Monday, August 20, 2007

AT&T's mandatory arbitration...

... is also found unconscionable: Shroyer v. New Cingular Wireless Services.
Under this three-part inquiry, courts are required to determine: (1) whether the agreement is “ ‘a consumer contract of adhesion’ ” drafted by a party that has superior bargaining power;
(2) whether the agreement occurs “ ‘in a setting in which disputes between the contracting parties predictably involve small amounts of damages’ ”; and (3) whether “ ‘it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.’ ”
Because all three parts of the Discover Bank test are satisfied, Cingular’s class arbitration waiver is both procedurally and substantively unconscionable, and cannot be enforced.


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