Washington State Supreme Court Refuses to Enforce Arbitration Clause


Since the United States Supreme Court’s ruling on AT&T Mobility v. Concepcion, many consumers across the nation have found it difficult to enforce their right to litigation. The Supreme Court maintained that, since arbitration is a superior means of solving disputes, the arbitration clauses many companies are adding to their consumer contracts are enforceable.
Many consumers disagree. The arbitration clauses which more and more companies are adding to their consumer contracts require consumers to give up their right to litigation. Instead, any dispute must be handled in arbitration. This is unfair to consumers as it prevents class actions, thereby severely decreasing the damages that can be awarded and making it less likely that many consumers who suffered only a small financial loss will pursue their grievance at all. Arbitrations are also handled by a company hired by the defendant, often making it more difficult for prosecuting consumers to get a fair hearing. We stongly advise consumers not sign arbitration agreements when making large purchases for items such as for cars or RVs. In those types of cases consumers have the leverage to say no to arbitration.

Many judges have found their hands tied by this Supreme Court decision and forced consumers into arbitration with the companies with which they signed a contract. The Washington State Supreme Court, on the other hand, has recently ruled in favor of the consumer in Gandee v. LDL Freedom Enterprises Inc. In the first such case to reach the Washington Supreme Court since the Concepcion decision, the Court affirmed the Pierce County Superior Court’s ruling which denied the Defendant’s motion to compel arbitration.

In this case, the defendant, a debt adjusters company, had provided a contract with an arbitration clause which went further than merely requiring arbitration. It also required said arbitration to be handled in Orange County, California, rather than the consumers’ home state of Washington; drastically shortened the consumers’ statute of limitations from the normal 4 years to a mere 30 days; and threatened that, if the consumers sued and lost, they would be responsible for all of the Defendant’s attorneys fees and legal costs.

The Gandees challenged the arbitration clause, saying that it is unconscionable and unenforceable under Washington contract law. The trial court agreed and the Defendants appealed the decision, putting the case before the Washington Supreme Court, which agreed with the trial court.

The Court held that the terms of the arbitration clause were grossly one-sided and existed to discourage potential claimants from accessing their rights due to the heavy cost burden imposed by the clause. While this may seem to fly in the face of the United States Supreme Court Concepcion decision, the Washington Supreme Court does not seem to think so. The opinion reads, “Concepcion provides no basis for preempting our relevant case law nor does it require the enforcement of Freedom’s arbitration clause.”

Our Wheaton, Illinois consumer rights and class action law firm handles individual and class action predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocates, the National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at Lubin Austermuehle are proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

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