Unconscionable Construction: How the Ninth Circuit Evades the FAA by Severing Arbitration Agreements as Unconscionable Note

Authors

Daniel B. Mitchell

Abstract

Bridge Fund Capital Corp. v. FastBucks Franchise Corp. illustrates a recent manifestation of an ongoing judicial hostility to arbitration. As the Supreme Court has developed its FAA jurisprudence to limit the severance of arbitration agreements, many lower courts have continued to develop legal justifications to circumvent these restrictions. The FAA's savings clause does afford some latitude for severance of arbitration agreements, but the Supreme Court has not yet defined the limits of the savings clause, nor whether the general contract defense and their justifications are sufficient to supersede FAA policy. Bridge Fund shows how the doctrine of unconscionability it being used to advance state consumer protection policies not as a last resort to protect individual parties from unconscionable agreements. Without a strong tether to objective standards, using the doctrine of unconscionability to sever arbitration agreements does little to put drafters of arbitration agreements on notice on how to draft agreements that will survive an unconscionability analysis. The more difficult it becomes to draft an arbitration agreement that withstands scrutiny from courts hostile to arbitration, the more expensive arbitration becomes, making it appealing which is the exact opposite of the purported purpose of the FAA. Bridge Fund represents an intrusion on party autonomy to choose how they will resolve their disputes and consequently endangers the use of arbitration as a viable alternative to traditional litigation.

Recommended Citation

Daniel B. Mitchell, Unconscionable Construction: How the Ninth Circuit Evades the FAA by Severing Arbitration Agreements as Unconscionable Note, 2012 J. Disp. Resol. (2012)
Available at: https://scholarship.law.missouri.edu/jdr/vol2012/iss1/13