Applying Washington state law, the Ninth Circuit held that the court, rather than the arbitrator, should determine whether an arbitration clause in a consumer contract was unconscionable. Smith v. JEM Group, Inc.,737 F.3d 636(9th Cir. 2013). The court concluded that the question of arbitrability is for the court to decide so long as the plaintiff’s challenge to the validity of an arbitration clause is a distinct question from a challenge to the validity of the contract as a whole. In a separate holding, the Ninth Circuit affirmed that this arbitration clause, which was part of a legal services contract, was unconscionable. A Washington attorney may include an arbitration clause in a client agreement if the client receives information to make an informed decision. The district court found the client was not sufficiently informed, and the Ninth Circuit agreed. Addressing Concepcion, the court held the provision did not unduly burden arbitration because it was limited to the process that results in the formation of the agreement, and was not specifically aimed at arbitration clauses.
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