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En banc hearing on who decides unconsionability
June 29, 2005 by Ross Runkel at LawMemo

The 9th Circuit will rehear en banc (11 judges!) the issue of whether it was for an arbitrator, rather than a court, to decide whether a contact is unconscionable. Nagrampa v. MailCoups, Inc (9th Cir 03/21/2005) was the original 3-judge panel decision holding that the arbitrator decides this question. The order for a rehearing, issued June 29, 2005, is [here].

I'll repeat a little of what I said earlier [here]. In Nagrampa there was a francise agreement which contained an arbitration agreement within it. Nagrampa claimed that both the arbitration agreement and the whole agreement were unconscionable. The 9th Circuit panel applied Prima Paint v. Flood & Conklin, 388 US 395 (1967), and made its own decision on the unconsionability of the arbitration agreement, but held that it was for the arbitrator to decide whether the contract as a whole was unconscionable.

My view:

• As I said before [here], the 9th Circuit panel got it right.
• So why a rehearing en banc? Probably because the US Supreme Court has granted certiorari to review a Florida case, Cardegna v. Buckeye Check Cashing, Inc. (Florida 01/20/2005) which held that it is for the court to decide whether an entire contract is void due to a violation of state usury laws. Previously blogged [here].

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