Jackson v. Rent-A-Center West ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ANTONIO JACKSON,  No. 07-16164
Plaintiff-Appellant, D.C. No.
v.  CV-07-00050-
RENT-A-CENTER WEST, INC., LRH/RAM
Defendant-Appellee.
 OPINION
Appeal from the United States District Court
for the District of Nevada
Larry R. Hicks, District Judge, Presiding
Submitted November 21, 2008*
San Francisco, California
Filed September 9, 2009
Before: Cynthia Holcomb Hall, Thomas G. Nelson and
Sidney R. Thomas, Circuit Judges.
Opinion by Judge Thomas;
Dissent by Judge Hall
*The panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).
12787
12790 JACKSON v. RENT-A-CENTER WEST
COUNSEL
Ian E. Silverberg, Hardy Law Group, Reno, Nevada, for the
appellant.
Michael T. Garone, Schwabe, Williamson & Wyatt, Portland,
Oregon, for the appellee.
OPINION
THOMAS, Circuit Judge:
Antonio Jackson appeals from a district court order dis-
missing his statutory race discrimination claim and compel-
ling arbitration. Under the circumstances presented here, we
JACKSON v. RENT-A-CENTER WEST 12791
conclude that the district court was required to determine
whether the arbitration agreement was unconscionable, and
we remand for further proceedings.
I
Jackson was an employee of Rent-A-Center West, Inc.
(“Employer”). On February 1, 2007, Jackson filed a com-
plaint in the United States District Court for the District of
Nevada alleging race discrimination and retaliation on the part
of the Employer under 42 U.S.C. § 1981. The Employer
moved to dismiss proceedings and compel arbitration, relying
on a Mutual Agreement to Arbitrate Claims (“Agreement to
Arbitrate,” “Agreement”) Jackson signed as a condition of his
employment with the Employer when he was initially hired.1
The Agreement specifically includes claims for discrimination
in the list of claims that must be resolved by arbitration.
Of particular relevance to this appeal is a section of the
Agreement entitled “Arbitration Procedures,” which includes
the following provision:
The Arbitrator, and not any federal, state, or local
court or agency, shall have exclusive authority to
resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this
Agreement including, but not limited to any claim
that all or any part of this Agreement is void or void-
able.
The Employer argued in the district court that, in light of
this provision, the threshold question of whether the arbitra-
tion agreement was valid and enforceable was for an arbitra-
1
In the district court, the Employer filed the declaration of its Director
of Compensation and Benefits stating that “[s]ince on or about July 2000,
Rent-A-Center has required all new employees to agree to arbitrate all
past, present, and future disputes.”
12792 JACKSON v. RENT-A-CENTER WEST
tor, not the court. Jackson argued in response that the
Agreement was unconscionable. In particular, he contended
that the Agreement was substantively unconscionable because
it contained one-sided coverage and discovery provisions and
a provision specifying that the arbitrator’s fee was to be
equally shared by the parties. Jackson also argued that the
Agreement was procedurally unconscionable because the
form contract was presented to him as a non-negotiable condi-
tion of his employment.
The district court granted the Employer’s motion to dismiss
proceedings and compel arbitration. The court found that the
Agreement to Arbitrate “clearly and unmistakenly provides
the arbitrator with the exclusive authority to decide whether
the Agreement to Arbitrate is enforceable” and held that “the
question of arbitrability is for the arbitrator.” The district
court also held that, even if it were to reach the merits of Jack-
son’s assertion that the Agreement was unconscionable, Jack-
son had not demonstrated that the Agreement was
substantively unconscionable.
On appeal, Jackson challenges the district court’s determi-
nation that enforceability of the Agreement to Arbitrate was
a question for the arbitrator. He further argues that the district
court erred in holding Jackson had not demonstrated the
Agreement was substantively unconscionable. We review de
novo a district court’s decision to compel arbitration. Bushley
v. Credit Suisse First Boston, 360 F.3d 1149, 1152 (9th Cir.
2004).
II
The Federal Arbitration Act (“FAA”) provides that agree-
ments to arbitrate disputes “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2(2000). While the FAA expresses a “liberal federal policy
favoring arbitration agreements,” Green Tree Fin. Corp.-Ala.
JACKSON v. RENT-A-CENTER WEST 12793
v. Randolph, 531 U.S. 79, 91 (2000) (internal quotation marks
omitted), federal law “directs courts to place arbitration agree-
ments on equal footing with other contracts,” EEOC v. Waffle
House, Inc., 534 U.S. 279, 293 (2002). Accordingly, under 9
U.S.C. § 2, “[a]rbitration agreements . . . are subject to all
defenses to enforcement that apply to contracts generally.”
Ingle v. Circuit City Stores, Inc. 328 F.3d 1165, 1170 (9th Cir.
2003). The threshold question before us is whether a court or
an arbitrator is to decide whether an arbitration agreement
was unconscionable and hence unenforceable.
A
[1] The Supreme Court has held that, as a matter of federal
substantive arbitration law, when a party challenges the valid-
ity of a contract between the parties, but “not specifically its
arbitration provisions,” the challenge to the contract’s validity
should be considered by an arbitrator, not a court. Buckeye
Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 446 (2006).
The flip side of this rule, however, is that when a party specif-
ically challenges the validity of arbitration provisions within
a larger contract, apart from the validity of the contract as a
whole, a court decides the threshold question of the enforce-
ability of the arbitration provisions. We applied this rule in
Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1264 (9th Cir.
2006) (en banc), stating that “[w]hen the crux of the com-
plaint is not the invalidity of the contract as a whole, but
rather the arbitration provision itself, then the federal courts
must decide whether the arbitration provision is invalid and
unenforceable under 9 U.S.C. § 2.” See also Ingle, 328 F.3d
at 1170; Ticknor v. Choice Hotels Int’l, Inc., 265 F.3d 931,
941 (9th Cir. 2001).
The rationale behind a rule requiring courts to make the
threshold determination when the challenge specifically tar-
gets the validity of arbitration provisions is that arbitration is
itself a matter of contract. “The duty to arbitrate being of con-
tractual origin, a compulsory submission to arbitration cannot
12794 JACKSON v. RENT-A-CENTER WEST
precede judicial determination that the . . . agreement does in
fact create such a duty.” John Wiley & Sons, Inc. v. Living-
ston, 376 U.S. 543, 547 (1964). Indeed, as a matter of federal
arbitration law, a court may not compel arbitration until it is
“satisfied that the making of the agreement for arbitration or
the failure to comply therewith is not in issue.” 9 U.S.C. § 4(2000). The FAA precludes state laws that single out arbitra-
tion provisions for special treatment, but does not allow fed-
eral courts to “shirk” their duty to consider, by applying the
relevant state contract law principles, whether an “arbitration
provision is invalid and unenforceable under 9 U.S.C. § 2 of
the FAA.” Nagrampa, 469 F.3d at 1264.
[2] Whether court or arbitrator is to determine arbitrability
is more straightforward in this case than it was in Nagrampa,
a case involving a challenge to arbitration provisions located
within a larger “container contract.” Jackson’s merits dispute
with the Employer does not arise out of a contract between
them, but is rather based in federal statutory discrimination
law. Jackson challenges the free-standing Agreement to Arbi-
trate he signed, contending that the Agreement is unconscio-
nable and that he cannot be compelled to arbitrate his
statutory discrimination claims.2
[3] We confronted a similar situation in Davis v.
O’Melveny & Myers, 485 F.3d 1066 (9th Cir. 2007). There,
we held that where the plaintiff brought claims for violation
of overtime laws against her employer, whether the employ-
er’s arbitration agreement was unconscionable “is for a court
to decide.” Id. at 1072. Pursuant to Buckeye, Nagrampa, Tick-
2
The district court incorrectly applied Buckeye‘s rule that a global chal-
lenge to the validity of a container contract in which arbitration provisions
are located is to be determined by the arbitrator. Jackson challenged the
Agreement to Arbitrate itself and did not challenge the validity of a con-
tract setting forth other substantive contractual obligations between the
parties. Accordingly, the “severability” principle announced in Buckeye
and the Court’s earlier decision in Prima Paint Corp. v. Flood & Conklin
Mfg. Co., 388 U.S. 395 (1967), does not apply.
JACKSON v. RENT-A-CENTER WEST 12795
nor, and Davis, we conclude that the question whether the
Agreement was unconscionable was for the court to decide.
The district court erred in concluding that unconscionability
was an issue to be decided by the arbitrator.
B
[4] The Employer argues that the validity of the Agreement
to Arbitrate must be determined by an arbitrator in accordance
with the terms of the Agreement. The Employer relies on
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938(1995), in which the Court stated that “[c]ourts should not
assume that the parties agreed to arbitrate arbitrability unless
there is ‘clea[r] and unmistakabl[e] evidence that they did so.”
Id. at 944 (quoting AT&T Techs., Inc. v. Comm’ns Workers,
475 U.S. 643, 649 (1986)). The Court explained this principle
as based in the parties’ expectations about whether court or
arbitrator determines the issue of whether they agreed to arbi-
trate:
[G]iven the principle that a party can be forced to
arbitrate only those issues it specifically has agreed
to submit to arbitration, one can understand why
courts might hesitate to interpret silence or ambigu-
ity on the “who should decide arbitrability” point as
giving arbitrators that power, for doing so might too
often force unwilling parties to arbitrate a matter
they reasonably would have thought a judge, not an
arbitrator, would decide.
First Options, 514 U.S. at 945.
[5] In contrast to First Options, we are not presented with
“silence or ambiguity on the ‘who should decide the arbitra-
bility point.’ ” Jackson does not dispute that the language of
the Agreement clearly assigns the arbitrability determination
to the arbitrator. What he does dispute, however, is that he
meaningfully agreed to the terms of the form Agreement to
12796 JACKSON v. RENT-A-CENTER WEST
Arbitrate, which he contends is procedurally and substantively
unconscionable. Jackson argues that, in light of the parties’
unequal bargaining power, the fact that the Agreement was
presented as a non-negotiable condition of his employment,
and the absence of any meaningful opportunity to modify the
terms of the Agreement, he did not meaningfully assent to the
Agreement.
[6] The Supreme Court has “determined that ‘arbitration is
a matter of contract and a party cannot be required to submit
to arbitration any dispute which he has not agreed so to sub-
mit.’ ” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
83 (2002) (quoting Steelworkers v. Warrior & Gulf Nav. Co.,
363 U.S. 574, 582 (1960)); see also Gateway Coal Co. v.
United Mine Workers of Am., 414 U.S. 368, 374 (1974) (“The
law compels a party to submit his grievance to arbitration
only if he has contracted to do so.”). “[A]rbitration is simply
a matter of contract between the parties; it is a way to resolve
those disputes—but only those disputes—that the parties have
agreed to submit to arbitration.” First Options, 514 U.S. at
943. The Employer would have us limit our inquiry regarding
whether the parties agreed to arbitrate arbitrability to the lan-
guage of the contract. First Options indicates that the
presumption—that courts determine whether parties agreed to
arbitrate—can only be overcome with “clear and unmistak-
able evidence” of such an intent. See id. at 944. It did not sug-
gest, however, that where arbitration provisions—unlike other
contractual provisions—are concerned, clear contractual lan-
guage is enforceable per se. Rather, the Court stated that
“[w]hen deciding whether the parties agreed to arbitrate a cer-
tain matter (including arbitrability), courts generally . . .
should apply ordinary state-law principles that govern the for-
mation of contracts.” Id. at 944 (emphasis added). The Court
explained that “[j]ust as the arbitrability of the merits of a dis-
pute depends upon whether the parties agreed to arbitrate that
dispute, so the question ‘who has the primary power to decide
arbitrability’ turns upon what the parties agreed about that
matter.” Id. at 943 (citations omitted). First Options, then,
JACKSON v. RENT-A-CENTER WEST 12797
directs that as a threshold matter the court must decide—by
applying “ordinary state-law principles”—whether the parties
agreed to arbitrate arbitrability.
[7] The Employer urges us to consider only that Jackson
signed the Agreement, which contains language consigning
the arbitrability question to the arbitrator. However, the FAA
was enacted in part “to place arbitration agreements ‘upon the
same footing as other contracts.’ ” Scherk v. Alberto-Culver
Co., 417 U.S. 506, 511 (1974) (quoting H.R. Rep. No. 96,
68th Cong., 1st Sess., 1, 2 (1924)). To engage in an artificially
contracted review of what the parties agreed to here would
contravene this principle and violate the proper role of coop-
erative federalism. Rather, we hold that where, as here, a
party challenges an arbitration agreement as unconscionable,
and thus asserts that he could not meaningfully assent to the
agreement, the threshold question of unconscionability is for
the court.
C
The Employer also relies on inapposite decisions from
other circuits, which have held enforceable agreements
between sophisticated commercial entities assigning the ques-
tion of arbitrability to the arbitrator. See Terminix Int’l Co.,
LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327, 1333 (11th
Cir. 2005); Contec Corp. v. Remote Solution Co., 398 F.3d
205, 208, 210-11 (2d Cir. 2005); Apollo Computer, Inc. v.
Berg, 886 F.2d 469, 472-74 (1st Cir. 1989). But see Micro-
chip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350, 1359
(Fed. Cir. 2004).
However, these cases are easily distinguishable. Unlike the
case at bar, there were no allegations in these cases that the
agreements were formed under circumstances of grossly
unequal bargaining power. In none of these cases did the
party resisting arbitration contend that there was no meaning-
ful agreement to arbitrate in the first place.
12798 JACKSON v. RENT-A-CENTER WEST
Rather, the issue at hand is similar to the question con-
fronted by the First Circuit in a case involving claims that a
form agreement between parties of markedly unequal bargain-
ing power was unconscionable. In Awuah v. Coverall N. Am.,
Inc., 554 F.3d 7 (1st Cir. 2009), a class of franchisees sued a
large commercial enterprise for fraud, misrepresentation,
breach of contract, and violations of various labor laws. The
corporation moved to compel arbitration with regard to three
franchisees whose agreements contained arbitration clauses.
These agreements incorporated by reference the Rules of the
American Arbitration Association, which provide in relevant
part that “[t]he arbitrator shall have the power to rule on his
or her own jurisdiction, including any objections with respect
to the existence, scope or validity of the arbitration agree-
ment.” Id. at 9. The franchisees responded that the arbitration
agreements were unconscionable.
The First Circuit concluded that Supreme Court precedent
did not determine the outcome, id. at 10-11, and followed its
own precedent in Apollo Computer, 886 F.2d at 472-74, hold-
ing that the language incorporated by reference into the agree-
ment was “about as ‘clear and unmistakable’ as language can
get.” Id. at 11 (citation omitted). Nonetheless, the Awuah
court did not limit its inquiry to the agreement’s language.
Rather, the court stated:
In principle, having the arbitrator decide questions of
validity may be fine if the parties so agreed; but if
the terms for getting an arbitrator to decide the issue
are impossibly burdensome, that outcome would
indeed raise public policy concerns. If arbitration
prevents plaintiffs from vindicating their rights, it is
no longer a valid alternative to traditional litigation.
Id. at 12 (quotations omitted). The court held that “appellees
are entitled to a ruling by [the district] court as to whether the
arbitration remedy in this case is illusory.” Id. at 13. The First
Circuit was careful to state that its “concern here is not with
JACKSON v. RENT-A-CENTER WEST 12799
unconscionability—essentially a fairness issue—but more
narrowly with whether the arbitration regime here is struc-
tured so as to prevent a litigant from having access to the arbi-
trator to resolve claims, including unconscionability
defenses.” Id. (internal citation omitted). In short, the First
Circuit held that where a contract delegates determination of
whether an arbitration provision is enforceable to the arbitra-
tor, a party challenging the provision is entitled to have a
court determine whether “the arbitration remedy is illusory.”
[8] We agree with the First Circuit that, where a party to
an agreement to arbitrate contends that the arbitration agree-
ment in particular was unconscionable and that he made no
meaningful choice to enter the agreement, summary enforce-
ment of the agreement is improper. However, while the First
Circuit stated that the threshold inquiry it mandated did not
encompass unconscionability, we hold that where a party spe-
cifically challenges arbitration provisions as unconscionable
and hence invalid, whether the arbitration provisions are
unconscionable is an issue for the court to determine, apply-
ing the relevant state contract law principles. This rule applies
even where the agreement’s express terms delegate that deter-
mination to the arbitrator. We hold that where, as here, an
arbitration agreement delegates the question of the arbitration
agreement’s validity to the arbitrator, a dispute as to whether
the agreement to arbitrate arbitrability is itself enforceable is
nonetheless for the court to decide as a threshold matter.
III
We next address the district court’s alternate holding that
the Agreement to Arbitrate was not unconscionable, and was
therefore enforceable. The agreement in this case was formed
in Nevada. Nevada law permits the invalidation of arbitration
provisions if they are both substantively and procedurally
unconscionable. D.R. Horton, Inc. v. Green, 96 P.3d 1159,
1162-63 (Nev. 2004). Substantive unconscionability arises
when contract terms are one-sided. Id. Jackson claims that
12800 JACKSON v. RENT-A-CENTER WEST
three aspects of the agreement are one-sided: (1) claim cover-
age, (2) costs, and (3) discovery. Though all three issues were
argued to the district court below, that court only addressed
one of them, determining that the provision regarding costs
was not substantively unconscionable.
The district court did not err in determining that the cost
provision was not substantively unconscionable. The arbitra-
tion agreement provided that the parties would share costs
equally, unless the law of the jurisdiction where the arbitra-
tion would be held required otherwise, in which case that law
would be followed. Jackson argues that, because this might
subject him to costs greater than those usually associated with
litigation, the provision is substantively unconscionable.
In evaluating cost one-sidedness, the Supreme Court of
Nevada has held that “[o]rdinary consumers may not always
have the financial means to pursue their legal remedies, and
significant arbitration costs greatly increase that danger. In
such a circumstance, the contract would lack [a] modicum of
bilaterality.” Id. at 1165 (internal quotation marks omitted).
Discussing a challenge to the equal sharing of fees, the court
cited our precedent invalidating such fee provisions and said
that the agreement’s “silence regarding potentially significant
arbitration costs does not, alone, render the agreement unen-
forceable . . . . [but may be] properly considered . . . in exam-
ining the asymmetrical effects of the provision.” Id. (citing
Ting v. AT & T, 319 F.3d 1126, 1148-49 (9th Cir. 2003)).
[9] In this case, the agreement contains both a fee-sharing
provision and the potential for undisclosed significant arbitra-
tion costs. Nonetheless, D.R. Horton held that silence about
those potential costs was not enough standing alone to find an
agreement unenforceable. Id. Jackson presented no evidence
suggesting prohibitive costs would actually be incurred and so
did not meet his burden of establishing the fee-sharing provi-
sion and silence regarding potentially significant arbitration
JACKSON v. RENT-A-CENTER WEST 12801
costs render the arbitration agreement unconscionable. See
Green Tree Fin. Corp.-Ala., 531 U.S. at 92.
[10] Furthermore, the fee-sharing provision specifically
states that “[i]n the event the law of the jurisdiction in which
the arbitration is held requires a different allocation of fees
and costs in order for this Agreement to be enforceable, then
such law shall be followed.” In other words, the agreement
itself effectively states that the fee-sharing provision is inap-
plicable if it is unconscionable under Nevada law. Jackson
fails to address or counter this argument. For these reasons,
we conclude that the district court correctly determined that
the costs provision was not substantively unconscionable.
[11] However, the district court did not address Jackson’s
remaining arguments about substantive unconscionability,
namely, that the Agreement’s coverage and discovery provi-
sions were one-sided and unfairly favored the Employer.
Therefore, we must vacate the judgment and remand for the
district court to complete its analysis of substantive uncons-
cionability.3
IV
In sum, we conclude that a court must decide the threshold
question of arbitrability when a plaintiff challenges an arbitra-
tion agreement as unconscionable, but the agreement provides
that the enforceability of the arbitration agreement is itself an
issue to be resolved through arbitration. We remand for fur-
ther proceedings consistent with this opinion. The parties
shall each bear their own costs on appeal.
3
The district court did not address procedural unconscionability because
it found no substantive unconscionability, and both prongs must be met for
a finding of unconscionability. If the district court determines on remand
that the agreement is substantively unconscionable, then it should deter-
mine whether the agreement is procedurally unconscionable.
12802 JACKSON v. RENT-A-CENTER WEST
AFFIRMED IN PART; REVERSED IN PART;
REMANDED.
HALL, Circuit Judge, dissenting:
This case concerns an arbitration agreement more favorable
to the employee than most this court sees. It stated plainly that
the arbitrator had the exclusive authority to resolve any dis-
pute regarding the agreement’s validity. It permitted modifi-
cation or revocation by the parties. It allowed Jackson the
chance to review it with an attorney prior to signing. In these
respects, this was not even a run-of-the-mill arbitration agree-
ment.1 Jackson’s allegations of unconscionability are also
vaguer than most.2 He claims, without any specifics, that the
agreement was a condition of his employment and non-
negotiable, although the latter is contradicted by the agree-
ment itself. He claims that the agreement lacks mutuality,
imposes burdensome costs, and includes one-sided discovery,
but only speculates that his costs might exceed the expense of
litigation and concedes that the discovery provision is not
alone unconscionable. So what we have, then, is an arbitration
agreement more favorable than most and unconscionability
allegations that are thinner than most.
1
Compare these provisions with others this court has seen. See, e.g.,
Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1265, 1281, 1283 (9th Cir.
2006) (describing a non-negotiable agreement which addressed some rules
by cross-reference only and where the party resisting arbitration claimed
she was not even informed about the arbitration provision on page twenty-
five of a thirty-page agreement).
2
Nagrampa, for example, involved a complaint which asserted causes
of action challenging the validity of the arbitration agreement and included
forty-one allegations stating facts supporting the causes of action. See id.
at 1264, 1266, 1270, 1283. Jackson’s complaint is silent as to the arbitra-
tion agreement. Vague allegations appear in his opposition to Rent-a-
Center’s motion to compel arbitration and are repeated verbatim in the
brief to this court.
JACKSON v. RENT-A-CENTER WEST 12803
Nonetheless, the majority’s opinion will send this case (not
to mention all those run-of-the-mill ones) to a mini-trial in the
district court to determine an agreement’s validity based on
just the bare allegation of unconscionability, even when the
contract language “clearly and unmistakably” chooses a dif-
ferent forum for that question. This is counter to the general
policy favoring arbitration of disputes. See Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626
(1985) (counseling the resolution of “any doubts concerning
the scope of arbitrable issues . . . in favor of arbitration,
whether the problem at hand is the construction of the con-
tract language itself or an allegation of waiver, delay, or a like
defense to arbitrability”). It also makes it difficult to under-
stand what the Supreme Court meant when it said that,
although the general rule gives the threshold question of
arbitrability to courts, parties may provide for the arbitrator to
decide the question instead if they do so “clearly and unmis-
takably.” AT&T Techs., Inc. v. Commc’ns Workers of Am.,
475 U.S. 643, 649 (1986). The exception begins to look very
much like the general rule in that courts will be deciding the
question of agreement validity under both scenarios, regard-
less of what the agreement’s language might say about the
chosen forum for that question.
In First Options v. Kaplan, Inc., the Supreme Court said a
court should not find an agreement “clear and unmistakable”
if there is any “silence or ambiguity.”3 514 U.S. 938, 944
(1995) (alterations omitted); cf. EEOC v. Waffle House, Inc.,
534 U.S. 279, 289 (2002) (“Absent some ambiguity in the
agreement, it is the language of the contract that defines the
scope of disputes subject to arbitration.”). The majority
3
The majority cites First Options’ statements that “ordinary state-law
principles” should be applied to the question of arbitrability, but neglects
to mention that these statements came in the context of the Court’s discus-
sion of the general rule wherein courts decide the question, rather than the
“important qualification” to that rule which is at issue here. 514 U.S. at
944.
12804 JACKSON v. RENT-A-CENTER WEST
admits there is no silence or ambiguity here. In Awuah v. Cov-
erall North America, Inc., the out-of-circuit case most on
point, the First Circuit found an allegedly unconscionable
agreement to be “about as ‘clear and unmistakable’ ” as it
could be in stating that agreement validity was for the arbitra-
tor to decide.4 554 F.3d 7, 11 (1st Cir. 2009). The majority
admits the language is similarly clear and unmistakable here.
In light of this, I believe the question of the arbitration agree-
ment’s validity should have gone to the arbitrator, as the par-
ties “clearly and unmistakably provide[d]” in their agreement.5
The majority opinion cites First Options and Awuah, but
then expands the district court’s inquiry beyond what those
cases envisioned. I respectfully disagree with this expansion.
Furthermore, to the extent the district court has a role to play
4
According to the majority, Awuah held that “where a party to an agree-
ment to arbitrate contends that the arbitration agreement in particular was
unconscionable and that he made no meaningful choice to enter the agree-
ment, summary enforcement of the agreement is improper.” Thomas Op.
at 12799. I respectfully disagree. Awuah explicitly said its concern was not
with unconscionability, and instead held that a district court only has the
very limited role of determining “whether the arbitration regime . . . is
structured so as to prevent a litigant from having access to the arbitrator.”
See 554 F.3d at 13 (emphasis omitted). Thus, even if an agreement was
alleged to be unconscionable, enforcement of the parties’ agreement to
send that question to arbitration would still be proper unless the party
resisting arbitration met the “high” burden of showing that the arbitration
was an illusory remedy. Id.5
The majority cites section 2 of the FAA (and cases referencing that
section) regarding the enforceability of unconscionable arbitration agree-
ments. See 9 U.S.C. § 2; Ingle v. Circuit City Stores, Inc., 328 F.3d 1165,
1170 (9th Cir. 2003); Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1264
(9th Cir. 2006). However, everyone agrees that unconscionable arbitration
agreements should not be enforced. At issue here is who should decide if
the agreement is unconscionable when the parties’ agreement gives the
question to the arbitrator. That issue is not addressed by section two of the
FAA. Nor is it addressed by any of the other cases the majority cites, with
the exception of Awuah, which, as discussed above, supports finding that
the parties in this case “clearly and unmistakably” consigned the agree-
ment’s validity to arbitration.
JACKSON v. RENT-A-CENTER WEST 12805
here, it should certainly be a more limited one than the major-
ity envisions, perhaps permitting courts to remain attuned to
“well-supported” claims of unconscionability or the potential
that arbitration might be illusory, while still resolving “any
doubts” as to what the parties agreed in favor of arbitration.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 626-27 (1985) (emphasis added); Awuah, 554
F.3d at 13 (finding a “narrow[ ]” remand appropriate to deter-
mine, not unconscionability, but instead whether the litigant
could meet a “high” burden to show that arbitration was “truly
illusory”); see also United Steelworkers of Am. v. Am. Mfg.
Co., 363 U.S. 564, 567-68 (1960) (“The function of the court
is very limited when the parties have agreed to submit all
questions of contract interpretation to the arbitrator. It is con-
fined to ascertaining whether the party seeking arbitration is
making a claim which on its face is governed by the contract).
For these reasons, I dissent.