Appellate Division Affirms Dismissal of Class Action Claims and Compels Arbitration in Case Against Sirius XM

In Parrella v. Sirius XM Holdings, Inc., the Appellate Division upheld a 2020 trial court decision dismissing a Sirius XM radio customer’s proposed class action complaint and compelling arbitration. The plaintiff had claimed that the satellite radio provider falsely advertised discounts in order to induce customers to reactivate their Sirius radio accounts. The radio provider moved to dismiss the complaint and compel arbitration, which it alleged was required under the parties’ customer agreement.

The plaintiff had a 15-year relationship with the radio provider, during which he used its services for various intervals of time. The plaintiff restarted or cancelled his services and each time, upon renewal, he received a copy of the customer agreement. The plaintiff had also contacted Sirius XM customer service to discuss reactivating his account, at which time the customer service representative informed the plaintiff of the customer agreement and told him where he could find a copy of that agreement on the company’s website. The customer agreement clearly and conspicuously contained a binding arbitration clause. Based on these facts, the trial court held that the plaintiff impliedly assented to the terms of the customer agreement and therefore was compelled to arbitrate his claims.

In his appeal, the plaintiff alleged that the trial court incorrectly found that he impliedly assented to the terms of the customer agreement and that the agreement was deficient under New Jersey’s Plain Language Act, N.J.S.A. 56:12-1 to -13 (“PLA”). With respect to the mutual assent argument, the Appellate Division found that, throughout his 15-year relationship with Sirius XM, the plaintiff “manifested an intention to be bound” by the customer agreement because he agreed to and used trial and full-price subscriptions and was provided with the customer agreement each time via hardcopy. In addition, when he spoke to the customer service representative regarding the renewal of his subscription, the representative verbally informed the plaintiff of the agreement and advised where it could be found on the website and how to request a copy via telephone. The plaintiff also knew he could refuse to accept the terms of the customer agreement as it was specifically stated in the subscription renewal notice, yet he never did so. These facts, and the fact that the plaintiff never disputed that he received the customer agreement, led the Appellate Division to uphold the trial court’s decision and find that the plaintiff impliedly assented to the terms of the customer agreement.

The Appellate Division also disagreed with the plaintiff’s argument that the customer agreement was not compliant with the PLA, which requires, among other things, that consumer contracts be written in a simple, clear, and understandable way. The plaintiff claims that the font used in the customer agreement was smaller than 10-point type and that it did not sufficiently explain that the plaintiff waived his rights via the arbitration provision. The Appellate Division noted that the PLA does not mandate that consumer agreements be in a specific font size; rather, it “is a guideline for courts to consider.” The Appellate Division also found that the language of the arbitration clause was sufficient to satisfy the PLA because it expressly stated, “by agreeing to arbitration, you are hereby waiving the right to go to court, including the right to a jury.”

This decision shows that courts will look at the totality of the circumstances to determine whether a contract’s binding arbitration clause is enforceable. Based on this ruling, New Jersey litigants should be mindful of the pattern of conduct and specific language of the arbitration clause before bringing claims based on contracts containing such provisions.