CAPLIN ENTERPRISES, INC. v. ARRINGTON
| Docket Number: | 2011-CT-01332-SCT CONSOLIDATED WITH NO. 2011-CT-01932-SCT Linked Case(s): 2011-CA-01332-COA ; 2011-CA-01332-COA ; 2011-CA-01332-COA ; 2011-CT-01332-SCT ; 2011-CT-01332-SCT ; 2011-CT-01332-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 05-08-2014 Opinion Author: Justice Chandler Holding: Court of Appeals affirmed in part, reversed in part; Circuit court affirmed. |
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| Additional Case Information: |
Topic: Contract - Arbitration clause - Substantive unconscionability - Contract of adhesion |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Arbitration clause - Substantive unconscionability - Contract of adhesion |
| Summary of the Facts: | Thirty-two plaintiffs who signed delayed-deposit check agreements with Zippy Check Advance agreed that Zippy Check could pursue judicial remedies against them to collect the debt, while any and all of their claims would be relegated to arbitration. The circuit courts found the arbitration agreements to be unconscionable and denied Zippy Check’s motions to compel arbitration. The Court of Appeals affirmed as to one version of the agreement and reversed as to the other. The Supreme Court granted certiorari. |
| Summary of Opinion Analysis: | The plaintiffs’ argument focuses on the alleged procedural and substantive unconscionability of the arbitration clauses. The arbitration clause provided that “[a]ny controversy or claim arising out of or relating to” the contract shall be settled by arbitration. The plaintiffs alleged that Zippy Check engaged in predatory lending; made fraudulent misrepresentations; breached the covenant of good faith and fair dealing; was negligent in handling the plaintiffs’ accounts; caused the plaintiffs to suffer emotional distress and mental anguish; and was negligent in hiring, training, and supervising employees. These claims arise out of or relate to the Zippy Check delayed-deposit agreement, and the dispute is within the scope of the arbitration agreement. A contract is substantively unconscionable if there is an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. Zippy Check drafted the contracts unilaterally and presented them to its customers on a take-it-or-leave-it basis. Thus, they were contracts of adhesion which makes an argument targeting a provision for a substantive unconscionability review easier to prove. There is no question that the old version of the arbitration clause contained in the adhesive delayed-deposit check agreements was so one-sided as to be oppressive and substantively unconscionable. The arbitration clause was oppressive because it forced the plaintiffs to arbitrate their claims, while permitting Zippy Check to pursue remedies for the plaintiffs’ breach in court. That contract also attempted to limit Zippy Check’s liability to the finance charge each plaintiff had paid in exchange for the cash. The arbitration clause and the limitation-of-liability clause, taken together, effectively deny the plaintiffs an adequate remedy against Zippy Check. And the arbitration clause in the new version of the contract, which permitted Zippy Check to pursue judicial remedies while relegating the plaintiffs’ claims to arbitration, is also clearly oppressive and substantively unconscionable. Thus, the judgment of the Court of Appeals is affirmed in part and reversed in part. |
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