3. EXCESSIVE OR DISPROPORTIONATE FINANCIAL BURDEN
Several jurisdictions have struck down arbitration
clauses as unconscionable due to the financial burden imposed upon
the consumer. For example, in Myers v. Terminix International
Company, an Ohio Court struck down a mandatory arbitration
clause due to undisclosed filing fees that were exorbitant when
compared to the size of the claim. Myers v. Terminix Int’l Co.,
91 Ohio Misc.2d 41, 697 N.E.2d 277 (Ohio 1998). The plaintiff
asserted a punitive damages claim in the amount of $2,000,000, thus
under AAA Rules, she would be required to pay a $7,000 filing fee.
Plaintiff also had a claim for treble damages based on the Consumer
Sales Practices Act. Because her claimed property damage exceeds
$41,000, her potential treble award would be over $120,000; the
nonrefundable filing fee on that amount would be $2,000. Thus, her
filing fee for arbitration would exceed the amount that she paid on
the contract by thirty- three percent. Plaintiff filed an affidavit
in opposition to the motion to stay, explaining that she did know at
the time of contracting that she would be required to pay an
arbitration filing fee and that she did not know that the fee would
be so high:
In Ohio, "[t]he basic test of
unconscionability of contract is whether under circumstances
existing at the time of making of the contract and in light of
general commercial background and commercial needs of a particular
trade or case, the clauses involved are so one-sided as to oppress
or unfairly surprise [a] party." Neubrander v. Dean Witter,
81 Ohio App.3d 308, 311-312, 610 N.E.2d 1089, 1091 (1992). There
is no dispute that Myers was unaware of the undisclosed
arbitration requirements. Such exorbitant filing fees,
"agreed to" unknowingly, would prevent a consumer of
limited resources from having an impartial third party review his
or her complaint against a business-savvy commercial entity.
Therefore, the court finds that the undisclosed filing fee
requirement in this case is so one-sided as to oppress and
unfairly surprise Myers. Thus, the court finds that the clause is
properly revocable. . . . Accordingly, the court finds that the
arbitration clause is unenforceable in this case.
Myers, 91 Ohio Misc.2d
at 47, 697 N.E.2d at 281.
Next, in Shankle v. B-G Maintenance Management
of Colorado, Inc., an arbitration clause which an employee
entered into as condition of continued employment, and which
required him to pay one-half of the arbitrator’s fees was held
unconscionable:
In this case, Mr. Shankle signed the Agreement
as a condition of continued employment. The Agreement requires Mr.
Shankle to arbitrate all disputes arising between he and his
former employer. In order to invoke the procedure mandated by his
employer, however, Mr. Shankle had to pay for one-half of the
arbitrator's fees. Assuming Mr. Shankle's arbitration would have
lasted an average length of time, he would have had to pay an
arbitrator between $1,875 and $5,000 to resolve his claims. Mr.
Shankle could not afford such a fee, and it is unlikely other
similarly situated employees could either. The Agreement thus
placed Mr. Shankle between the proverbial rock and a hard
place--it prohibited use of the judicial forum, where a litigant
is not required to pay for a judge's services, and the prohibitive
cost substantially limited use of the arbital forum.
Shankle, 153 F.3d 1230,
1235 (10th Cir. 1999).
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