New Jersey Supreme Court Rejects Arbitration Clause Without Proof of Customer Agreement
The enforceability of arbitration agreements in consumer contracts has once again come under judicial scrutiny—and this time, the scrutiny proved fatal. In a unanimous ruling issued yesterday, the New Jersey Supreme Court struck down a cellular service provider’s attempt to enforce an arbitration clause, holding that the company failed to prove the customer was ever properly notified of the agreement, let alone affirmatively agreed to it.
The case, involving telecommunications provider Optimum (a brand owned by Altice USA), highlights how critical the actual formation of arbitration agreements remains in consumer matters. While courts across the country have consistently upheld the enforceability of such provisions, this decision reaffirms that the procedural groundwork—notice, assent, documentation—matters profoundly.
Background: The Dispute and the Arbitration Push
The plaintiff, Gerald Fazio, Jr., is a quadriplegic who visited an Optimum retail location during the COVID-19 pandemic and was denied entry due to his refusal to wear a mask. Fazio explained that his underlying respiratory condition made masking medically difficult. He subsequently filed a lawsuit against Altice, asserting that the denial of entry constituted unlawful discrimination based on his disability.
In response, Altice moved to compel arbitration, relying on a standard Customer Service Agreement (CSA) allegedly applicable to Fazio’s account. The company submitted an affidavit from a business representative stating that Fazio “would have received a copy of the Customer Service Agreement by email,” dating back to the time he opened his account in 2019. The company also argued that this process was part of its regular business practice.
Notably, no signed agreement was presented. Nor was there evidence that Fazio had opened an email or clicked to accept terms. Fazio disputed having ever received the arbitration agreement at all.
Despite these gaps, the trial court granted Altice’s motion to compel arbitration, and the Appellate Division affirmed. The matter ultimately reached the New Jersey Supreme Court.
The Supreme Court's Ruling: Habit Is Not a Substitute for Proof
The New Jersey Supreme Court reversed both lower court rulings, holding that Altice failed to carry its burden of showing that Fazio had agreed to arbitrate his claims. The Court focused heavily on the evidentiary shortcomings in Altice’s submissions, particularly the use of general assertions about business practices instead of concrete documentation.
Under New Jersey Rule of Evidence 406(a), evidence of a party’s habit or routine practice can sometimes support inferences about what occurred in a particular instance. However, as the Court emphasized, that rule requires a high degree of specificity. Vague or generalized testimony will not suffice.
The Court explained:
“Before a court may admit evidence of habit, however, the offering party must establish the degree of specificity and frequency of uniform response that ensures more than a mere ‘tendency’ to act in a given manner, but rather, conduct that is ‘semi-automatic’ in nature.”
In dissecting Altice’s affidavit, the Court identified several key deficiencies:
The affiant claimed general familiarity with business practices but failed to describe them in any meaningful detail.
There was no certification that the CSA was sent automatically upon activation of service.
No description was provided about who sends the agreements, how they are sent, or how such communications are documented.
Assertions were speculative, conditional, and phrased in terms such as “would have received” or “would have discussed,” rather than referencing actual events or records.
Ultimately, the Court found that the affidavit did not establish how or whether the CSA was delivered to Fazio, or that he had actual or constructive notice of its terms.
To read the decision, click here.
Broader Implications for Consumer Arbitration Agreements
This decision delivers a significant message to businesses that rely on form contracts and digital delivery of arbitration agreements: procedural shortcuts are a litigation risk. Particularly in consumer-facing industries like telecom, retail, and tech, the enforceability of arbitration provisions increasingly depends on the clarity of the company’s onboarding and contracting practices.
Courts nationwide have expressed a willingness to enforce arbitration agreements, even where class waivers or individualized dispute resolution are involved. However, enforceability hinges on basic contract law: offer, notice, and assent. If a business cannot establish that a customer had meaningful access to and awareness of the arbitration clause, the agreement may not be enforceable—even if the clause itself is well-drafted.
This ruling also reinforces a trend: judges are closely scrutinizing affidavits that rely on generalized descriptions of process. Statements about what “usually” happens or what a company “would have” done are no substitute for evidence about what did happen with this customer.
A Word of Caution for Digital-First Consumer Businesses
The case also serves as a cautionary tale for companies that rely exclusively on email communications, auto-generated onboarding, or online click-through terms. While these practices are often sufficient in the commercial world, consumer protection doctrines demand more. For example:
Delivery is not acceptance. The fact that an email may have been sent does not mean it was received or read.
Routine is not certainty. General testimony about how agreements typically go out won’t carry the day unless supported by documentation.
Clickwrap beats browsewrap. Courts are more likely to enforce agreements when the consumer has affirmatively clicked “I agree” than when arbitration language is buried in linked terms of service.
Businesses are well-advised to periodically audit their contracting procedures to ensure that arbitration clauses are presented in a manner that is clear, prominent, and verifiable.
Arbitration Is Still Viable—But Only When Properly Executed
Importantly, this ruling does not signal a retreat from arbitration. Courts in New Jersey and elsewhere continue to uphold arbitration agreements that are fairly presented and supported by reliable evidence of agreement. The message is not anti-arbitration—it's anti-assumption.
From a litigation standpoint, the ruling is especially relevant in cases involving:
Mass arbitrations filed by consumers under form contracts
Disability discrimination claims or civil rights-based disputes
Claims where onboarding occurred remotely or during the pandemic
Accounts opened long ago, where documentation may no longer exist
Unlocking Solutions for Demanding Consumer Disputes
For businesses and consumers alike, the decision underscores the value of thoughtful and well-supported dispute resolution planning. Whether drafting arbitration clauses, updating digital contracting workflows, or litigating enforceability, attention to procedural detail is critical.
Nationwide ADR offers deep experience in navigating consumer arbitration disputes, including questions about enforceability, formation, and process integrity. In an era where mass filings and procedural challenges are rising, the firm’s arbitration and mediation services provide clarity, fairness, and practical guidance from start to finish.
Whether the issue involves a single consumer dispute or a large-scale arbitration program, Nationwide ADR is committed to Unlocking Solutions for Demanding Cases.
To explore services or schedule a consultation, visit NationwideADR.com.