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No. 15-0128 -- Nationstar Mortgage, LLC v. Adam West and Bethany West 

Workman, Justice, dissenting 

In reversing the well-reasoned decision of the circuit court, the majority 

destroys consumer rights through its overly harsh analysis of the Wests’ 

unconscionability contract defense. The real question in this case is whether the Wests 

met their burden under Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 

(2000), to demonstrate that they face such “high costs” if compelled to arbitrate their 

claims against Nationstar that they are effectively precluded from vindicating their rights 

in the arbitral forum. Id. at 90. The record is clear that the Wests have met their burden of 

showing the likelihood of incurring such costs, and I would invalidate the arbitration 

agreement as “prohibitively expensive.” Id. at 92. I therefore respectfully dissent. 

This case presents just another example of the troubling issues surrounding 

arbitration clauses inserted into form contracts in consumer transactions by powerful outof-state corporations.1

 As Justice Ginsburg recently commented, the precedent of the 

 

1

See Melissa T. Lonegrass, Finding Room for Fairness in Formalism-the Sliding 

Scale Approach to Unconscionability, 44 Loy. U. Chi. L.J. 1, 3 (2012) (“Standard forms

are ubiquitous, but hardly innocuous. In fact, form contracts are rife with the potential for 

abuse. Their nature and universality permit drafters to impose any number of onerous 

terms on unwary consumers, including arbitration agreements, class action waivers, 

liquidated damages provisions, warranty disclaimers, exculpatory clauses, and choice-oflaw provisions. Form contracts even empower drafters to shift risks at will, often without 

warning, through unilateral change-of-terms clauses--an increasingly common favorite of 

credit card issuers, banks, utility companies, and a host of other merchants and service 

(continued . . .) 

FILED

April 7, 2016 

released at 3:00 p.m. 

RORY L. PERRY II, CLERK 

SUPREME COURT OF APPEALS 

OF WEST VIRGINIA
2 

United States Supreme Court has “predictably resulted in the deprivation of consumers’ 

rights to seek redress for losses, and, turning the coin, they have insulated powerful 

economic interests from liability for violations of consumer-protection laws.” DIRECTV, 

Inc. v. Imburgia, 136 S. Ct. 463, 477 (2015) (Ginsburg, J., dissenting); see e.g., Judith 

Resnick, Diffusing Disputes: The Public in the Private of Arbitration, the Private in 

Courts, and the Erasure of Rights, 124 Yale L.J. 2804, 2804 (2015) (“Although hundreds 

of millions of consumers and employees are obliged to use arbitration as their remedy, 

almost none do so -- rendering arbitration not a vindication but an unconstitutional 

evisceration of statutory and common law rights.”). Because “consumers lack bargaining 

power to change the terms of consumer adhesion contracts ex ante, ‘[t]he providers 

[have] won the power to impose a mandatory, no-opt-out system in their own private 

“courts” designed to preclude aggregate litigation.’” DIRECTV, 136 S.Ct. at 477 

(Ginsburg, J., dissenting) (quoting Resnik, Fairness in Numbers: A Comment on AT&T v. 

Concepcion, Wal-Mart v. Dukes, and Turner v. Rogers, 125 Harv. L. Rev. 78, 133 

(2011)). 

Although the Supreme Court has stressed that federal policy under the 

Federal Arbitration Act, 9 United States Code § 2 (West 2016), favors the enforcement of 

 

providers. Although essential to the American economy, form contracts expose 

consumers to a parade of one-sided, risk- and rights-shifting provisions.”) (footnotes 

omitted). 
3 

valid arbitration agreements,2 the Supreme Court has been equally clear that a party can 

be forced into arbitration only if he or she has in fact entered into a valid, enforceable 

contract waiving his or her right to a judicial forum. AT&T Tech., Inc. v. Commc’n 

Workers of Am., 475 U.S. 643, 648 (1986). Whether the parties actually agreed to 

arbitrate is determined under ordinary state-law contract principles. Penn v. Ryan’s 

Family Steak Houses, Inc., 269 F.3d 753, 758-59 (7th Cir. 2001). An arbitration clause 

may be declared unenforceable upon the same grounds at law or equity for the revocation 

of any contract. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). 

Therefore, a traditional unconscionability contract defense still exists because the FAA’s 

saving clause permits it. Id. 

Consistent with these principles, this Court still has the authority to find an 

arbitration clause invalid due to unconscionability. “[W]e analyze unconscionability in 

terms of two component parts: procedural unconscionability and substantive 

unconscionability.” Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 681, 724 S.E.2d 

250, 285 (2011) (“Brown I”). Substantive unconscionability goes to the specific terms of 

the contract and procedural unconscionability concerns the formation of the agreement. 

While the presence of both procedural and substantive problems is necessary for an 

ultimate finding of unconscionability, such a finding may be appropriate when a contract 

 

2

“[D]ue regard must be given to the federal policy favoring arbitration, and 

ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.” 

Volt Inf. Sciences, Inc. v. Bd. of Tr. of Leland Stanford Jr. Univ., 489 U.S. 468, 475-76 

(1989). 
4 

presents pronounced substantive unfairness and a minimal degree of procedural 

unfairness, or vice versa. To be unenforceable, a contract term must -- “at least in some 

small measure” -- be both procedurally and substantively unconscionable. Id. at Syl. Pt. 

20; Dan Ryan Builders, Inc. v. Nelson, 230 W. Va. 281, 289, 737 S.E.2d 550, 558 (2012). 

The United States Court of Appeals for the Fourth Circuit explained the 

particular characteristics of both procedural and substantive unconscionability in Carlson 

v. General Motors Corp., 883 F.2d 287 (4th Cir. 1989): 

Substantive unconscionability involves those one-sided terms 

of a contract from which a party seeks relief (for instance, “I 

have the right to cut off one of your child’s fingers for each 

day you are in default”), while procedural unconscionability 

deals with the process of making a contract -- “bargaining 

naughtiness” (for instance, “Just sign here; the small print on 

the back is only our standard form”). Each of these branches 

of unconscionability has common-law cousins; procedural 

unconscionability looks much like fraud or duress in contract 

formation, and substantive unconscionability reminds us of 

contracts or clauses contrary to public policy or illegal. 

Id. at 296 n.12 (quoting James J. White & Robert S. Summers, Uniform Commercial 

Code § 4-3, at 186 (3d ed. 1988)). 

 Our substantive/procedural analysis is more of a sliding scale than a true 

dichotomy. The more substantively oppressive the contract term, the less evidence of 

procedural unconscionability is required to establish unconscionability. Syl. Pt. 9, Brown 

v. Genesis Healthcare Corp., 229 W. Va. 382, 729 S.E.2d 217 (2012) (Brown II). See

Lonegrass, Finding Room for Fairness in Formalism-the Sliding Scale Approach to 
5 

Unconscionability, 44 Loy. U. Chi. L.J. 1, 12 (“[T]he sliding scale approach does not 

require that procedural and substantive unconscionability each be present in any 

particular degree; rather, a relatively large quantum of one type of unconscionability can 

offset a relatively small quantum of the other. Thus, under the sliding scale approach, the 

two prongs are viewed in tandem, permitting the court to make a finding of 

unconscionability if the overall weight of the facts and circumstances favors 

intervention.”) (footnotes omitted); Cordova v. World Fin. Corp. of N.M., 208 P.3d 901, 

908 (N.M. 2009) (“The more substantively oppressive a contract term, the less procedural 

unconscionability may be required for a court to conclude the offending term is 

unenforceable.”). 

 As discussed below, taken together, the oppressive and one-sided 

substantive provisions of the arbitration clause at issue in the instant case and the 

inequality of bargaining power between the parties render the arbitration clause in the 

Wests’ loan agreement unconscionable. Therefore, the circuit court appropriately applied 

traditional tools of our State contract law when it held the arbitration clause was 

unenforceable. 

A. The Arbitration Clause is Procedurally Unconscionable 

There can be no reasonable disagreement that the contract between the 

Wests and Nationstar was a contract of adhesion at the time of formation, but the 

majority is correct in determining that our analysis does not end here. “[T]he times in 
6 

which consumer contracts were anything other than adhesive are long past.” 3

Concepcion, 563 U.S. at 346-47. While adhesion can be a factor when arguing 

unconscionability, the mere lack of a meaningful choice and negotiation between the 

parties will not, standing alone, establish unconscionability.4 

The majority goes on to address the elements of procedural 

unconscionability pursuant to Brown I.

5

 While I agree that the omission of an “opt out” 

 

3

 “Experts have long acknowledged that consumers do not read form contracts 

before signing them, and have recently come to better understand the more fundamental, 

and sobering, truths about standard contracts: consumers who actually read consumer 

contracts do not understand them, either because they lack the requisite legal training, or 

worse, basic literacy skills.” Lonegrass, supra at 3-4 (footnotes omitted). 

4

 Admittedly, the United States Supreme Court in Concepcion “did not 

automatically entitle defendants to arbitration, but it did make it easier for defendants to 

enforce their contract provisions.” Megan Barnett, There Is Still Hope for the Little Guy: 

Unconscionability Is Still A Defense Against Arbitration Clauses Despite AT&T Mobility 

v. Concepcion, 33 Whittier L. Rev. 651, 664 (2012). 

5

 In syllabus point seventeen of Brown I, we held: 

Procedural unconscionability is concerned with 

inequities, improprieties, or unfairness in the bargaining 

process and formation of the contract. Procedural 

unconscionability involves a variety of inadequacies that 

results in the lack of a real and voluntary meeting of the 

minds of the parties, considering all the circumstances 

surrounding the transaction. These inadequacies include, but 

are not limited to, the age, literacy, or lack of sophistication 

of a party; hidden or unduly complex contract terms; the 

adhesive nature of the contract; and the manner and setting in 

which the contract was formed, including whether each party 

had a reasonable opportunity to understand the terms of the 

contract. 

(continued . . .) 
7 

provision is not in itself sufficient to establish procedural unconscionability, the Brown I

factors, taken as a whole, weigh in favor of procedural unconscionability in this case. 

It is clear that the Wests had no reasonable opportunity to understand the 

terms of the contract they were signing. They had no opportunity to review the arbitration 

rider prior to the closing; the arbitration rider was contained in a stack of papers prepared 

by and provided by Nationstar; and the Wests were unaware they signed an arbitration 

agreement. Furthermore, the documents Nationstar provided to the Wests did not contain 

information about the American Arbitration Association (AAA) rules and protocols that 

governed commercial arbitration or the costs associated with filing a claim.6 

Finally, the bargaining power between Nationstar and the Wests was 

unquestionably unequal in that the Wests are relatively unsophisticated consumers 

contracting with corporate defendants who drafted the arbitration clause and included it 

as boilerplate language in the loan agreement. Simply put, there was no “‘real and 

 

228 W.Va. 646, 724 S.E.2d 250. 

6

I recognize that “even the most diligent consumer who on his or her own 

initiative obtains the rules from the AAA and reads them would have a most difficult 

time accurately assessing his or her exposure.” DeVito v. Autos Direct Online, Inc., 37 

N.E.3d 194, 202-03 (Ohio 2015). A review of the 2013 amendments to the AAA’s rules 

reflects a set of elaborate rules and procedures for commercial arbitration (the 

“Commercial Arbitration Rules and Mediation Procedures”), and a separate set of more 

streamline rules and procedures for consumer disputes (the “Consumer Arbitration 

Rules”). 
8 

voluntary meeting of the minds’ of the parties at the time that the contract was executed.” 

Brown I, 228 W.Va. at 681, 724 S.E.2d at 285. 

Further, the arbitration provision is substantively unconscionable because 

of the prohibitive costs the Wests would incur in filing an action for commercial 

arbitration. When these costs are coupled with the total lack of mutuality, the sliding 

scale is tipped heavily in favor of complete unconscionability. See 1 E. Allan Farnsworth, 

Farnsworth on Contracts § 4.28, at 585 (3d ed. 2004) (“A court will weigh all elements 

of both substantive and procedural unconscionability and may conclude that the contract 

is unconscionable because of the overall imbalance.”). 

B. The Arbitration Clause is Substantively Unconscionable 

The Wests contend they are facing paying more than $5,750 (and possibly 

well over $14,700) to arbitrate their claims against Nationstar under the AAA 

Commercial Rules and Mediation Procedures. It is difficult to ascertain the precise costs 

of the proceedings because one or three arbitrators may be appointed to hear the matter.7

In addition, the AAA may require the parties to deposit in advance of the hearing such 

sums as it deems necessary to cover the expense of the arbitration. AAA Comm. R. 56(a). 

 

7

See AAA Comm. R. 16(a) (“If the arbitration agreement does not specify the 

number of arbitrators, the dispute shall be heard and determined by one arbitrator, unless 

the AAA, in its discretion, directs that three arbitrators be appointed. A party may request 

three arbitrators in the Demand or Answer, which request the AAA will consider in 

exercising its discretion regarding the number of arbitrators appointed to the dispute.”). 
9 

Following the hearing, the Wests could incur thousands more in shared expenses for the 

arbitrator and other costs. 8

 The prospect of incurring these onerous costs and fees 

effectively precludes the Wests’ opportunity to vindicate their consumer rights. 

In the landmark case of Green Tree, the United States Supreme Court 

directly addressed the question of whether arbitration fees potentially incurred by 

consumers could invalidate an arbitration clause. In Green Tree, a mobile home buyer 

brought a class-action suit against the lender for alleged Truth in Lending Act (“TILA”) 

and Equal Credit Opportunity Act (“ECOA”) violations in the loan agreement, which 

required that all disputes arising from or related to the contract were to be resolved by 

binding arbitration. 531 U.S. at 83. The Supreme Court reversed the Eleventh Circuit’s 

holding that the arbitration agreement’s silence as to the filing fees, arbitrators’ costs, and 

other arbitration expenses had rendered the arbitration provision unenforceable because it 

exposed the buyer to potentially steep arbitration costs. Id. at 84. Acknowledging that the 

Green Tree parties had provided no detail of the expected arbitration fees and costs, the 

Supreme Court observed that while “the existence of large arbitration costs could 

preclude a litigant” of limited resources from effectively pursuing his or her claims in an 

arbitral forum, “[t]he ‘risk’ that [the buyer] will be saddled with prohibitive costs is too 

 

8

See AAA Comm. R. 54 (“The expenses of witnesses for either side shall be paid 

by the party producing such witnesses. All other expenses of the arbitration, including 

required travel and other expenses of the arbitrator, AAA representatives, and any 

witness and the cost of any proof produced at the direct request of the arbitrator, shall be 

borne equally by the parties, unless they agree otherwise or unless the arbitrator in the 

award assesses such expenses or any part thereof against any specified party or parties.”). 
10 

speculative to justify the invalidation of an arbitration agreement.” Id. at 92. Essentially, 

Green Tree placed upon the party asserting the prohibitive expense the burden of 

showing the likelihood of incurring such costs. See Bradford v. Rockwell Semiconductor 

Sys., Inc., 238 F.3d 549, 556 (4th Cir. 2001) (“[A]ppropriate inquiry is one that evaluates 

whether the arbitral forum in a particular case is an adequate and accessible substitute to 

litigation, i.e., a case-by-case analysis that focuses, among other things, upon the 

claimant’s ability to pay the arbitration fees and costs, the expected cost differential 

between arbitration and litigation in court, and whether that cost differential is so 

substantial as to deter the bringing of claims”); Burden v. Check into Cash, LLC, 267 

F.3d 483, 492 (6th Cir. 2001) (finding Green Tree requires party resisting arbitration to 

show likelihood of prohibitive expenses). 

Consistent with Green Tree, the court in Tillman v. Commercial Credit 

Loans, Inc., 655 S.E.2d 362 (N.C. 2008), found an arbitration clause substantively 

unconscionable because the collective effect of its provisions would have precluded the 

plaintiffs from “‘vindicating [their] . . . rights in the arbitral forum.’” Id. at 371 (quoting 

Green Tree, 531 U.S. at 90). In Tillman, the court was persuaded by the prohibitively 

high costs the borrowers would face to bring their claims in the commercial arbitration 

setting. 

In terms of ability to pay, the evidence of plaintiffs’ limited 

financial means is uncontested. Plaintiffs live paycheck to 

paycheck and usually have very little money left in their bank 

accounts after paying their monthly bills. The arbitration 

clause specifies that AAA will administer any arbitration 
11 

between the parties to the loan agreement, and evidence in the 

record indicates that the average daily rate of AAA arbitrator 

compensation in North Carolina is $1,225.00. According to 

the arbitration clause, when an arbitration lasts more than 

eight hours, the loser will be charged with costs. Moreover, 

the clause provides for a de novo appeal before a panel of 

three arbitrators, and again, the loser pays the costs. For 

example, at the average rate, a two-day appeal would cost the 

losing party $7,350.00 in arbitrator fees. Plaintiffs simply do 

not have the resources to risk facing these kinds of fees. 

Id. at 371; but see Torrence v. Nationwide Budget Fin., 753 S.E.2d 802, 812 (N.C. App. 

2014) (recognizing Tillman’s substantive unconscionability analysis is undermined by 

“[b]oth Concepcion and Italian Colors9

 [which] hold that a class action waiver does not 

render an arbitration agreement unconscionable.”). 

In the instant case, the Wests do not have the financial resources to risk 

losing sky-high commercial arbitration fees in their fight to save their home. The majority 

belittles the Wests’ legitimate concerns as “wholly speculative.” However, it would be 

more judicious for this Court to reject Nationstar’s argument—that simply because the 

arbitrator might order it to pay the costs of arbitration, the clause can be rescued—as 

wholly speculative. 

The circuit court correctly determined that the threat of oppressive costs 

rendered the arbitration clause unconscionable and, therefore, unenforceable. 

Consequently, I would affirm the circuit court’s ruling. 

 

9

American Express Co. v. Italian Colors Rest., 133 S.Ct. 2304 (2013).