In Chalk v. T-Mobile USA, Inc., No. 06-35909 (9th Cir. Mar. 27, 2009), the issue before the Ninth Circuit is whether a class action waiver in an agreement between T-Mobile and its customers is unconscionable under Oregon law. Steward and Chalk (plaintiffs) bought from T-Mobile a PC card manufactured by Sony. The card enables computers to connect wirelessly to the Internet. By signing the one-year service agreement with T-Mobile, the plaintiffs acknowledged that the agreement: REQUIRES MANDATORY ARBITRATION OF DISPUTES; REQUIRES MANDATORY WAIVER OF THE RIGHT TO JURY TRIAL AND WAIVER OF ANY ABILITY TO PARTICIPATE IN CLASS ACTION; The Terms and Conditions instructs purchasers to refrain from using the service should the purchaser disagree with the terms. It also provides for mandatory arbitration of all claims by the American Arbitration Association and states that each party agrees to pay its “own other fees, costs and expenses including those for counsel, experts, and witnesses.” Plaintiffs were not able to make the card to function properly, and after contacting Sony and T-Mobile several times without success, plaintiffs filed a class action suit. Plaintiffs alleged violation of federal and state law and alleged that the defendants knew or should have known that the card was not compatible. Defendants filed a motion to compel arbitration citing the arbitration clause and the district court granted it. The Ninth Circuit reviewed the validity of the agreement under Oregon law, in particular, the plaintiffs’ allegations of unconscionability: Procedural unconscionability: “oppression” and “surprise.” Here, the court agreed with the district court and held that the “take-it -or-leave-it” nature of the contract was not procedural unconscionable. Substantive unconscionability. The court analyzed whether the terms of the agreement are “unfairly one-sided.” It held that the class action waiver is substantively unconscionable and unenforceable. The court based its finding in two reasons: (a) the waiver is inherently one-sided when contained in a consumer contract and (b) it prevents individuals from vindicating their rights. Technorati Tags: arbitration, ADR, law, class action waiver, unconscionability, consumer arbitration agreement

A recent bill related to ADR has been filed by the 81st Texas Legislature. H.B. 2139, authored by Rep. McClendon, would establish a victim-offender pretrial mediation program for first time offenders. Status: Left pending in committee on 03/19/2009. Technorati Tags: arbitration, ADR, law, Mediation,

Need CLE credits? The Dispute Resolution Section of the ABA will be hosting its 11th Annual Spring Conference next month. The Conference brochure is here and online registration is here.

The following bills related to Alternative Dispute Resolution have been introduced recently by the 111st. Congress. H.R. 1214. Filed by Rep. Gutierrez, (D-IL) this bill, titled “Payday Loan Reform Act of 2009,” would amend the Truth in Lending Act to establish additional payday loan requirements to protect consumers. This bill, among other things, prohibits a mandatory arbitration clause that is “oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.” Status: referred to the house Committee on Financial Services on 02/26/2009. S. 512. Filed by Sen. Martinez (R-FL) this bill, titled “Fairness in Nursing Home Arbitration Act of 2009,” would prohibit arbitration agreements in nursing home contracts. Status: referred to the Senate Committee on the Judiciary on 03/03/2009. S. 560. Filed by Sen. Kennedy (D-MA), this bill, titled “Employee Free Choice Act of 2009,” would amend the National Labor Relations Act to require first mediation and then binding arbitration if both parties are unable to reach an agreement within certain time frame. Status: referred to the Committee on Health, Education, Labor, and Pensions on 03/10/2009. H.R. 1409. Filed by Rep. Miller (D-CA), this bill is similar to S. 560. Status: referred to the House Committee on Education and Labor on 03/10/2009. Technorati Tags: arbitration, ADR, law, Payday Loan Reform Act of 2009, Fairness in Nursing Home Arbitration Act of 2009, Employee Free Choice Act of 2009