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The Missouri Compromise: Precedent Finding Class Arbitration Waivers Unconscionable Is Vacated

The Missouri Supreme Court just acknowledged that its 2010 decision, finding a class arbitration waiver was unenforceable under state law, is preempted by the FAA, pursuant to the rationale of ConcepcionIn Robinson v. Title Lenders, Inc., __ S.W.3d __, 2012 724669 (Mo. Mar. 6, 2012) and Brewer v. Mo. Title Loans, Inc., __S.W.3d __, 2012 WL 716878 (Mo. Mar. 6, 2012) (“Brewer II“), the Missouri Supreme Court bid farewell to case law that survived about one year.

In the 2010 decision, Brewer v. Missouri Title Loans, Inc., 323 S.W.3d 18 (Mo. 2010), the Missouri court reasoned that forcing individual arbitration would essentially deny consumers a remedy for their claims, and therefore the class arbitration waiver was unconscionable.  It refused to sever the class waiver and instead found the entire arbitration agreement was unenforceable.  After the U.S. Supreme Court decided Concepcion, that Court vacated and remanded Brewer.  (In Brewer II, the Missouri court goes out of its way to point out that it was not the only court who had an opinion vacated based on Concepcion — it gives a footnote shout out to five other decisions with a similar history.)

In two opinions issued on the same day, the Missouri Supreme Court said that it got the message of Concepcion.  In Robinson, it notes that “Concepcion invalidates this Court’s reasoning in Brewer I” and that “post-Concepcion, courts may not apply state public policy concerns to invalidate an arbitration agreement even if the public policy at issue aims to prevent undesirable results to consumers.”  While public policy concerns may be off the table, the court affirmed in Brewer II that  “Concepcion permits state courts to apply state law defenses to the formation of the particular contract at issue.”

Missouri was not ready to enforce the arbitration agreements at issue, however.  Instead, in a compromise of sorts, the Missouri courts seemed to agree to look harder for unconscionability that is unrelated to the class action waiver (and for reasons to distinguish the arbitration agreements from the one at issue in Concepcion).  In Brewer II, the Missouri court determined that under its general contract law precedent, the arbitration agreement was unconscionable because it was non-negotiable, its terms were one-sided, the arbitration requirement was unilateral, and the plaintiff had submitted affidavits from attorneys that it would not be cost-effective to pursue the claims on an individual basis.  (Brewer II was a 4-3 decision, with one dissenter writing “This case is nothing more than evidence of the majority’s refusal to abide by controlling federal law.”)  In Robinson, the court remanded the case to the trial judge to determine whether it is unconscionable under state law precedent that do survive Concepcion.