannot be compelled to arbitrate the claims of Geary and Wheeler. Florida
law still requires that the incorporated document be “sufficiently described or
referred to in the incorporating agreement,” (Opp. 34 (quoting BGT Grp., Inc. v.
Tradewinds Engine Servs., LLC, 62 So. 3d 1192, 1194 (Fla. Dist. Ct. App.
2011)). The language in the U.S. Agreements, say the plaintiffs, fails to meet
that somewhat lower standard. I find that, on the facts as alleged, the
difference in the standard does not require a different result, and I will deny
the motion to compel arbitration as to those two Florida customers.
Under Florida law:
To incorporate by reference a collateral document, the
incorporating document must (1) specifically provide
“‘that it is subject to the incorporated Lcollaterall
document’ “ and (2) the collateral document to be
incorporated must be “ ‘sufficiently described or
referred to in the incorporating agreement” so that the
intent of both parties may be ascertained.
Spicer v. Tenet Florida Physician Servs., LLC, 149 So. 3d 163, 166 (Fla. Dist. Ct.
In Spicer, the plaintiff’s employment agreement with the defendant
contained the following incorporation-by-reference clause: “you agree that any
and all disputes regarding your employment with [the defendantj, including
disputes relating to the termination of your employment, are subject to the
Tenet Fair Treatment Process [“F’TP”], which includes final and binding
arbitration.” Id. at 164. The agreement also stated, “If you have any questions,
feel free to contact
me in the Human Resources Department at
[phone number].” The defendants did not provide the plaintiff with a copy of the
FTP until seventeen days after the plaintiff had signed the employment
agreement. When the plaintiff filed a lawsuit under Florida’s Whistleblower Act,
the defendants moved to compel arbitration pursuant to the terms of an
arbitration provision in the FTP. A Florida appeals court held that the
employment agreement did not incorporate the FTP, explaining:
[M]erely providing a telephone number in a document
for a party to call “if you *have any questions” is not
sufficient to meet the requirement of giving the location
of a document to be incorporated by reference.
We conclude that the employment agreement, standing
alone, did not contain a legally sufficient arbitration
agreement because it failed to set forth some
procedures by which arbitration was to be effected.
Although the employment agreement clearly stated
that any and all disputes were “subject to” the FTP,
the FTP was not sufficiently described in the
employment agreement or attached and no location was
given as to where the FTP could be found.
Id. at 167—68 (emphasis added).
On the facts before me, the standard applied in Spicer yields the same
result as the New Jersey standard. The plaintiff must receive an incorporated
document, or else clear direction on how to access it, prior to signing the
agreement that allegedly incorporates that extrinsic document. Construing the
Complaint in the light most favorable to the plaintiffs, Payless failed to provide
Geary and Wheeler with the necessary access here.
Spicer relied on BGT Group, Inc. v. Tradewinds Engine Services, LLC, 62
So. 3d 1192, 1193 (Fla. Dist. Ct. App. 2011). There, a Florida appeals court
denied a motion to compel arbitration when the arbitration provision appeared
in terms and conditions that were referred to in a purchase order but not
actually provided to the plaintiff until the plaintiff filed its breach-of-contract
action. The purchase order stated: “ALL QUOTATIONS, INVOICES AND
ORDERS ARE SUBJECT TO THE ATTACHED BGT TERMS AND CONDITIONS.”
Id. at 1194. The court reasoned that “cases finding sufficient description of a
collateral document to create an incorporation by reference involve more
detailed descriptions of the collateral document, or where the document could
Id. at 1195, citing two examples:
[I]n Kaye v. Macan Building & Design, Inc., 967 So.2d
1112, 1113 (Fla. 4th DCA 2007), the collateral
document was described as “The American Institute of
Architects Documents No. A—201, April 1997 Edition,”
an industry standard. And in Avatar Properties, Inc. v.
Greetham, 27 So.3d 764, 766 (Fla. 2d DCA 2010),
although a home warranty was not attached to a
purchase and sale agreement, “the agreement state[d]
that the warranty was available for examination at [the
seller’s] offices and, that upon request the warranty
would be attached as an exhibit to the purchase and
Id. at 1195. Again, if this does not state a standard consistent with that of New
Jersey, I nevertheless read it as producing a similar result.
Here, the complaint alleges that Geary did not receive the U.S. Rental
Jacket until “after the transaction was completed,” i.e., after she initialed the
U.S. Agreement. (Compi.
106—106) The Complaint does not indicate either
way whether Wheeler received the U.S. Rental Jacket at all. There are no
surrounding facts about whether the contents of the Jacket were otherwise
made available. Therefore, under Florida law, the limited record before me fails
to make clear that Geary’s and Wheeler’s claims are arbitrable, and I will deny
Payless’s motion pending further development of the factual record.
Florida’ s “availability” standard made a difference, however, in Access Telecom,
Inc. v. Numaxx World Merchants, LLC, No. 1:13-CV-20404, 2013 WL 12108129, at *7
(S.D. Fla. Nov. 25, 2013) (terms and conditions were incorporated by reference into
purchase order in part because “[t]he Purchase Order specifically provide[d]: ‘Please
visit our website for terms and conditions at www.numaxx.com that govern this
[and] a reasonable user could easily navigate to the Terms and
Conditions through only one mouse click from the homepage.”). See also Affinity
Internet, Inc. v. Consol. Credit Counseling Servs., Inc., 920 So. 2d 1286, 1288 (Fla. Dist.
Ct. App. 2006) (no incorporation by reference where contract stated it was “subject to
all of [defendant’s] terms, conditions, user and acceptable use policies located”
stated website,” but “no printed version of the policies allegedly located at that website
was attached to the contract” or subsequently provided to the plaintiffs).
Because I will not compel arbitration of any of the plaintiffs’ claims at
this time, I will not now address the defendants’ arguments concerning the
non-signatories’ ability to enforce the arbitration provisions and whether the
arbitration provisions mandate bilateral rather than class-wide arbitration.
For the foregoing reasons, the defendants’ motions to compel arbitration
(ECF Nos. 16—17) are DENIED as presented. That being the case, there must be
discovery so that the motion to be compel can be decided on a summary
judgment standard. See Section II, supra. At their earliest mutual
convenience, the parties shall set up a conference with Magistrate Judge Clark
and work out a schedule of phased discovery. The first phase should focus
primarily on arbitrability. At its conclusion, I will accept one joint motion for
partial summary judgment on the issue of arbitrability from the defendants.
The plaintiffs, if they wish, may cross-move for partial summary judgment on
the same issue.
Dated: June 9, 2017
H N. KEVIN MCNULTY, U S
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