Two More Cases Against Sky Zone, Both Involving Arbitration Clauses

Matullo v. Skyzone Trampoline Park, ___ N.J. Super. ___ (App. Div. 2022); Perez v. Sky Zone LLC, ___ N.J. Super. ___ (App. Div. 2022). Sky Zone, an entertainment operation, has appeared in this blog before, in a case involving Sky Zone’s liability waiver provision. Today, Sky Zone again entered the books of reported opinion, with two separate opinions of the Appellate Division in cases that were argued on the same day and decided by the same panel. Both cases involved the arbitration clause that Sky Zone imposes on persons entering its trampoline parks. Both opinions were written by Judge Gilson.

Matullo involved a fifteen-year-old plaintiff who signed Sky Zone’s agreement in order to enter a trampoline park on November 10, 2017. The agreement contained an arbitration clause. As Judge Gilson described, “[t]he Agreement had a place for the patron to electronically sign it and provide the signer’s birthdate. Just above that information, the Agreement explained that if the patron was bringing a child with him or her, by signing the Agreement the patron was representing he or she was a parent, legal guardian, or had the power of attorney with authority to execute the Agreement on behalf of the child.” For those bringing a child, the agreement stated “I am eighteen years of age or older.”

Plaintiff “first listed himself as the signing party and gave a birthday of July 4, 1998. He also listed himself as a minor and gave the birthday of July 4, 2002.” The 1998 birthdate held himself out as being nineteen years old. The 2002 birthdate, his actual one, showed that he was only fifteen.

Plaintiff allegedly suffered injuries while at the trampoline park and filed suit. Defendants (together, “Sky Zone”) invoked the arbitration clause and moved to compel arbitration. Plaintiff contended that since he was a minor when he signed the agreement and entered the trampoline park, he was able to disaffirm it.

The Law Division granted Sky Zone’s motion. That court recognized the principle that a party can disaffirm an agreement signed when s/he was a minor, “but held that plaintiff had defrauded Sky Zone by representing that he was an adult when he signed the Agreement. The judge also reasoned that the ‘equities’ and ‘law’ require that people should be bound to a contract when they receive the benefit of the contract through fraud,” Judge Gilson said.

Plaintiff appealed, and the Appellate Division reversed, applying the de novo standard of review. Plaintiff was permitted to disaffirm the agreement because he signed it when he was a minor. “New Jersey has long recognized the general rule that a person can disaffirm a contract he or she entered before reaching the age of majority and avoid being bound by the terms of the contract,” Judge Gilson said, citing prior cases and treatises.

The panel recognized “an estoppel exception that can preclude disaffirmance if the minor, when entering the contract, misrepresented that he or she was an adult.” But under the leading case, La Rosa v. Nichols, 92 N.J.L. 375 (E. & A.1918), that exception required reliance by the other contracting party.

Here, Judge Gilson found, there was no such reliance by Sky Zone. “Sky Zone does not claim that any of its employees or representatives reviewed the Agreement before plaintiff entered the park. Had a Sky Zone representative reviewed plaintiff’s information, that representative could not have reasonably relied on the information provided by plaintiff.”

Plaintiff had listed his birth date as both 1998 and 2002. “Anyone reviewing that information would have had to question its accuracy. There were obvious questions as to the authority of the nineteen-year-old to waive the rights of the fifteen-year-old. Moreover, the use of the same name and the listing of birthdays, which were on the same month and day and four years apart, raised even more questions. A reasonable person reviewing that information would have recognized how unlikely it is that a nineteen-year-old is the legal guardian of a fifteen-year-old who shares the same name and birthday. Sky Zone could not have reasonably relied on one sentence in which plaintiff misrepresented his age when in the next sentence he disclosed his age.” The Appellate Division ordered that plaintiff’s complaint be reinstated so he could litigate his case in court.

The Perez case was more ordinary. That plaintiff was an adult when he signed the entrance agreement that contained the arbitration clause. Following his injury, he sued Sky Zone and two other parties not apparently related to Sky Zone, Abeo North America, Inc. (“Abeo”) and Fun Spot Manufacturing, LLC (“Fun Spot”). The Sky Zone parties moved to compel arbitration. Abeo and Fun Spot did not, and at oral argument on Sky Zone’s motion to compel arbitration, those two parties reiterated that they had not joined that motion.

The Law Division granted Sky Zone’s motion and ordered arbitration as to all defendants. Plaintiff appealed. Judge Gilson’s opinion upheld arbitration as to the Sky Zone parties. “The language of the Arbitration Provision in the Agreement signed by plaintiff is clear. It states plaintiff was ‘agreeing to arbitrate any dispute’ arising out of his use of the trampoline park and was ‘waiving [his] right . . . to maintain a lawsuit.’ It sets forth that ‘[b]y agreeing to arbitrate, [plaintiff] understand[s] that [he] will NOT have the right to have [his] claim determined by a jury.’ That broad language is a clear and unambiguous waiver of plaintiff’s right to a jury trial and to pursue his claims in a court of law and, accordingly, is enforceable.”

But the Appellate Division reversed as to Abeo and Fun Spot. The trial judge had included them in the arbitration “based on agency principles.” But there was no evidence that either of those defendants was “an affiliate company or agent of the Sky Zone defendants. To the contrary, Fun Spot filed an answer and did not assert that it was covered by the Arbitration Provision. Consequently, we find no support for the trial court’s conclusory determination that the claims against Abeo and Fun Spot could be compelled to arbitration ‘based on agency principles.'”

Plaintiff made two arguments against enforcement of the arbitration clause in favor of Sky Zone. Judge Gilson was unimpressed by either of them.

First, plaintiff contended that the arbitration clause was unenforceable because it called for arbitration by JAMS, but JAMS was unavailable. But both the Federal Arbitration Act (“FAA”) and the New Jersey Arbitration Act (“NJAA”) “provide for a court-appointed arbitrator if the designated arbitrator is unavailable. Section 5 of the FAA authorizes a court to designate an arbitrator ‘if for any other reason there shall be a lapse in the naming of an arbitrator . . . or in filling a vacancy.’ 9 U.S.C. § 5. The NJAA has a similar provision, authorizing court-appointment of an arbitrator if ‘an arbitrator appointed fails or is unable to act.’ N.J.S.A. 2A:23B-11(a).” There was no indication that the designation of JAMS was essential to the agreement. JAMS’s unavailability thus did not void the arbitration clause.

Second, plaintiff objected that because the agreement contained other allegedly unenforceable provisions, the arbitration clause in that agreement could not be enforced. Plaintiff labeled the trial court’s decision as “severing and enforcing the Arbitration Provision.”

Judge Gilson observed that plaintiff’s argument was based on a misconception. “The trial court did not sever other provisions; rather, the trial court correctly recognized that the validity of the other provisions was a scope-of-arbitrability question that had to be presented to the arbitrator. We agree because that is what the law requires when parties delegate those issues to the arbitrator.”