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A New Jersey judge has found that the binding arbitration requirement everyone who takes the ACT must sign is "unconscionable" and may not be enforced in the case of a student suing the testing organization.
While the ruling currently applies to one case, the lawyer representing that student says he believes it is the first time that the clause has been invalidated in lawsuits against either ACT or the College Board, which has a similar clause for test takers. If the ruling stands, it could become much easier for people to sue testing companies.
The ruling came in a suit by Brendan Clare against ACT, seeking damages against the organization for -- in his view -- incorrectly challenging his ACT scores and endangering his chances of admission to college. Beyond the central charge in his case, he also accuses ACT of acting in ways that caused him substantial damage. For instance, he says that ACT notified him that his scores were being challenged many months after he took the test and the day after he had to respond to college admissions offers. (In the end, he took the ACT again and achieved a score close enough to the challenged score that ACT released it, enabling him to enroll at Pennsylvania State University.)
ACT has denied wrongdoing and has attempted to have the suit blocked by citing mandatory arbitration clauses that Clare signed (at the age of 17) when registering for the test. This week's ruling by Judge Michael J. Rogers did not cover the merits of the lawsuit, but rejected ACT's request that the binding arbitration provisions be enforced.
Rogers cited several reasons for doing so, after reviewing the law on mandatory arbitration clauses, which in many circumstances are legal. The decision noted that whether they are legal depends on a series of circumstances, including whether someone entering into such an agreement made a true, informed decision to do so.
ACT argued, the decision noted, that Clare could have opted not to take the ACT. But Judge Rogers disagreed. "The harsh reality facing plaintiff and millions of other students each year who desire to gain admittance to college is that they must submit to either the ACT or the SAT standardized test," the ruling said. "As mentioned earlier, the SAT contract contains waivers similar to those of ACT. There is nowhere else for a student to turn beyond these two testing services. This is a form of de facto economic compulsion."
Further, the ruling noted that Clare -- and most who sign up for the ACT or SAT -- do so as minors, without reviewing the arbitration clause with parents. "What is troublesome is that ACT contracts primarily with minors, as here, without parental approval," the ruling said. "Minors are unsophisticated and inexperienced in the world of contracts and contract choices … Public policy demands that minors receive protection that is in their best interests. Minors cannot be expected to knowingly and voluntarily waive their constitutional right to a jury trial and any possible claims for damages of any kind without parental input, supervision, and approval."
Finally, the ruling said that a false claim of cheating on a test could have far-reaching consequences that would motivate someone to want to sue and to have a jury trial, as Clare would now have under the ruling.
"Incorrect test score reporting can have devastating and life-long consequences for an innocent minor," the ruling said. "Based on the timing of the score cancelations here, the damage is done and the harm possibly irreparable when caused by such and intolerable and lengthy delay. The available remedy at arbitration is ephemeral and illusory as the student watches the college admissions process pass by while the validity of the test scores is subject to limited and narrow review."
ACT could appeal the ruling. If it does not do so, discovery will proceed in the case.
A spokesman for ACT said that the organization does not comment on litigation but would say, on the subject of this week's ruling, the following: "ACT does not agree with the judge’s reasoning or conclusions on his recent order. We are considering our options on how best to move forward."
