In The 

Court of Appeals 

Seventh District of Texas at Amarillo

No. 07-14-00240-CV 

ECOM USA, INC. AND U.S. COTTON GROWERS ASSOCIATION, APPELLANTS 

 

V. 

 

DAVID LYNN CLARK AND ASHLEY LYN CLARK, PATSY MARIE CLARK, RANDY 

CRAIG COLEMAN AND SANDRA JO COLEMAN, WILLIAM RONALD COLEMAN 

AND JODI A. COLEMAN, APPELLEES 

 

On Appeal from the 286th District Court 

Cochran County, Texas 

Trial Court No. 13-05-4320, Honorable Pat Phelan, Presiding 

 

February 25, 2015 

 

Memorandum Opinion 

 

Before QUINN, C.J., and HANCOCK and PIRTLE, JJ. 

 

This interlocutory appeal involves the district court’s refusal to compel David 

Lynn Clark, Ashley Lyn Clark, Patsy Marie Clark, Randy Craig Coleman, Sandra Jo 

Coleman, William Ronald Coleman and Jodi A. Coleman (collectively referred to as the 

Farmers) to submit their claims against ECOM USA, Inc. and U.S. Cotton Growers 

Association (USCGA) to arbitration. The Farmers had contracted to deliver cotton they 

grew for the 2010 and 2011 crop years to USCGA, a marketing pool owned and 
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administrated by Ecom. Dispute arose as to the performance of those agreements, and 

the Farmers sued Ecom and USCGA. Their causes of action included breached 

contract, fraud, violations of the Texas Deceptive Trade Practices Act, conversion, 

negligent misrepresentation, breached fiduciary duty, conspiracy, and civil theft. They 

also sought an accounting and a declaratory judgment. 

According to the record, each contract at issue contained a provision stating that 

"any and all disputes arising between" the parties "shall be resolved . . . exclusively by 

binding arbitration pursuant to the arbitration rules of the American Cotton Shippers 

Association.”1 Per that clause, Ecom and USCGA moved the trial court to compel the 

parties to arbitrate. Instead of doing so, it “conclude[d] that the arbitration 

agreements . . . [were] unconscionable, unenforceable, and void.” Ecom and USCGA 

appealed, contending that the trial court erred in so ruling. We reverse and remand.

When the trial court acted, it did not have the benefit of the Texas Supreme 

Court’s opinion in Venture Cotton Coop. v. Freeman, 435 S.W.3d 222 (Tex. 2014). That 

case involved farmers who contracted to sell their cotton through a cooperative 

marketing pool and who eventually sued the marketing pool. Like the situation at bar, 

each contract also had arbitration clauses which the farmers attacked as 

unconscionable. When the marketing pool sought to enforce those clauses, the trial 

 

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The entire clause reads as follows:

The Member, the Agent (in the event one has been appointed by the Member) and USCGA agree 

that any and all disputes arising between or among them or Ecom USA, Inc. (“Ecom”) shall be 

resolved by exclusively by binding arbitration pursuant to the arbitration rules of the American 

Cotton Shippers Association. Unless otherwise agreed, all arbitration proceedings shall take 

place in Dallas, Texas or Memphis Tennessee. Notwithstanding the foregoing, in the event of a 

breach or threatened breach of this Agreement by the Member or Agent that would cause 

irreparable harm to USCGA or Ecom shall be entitled to injunctive relief in lieu of proceeding to 

arbitration. The prevailing party in any arbitration or injunction proceeding shall be entitled to 

recover as a part of its remedy its costs and expenses, including, but not limited to, reasonable 

attorneys’ fees.
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court held them unconscionable. Id. at 225. The intermediate appellate court affirmed 

the decision. Id. So, the dispute came before the Supreme Court.

The farmers in Venture argued that the arbitration provisions were 

unconscionable because 1) they “were one-sided and designed to foster arbitrator bias,” 

2) the summary nature of the arbitration rules “denied them adequate discovery and 

preparation time,” 3) “arbitration was too expensive and . . . its prospective cost would 

prevent them from vindicating their rights in the arbitral forum,” and 4) the “agreement 

and ACSA rules violated the state's public policy by illegally eliminating their statutory 

right to attorney's fees and other remedies under the Texas Consumer Protection—

Deceptive Trade Practices Act (DTPA).” Id. at 228-29. Of those issues, only the latter 

was considered. And, the Supreme Court agreed that since the arbitration provision 

could be read as waiving remedies afforded under the DTPA and the waiver did not 

comport to the requirements of that Act, it was invalid because it transgressed public 

policy. Id. at 230. 

Yet, the invalidity of that aspect of the American Cotton Shipper Association rules 

(which the parties were obligated to follow under the arbitration clause) did not 

necessarily warrant a holding that arbitration was unconscionable. Rather, the court 

observed that an illegal or unconscionable provision of a contract may generally be 

severed if it does not constitute the essential purpose of the agreement. Id. at 230, 

quoting, In re Poly-America, L.P., 262 S.W.3d 337 (Tex. 2008). So too did it note that 1) 

when “determining an agreement's essential purpose, the issue is ‘whether or not 

parties would have entered into the agreement absent the unenforceable provisions’" 

and 2) an arbitration agreement's essential purpose is “to provide for a speedy and 
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efficient resolution of disputes to ensure timely performance under the contract.” Id. It 

then concluded this aspect of the opinion by stating that “[t]he agreement's collateral 

effect on statutory rights and remedies appears to be a peripheral concern to this 

essential purpose.” Id. So, the “objectionable limitation” did not render unconscionable 

the obligation to arbitrate; it could simply be severed or eliminated. Id. at 230-31. This, 

however, was not the end of the court’s commentary.

It continued by observing that unconscionability “typically involves a broader 

inquiry”. Id. at 233. The analysis is made “‘in light of a variety of factors, which aim to 

prevent oppression and unfair surprise.’” Id., quoting, In re Poly-America, supra. That 

“light” concerns the contract’s “‘setting, purpose, and effect.’” Id., quoting, RESTATEMENT 

(SECOND) OF CONTRACTS § 208, cmt. a. Consequently, the trial court “should consider 

‘the parties’ general commercial background and the commercial needs of the particular 

trade or case’ when determining whether ‘the clause involved is so one-sided that it is 

unconscionable under the circumstances existing when the parties made the contract.’” 

Id., quoting, In re Olshan Found. Repair Co., 328 S.W.3d 883, 892 (Tex. 2010). 

Also encompassed within this framework is the relative bargaining power of the 

parties. RESTATEMENT (SECOND) OF CONTRACTS § 208, cmt. d. It is not enough that the 

parties have unequal bargaining power, or that inequality results in an allocation of risks 

to the weaker party. Id. The disparity, at the very least, must be gross and coupled with 

terms unreasonably favorable to the stronger party. Id. This is so because courts must 

recognize that parties are free to negotiate their own bargains, and that includes the 

freedom to strike unwise or foolish deals and create hardships for themselves. Venture 

Cotton Coop. v. Freeman, 435 S.W.3d at 228; see Cross-Timbers Oil Co. v. Exxon 
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Corp. 22 S.W.3d 24, 26 (Tex. App.—Amarillo 2000, no pet.) (observing that “the parties 

strike the deal they choose to strike and, thus, voluntarily bind themselves in the 

manner they choose”). It is when the bargain is grossly unfair that the freedom to 

negotiate is overcome by the need to render it unenforceable. See Venture Cotton 

Coop. v. Freeman, 435 S.W.3d at 228 (stating that “this notion that parties are free to 

negotiate their own bargains conflicts with the equally compelling notion that grossly 

unfair bargains should not be enforced”). So, pertinent to assessing whether the 

balance so tips in any particular case are such things as the “commercial atmosphere in 

which the agreement was made, the alternatives available to the parties at the time and 

their ability to bargain, any illegality or public-policy concerns, and the agreement’s 

oppressive or shocking nature.” Id. 

The balance is not an easy one to strike. As can be seen from what we said 

above, conflicting policies are at play. And, another that cannot be ignored is that 

favoring arbitration as a means to timely and efficiently resolve disputes. See In re 

Olshan Foundation Repair, L.L.C., 328 S.W.3d at 892 (stating that “arbitration is favored 

in both federal and Texas law”). Arbitration is not per se unconscionable. Id. So, 

caution must be taken to avoid placing the bar too low in deciding whether clauses like 

that before us are unconscionable. Id.

Much like the farmers in Venture, the Farmers at bar “emphasized potential 

abuses and unequal treatment under the arbitral process” in complaining about the

unconscionability of the arbitration clause. That is, they alleged below that arbitration 

clauses are unenforceable when “1) the causes of action pled cannot be effectively 

arbitrated; 2) the damages pled cannot be awarded or recovered [via arbitration]; 3) 
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effective development and presentation of the case is not allowed [in arbitration]; and 4) 

the arbitrators are impartial.” So too did they posit that those circumstances existed 

here. Indeed, their evidence focused on those four criteria. Due to that focus, though, 

little was said about the parties’ general commercial background and commercial needs 

of the particular case. So too were other pivotal indicia ignored, such as 1) the 

commercial atmosphere in which the agreement was made, 2) the alternatives available 

to the parties at the time they executed the contracts, and 3) the ability of the Farmers 

to bargain.

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 Whether the Farmers actually knew of the ramifications of agreeing to 

arbitrate and the limitations placed upon their ability to seek redress through the court 

system garnered little attention as well. That is also a matter of concern since knowing 

of the limitations about which they complain while raising no objection before executing 

the agreements merits consideration in the overall equation.3

The curtailed nature of the inquiry is also reflected in the trial court’s findings of 

fact and conclusions of law. The document said nothing of the indicia mentioned in the

preceding paragraph and deemed important by the Supreme Court in Venture. Given 

these circumstances, the inquiry discussed in Venture was incomplete. 

Unconscionability is a question of law which we review de novo under an abuse 

of discretion standard. See In re Poly-America, L.P., 262 S.W.3d at 349 (whether a 

 

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That the Farmers intended to pursue such a narrow approach and omit development of the indicia about 

which we speak is exemplified in this representation to the trial court: “[W]e’re not arguing about contract 

formation. We’re not arguing about who signed it or who read it or all those things that you see a lot of 

times when we’re talking about an arbitration agreement.”

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For instance, the Farmers complain of the location at which the arbitration was to occur and the expense 

inherent in proceeding there. But, the arbitration clause itself disclosed that it was to be held in either 

Dallas, Texas or Memphis, Tennessee, and the Farmers signed it anyway. Did they object? Did they 

have opportunity to negotiate the point? Both are unknown at this time. If they did, however, and opted 

to withhold their complaint, one could legitimately question whether policy would allow them to now be 

freed from the limitation.
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contract is unconscionable when formed is a question of law which is reviewed de 

novo); Whataburger Rests., LLC v. Cardwell, 446 S.W.3d 897, 908 (Tex. App.—El Paso 

2014, pet. filed). The resolution of fact issues relevant to the decision is a matter for 

the trial court. Whataburger Rests., LLC v. Cardwell, 446 S.W.3d at 908. Yet, we are 

free to determine whether the trial court properly applied the law to the facts. Id. 

Finally, the failure to properly analyze or apply the law in general or the law of

unconscionability, in particular, constitutes an instance of abused discretion. In re PolyAmerica, L.P., 262 S.W.3d at 349. 

Here, the narrow approach undertaken by the Farmers and adopted by the trial 

court evinced an incomplete and improper analysis of the issue. Thus, the trial court 

abused its discretion in refusing to compel arbitration due to the purported 

unconscionability of the arbitration clause. We reverse the trial court’s decision and 

remand the cause for further proceedings in light of the Supreme Court’s opinion in 

Venture.

Brian Quinn

Chief Justice