An Illinois Appellate Court recently upheld a finding of procedural unconscionability of an arbitration clause contained within a “Customer Agreement” where the parties were in disparate bargaining positions, the agreement was a pre-printed form contract, the agreement was not mailed to the consumer until after she had already purchased satellite television equipment and contracted for satellite service, and the consumer was left with no “meaningful choice” in deciding whether to accept certain portions of the agreement.
In Bess v. DirecTV, an Illinois consumer sued her satellite television service provider for its $5 late fee in monthly service payments, challenging its validity under Illinois laws of equity and the Illinois Consumer Fraud and Deceptive Business Practices Act. After the plaintiff filed the case in Illinois courts, DirecTV sought to enforce an arbitration clause contained in the Customer Agreement that was mailed to the plaintiff after she had already purchased satellite-receiving equipment and subscribed to DirecTV’s service. The clause was printed in 8-point font on the last two panels of a multi-paneled document, which provided that arbitration be the exclusive forum for dispute resolution under the parties’ agreement. The agreement provided that acceptance of the terms was completed by continuing to receive DirecTV service. The court analyzed several factors in finding procedural unconscionability of the arbitration provision, including the fact that the consumer was given the pre-printed form agreement on a “take-it-or-leave-it” basis, after she had already purchased the necessary equipment and service. The court reasoned that the consumer was not allowed any “meaningful choice” in accepting this arbitration provision, and, therefore, it was not valid.
According to Erin Gaeke, a member of the firm’s Litigation Practice Group, sellers of products should always avoid exposing purchasers, especially consumers, to the sellers’ terms and conditions of sale for the first time as part of the shipment of the product.