Plaintiffs are tenants at a luxury apartment building complex. They claim they were defrauded by defendant landlords' knowingly false promises in its advertisements, brochures, and oral statements to prospective tenants that the apartment complex would have "elevated, 24/7 security" and that security personnel would be stationed 24/7 at a podium near each building's entrance. Plaintiffs allege they relied on these representations in deciding to lease the apartments at the rent level charged.
Upon moving into the apartments, plaintiffs learned that the apartment complex's security cameras did not function, and security personnel were only stationed at the front of the building from approximately 11:00 a.m. to 5:00 p.m. on weekdays, with shorter hours on weekends, as opposed to being present 24/7, and at times were present during those hours when performing other assigned tasks.
The lease contained a three-day attorney review clause and had several addendums, including a waiver of the right to file a class action against the landlord. The lease did not contain an arbitration agreement.
Plaintiffs filed a class action complaint alleging common law fraud and violations of the New Jersey Consumer Fraud Act against their landlord. Prior to discovery or class certification, defendants moved to dismiss the complaint for failure to state a claim upon which relief can be granted, or, in the alternative, to strike plaintiffs' class action allegations. Defendants argued the class action waiver in plaintiffs' lease agreements were clear and unambiguous and the lease was not a contract of adhesion. Plaintiffs argued the lease was a contract of adhesion, the class waiver was unconscionable, and the caselaw upholding class action waivers were inapplicable because the contracts in those cases included an arbitration provision. The trial court denied the motion in its entirety. Defendants' motion for leave to appeal that interlocutory ruling was granted.
The court affirmed the denial of defendants' motion, holding that a waiver of the right to maintain a class action is unenforceable absent an arbitration agreement. Noting that the class action waiver dismantled or disabled important procedures provided in our Part IV rules, and that the public policy of this state favors a class action where numerous claims involve a common nucleus of facts, the court adopts a bright-line rule that in the absence of an arbitration agreement, class action waivers are unenforceable as a matter of law and public policy.
