Bresnan Communications refused to follow a Montana Supreme Court decision invalidating an arbitration contract on unconscionability grounds because it determined that the Montana court had applied a legal rule that, although framed in general unconscionability terms, in practical effect discriminated against arbitration agreements. Indeed, the Ninth Circuit in Mortensen v. That is because, as the Supreme Court reiterated in Concepcion, the Federal Arbitration Act preempts state law that is 'applied in a fashion that disfavors arbitration.'

Ralphs Grocery, holding that an arbitration provision was unenforceable because the company 'gets to pick the pool of potential arbitrators every time an employee brings a claim.' Similar decisions invalidate arbitration clauses that subject consumers or employees to unfair arbitration fees, require unduly burdensome travel for arbitration proceedings, or force the losing party to pay the winner's legal bills.Ĭritical to the validity of these rulings is that the unconscionability principle applied to the arbitration agreement is the same one that governs all other types of contracts under the relevant state's law. Court of Appeals for the Ninth Circuit did in Chavarria v. Lower courts, as a result, routinely reject such challenges to arbitration contracts.īut these rulings do not mean that 'anything goes.' Most significantly, if arbitration agreements specify procedures that are fundamentally unfair, and therefore violate state contract law principles of unconscionability, courts can and do refuse to enforce them. Italian Colors Restaurant make clear that arbitration agreements cannot be invalidated just because they provide for dispute resolution on an individual rather than a class basis. Now, with their options dwindling in the courts, arbitration's opponents are shifting their efforts to the policy arena.Ĭoncepcion and the Supreme Court's subsequent decision in American Express v. Concepcion, the legal rules favoring enforcement of arbitration provisions are fairly settled. Supreme Court rejected a key challenge to mandatory arbitration agreements in AT&T Mobility v.

Concepcion v united states