United States: Recent N.J. Supreme Court Decision Highlights Pitfalls Of Nonbinding Arbitration

Last Updated: February 23 2015
Article by Denise R. Rosenhaft and Evan Marc Lazerowitz

In Vanderslice v. Stewart, No. 073362, 2015 N.J. LEXIS 54 (N.J. Jan. 29, 2015), the Supreme Court of New Jersey decided that a defendant could demand a trial de novo after a nonbinding arbitration award was entered against it, despite its failure to timely pay the required filing fee associated with the demand. This decision is a good reminder that "nonbinding" arbitration in the Superior Court of New Jersey may in fact become binding on a party under a variety of circumstances. Significantly, under Rule 4:21A-6, if a party fails to demand a trial de novo within 30 days of the arbitration award's entry, it becomes a final judgment against that party.

Under New Jersey's court rules, certain civil actions are submitted to mandatory, nonbinding arbitration after the end of the discovery period. If a party is dissatisfied with the arbitrator's decision, it may make a demand for a trial de novo by filing the required demand forms, accompanied by a check, within 30 days of the filing of the arbitration award. A party may opt out of nonbinding arbitration by sending a certification to the Arbitration Administrator before the scheduling of the case for arbitration or 15 days after, explaining why the matter is not fit for nonbinding arbitration. After the case has been scheduled for arbitration, a formal motion is required to remove it. If any party objects to the removal of the case from arbitration, a judge makes the final determination.

The plaintiff in Vanderslice sued the defendants -- Camden County, Camden County Fire Police Department and one of the Department's sergeants -- for personal injuries sustained in a motor vehicle accident. The case was referred to mandatory, nonbinding arbitration. The arbitration panel determined that the defendants were 100 percent liable and awarded the plaintiff $145,970 in noneconomic damages and lost wages. The next day, the defendants submitted a demand form to the Arbitration Administrator to vacate the arbitration award and proceed to trial.

However, the defendants attached a payment voucher that gave the court the right to draw on Camden County's account with the State Treasury. The Arbitration Administrator forwarded the payment voucher to the State Treasurer, which issued a check 30 days later. The Arbitration Administrator received the check two days later, 32 days after the arbitration award. Because the check was not received within 30 days of the award, as required by the court rules, the Arbitration Administrator concluded the defendants' demand was not timely filed and neither filed the demand nor deposited the check. The Arbitration Administrator did not notify the defendants, as is required by Rule 1:5-6(c)(1)(A), that their payment was nonconforming.

The defendants were alerted to their payment error only when the plaintiff moved to confirm the arbitration award and enter judgment. The trial court permitted the defendants to file their demand late, concluding they "substantially complied" with the court rules. The case proceeded to trial and the jury returned a verdict in favor of the defendants. The plaintiff appealed, arguing the trial court should not have permitted the defendants' late filing. The Appellate Division agreed and entered judgment in favor of the plaintiff, concluding that defendants failed to show "extraordinary circumstances" justifying the late filing of their demand.

The Supreme Court of New Jersey reversed the Appellate Division's decision and found the demand was timely filed. The Court relied on Rule 1:5-6(c)(1)(A), which requires the court clerk to return a document to the party seeking to file it as "Received but not Filed" if the filing fee has not been paid. The filing party then has 10 days to cure its error. The Court held that because the Arbitration Administrator failed to notify the defendants that their filing was deficient, the 10-day cure period never commenced. The Court concluded that because the Arbitration Administrator received the check from the State Treasurer before the defendants were even notified of their deficient filing, the demand was not received out of time "[b]y any measure."

Importantly, the Court did not address whether "substantial compliance" or "extraordinary circumstances" constitutes the proper standard for a motion to relax the 30-day limit for filing a demand for a trial de novo.

Vanderslice underscores the potential finality of nonbinding arbitration, particularly for unsuspecting parties. If an arbitrator enters an award against a party, that award may become a final judgment unless the party affirmatively acts to vacate it. In Vanderslice, the Supreme Court of New Jersey clarified only the standard applicable to demands that are timely filed but deficient in some form. It left unresolved how courts should adjudicate a party's motion to file a demand after the 30-day limit has expired.

In addition to carefully complying with Rule 4:21A-6's requirements, parties should determine at the outset of the case whether they want to participate in nonbinding arbitration. If not, parties should take advantage of the opt-out provisions as early as practicable. Nonbinding arbitration in the Superior Court is a misnomer, and parties should be aware of its many potential traps or they risk finding themselves subject to an adverse judgment without even going to trial,

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Denise R. Rosenhaft
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.