Case ID: f-appx_506/html/0543-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Doyle WHEELER; Carri Wheeler, husband and wife, individually and on behalf of similarly situated Washington residents, Plaintiffs-Appellees, v. NOTEWORLD LLC, dba NoteWorld Servicing Center; Nationwide Support Services Inc., a California corporation; John Does, A-K; Jane Does, A-K, Defendants, and Freedom Debt Center, a California corporation, Defendant-Appellant.
    No. 11-35984.
    United States Court of Appeals, Ninth Circuit.
    Argued and Submitted Dec. 3, 2012.
    Filed Jan. 23, 2013.
    Timothy W. Durkop, Durkop Law Office, Spokane Valley, WA, Boyd McFadden Mayo, Darrell William Scott, Matthew John Zuchetto, The Scott Law Group, P.S., Spokane, WA, for Plaintiff-Appellee.
    James B. King, Esquire, Christopher Joseph Kerley, Markus William Louvier, Evans, Craven & Lackie, P.S., Spokane, WA, for Defendant-Appellant.
    Before: SCHROEDER, MeKEOWN, and TALLMAN, Circuit Judges.
   MEMORANDUM

Plaintiffs Doyle and Carri Wheeler brought a consumer debt diversity action against Defendants NoteWorld LLC, Freedom Debt Center (“Freedom”), and others, arising from the Wheelers’ engagement of Freedom to provide them with debt settlement services. Freedom appeals the denial of its motion to compel arbitration. We affirm.

The district court concluded, and the parties do not dispute, that three provisions of the arbitration section of the Debt Settlement Agreement were substantively unconscionable: the 30-day limitation period for claims; the loser-pays-all provision; and the provision requiring the Wheelers to arbitrate their Washington claim in Orange County California.

Under Washington law, severance of unconscionable provisions from a section of an agreement is not possible where the unconscionable provisions permeate that section. McKee v. AT & T Corp., 164 Wash.2d 872, 191 P.3d 845, 860 (2008). This contract’s arbitration section has only four sentences and three of these contain an unconscionable provision. The section is materially similar to the one in McKee where four provisions of a consumer services contract were held to be substantively unconscionable and to permeate the dispute resolution section. The Supreme Court of Washington treated the McKee arbitration section differently from the arbitration provisions contained in the employment contracts at issue in Adler v. Fred Lind Manor, 153 Wash.2d 331, 103 P.3d 773 (2004) and Zuver v. Airtouch Communications, Inc., 153 Wash.2d 293, 103 P.3d 753 (2004). In those cases, severance of the unconscionable provisions was ordered because there were only two, and the rest of the provisions in the lengthy arbitration agreements could stand on their own. Here, as in McKee, the remaining provisions cannot. The unconscionable provisions “taint the entire [] section, such that severance would essentially require us to rewrite the [] agreement.” McKee, 191 P.3d at 860-61. Regardless of whether the severance issue is one of law to be decided de novo or a discretionary determination, we must affirm the district court in this case. There was no error of law or abuse of discretion.

AFFIRMED. 
      
       This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.