An Appellate Division panel decided Ricciardi v. Abingdon Care Rehabilitation Center. The two-judge panel – Judges Alvarez and Suter – upheld the lower court’s decision to invalidate an arbitration agreement.
The court’s decision follows the now-familiar two-step process.
It begins with the recitation of language favoring arbitration. The court is “mindful of the strong preference to enforce arbitration agreements, both at the state and federal level.” Further, it is “black-letter law that arbitration is a favored means of dispute resolution both under federal and state law.” Accordingly, arbitration clauses may only be “invalidated on grounds existing at law or equity that call for the revocation of any contract.”
In the second step, the court holds that “as a matter of law, the arbitration agreement lacked the mutuality of assent necessary for it to be binding on both parties.”
What’s interesting about this case is the basis for its finding. Rather than finding the language of the agreement itself insufficiently clear and explanatory, the court instead suggests that plaintiff’s failure to read and understand the document is sufficient to invalidate the agreement.
The plaintiff was not “given an explanation of the agreement.” He was “simultaneously presented” with “a number of forms related to medical treatment and the provision of services.” And signatures on all documents noted to have been signed “at the exact time,” lead to “an inescapable inference” that the plaintiff “did not read or comprehend anything.”
Indeed, the plaintiff was presented with 12 different forms. Signing them all within a minute, the plaintiff presumably read none of them. There is similarly no indication that an explanation was provided for any of the 11 other documents that were signed.
So: what is the legal status of the other 11 documents? The court has emphasized that arbitration agreements are invalidated only on grounds “that call for the revocation of any contract.” And beyond this particular plaintiff, what are we to think about the enforceability of the myriad other consumer contracts that go unread?
The idea that we are not responsible for the agreements we sign – that any contract is subject to disavowal on testimony that one of the parties didn’t read the thing – is a poison. The predictable enforcement of contracts is an essential element to stability in the law and to economic growth.
The court is either upending a couple of decades-worth of contract law, or yet another example of arbitration being invalidated on grounds that do not call for the revocation of any other contract.