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    March
    31
    2008

    Mandatory Arbitration of Consumer Rights Cases

    Debra Schneider and Michael Quirk

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    The ability of corporations to opt out of the public civil justice system by using mandatory arbitration clauses in consumer contracts poses a fundamental policy question for Congress and the courts. Still, there are ways to preserve clients' rights to have their day in court.

    Wisconsin LawyerWisconsin Lawyer
    Vol. 75, No. 9, September 2002

    Mandatory Arbitration of Consumer Rights Cases

    The ability of corporations to opt out of the public civil justice system by using mandatory arbitration clauses in consumer contracts poses a fundamental policy question for Congress and the courts. Still, there are ways to preserve clients' rights to have their day in court.

    court house by Debra L. Schneider & Michael J. Quirk

    letter "i"n December 2001 a national long-distance telephone company mailed a notice to its customers in Wisconsin and elsewhere across the country telling them that they were losing their right to sue the company in court for violations of their legal rights. Instead, the customers would have to submit their legal claims to a private and binding arbitration system if they wanted to keep their phone service.

    In addition to losing their right of access to courts, Wisconsin customers would no longer be able to recover punitive damages or attorney fees in arbitration with the company even though such relief would be available to them in court under the Wisconsin Consumer Act. Furthermore, customers were given only two years to file any claims in arbitration, despite the existence of longer statutes of limitation, and were prohibited from participating in any class action against the phone company. What is perhaps most surprising about these restrictions on consumers' rights is that they are hardly unique to this particular service agreement.

    Across the country, businesses are effectively privatizing the civil justice system and rewriting consumer protection laws through their use of mandatory arbitration. More and more businesses in a growing number of fields are inserting mandatory and binding arbitration clauses into their standard form contracts with consumers. This trend poses the potential to shield businesses from liability to consumers and to conceal corporate wrongdoing from public scrutiny. Although arbitration clauses are generally enforceable under federal and state law, they cannot be enforced if they are imposed in an unfair or deceptive manner or would prevent consumers from effectively enforcing all of the legal rights they would have in court.

    This article gives a brief overview of some of the problems that consumers may experience with private arbitration when it is imposed by businesses through contracts of adhesion. It then outlines some of the leading arguments that consumer advocates in Wisconsin and elsewhere are using to fight arbitration and preserve their clients' right of access to court.

    Problems with Mandatory Arbitration of Consumer Claims

    Private arbitration may serve beneficial purposes when it is used in commercial agreements between parties of equal bargaining power who have access to legal representation when the contract is formed, at the time the contract consists of genuinely bargained-for terms, and when all parties are clearly aware of its implications. However, when mandatory and binding arbitration clauses are placed in consumer contracts, the result can be unfair to consumers. Arbitration requirements are common in consumer transactions with credit card issuers, telephone service providers, car dealerships, mobile home manufacturers, and both prime and subprime lending institutions. The arbitration clauses typically appear in standard form preprinted contracts of adhesion that businesses use in consumer transactions.1 Most American consumers have by now received at least one mandatory arbitration clause in some form of purchase agreement or billing statement and therefore have, whether knowingly or not, waived their right of access to court to resolve many legal disputes.

    In addition to experiencing disadvantages in bargaining power, consumers may not immediately comprehend the implications of an arbitration clause because they are primarily focused on the purpose and price of a given transaction. Businesses, on the other hand, enter into transactions with consumers on a daily basis and thus are far more likely to be thinking about dispute resolution when they draft a contract. Consumers may be unaware that arbitration materially changes the rules of dispute resolution so that the right to a jury trial is eliminated, pre-hearing discovery is limited, class actions are prohibited, and the ability to appeal erroneous interpretations of the law is sharply circumscribed.2 In some instances, an arbitration clause will require the consumer, but not the merchant, to arbitrate disputes. Some arbitration clauses even bind consumers to arbitration not just for disputes arising from the current transaction but also for disputes arising from past transactions.3 Since many businesses draft arbitration clauses in legalese and insert them in the fine print of standard form contracts, consumers are relinquishing important legal protections without ever giving their meaningful consent.

    Private arbitration proceedings themselves can work to the benefit of corporate defendants for reasons that might make consumers and their advocates think twice before relinquishing access to court. One commentator has observed a shared perception among plaintiff advocates and corporate representatives alike that arbitration "systematically favors" business defendants over individual plaintiffs.4 A federal court of appeals has found that arbitration allows businesses, as "repeat players" in the forum, to gain advantage over individual plaintiffs based on their superior knowledge in the selection of the arbitrators who will decide their cases.5

    A compelling example of one-sided results in a consumer arbitration system involving a major credit card lender was reported in The Washington Post: "The data, disclosed ... by First USA in a class-action lawsuit challenging mandatory arbitration, show that not only has the company sought arbitration far more often than consumers, it has also won 99.6 percent of the cases that went all the way to the arbitrator."6

    Even when plaintiffs prevail over corporate defendants, studies show that arbitrators tend to award smaller amounts in damages than judges and juries would award in court.7 This evidence of advantages for corporate defendants is predictable in a system in which arbitrators compete to be selected by the parties, work under short-term contracts, and may fear a loss of future work if their decisions are seen as unfavorable by the parties that are most likely to appear in subsequent arbitrations.

    Arbitration proceedings also can be exceedingly expensive for consumers, with case filing fees of several hundred dollars and arbitrator fees (typically $150 to $450 per hour) running into the thousands of dollars.8 These costs contrast sharply with state trial court filing fees of $70 for small claims and $214 for large claims in most Wisconsin counties.9 Although forum costs are not the only expense that consumers incur when they pursue claims in court or arbitration, the added costs of arbitration pose a significant obstacle at the point of entry in consumer cases. Since many consumers do not pay attorney fees up front either because of statutory fee-shifting provisions or contingency fee agreements, the initial costs of the arbitral forum (as opposed to a judicial forum) are likely to bear significantly on a consumer's ability to pursue her claims.

    A financially strapped consumer who was defrauded by a business may view the high filing fees and the arbitrator's hourly charges as insurmountable barriers, especially in light of the value of her individual claims. The cost of private arbitration thus can prevent consumers from ever pursuing, let alone vindicating, their statutory and common law claims against businesses.

    Consumers' statutory claims frequently involve small sums of money compared with those at stake in business disputes under commercial contracts. In court, consumers can aggregate these claims on a class-wide basis and obtain representation by attorneys who can afford to work for a contingency fee based on the aggregate value of the claims. In arbitration, by contrast, businesses often argue (with a surprising degree of success) that class-based proceedings are prohibited so that a consumer can vindicate only her individual claim.10 The combination of a ban on aggregated claims and the imposition of substantial forum costs thus may render private arbitration inaccessible as a forum for many consumers.

    Arbitration also is typically enshrouded in secrecy, with arbitration services like the National Arbitration Forum adopting rules that allow businesses to bar plaintiffs from disclosing information about their cases.11 Because papers filed with the arbitrator are not public records and proceedings do not take place in public courtrooms, businesses are better able to evade accountability by shielding allegations of their own wrongdoing from public scrutiny. If Bridgestone and Ford dealers had adopted arbitration provisions several years ago, they might well have succeeded in concealing their tire failures from the press and the public. The dangers posed by this secrecy are compounded by the nearly unbridled discretion that arbitrators have in deciding cases. Courts have repeatedly held that arbitration decisions are subject to the most limited judicial review, with the U.S. Supreme Court recently finding that "improvident, even silly fact finding" is not grounds for overturning an arbitrator's ruling.12

    In light of these disadvantages of private arbitration proceedings, consumers often will seek to assert and preserve their right of access to court in response to a business defendant's motion to compel arbitration.

    Fighting Mandatory Arbitration

    The Federal Arbitration Act. Most contractual arbitration clauses are governed by the Federal Arbitration Act (FAA).13 The U.S. Supreme Court has interpreted the FAA to create a rule of substantive contract law making arbitration agreements enforceable on the same footing as other contracts.14 As substantive federal law, the FAA applies in both federal and state courts.15 State courts frequently are called upon to apply the FAA because the Act, despite its declaration of substantive federal law, "does not create any independent federal-question jurisdiction under 28 U.S.C. § 1331 or otherwise."16 Although the Supreme Court has stated that the FAA establishes a liberal federal policy favoring arbitration,17 this policy does not require courts to enforce arbitration clauses that unfairly burden the rights of consumers.

    Section 2 of the FAA provides that arbitration agreements shall be enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract."18 The Supreme Court has held that the FAA preempts state laws singling out arbitration clauses from other contractual provisions for nonenforcement or disfavored treatment.19 Based on these holdings, the Wisconsin Court of Appeals and several federal courts have held that the FAA preempts the provision of Wisconsin's Fair Dealership Law that requires judicial resolution of disputes relating to franchise dealership agreements, because it singles out and disfavors arbitration clauses.20

    At the same time, however, the Supreme Court has recognized that "generally applicable contract defenses, such as duress, fraud, or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2."21 The key to making a successful challenge against arbitration in a given case is thus to attack the unfair aspects of the particular arbitration clause at issue and not to make generalized arguments against all arbitration. These arguments will necessarily be fact-specific and may require developing an extensive factual record on contract formation and the effects of a contract's terms, but the FAA expressly provides for trial proceedings in advance of a court's determination that a case should be ordered into arbitration.22

    State Law Grounds for Resisting Arbitration. The FAA does not by itself answer the question of whether an arbitration clause is enforceable. Instead, the Act requires application of state contract law to the critical questions of whether the parties formed an agreement to arbitrate and whether the particular agreement can be enforced under generally applicable contract law rules.

    Formation of Agreement to Arbitrate. Arbitration is a matter of contract, and a party is not required to submit any dispute to arbitration unless the party has agreed to do so.23 Arbitrators derive their authority solely from the parties' advance agreement that they will submit their disputes to arbitration.24 A party seeking to compel arbitration bears the burden of showing that the other party has agreed to arbitrate in the first instance and waived the right to go to trial.25 The question of "substantive arbitrability," in other words, whether the parties have agreed to submit a matter to arbitration, is a question of law for the court to decide.26

    In general, an individual does not waive a constitutional right, such as the right to a jury trial, unless that waiver is knowing, voluntary, and intelligent.27 The Wisconsin Consumer Act (WCA) provides additional support for this proposition in the context of consumer transactions. The WCA is remedial legislation intended to protect consumers from "unfair, deceptive, false, misleading and unconscionable practices by merchants"28 and "to permit and encourage the development of fair and economically sound consumer practices in consumer transactions."29 The legislature "clearly intended the Wisconsin Consumer Act to assist consumers, particularly those of limited means, in combating unfair business practices."30 Thus, when evaluating whether or not an agreement to arbitrate has been formed, courts must determine whether the consumer expressly agreed to arbitrate, whether that agreement was made knowingly and voluntarily, and whether the language of the arbitration clause is clear and unambiguous in communicating to the consumer the nature and significance of what is being signed.31

    In situations in which a consumer never signed an agreement to arbitrate, in which the consumer's claim arose prior to the date of the contract, and perhaps in which the merchant unilaterally attempted to impose an arbitration clause after the parties already had reached an agreement, consumers may argue under state contract law that an agreement to arbitrate was never formed. For example, a federal district court recently held that there was no agreement to arbitrate in an online consumer transaction in which the customer was able to download the software program he was purchasing without ever seeing or clicking on the Web site's arbitration clause to signify his assent to it.32 Only if the court finds that there is in fact an agreement between the parties to arbitrate can it go on to analyze whether the contract is enforceable.

    State Contract Law. Some arbitration clauses are vulnerable to challenge under the state law doctrine that courts will not enforce contract provisions that are unconscionable. To establish that a contract provision is unconscionable, a party typically has to show that there is a substantial imbalance in bargaining power between the contracting parties, that one party had no meaningful choice as to a provision, or that the provision was hidden or concealed from the party (so-called "procedural unconscionability"), while at the same time showing that the provision itself is unfairly one-sided in favor of the stronger party (so-called "substantive unconscionability").33

    Procedural unconscionability addresses those factors bearing upon the meeting of the minds of the contracting parties, such as "age, education, intelligence, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, whether alterations in the printed terms were possible, [and] whether there were alternative sources of supply for the goods in question."34 Substantive unconscionability "embraces the contractual terms themselves, and requires a determination whether they are commercially reasonable."35

    The Wisconsin Consumer Act also enumerates specific factors that are to be considered in determining whether a consumer transaction is procedurally or substantively unconscionable.36 These factors include whether "the terms of the transaction require customers to waive legal rights"37 or to "jeopardize money or property beyond the money or property immediately at issue in the transaction."38 Specific business practices that may take advantage of a consumer's inability to protect her interests39 or that have the natural effect of causing a consumer to misunderstand the nature of the transaction also are to be considered as indicia of unconscionability.40

    Consumers may be able to establish the procedural element of unconscionability by demonstrating that they have no meaningful choice as to arbitration when the business defendant is part of an industry in which consumer arbitration requirements are prevalent. In a case involving subprime lending practices, for example, one state's high court held that the plaintiff borrowers had established procedural unconscionability by building a record showing that nearly every regional subprime lender, including the defendant, required borrowers to submit to arbitration as a condition for taking out a loan.41 The resulting absence of borrower choice as to arbitration made the lender's arbitration requirement procedurally unconscionable.

    While arbitration clauses are not per se unconscionable, some companies write them in such a one-sided manner that their terms become substantively unconscionable when applied against consumers. For example, several courts, including the Seventh Circuit, have held that a business's arbitration clause is either unconscionable or void for want of mutuality or consideration when it requires consumers or employees to submit to arbitration while preserving the exclusive right of the business to sue in court on its own claims.42 Courts also have held that arbitration clauses are substantively unconscionable if they contain provisions restricting the arbitrator's authority to award relief that otherwise would be available to prevailing parties in court.43 Thus, while the FAA makes arbitration clauses enforceable as a general matter, federal law does not displace the important role of state law in preventing businesses from using adhesion contracts to take unfair advantage of consumers.

    Consumers also may use the high costs of arbitration to argue that a defendant's arbitration clause is unconscionable.44 This argument requires developing an evidentiary record by the party challenging arbitration in order to support the claim that arbitration is too expensive and that the costs involved would deter many consumers from attempting to vindicate their claims.45

    In addition to the doctrine of unconscionability, the entire range of contract law rules and requirements is available to consumers fighting arbitration. The common law and U.C.C. doctrines of fraud, duress, incapacity, undue influence, mistake, and breach of good faith may enable a party to resist enforcement of an arbitration clause. For example, the U.S. Supreme Court recently held that an arbitration agreement between an employer and an employee did not prevent the Equal Employment Opportunity Commission (EEOC) from suing the employer in court to obtain victim-specific relief for the employee because the EEOC was not a party to the arbitration clause.46 In so holding, the Supreme Court explained that "we do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the federal policy favoring arbitration is implicated."47 Other appellate courts have similarly relied on ordinary contract law principles to limit the scope of arbitration clauses by holding, for example, that an agreement between a mobile home manufacturer and a home buyer does not bind the buyer's nonsignatory children who were injured by a manufacturing defect, and that a credit card lender's contract allowing consumers to "request" arbitration does not create a binding requirement.48

    Since the FAA explicitly preserves state contract law arguments against the enforcement of arbitration clauses, these arguments can serve as a powerful tool for preserving the rights of consumers, including their right of access to court.

    Federal Law Grounds for Resisting Arbitration. Finally, parties also may succeed in beating arbitration in some settings by raising arguments under federal law. The U.S. Supreme Court has conditioned its approval of binding arbitration for federal statutory claims on the requirement that arbitration provide all substantive rights and remedies that would be available to parties in court: "By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum."49 Therefore, arbitration must allow a claimant to "effectively vindicate his or her statutory cause of action,"50 and must offer "all of the types of relief that would otherwise be available in court" before a court may require arbitration of any statutory claims.51

    Conversely, courts will not enforce arbitration contracts that diminish a claimant's statutory rights.52 The Seventh Circuit recently held that an employer's mandatory arbitration clause was unenforceable against a former employee asserting Title VII sex discrimination claims because the clause required each party to pay its own attorney fees, thereby denying a prevailing plaintiff her statutory right to recover attorney fees.53 In so holding, the Seventh Circuit explained that:

    "[T]he clause here purports to forfeit McCaskill's statutory right to attorney's fees, a remedy that we have already recognized is essential to fulfill the remedial and deterrent functions of Title VII. Because the provision prevents her from effectively vindicating her rights in the arbitral forum by preemptively denying her remedies authorized by Title VII, the arbitration agreement is unenforceable."54

    Thus, when a business overreaches by writing an arbitration clause that limits the substantive remedies that otherwise are available to consumers under federal or state law, a consumer may argue that federal law prohibits enforcement of the arbitration clause.

    Consumers also may argue that the federal statutes giving rise to their claims prohibit all mandatory binding arbitration requirements imposed by businesses. While the Supreme Court has held that claims under many federal statutes are subject to arbitration,55 the Court also has repeatedly recognized that Congress is free to override the FAA's policies in any other statute by prohibiting arbitration of claims.56 Consumers have had considerable success, for example, in arguing that the federal Magnuson-Moss Warranty Act 57 prohibits binding arbitration of breach of express warranty claims through its provisions requiring that any informal dispute resolution proceedings established by warrantors be nonbinding.58 Consumer advocates should thoroughly examine a federal statute's text, legislative history, and underlying purposes before conceding that claims arising under the statute are subject to arbitration under the FAA.

    Debra L. SchneiderDebra L. Schneider, Marquette 1984, is a sole practitioner doing business as Consumer Legal Advocacy, Waukesha, representing the interests of individual consumers.

    Michael J. QuirkMichael J. Quirk is the NAPIL Consumer Rights Fellow with Trial Lawyers for Public Justice (TLPJ) in Washington, D.C., where he works on TLPJ's Mandatory Arbitration Abuse Prevention Project. He is coauthor of the book Consumer Arbitration Agreements: Enforceability and Other Topics (National Consumer Law Center and The TLPJ Foundation, 2001), published as part of NCLC's Consumer Credit and Sales Legal Practice Series.

    Lisa A. Petersen, Northern Illinois 1993, practices with Ticor & Chicago Title Insurance Companies in Waukesha.

    Conclusion

    The ability of corporations to opt out of the public civil justice system poses fundamental policy questions for Congress and for the courts. In seeking to preserve their clients' right to have their day in court, consumer advocates can fight the enforcement of arbitration clauses in many cases by drawing from a wide range of arguments that are available to them under state and federal law.

    Endnotes

    1 An adhesion contract is one in which a party has no realistic opportunity to bargain over the contract's terms and, therefore, has little choice but to accept those terms as a condition of entering into the transaction. See, e.g., Katze v. Randoph & Scott Mut. Fire Ins. Co., 116 Wis. 2d 206, 212-13, 341 N.W.2d 689, 692 (1984).

    2 For a discussion of the procedural differences between judicial and arbitration proceedings, see Armendariz v. Foundation Health Psychare Servs., 6 P.3d 669, 692-93 (Cal. 2000).

    3 See, e.g., Zawikowski v. Beneficial Nat'l Bank, 1999 U.S. Dist. Lexis 514 (N.D. Ill. Jan. 11, 1999).

    4 David S. Schwartz, Enforcing Small Print to Protect Big Business: Employee and Consumer Rights Claims in an Age of Compelled Arbitration, 1997 Wis. L. Rev. 33, 63-64.

    5 See Lisa B. Bingham, Employment Arbitration: The Repeat Player Effect, 1 Employee Rights & Employment Pol'y 189 (1997); see also Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1476 (D.C. Cir. 1997); Mercuro v. Superior Court, 116 Cal. Rptr. 2d 671, 679 (Ct. App. 2002).

    6 Caroline E. Mayer, Win Some, Lose Rarely? Arbitration Forum's Rulings Called One-Sided, Wash. Post, Mar. 1, 2000.

    7 See Marcus Nieto and Margaret Hosel, Arbitration in California Managed Health Care System, 21 (2000) (study commissioned by California Legislative Research Service); see also Armendariz, 6 P.3d at 693 (citing Haig, Corporate Counsel's Guide: Development Report on Cost-Effective Management of Corporate Litigation, 610 PLI/Lit. 177, 186-87 (July 1999), and Schwartz, supra note 4, at 64-65).

    8 See Ting v. AT&T, 182 F. Supp. 2d 902, 917 (N.D. Cal. 2002).

    9 Wis. Stat. §§ 814.62(3)(a), .61(1)(a), .634, .635.

    10 See, e.g., Champ v. Siegel Trading Co., 55 F.3d 269 (7th Cir. 1995) (holding that party cannot assert class claim in arbitration unless arbitration clause specifically allows aggregation of claims).

    11 See National Arbitration Forum, Code of Procedure Rule 4 ("Confidentiality") ("Arbitration proceedings are confidential unless all parties agree otherwise. A party who improperly discloses confidential information shall be subject to sanctions. The Arbitrator, Director, and Forum staff shall not disclose confidential information. Parties may disclose Orders and Awards they receive"). (Emphasis added.)

    12 Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001) (citation omitted); see also, generally, Lattimer-Stevens Co. v. United Steelworkers, 913 F.2d 1166, 1169 (6th Cir. 1990) ("When courts are called on to review an arbitrator's decision, the review is very narrow; one of the narrowest standards of judicial review in all of American jurisprudence.").

    13 9 U.S.C. §§ 1 et seq.

    14 See, e.g., Southland Corp. v. Keating, 465 U.S. 1, 11 (1984); Volt Information Sciences Inc. v. Board of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 478 (1989).

    15 Keating, 465 U.S. at 16; see also Madison Beauty Supply Ltd. v. Helene Curtis Inc., 167 Wis. 2d 237, 481 N.W. 2d 644 (Ct. App. 1992).

    16 Keating, 465 U.S. at 15 n.9.

    17 Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).

    18 9 U.S.C. § 2.

    19 See Keating, 465 U.S. at 3; Perry v. Thomas, 482 U.S. 483, 491 (1987); Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265, 281 (1995); Doctor's Assocs. Inc. v. Casarotto, 517 U.S. 681, 687, 688 (1996).

    20 See Madison Beauty Supply Ltd. v. Helene Curtis Inc., 167 Wis. 2d 237, 481 N.W.2d 644 (Ct. App. 1992); S+L+H S.p.A. v. Miller-St. Nazianz Inc., 988 F.2d 1518 (7th Cir. 1993); Good(E) Business Sys. Inc. v. Raytheon Co., 614 F. Supp. 428 (W.D. Wis. 1985).

    21 Casarotto, 517 U.S. at 686-87; see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991) ("courts should remain attuned to well-supported claims that the [arbitration] agreement resulted from the sort of fraud or overwhelming economic power that would provide grounds for the revocation of any contract") (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 627 (1985)).

    22 See 9 U.S.C. § 4.

    23 Jefferson Joint Sch. Dist. No. 10 v. Jefferson Educ. Ass'n, 78 Wis. 2d 94, 101, 253 N.W.2d 536, 540 (1977); Kimberly Area Sch. Dist. v. Zdanovec, 222 Wis. 2d 27, 38-39, 586 N.W.2d 41, 46 (Ct. App. 1998).

    24 Zdanovec, 222 Wis. 2d at 39, 586 N.W.2d at 46.

    25 Gibson v. Neighborhood Health Clinics Inc., 121 F.3d 1126, 1130 (7th Cir. 1997) (applying Indiana law).

    26 Jefferson Joint Sch. Dist. No. 10, 78 Wis. 2d at 101-102, 253 N.W.2d at 540-41; Zdanovec, 222 Wis. 2d at 38, 586 N.W.2d at 46.

    27 K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 756 (6th Cir. 1985) ("Those cases in which the validity of a contractual waiver of jury has been in issue have overwhelmingly applied the knowing and voluntary standard.").

    28 Wis. Stat. § 421.102(2)(b).

    29 Wis. Stat. § 421.102(2)(c).

    30 Kett v. Community Credit Plan Inc., 228 Wis. 2d 1, 18, 596 N.W.2d 786 (1999).

    31 For a discussion on conspicuousness in exculpatory contracts, see Yauger v. Skiing Enters. Inc, 206 Wis. 2d 76, 86-89, 557 N.W.2d 60 (1996).

    32 See Specht v. Netscape Communications Corp., 150 F. Supp. 2d 585 (S.D.N.Y. 2001).

    33 First Fed. Finan. Serv. Inc. v Derrington Chevron Inc., 230 Wis. 2d 553, 558, 602 N.W.2d 144, 146-47 (Ct. App. 1999); Discount Fabric House Inc. v. Wisconsin Tel. Co., 117 Wis. 2d 587, 602, 345 N.W.2d 417, 424 (1984).

    34 Derrington, 230 Wis. 2d at 559, 602 N.W.2d at 147; Discount Fabric House, 117 Wis. 2d at 602, 345 N.W.2d at 425.

    35 Derrington, 230 Wis. 2d at 559, 602 N.W.2d at 147; Discount Fabric House, 117 Wis. 2d at 602, 345 N.W.2d at 425.

    36 Wis. Stat. § 425.107.

    37 Wis. Stat. § 425.107(e).

    38 Wis. Stat. § 425.107(f).

    39 Wis. Stat. § 425.107(d).

    40 Wis. Stat. § 425.107(g).

    41 American Gen. Fin. Inc. v. Branch, 793 So. 2d 738, 750-51 (Ala. 2000), cert. denied, 122 S. Ct. 342 (2001); see also Ting, 182 F. Supp. 2d at 929 (finding procedural unconscionability based on oppression or lack of consumer choice where more than two-thirds of long distance telephone companies required consumers to arbitrate as condition of service).

    42 See, e.g., Gibson v. Neighborhood Health Clinics Inc., 121 F.3d 1126 (7th Cir. 1997) (applying Indiana contract law); Circuit City Stores Inc. v. Adams, 279 F.3d 889 (9th Cir. 2002) (California law); Ticknor v. Choice Hotels Inc., 265 F.3d 931 (9th Cir. 2001) (Montana law); Showmethemoney Check Cashers Inc. v. Williams, 27 S.W.3d 361 (Ark. 2000); Armendariz v. Foundation Health Psychare Servs. Inc., 6 P.3d 669 (Cal. 2000); Worldwide Ins. Group v. Klopp, 603 A.2d 788 (Del. 1992) (one-sided arbitration appeal provision); Iwen v. U.S. West Direct, 977 P.2d 989 (Mont. 1999); Arnold v. United Companies Lending Corp., 511 S.E.2d 854 (W. Va. 1998). Other courts, applying the contract law of different states, have rejected this argument. See, e.g., Harris v. Green Tree Fin. Corp., 183 F.3d 173 (3d Cir. 1999) (Pennsylvania law); Munoz v. Green Tree Fin. Corp., 542 S.E.2d 360 (S.C. 2001).

    43 See, e.g., Branch, 793 So. 2d at 749-50 (cap on punitive damages that arbitrator can award is substantively unconscionable); Pinedo v. Premium Tobacco Inc., 102 Cal. Rptr. 2d 435 (2000) (arbitration clause is unconscionable based in part on limitations of employees' statutory remedies); Powertel Inc. v. Bexley, 743 So. 2d 570 (Fla. Dist. Ct. App. 1999); Lozada v. Dale Baker Oldsmobile Inc., 91 F. Supp. 2d 1087 (W.D. Mich. 2000) (arbitration clause restricting consumers' statutory right to injunctive relief is unconscionable); see also Ting, 182 F. Supp. 2d at 930 (prohibition of any relief in arbitration for consumers other than lost value of telephone service is substantively unconscionable).

    44 See, e.g., Pitchford v. Oakwood Mobile Homes Inc., 124 F. Supp. 2d 958 (W.D. Va. 2000) (arbitration fees of several thousand dollars borne by consumer render arbitration clause unconscionable); Pinedo v. Premium Tobacco Inc., 102 Cal. Rptr. 2d 435 (2000) (requirement that employee front all arbitration fees cited as factor in finding that employer's arbitration clause is unconscionable); Brower v. Gateway 2000, 676 N.Y.S.2d 569 (App. Div. 1998) ($4,000 in arbitration fees, half of which would not be refunded if consumer plaintiff prevailed, renders arbitration clause unconscionable).

    45 Cf. Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 92 (2000) (party alleging that arbitration costs will prevent her from enforcing her federal statutory claims bears burden of proof in establishing likelihood of such prohibitive costs).

    46 EEOC v. Waffle House Inc., 534 U.S. 279, 122 S. Ct. 754, 764 (2002).

    47 Id.

    48 See Fleetwood Enters. Inc. v. Gaskamp, __ F.3d __, 2002 WL 100434 (5th Cir. Jan. 24, 2002); Wells v. Chevy Chase Bank, 768 A.2d 620 (Md. 2001).

    49 Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 628 (1985).

    50 Gilmer, 500 U.S. at 28.

    51 Cole, 105 F.3d at 1482.

    52 See, e.g., Perez v. Globe Airport Sec. Servs., 253 F.3d 1280, 1286-87 (11th Cir. 2001) (holding arbitration clause that prevents prevailing Title VII plaintiff from recovering attorney fees to be unenforceable); DeGaetano v. Smith Barney Inc., 983 F. Supp. 459, 469 (S.D.N.Y. 1997) (voiding arbitration clause disallowing attorney fees for prevailing Title VII plaintiff); Lozada v. Dale Baker Oldsmobile Inc., 91 F. Supp. 2d 1087, 1105 (W.D. Mich. 2000) (finding as to consumer Truth In Lending Act and state consumer protection act claims that "both federal and Michigan case law support a conclusion that an arbitration provision is substantively unconscionable because it waives class remedies, as well as declaratory and injunctive relief"); Derrickson v. Circuit City Stores Inc., 81 Fair Empl. Prac. Cas. 1533 (D. Md. 1999) (arbitration clause capping punitive damages and back pay remedies under section 1981 is unenforceable), aff'd, 203 F.3d 821 (4th Cir.) (table), cert. denied, 530 U.S. 1276 (2000).

    53 McCaskill v. SCI Management Corp., 285 F.3d 623 (7th Cir. 2002).

    54 Id. at 627.

    55 See, e.g., Green Tree Fin. Corp.-Ala., 531 U.S. at 92 (Truth In Lending Act claims generally subject to arbitration); Gilmer, 500 U.S. at 35 (Age Discrimination in Employment Act claims); Rodriguez de Quijas v. Shearson/American Express Inc., 490 U.S. 477, 483 (1989) (Securities Act of 1933 claims).

    56 See, e.g., Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 226 (1987) ("Like any other statutory directive, the Arbitration Act's mandate may be overridden by a contrary congressional command.").

    57 15 U.S.C. §§ 2301-2312.

    58 See, e.g., Wilson v. Waverlee Homes Inc., 954 F. Supp. 1530, 1538 (M.D. Ala. 1997), aff'd mem., 127 F.3d 40 (11th Cir. 1997); Pitchford v. Oakwood Mobile Homes Inc., 124 F. Supp. 2d 958, 964-65 (W.D. Va. 2000); Parkerson v. Smith, ___So. 2d___, 2002 WL 358678 (Miss. March 7, 2002); see also Cunningham v. Fleetwood Homes of Ga. Inc., 253 F.3d 611, 622-23 (11th Cir. 2001) and Ex Parte Thicklin, __ So. 2d __, 2002 WL 27925 (Ala. Jan. 11, 2002) (Magnuson-Moss Act's disclosure requirements prohibit enforcement of warrantor's mandatory arbitration clause that is in separate document from the written warranty); but see also In re American Homestar of Lancaster Inc., 50 S.W.3d 480, 486 (Tex. 2001) (holding that warrantor's mandatory binding arbitration clause is enforceable for consumer claims arising under Magnuson-Moss Act).