1 A Petition to Compel Arbitration is an initial pleading, and is typically accompanied by

a separate motion to compel arbitration. Patriot has not filed such a motion here; however, the Federal

Arbitration Act provides that applications to compel arbitration “shall be made and heard in the manner

provided by law for the making and hearing of motions.” 9 U.S.C. § 6. In accordance with those

principles, Patriot’s Petition may be resolved via ordinary motion practices, notwithstanding the

absence of a distinct motion designated as such.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

PATRIOT MANUFACTURING, INC., )

 ) PUBLISH

Plaintiff, )

 )

v. ) CIVIL ACTION 05-0321-WS-M

 )

MICHAEL and KALIE DIXON, )

 )

Defendants. )

ORDER

This matter is before the Court on the Petition to Compel Arbitration (doc. 2) filed by plaintiff

Patriot Manufacturing, Inc. (“Patriot”). The parties having fully availed themselves of the opportunity to

present argument and authority in support of their respective positions, and no party having identified

disputes of material fact that might require an evidentiary hearing or other factfinding event, the Court

finds that the Petition is ripe for disposition at this time.1

I. Background.

On or about April 26, 2005, defendants Michael and Kalie Dixon (the “Dixons”) filed a lawsuit

in the Circuit Court of Clarke County, Alabama, styled Michael and Kalie Dixon v. Patriot Homes

of Alabama, Inc., et al., Case No. CV-05-074-B (the “State Court Action”). The Dixons alleged

that they had purchased a Patriot-manufactured mobile home from a dealer named Cedar Ridge

Homes, Inc. (“Cedar Ridge”) in January 2004, but that the home suffered from a litany of defects,

including structural and plumbing problems, cracked and warped walls, flooring and electrical

deficiencies, and ill-fitting doors and windows. Based on these allegations, the Dixons brought claims

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 1 of 22
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against Patriot and Cedar Ridge for, inter alia, breach of warranty, negligence, fraud, and violation of

the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301, et seq. The State Court Action remains

pending at this time.

On June 2, 2005, Patriot initiated this action against the Dixons by filing a Petition to Compel

Arbitration (doc. 1) pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (“FAA”). Cedar

Ridge is not a party to this case. Patriot maintains that the Dixons’ claims against it in the State Court

Action all lie within the scope of an enforceable arbitration agreement (the “Arbitration Agreement”)

executed by the Dixons, Patriot and Cedar Ridge as part of the mobile home sales transaction. The

Arbitration Agreement states as follows:

“All disputes, claims or controversies of every kind or nature that may arise between or

among the Owner, Retailer, [or] Patriot ... shall be settled by binding arbitration

conducted pursuant to the provisions of 9 U.S.C. Section 1, et seq., and administered

by the American Arbitration Association (“AAA”) under its commercial Arbitration

Rules .... Without limiting the generality of the foregoing, it is the intention of the Owner,

the Retailer, and Patriot to resolve by binding arbitration all disputes, whether arising

out of tort, contract, or otherwise, arising from, concerning or related to the Home, its

design, sale, delivery, warranties, setup, repair, installation, manufacture, performance,

condition, or financing or any insurance obtained in connection with the Home, including

any dispute, controversy, claim or question of any nature whatsoever related to the

enforceability, validity, scope or interpretation of this Arbitration Agreement.”

(Petition, Exh. A, ¶ 2.) The Arbitration Agreement is a one-page, standalone document, and does not

appear to have been referenced in other transactional documents completed by the Dixons, Cedar

Ridge and Patriot at the time of the sale.

In connection with its Petition, Patriot filed a Motion for Preliminary Injunction (doc. 9) seeking

a stay of the State Court Action pending resolution of its Petition in federal court. A flurry of briefing

ensued, with the Dixons contesting subject matter jurisdiction in the absence of Cedar Ridge (a nondiverse entity) and alternatively arguing that the Court should apply Colorado River abstention. On

September 1, 2005, the Court entered an Order (doc. 16) rejecting the Dixons’ jurisdictional and

abstention attacks, but denying Patriot’s Motion for Preliminary Injunction pursuant to the AntiInjunction Act, 28 U.S.C. § 2283. Perceiving no reason to delay resolution of the merits of the

Petition, the Court ordered supplemental briefing on the enforceability of the Arbitration Agreement.

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 2 of 22
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II. Legal Standard.

The strong federal preference for arbitration of disputes expressed by Congress in the FAA

must be enforced wherever possible. See Musnick v. King Motor Co. of Fort Lauderdale, 325

F.3d 1255, 1258 (11th Cir. 2003). However, notwithstanding this federal policy favoring arbitration,

“arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute

which he has not agreed so to submit.” MS Dealer Service Corp. v. Franklin, 177 F.3d 942, 947

(11th Cir. 1999) (citation omitted). A district court must undertake a two-step inquiry when

considering a motion to compel arbitration. Its first task “is to determine whether the parties agreed to

arbitrate that dispute,” a determination made by reference to the “federal substantive law of arbitrability,

applicable to any arbitration agreement within the coverage of the Act.” Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-28, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)

(citations omitted). Any doubts concerning the scope of arbitrable issues should be resolved in favor of

arbitration. Id. If the court determines that the parties did agree to arbitrate the dispute in question,

then the second step is to consider “whether legal constraints external to the parties’ agreement

foreclosed the arbitration of those claims.” Id. at 628. 

In determining whether the parties agreed to arbitrate a particular dispute, courts consider: (1)

whether there is a valid agreement to arbitrate; and (2) whether the dispute in question falls within the

scope of that agreement. See Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996); Hudson

v. Outlet Rental Car Sales, Inc., 876 So.2d 455, 457 (Ala. 2003). To resolve these questions,

courts apply state law principles relating to ordinary contract formation and interpretation, construed

through the lens of the federal policy favoring arbitration. See Young v. Jim Walter Homes, Inc., 110

F. Supp.2d 1344, 1346 (M.D. Ala. 2000); Oakwood Mobile Homes, Inc. v. Barger, 773 So.2d

454, 459 (Ala. 2000) (“[w]hen deciding whether the parties agree to arbitrate a certain matter

(including arbitrability), courts generally ... should apply ordinary state-law principles that govern the

formation of contracts”) (citations omitted). Under Alabama law, a valid agreement to arbitrate is

created when the agreement is voluntarily entered into and is contained in a contract involving interstate

commerce. See Old Republic Ins. Co. v. Lanier, 644 So.2d 1258, 1260 (Ala. 1994).

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 3 of 22
2 Regrettably, the statute does not define the term “informal dispute settlement

procedure.” If Helen of Troy had the face that launched 1,000 ships, then surely this statutory and

regulatory ambiguity has the potential to launch 1,000 lawsuits, given the prevalence of arbitration

agreements in modern retail consumer transactions and the statutory uncertainty as to whether such

agreements lie within the MMWA’s purview.

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III. Analysis.

In this case, there is no dispute that the parties agreed to arbitrate all disputes encompassed by

the State Court Action. Thus, the only question before the Court is whether external legal constraints

preclude arbitration. The Dixons purport to identify three such constraints. First, they maintain that the

agreement is unenforceable as a matter of law because it fails to comport with the “single document

rule” under the Magnuson Moss Warranty Act (“MMWA”). Second, they urge the Court to find that

binding arbitration agreements are always unenforceable under the MMWA. Third, the Dixons

contend that the Arbitration Agreement is unconscionable and that it therefore cannot be enforced

against them.

A. Whether the Arbitration Agreement Violates the “Single Document Rule.”

The Dixons’ first salvo is that the Arbitration Agreement violates the disclosure requirements of

the MMWA. 

1. Statutory/Regulatory Treatment of Arbitration Agreements.

Under the MMWA, “any warrantor warranting a consumer product to a consumer by means of

a written warranty, shall to the extent required by rules of the [Federal Trade] Commission, fully and

conspicuously disclose in simple and readily understood language the terms and conditions of such

warranty.” 15 U.S.C. § 2302(a). The statute specifies that such rules may require inclusion in the

written warranty of information concerning any “informal dispute settlement procedure” offered or

required by the warrantor. Id. § 2302(a)(8). The MMWA also directs the Federal Trade Commission

(“FTC”) to design rules containing “minimum requirements for any informal dispute settlement

procedure which is incorporated into the terms of a written warranty.” Id. § 2310(a)(2).2

In satisfaction of its statutory mandate, the FTC promulgated a rule providing that “[a]ny

warrantor warranting to a consumer by means of a written warranty a consumer product actually

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 4 of 22
3 A warrantor’s failure to comply with the single document rule precludes him from

compelling arbitration of express warranty or MMWA claims, but does not impair arbitrability of other

causes of action. See Stevens v. Phillips, 852 So.2d 123, 133 (Ala. 2002) (notwithstanding violation

of MMWA disclosure rules, buyer can be compelled to arbitrate non-warranty “other claims” against

warrantor); Ex parte Thicklin, 824 So.2d 723, 730 & n.2 (Ala. 2002) (trial court erred in compelling

arbitration of express warranty and MMWA claims where warrantor failed to disclose arbitration

requirement in written warranty, but implied warranty claims remain subject to arbitration);

Cunningham v. Fleetwood Homes of Georgia, Inc., 253 F.3d 611, 613, 624 (11th Cir. 2001)

(leaving undisturbed trial court’s decision to compel arbitration of all claims except for MMWA and

express warranty claims, where warranty was violative of single document rule). Thus, the Dixons’

reliance on the “single document rule” implicates only the arbitrability of their express warranty and

MMWA causes of action, and in no way affects or relates to the arbitrability of the claims for

negligence, fraud, misrepresentation, breach of implied warranties and the like.

4 The “informal dispute settlement mechanism” language is replicated in § 703.2, which

provides in part that “[t]he warrantor shall disclose clearly and conspicuously at least the following

information on the face of the written warranty: ... A statement of the availability of the informal dispute

settlement mechanism.” 16 C.F.R. § 703.2(b)(1). There appears to be no meaningful distinction

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costing the consumer more than $15.00 shall clearly and conspicuously disclose in a single document in

simple and readily understood language,” nine specific items of information. 16 C.F.R. § 701.3(a). 

This requirement is known as the “single document rule.”3 The nine items that must be disclosed in a

written warranty are as follows: (i) the identities of parties to whom the warranty is extended; (ii) a clear

description and identification of any parts of the product excluded from the warranty; (iii) a statement of

what the warrantor will and will not do in case of defect, malfunction or other nonconformity of the

product to the warranty; (iv) the temporal boundaries of the warranty; (v) a step-by-step description of

the procedure for consumers to obtain performance under the warranty; (vi) “[i]nformation respecting

the availability of any informal dispute settlement mechanism elected by the warrantor;” (vii) a

statement identifying any limitations on the duration of implied warranties; (viii) a statement of exclusions

or limitations on relief (such as incidental or consequential damages); and (ix) a statement advising the

buyer that the warranty confers specific legal rights, and that other rights may be conferred pursuant to

state law. Id. (emphasis added); see also Bailey v. Monaco Coach Corp., 350 F. Supp.2d 1036,

1040 (N.D. Ga. 2004) (“In order to prevent consumer misunderstanding, the single document rule

codified by the [FTC] specifies nine mandatory disclosures.”).4

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 5 of 22
between the use of the term “informal dispute settlement procedure” in the statute and “informal dispute

settlement mechanism” in the regulations; therefore, for purposes of this Order, both terms will be

utilized interchangeably.

5 Despite their vigorous debate over the status of Patriot’s written warranty vis a vis the

MMWA, neither side has included a copy of said warranty in its filings. Thus, the record is silent as to

the actual form and contents of Patriot’s written warranty, and the Dixons have failed to show that the

warranty document omits reference to the Arbitration Agreement. Notwithstanding this omission,

Patriot does not contest the Dixons’ representation that the challenged warranty makes no mention of

the Arbitration Agreement. On that basis, the Court will assume for purposes of this Order that

Patriot’s warranty contained no reference to the Arbitration Agreement.

6 Cunningham nowhere explicitly states that an arbitration agreement constitutes an

informal dispute settlement mechanism under the MMWA. Nonetheless, a plain reading of that

decision shows that the panel’s rationale equated arbitration agreements with informal dispute

settlement mechanisms. In summarizing its holding, the Cunningham court explained that the only issue

before it was whether a third-party beneficiary could compel binding arbitration of warranty claims

“when there is no reference to binding arbitration in the warranty.” Id. at 624. In the very next

sentence, Cunningham explains that this third-party beneficiary’s “failure to disclose in the warranty a

term or clause requiring the Cunninghams to utilize an informal dispute resolution mechanism runs afoul

of the disclosure requirements of the” MMWA. Id.

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2. The Cunningham / Davis Interplay.

The Dixons maintain that Patriot furnished them with a written warranty that “fails to reference

this [arbitration] requirement in any manner.” (Defendants’ Memorandum (doc. 8), at 21.)5 Because

the warranty does not mention the Arbitration Agreement, the Dixons claim, it runs afoul of the single

document rule and therefore cannot be enforced. This position is not without superficial appeal. After

all, in Cunningham v. Fleetwood Homes of Georgia, Inc., 253 F.3d 611 (11th Cir. 2001), the

Eleventh Circuit implicitly concluded (with no explanation or analysis) that an arbitration agreement was

an “informal dispute settlement mechanism” within the meaning of the FTC’s disclosure rules, such that

it would have to be referenced in the warranty. Id. at 622.6 Cunningham affirmed the district court’s

decision not to compel arbitration where the warrantor did not disclose the arbitration agreement in the

warranty,. Id. (“Compelling arbitration on the basis of an arbitration agreement that is not referenced in

the warranty presents an inherent conflict with the Act’s purpose of providing clear and concise

warranties to consumers.”); see also Ex parte Thicklin, 824 So.2d 723, 730 (Ala. 2002) (following

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 6 of 22
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Cunningham and deeming failure to disclose arbitration requirement in warranty to be violation of

MMWA).

But Cunningham’s assumption that an arbitration agreement is an “informal dispute settlement

mechanism” for purposes of the MMWA’s single document rule is no longer valid in this Circuit. One

year after Cunningham was decided, the Eleventh Circuit found “no evidence that Congress intended

binding arbitration to be considered an informal dispute settlement procedure” under the MMWA.

Davis v. Southern Energy Homes, Inc., 305 F.3d 1268, 1276 (11th Cir. 2002) (citation omitted). 

The Davis opinion echoed a Fifth Circuit ruling that “binding arbitration is not normally considered to

be an ‘informal dispute settlement procedure,’ and it therefore seems to fall outside the bounds of the

MMWA and of the FTC’s power to prescribe regulations.” Walton v. Rose Mobile Homes LLC,

298 F.3d 470, 476 (5th Cir. 2002). The Walton court closely scrutinized the MMWA’s legislative

history, after which it concluded that “the reference to ‘informal dispute settlement procedure’

seemingly precludes binding arbitration from its scope, as binding arbitration is not normally considered

an informal procedure.” Id. at 476-77.

In the wake of Cunningham and Davis, then, what is the present status of the MMWA’s

disclosure requirements? Clearly, the single document rule remains alive and well. But the statutory

and regulatory scheme does not require that all information having any bearing on the warranty must be

disclosed within the warranty. To the contrary, the MMWA – and more precisely § 2302(a) – plainly

provides that a warrantor’s required disclosures under the single document rule are limited to those

specifically enumerated in the FTC regulations. Those regulations do not identify arbitration agreements

as items that must be disclosed, but they do mandate disclosure of “informal dispute settlement

mechanisms.” The Davis case, which is binding precedent to this Court, decided that arbitration

agreements are not “informal dispute settlement mechanisms” in the context of the MMWA.

Under this synopsis of the law, then, it is plain that, while the single document rule enjoys

continued vitality, arbitration agreements lie beyond the scope of the disclosures required pursuant to

that rule. That being the case, the Arbitration Agreement executed by Patriot and the Dixons does not

fail for want of compliance with the single document rule even though the parties apparently agree that

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 7 of 22
7 The Dixons protest that Patriot’s position requires a finding that “the single document

rule is no longer valid,” and decry the threatened “elimination of the single document rule.” 

(Defendants’ Supplemental Brief (doc. 19), at 2, 4.) Patriot’s argument does nothing of the sort. At

issue here is not whether the single document rule exists (it unquestionably does), but rather its breadth

and what must be disclosed thereunder. A straightforward interpretation of the foregoing authorities is

that the single document rule, as formulated by FTC regulations, includes an exhaustive list of the

information that must be disclosed. The rule omits reference to arbitration agreements. This omission

implies that such information is beyond the scope of the single document rule; therefore, a warrantor’s

failure to recite an arbitration agreement in the warranty violates neither the single document rule nor the

MMWA.

-8-

Patriot’s warranty did not mention arbitration. Simply put, the single document rule (as set forth in §

2302(a) and FTC regulations) does not require disclosure of the Arbitration Agreement within the

warranty.7 Therefore, Patriot’s failure to make such a disclosure in no way forecloses enforcement of

the Arbitration Agreement.

3. Defendants’ Objections.

In the face of this interpretation of the single document rule, the Dixons counter with three

arguments. First, they assert that Cunningham enlarges the rule to require a warrantor to disclose “all

relevant terms of the warranty,” whether or not those terms were listed in the statute or FTC

regulations. Because an arbitration agreement is plainly a “relevant term,” the Dixons maintain, the

single document rule obliges Patriot to disclose it in the warranty. (Defendants’ Supplemental Brief, at

4.) Second, the Dixons maintain that the correct construction of the MMWA and its accompanying

regulations is that arbitration agreements are “informal dispute settlement mechanisms,” disclosure of

which is mandated by the regulations. (Id. at 13-15.) Third, the Dixons insist that excluding arbitration

agreements from the ambit of the single document rule would yield nonsensical and unfair results.

a. The “All Relevant Terms” Objection.

The Dixons object that limiting the single document rule to the FTC regulations is too narrow. 

Instead, they claim, the rule was properly formulated by the Eleventh Circuit in Cunningham as

requiring a warrantor to “disclose in a single document all relevant terms of the warranty.” 253 F.3d at

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 8 of 22
8 Elsewhere, the Cunningham court framed the rule as “requiring warrantors to present

all information relevant to the warranty in one place, where it might be easily located and assimilated by

the consumer.” Id. at 621.

9 The Cunningham ruling in no way turned on an “all relevant terms” formulation of the

single document rule. To the contrary, the Cunningham court’s finding was that an arbitration

agreement not mentioned in a written warranty was unenforceable because FTC regulations shaping the

single document rule require disclosure of “informal dispute settlement mechanisms.” 253 F.3d at 624. 

Given its implicit, unstated determination that an arbitration agreement is an “informal dispute settlement

mechanism” under the MMWA, Cunningham did not have to read the ambit of the single document

rule any more broadly than the nine enumerated categories in the regulations, and certainly did not need

to devise a new, expanded iteration of the rule in order to reach its outcome.

10 The logistical and practical difficulties inherent in a sweeping “all relevant terms”

construction of the single document rule are immense. What terms are “relevant,” if the rule is not

confined to those terms specifically enumerated by the FTC? Who decides what a “relevant” term is, if

not the FTC? How is a warrantor to know, a priori, whether a given term is or is not “relevant”? 

Absent such knowledge, how is a warrantor to comply with the single document rule? It is easy to

envision warrantors adopting a “kitchen-sink” approach in the face of such uncertainty, which would

yield counterproductive warranty documents that envelop and overwhelm consumers in a miasma of

relatively insignificant details, all at cross purposes to the MMWA’s statutory objectives of clarity and

simplification. The Court has every confidence that the Eleventh Circuit would have ventured into this

dense, thorny thicket only with the utmost circumspection. To accept the Dixons’ reading of

Cunningham would be to find that the panel rushed headlong into an interpretational quagmire without

a second thought in framing the asymptote of the rule. The Court finds it exceedingly unlikely that the

Cunningham court would have done so.

-9-

622.8 The problem with Dixons’ seizing on this bit of dicta is that the Cunningham panel did not

purport to announce a new construction of the single document rule.9 It did not parse the statute or the

regulations to buttress the proposition that the single document rule requires disclosure of “all relevant

terms,” nor did it identify any inadequacies or deficiencies in the list of terms enumerated in the FTC

regulations. Surely, the Cunningham court would have engaged in such a searching analysis if it had

intended to rewrite the statutory rule in that manner.10 Taken in context, Cunningham’s references to

disclosure of “all relevant terms” were not a proclamation about the reach and scope of the single

document rule, but were merely shorthand statements designed to circumvent the unwieldiness of

writing “disclosure in a single document of those specific terms of a warranty enumerated by the

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11 The Dixons rely heavily on a Delaware state court opinion interpreting Cunningham as

expanding the single document rule beyond the regulatory text and recognizing a “broader principle that

a warrantor is required to disclose in a single document all relevant terms of the warranty.” 

DaimlerChrysler Corp. v. Matthews, 848 A.2d 577, 577-78 (Del.Ch. 2004). For the reasons set

forth supra, the Court cannot agree with DaimlerChrysler that Cunningham intended to fashion a

new, expanded version of the single document rule that transcends the boundaries of the MMWA and

the FTC’s implementing regulations.

12 This conclusion is reinforced by the strong federal policy favoring arbitration and the

deference that courts must pay to congressional intent before excluding arbitration of statutory claims. 

See Ivax Corp. v. B. Braun of America, Inc., 286 F.3d 1309 (11th Cir. 2002) (“the Supreme Court

has commanded that questions of arbitrability mst be addressed with a healthy regard for the federal

policy favoring arbitration”); Davis, 305 F.3d at 1273 (“unless Congress has clearly expressed an

intention to preclude arbitration of the statutory claim, a party is bound by its agreement to arbitrate”). 

In light of this policy, the Court will not embrace the strained reading of Cunningham that would be

required to defeat arbitrability here.

13 This argument, if accepted, would validate the Dixons’ position that written warranties

must include references to arbitration agreements. After all, the single document rule provides that

warranties must disclose “[i]nformation respecting the availability of any informal dispute settlement

procedure offered by the warrantor and a recital, where the warranty so provides, that the purchaser

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Federal Trade Commission in 16 C.F.R. § 701.3, pursuant to the authority delegated by 15 U.S.C. §

2302(a).” In short, the Dixons interpret Cunningham as doing something it manifestly did not.11

The Dixons repeatedly insinuate that the single document rule had its genesis in Cunningham. 

(Defendants’ Supplemental Brief, at 2, 3, 4.) It did not. The rule is a creature of statute and regulation,

not of judge-made law. It was forged on the anvil of § 2302(a) and shaped by the hammer of § 701.3. 

Thus, the MMWA and its regulations trace the scope of the single document rule, and it is not the

courts’ place to substitute their judgment for Congress and the FTC as to how far that rule should

reach. For all of these reasons, the Court declines to construe Cunningham as superimposing a new,

expanded single document rule over that promulgated by Congress in § 2302(a), and implemented by

the FTC via § 701.3.12

b. The Statutory Interpretation Objection.

The Dixons’ next objection is that arbitration agreements actually are “informal dispute

settlement mechanisms” as that term is used in the MMWA and the FTC regulations.13 In support of

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 10 of 22
may be required to resort to such procedure before pursuing any legal remedies in the courts.” 15

U.S.C. § 2302(a)(8); see also 16 C.F.R. § 701.3(a) (requiring warranty to disclose “[i]nformation

respecting the availability of any informal dispute settlement mechanism elected by the warrantor”). If

arbitration were an informal dispute settlement procedure/mechanism, then the rule would

unquestionably encompass arbitration agreements, and Patriot’s failure to disclose the Arbitration

Agreement in the written warranty would render the arbitration provision unenforceable as to express

warranty and MMWA claims.

14 Had Davis not rejected the FTC’s position that arbitration agreements were informal

dispute settlement mechanisms, the reasoning undergirding its holding would have collapsed. The

Davis court was examining whether Congress had expressed a clear intention to preclude binding

arbitration of statutory claims, such a clear expression being required to cut off arbitration rights under

the FAA. See Mitsubishi Motors, 473 U.S. at 628 (explaining that parties who validly agree to

arbitrate should be held to their agreement unless Congress evinces an intention to preclude mandatory

arbitration of specific statutory claims). Although the language of the MMWA makes no mention of

binding arbitration, the Davis appellees maintained that references to “informal dispute settlement

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this position, the Dixons cite a law review article and a dissenting opinion in an Illinois state case for the

proposition that when the MMWA was enacted in 1975, the phrase “informal dispute settlement

mechanisms” had a different meaning than it does today. See Andrew Lamis, The New Age of

Artificial Legal Reasoning as Reflected in the Judicial Treatment of the Magnuson-Moss Act and

the Federal Arbitration Act, 15 Loy. Consumer L. Rev. 173, 179 (2003); Borowiec v. Gateway

2000, Inc., 808 N.E.2d 957, 975 (Ill. 2004) (Kilbride, J., dissenting).

Any debate on this point is foreclosed by the Eleventh Circuit’s opinion in Davis, wherein the

court concluded that binding arbitration “is of a different nature” than informal dispute settlement

procedures. 305 F.3d at 1276. Davis pointedly noted the paucity of evidence in the statutory

language or legislative history “that Congress intended binding arbitration to be considered an informal

dispute settlement procedure.” Id. This distinction between binding arbitration and informal dispute

settlement mechanisms prompted Davis’s determination that FTC regulations defining arbitration as a

type of informal dispute settlement mechanism (as to which the FTC was empowered to issue

regulations) were unreasonable. It was also a key analytical underpinning of Davis’s ultimate holding

that “written warranty claims arising under the [MMWA] may be subject to valid binding arbitration

agreements.” Id. at 1280.14 The Fifth Circuit has reached a similar conclusion. See Walton, 298 F.3d

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procedures” in the legislative history showed that Congress had considered all methods of dispute

resolution, including arbitration. Yet 15 U.S.C. § 2310(a) is drafted in terms recognizing only

nonbinding informal dispute settlement procedures. Because Congress considered all kinds of dispute

resolution procedures, the Davis appellees argued, its decision to allow only nonbinding informal

dispute settlement procedures in the MMWA evinced an intent to forbid binding arbitration. If the

Eleventh Circuit had agreed with the Davis appellees that arbitration was included under the umbrella

of “informal dispute settlement procedures,” then its finding that Congress did not express a clear intent

to bar binding arbitration of MMWA claims would have been imperilled and probably invalidated.

15 In its supplemental brief (doc. 20), plaintiff cites Harrison v. Nissan Motor Corp. in

U.S.A., 111 F.3d 343 (3rd Cir. 1997) for its purported “holding” that “binding arbitration is not an

informal dispute settlement procedure[] subject to FTC regulation.” (Plaintiff’s Supplemental Brief, at

15.) A careful reading of Harrison shows that plaintiff has overstated that case. Harrison involved a

non-binding arbitral procedure through which a consumer could file suit under Pennsylvania’s Lemon

Law if she did not receive the arbitrator’s decision within 40 days. The Third Circuit found that this

procedure “does not constitute arbitration within the meaning of the FAA.” 111 F.3d at 351. Although

not central to its decision, the Harrison court opined in passing that if the drafters of the MMWA and

the FTC regulations had wanted “informal dispute resolution procedures” to be subsumed under the

FAA, they likely would have used the term “arbitration.” Id. Harrison is thus no more than

tangentially relevant to the issues presented here.

16 Davis’s finding is reinforced by an exercise in statutory construction. In obliging a

warrantor to disclose “informal dispute settlement procedures,” Congress stated that the warrantor

should also recite “that the purchaser may be required to resort to such procedure before pursuing any

-12-

at 477 (opining that MMWA’s reference to “informal dispute settlement procedures” appears to

preclude binding arbitration, inasmuch as arbitration is not an informal procedure and nothing suggests

that Congress intended binding arbitration to be within scope of MMWA’s informal dispute settlement

procedures).15

In arguing that arbitration is an informal dispute settlement procedure within the meaning of the

MMWA, the Dixons ask this Court to credit law review articles and dissenting state court opinions

from other jurisdictions over Eleventh and Fifth Circuit authority. This the Court cannot do. Pursuant

to Davis and Walton, then, the Court finds that the MMWA’s requirement that written warranties

disclose informal dispute settlement procedures does not encompass an obligation to disclose

arbitration agreements because arbitration is not an informal dispute settlement procedure within the

meaning of the statute.16 Thus, neither the MMWA nor the FTC regulations sweep arbitration

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legal remedies in the courts.” 15 U.S.C. § 2302(8). Arbitration is a substitute for pursuing legal

remedies in the courts. It is not a prelude to such judicial actions. Therefore, construing “informal

dispute settlement procedures” to mean arbitration agreements would yield a result that was inconsistent

with, and would render nugatory, other language utilized by Congress in the very same sentence of the

MMWA. See Walton, 298 F.3d at 475 (declaring that “binding arbitration generally is understood to

be a substitute for filing a lawsuit, not a prerequisite”).

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agreements within the ambit of disclosures that must be made in a written warranty pursuant to the

single document rule.

c. The Fairness Objection.

Next, the Dixons argue that any interpretation of the single document rule that excludes

arbitration agreements would be unjust and unfair. According to the Dixons, omission of arbitration

agreements from the list of mandatory disclosures in § 701.3 should not be viewed as an indication that

the FTC wished to exempt such agreements from the rule. Instead, the Dixons insist that if § 701.3 is

construed in the context of the FTC’s long-held belief that binding arbitration is prohibited under the

MMWA, it becomes clear that excising arbitration agreements from the scope of the single document

rule would contravene the FTC’s intent.

The Dixons are correct that the FTC’s position has long been that informal dispute settlement

procedures cannot be binding under the MMWA. See 16 C.F.R. § 700.8 (“A warrantor shall not

indicate in any written warranty ... either directly or indirectly that the decision of the warrantor ... or

any designated third party is final or binding in any dispute concerning the warranty”); 16 C.F.R. §

703.5(j) (decisions under informal dispute settlement procedures “shall not be legally binding on any

person” under MMWA). If the FTC had good reason to subscribe to the view that binding arbitration

is prohibited under the MMWA, then one could credibly argue that the FTC likewise had good reason

to exclude arbitration agreements from the list of items that must be disclosed in a written warranty. If

binding arbitration of written warranty claims is impermissible, then it would be a superfluous, empty

gesture for the FTC to oblige warrantors to include the terms of those unenforceable arbitration

agreements in warranty disclosures under the single document rule.

But the FTC no longer has good reason to believe that arbitration agreements are

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 13 of 22
17 But see Rickard v. Teynor's Homes, Inc., 279 F. Supp.2d 910, 921 (N.D. Ohio

2003) (declining to follow Davis and Walton, and instead upholding FTC regulations that MMWA

bars arbitration agreements for written warranty claims).

18 The Dixons again point to a Delaware Chancery Court opinion in which the vice

chancellor opined, “I have no doubt that when the FTC or Congress revisit the regulatory scheme in

this area, they will adhere to Cunningham and decline to adopt the position advanced by

DaimlerChrysler, which, in effect, is that while warrantors are required to include any nonbinding

arbitration provisions in the warranty itself, they should be free to include binding arbitration provisions

in a separate document.” DaimlerChrysler, 848 A.2d at 588-89. Given the FTC’s inaction in the

years following Walton and Davis, this Court does not share DaimlerChrysler’s sanguinity as to what

modifications the FTC or Congress might wish to make to the single document rule.

-14-

unenforceable in the MMWA setting. Three years ago, the Eleventh and Fifth Circuits unambiguously

held in rapid succession that “written warranty claims arising under the [MMWA] may be subject to

valid binding arbitration agreements.” Davis, 305 F.3d at 1278; see also Walton, 298 F.3d at 479

(“We hold that the MMWA does not preclude binding arbitration of claims pursuant to a valid, binding

arbitration agreement, which the courts must enforce pursuant to the FAA.”); Pack v. Damon Corp.,

320 F. Supp.2d 545, 558 (E.D. Mich. 2004) (following Davis and Walton, and concluding that the

MMWA does not preclude enforcement of arbitration agreements as to warranty claims). In the

intervening timespan, no published decision of any federal appeals court has criticized or broken ranks

with the Davis/Walton approach.17 As a result, the FTC has been on notice since September 2002

that in at least two federal circuits, MMWA written warranty claims are arbitrable in the presence of a

valid arbitration agreement. Had the FTC wished to amend its regulations under the MMWA to

account for these authorities and place arbitration agreements within the scope of required disclosures

under the single document rule, it could have done so. The agency’s apparent inaction in the presence

of substantial federal appellate authority that arbitration agreements are permissible under the MMWA

cuts directly against the Dixons’ hypotheses about how the FTC would have worded § 701.3 if it had

known that arbitration agreements are enforceable in the MMWA context.18

More fundamentally, the Dixons are asking this Court to encroach on the statutory and

regulatory framework by unilaterally constructing a judicial rule that neither Congress nor the FTC has

seen fit to create. Congress delegated the authority to the FTC, not to the federal judiciary, to

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 14 of 22
19 In that regard, the Court cannot embrace the Dixons’ equitable arguments that if

Congress and the FTC had intended to include nonbinding alternative dispute mechanisms within the

parameters of the single document rule, then they must have also intended to include arbitration

agreements. Surely, Congress and the FTC could have referenced arbitration agreements had they

wished to do so, and could have modified the statute and/or the regulations in the wake of Dixon and

Walton had they wished to clarify their intentions. There are, or may be, valid policy reasons for

treating arbitration agreements differently than other alternative dispute mechanisms. See generally

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74

L.Ed.2d 765 (1983) (interpreting FAA as “a congressional declaration of a liberal federal policy

favoring arbitration agreements”). The Court therefore declines the Dixons’ invitation to hold that

excluding arbitration agreements from the single document rule “makes no sense whatsoever” and to

interpret the MMWA as including such agreements within the ambit of the rule. (Defendants’

Supplemental Brief, at 7.)

20 In so finding, the Court does not credit Patriot’s argument that “courts are likely to

strike down any rule that attempts to create special disclosure requirements for arbitration agreements

subject to the FAA.” (Plaintiff’s Supplemental Brief, at 20 n.2.) The lone authority on which Patriot

relies for this proposition is Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681, 116 S.Ct. 1652,

134 L.Ed.2d 902 (1996). Doctor’s Associates rested on the notion that “Congress precluded States

-15-

enumerate the items that must be disclosed in a written warranty. In so doing, Congress made clear

that the MMWA disclosure requirement extends only “to the extent required by rules of the

Commission.” 15 U.S.C. § 2302(a). The FTC responded to this delegation of authority with a rule

delineating nine specific categories of information that must be disclosed. See 16 C.F.R. § 701.3. The

FTC’s rule omitted any reference to arbitration agreements. Neither Congress nor the FTC requested

the assistance of the judiciary to “fill in” additional disclosure requirements that the agency may have

inadvertently overlooked or that the courts might think are prudent. It is not the place of this Court to

speculate as to what the FTC’s intentions may have been in drafting § 701.3, much less to judicially

supplement the regulation by engrafting onto it the Court’s own views as to which categories of

information should be disclosed in a written warranty under the MMWA.19

Simply put, the Court cannot assume that Congress and the FTC made a mistake in omitting

arbitration agreements from the list of MMWA disclosures. Even if it could, the Court will not step

outside the judicial role to assume the distinctly legislative responsibility of welding its own normative

values onto the comprehensive statutory and regulatory regime giving rise to the single document rule.20

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 15 of 22
from singling out arbitration provisions for suspect status, requiring instead that such provisions be

placed upon the same footing as other contracts.” 517 U.S. at 687. That case in no way supports

plaintiff’s position, inasmuch as Doctor’s Associates did not cabin Congress’s authority to limit the

enforcement of arbitration clauses in particular statutory contexts.

-16-

B. Whether Binding Arbitration Agreements are Viable under the MMWA.

As an alternative argument, the Dixons offer a critique of the Davis decision. In particular, they

charge the Davis panel with unduly subordinating the MMWA to the FAA, misreading the legislative

history of the MMWA, misunderstanding the meaning of the term “informal dispute settlement

mechanism” as used by Congress, and ignoring fundamental rules of statutory construction. At the

conclusion of this litany of perceived errors, the Dixons exhort the Court to adopt a ruling “that binding

arbitration is not permissible in the context of consumer product warranties.” (Defendants’

Supplemental Brief, at 10.) The Court appreciates the Dixons’ belief that Davis “was incorrectly

decided.” (Id. at 11.) Be that as it may, Davis is the law of this circuit unless and until it is overruled

by the Supreme Court or by an en banc decision of the Eleventh Circuit. The undersigned is

constrained to follow Davis and will not cast it aside, irrespective of the Dixons’ criticisms.

C. Whether the Arbitration Agreement is Unconscionable.

The Dixons’ final objection to the Arbitration Agreement is that it is unconscionable, and

therefore void. As grounds for this argument, the Dixons maintain that the terms of that agreement

“grossly favor Patriot at the expense of the Dixons” because they “are boilerplate in nature” and

“purport to apply to all possible claims,” effectively operating as “a waiver of the Dixons’ constitutional

right to a jury trial.” (Defendants’ Memorandum (doc. 8), at 22.) Alternatively, the Dixons maintain

that the Arbitration Agreement is unconscionable because the Dixons “did not enter into [it] voluntarily

and with a meaningful choice,” but instead “were effectively forced to acquiesce” to it.

This ground has been ploughed on numerous occasions by Alabama courts. Undoubtedly, “[a]

court should refuse to enforce an arbitration agreement where the record supports a determination of

unconscionability.” Ex parte Napier, 723 So.2d 49, 52 (Ala. 1998). “[T]he party asserting the

defense of unconscionability has the burden of proving unconscionability.” Napier, 723 So.2d at 52;

see also Fleetwood Enterprises, Inc. v. Bruno, 784 So.2d 277, 281 (Ala. 2000) (“Unconscionability

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 16 of 22
21 Rare, indeed, is the arbitration clause that does not embrace all possible causes of

action related to the subject transaction and cut off the consumer’s right to a jury trial on such claims. 

Thus, the Dixons’ critique is not tailored to this Arbitration Agreement, per se, but rather reads like an

indictment against arbitration clauses generally. A formidable wall of binding precedent, not to mention

the staunchly pro-arbitration policy expressed in the FAA, forbids this Court from crediting these

contentions and invalidating arbitration agreements across the board.

-17-

is an affirmative defense ... and the party asserting the defense bears the burden of proof.”); Harbor

Village Home Center, Inc. v. Thomas, 882 So.2d 811, 818 (Ala. 2003) (similar). A bargain is

unconscionable when it is one that “no man in his sense and not under delusion would make on the one

hand, and [that] no honest and fair man would accept on the other.” Leeman v. Cook's Pest Control,

Inc., 902 So.2d 641, 645 (Ala. 2004) (citation omitted).

To assess the merits of an unconscionability defense, Alabama courts examine whether the

arbitration agreement’s terms are grossly favorable to one party, and whether the favored party has

overwhelming bargaining power, such that the agreement as executed is “patently unfair.” Leonard v.

Terminix Intern. Co., L.P., 854 So.2d 529, 538 (Ala. 2002); see also Stevens v. Phillips, 852

So.2d 123, 134 (Ala. 2002) (unconscionability rests on “prevention of oppression and unfair surprise”

and is not intended to disturb mere “allocation of risks because of superior bargaining power”).

According to the Dixons, the provisions of the Arbitration Agreement are grossly favorable to

Patriot because they would cover all possible claims relating to the manufacture and sale of the mobile

home, they violate a simple consumer’s reasonable expectations in an unspecified way, and they

effectively waive the consumer’s right to a jury trial. (Defendants’ Memorandum, at 22.) These

arguments sweep too broadly. Under the Dixons’ rationale, every binding, comprehensive arbitration

agreement in a retail transaction would be “grossly favorable” to the seller, and therefore

unenforceable.21 That is not the law. See Leeman, 902 So.2d at 645 (“arbitration agreements are not

in themselves unconscionable”); Patrick Home Center, Inc. v. Karr, 730 So.2d 1171, 1173

(Ala.1999) (under Alabama law, arbitration agreements are not inherently unfair or oppressive, nor is

mere existence of an arbitration agreement, without more, sufficient to establish unconscionability). 

Rather, to satisfy the “grossly favorable” standard, courts look to whether the agreement includes (a)

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 17 of 22
22 For example, an arbitration agreement has been found not to be grossly favorable to

either party where the party seeking to avoid enforcement made no showing of biased decisionmakers

in arbitral proceedings. See also Briarcliff Nursing Home, Inc. v. Turcotte, 894 So.2d 661, 666

(Ala. 2004).

23 The statement that they “intend to produce evidence” to back up these allegations at

some unspecified future date is unavailing, as a matter of law. If the Dixons had evidence they wished

to present in support of their unconscionability defense, it was incumbent on them to proffer such

evidence now, rather than simply articulating a vague intent to present it in the future. See Leeman, 902

So.2d at 644 (explaining that “a motion to compel arbitration is analogous to a motion for summary

judgment”).

-18-

terms that impair the integrity of the bargaining process or otherwise contravene the public interest or

public policy, (b) terms that would impermissibly alter fundamental legal duties, (c) terms that seek to

negate the reasonable expectations of the nondrafting party, and (d) unreasonably and unexpectedly

harsh terms having to do with central aspects of the transaction. See Leeman, 902 So.2d at 645.22

The Dixons have come forward with no evidence that this Arbitration Agreement is any more slanted or

one-sided than the run-of-the-mine arbitration provision in any other consumer transaction. Therefore,

they have failed to satisfy the “grossly favorable” prong of the unconscionability test.

Even if the Arbitration Agreement were improperly tilted in Patriot’s favor, the

unconscionability defense would remain unavailable here because the Dixons have not shown that

Patriot held “overwhelming bargaining power.” The Dixons state, in conclusory terms and with no

supporting evidence, that they lacked “meaningful choice” and that they were “effectively forced to

acquiesce to the arbitration requirement.” (Defendants’ Memorandum, at 23.)23 In support of this

argument, the Dixons state, again without support, that virtually all manufacturers of mobile homes in the

Dixons’ area require arbitration agreements as a condition of sale. But Alabama law requires a much

greater showing to establish unsconscionability on that basis. In Conseco Finance

Corporation-Alabama v. Boone, 838 So.2d 370 (Ala. 2002), the Alabama Supreme Court rejected

an unconscionability argument where a buyer presented evidence that the lender controlled 38% of the

market for financing mobile homes, but offered no evidence of the practices of other lenders, much less

evidence that the purchaser attempted to “shop around” for a financing arrangement that would not

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 18 of 22
24 On a related note, the record includes no evidence that the Dixons questioned or

challenged the Arbitration Agreement in any way when it was presented to them, or that they wavered

at all before signing it. Where a consumer signs without question a proffered form agreement containing

an arbitration clause, “it is difficult to conclude that [he] lacked a meaningful choice--and that this lack

of choice could render the arbitration provision unconscionable--when in fact [he] never undertook to

actually make a choice.” Leeman, 902 So.2d at 647. This principle also militates against a finding of

unconscionability here.

25 The Dixons also assert that they would be responsible for their own attorney’s fees,

plus witness fees, expert fees, and the like. (Id.) These ordinary litigation expenses would appear to

rest with the Dixons regardless of whether they proceed under the Commercial Rules, the Consumer

Rules, or in state court. It is unclear how the pragmatic default rule of the “American Rule,” requiring

litigants to pay their own litigation expenses, in any way promotes the Dixons’ unconscionability

defense.

-19-

require an arbitration clause. Id. at 373; see also Jim Walter Homes, Inc. v. Saxton, 880 So.2d 428,

431 (Ala. 2003) (“a party claiming to have had no ‘meaningful choice’ must present evidence indicating

that he or she could not have entered into a similar contract without an arbitration requirement either

with the same party or with a competitor”); Briarcliff Nursing Home, Inc. v. Turcotte, 894 So.2d

661, 666 (Ala. 2004) (by not showing that the desired services were unavailable elsewhere without

agreeing to arbitration, consumer failed to show overwhelming bargaining power prong of

unconscionability test). In the absence of evidence that the Dixons could not reasonably have procured

a comparable mobile home from another vendor without signing an arbitration agreement, their

“meaningful choice” ground for unconscionability rings hollow.24

In a final assault on the Arbitration Agreement, the Dixons complain that the requirement that

arbitration proceed under the AAA’s Commercial Rules of Arbitration (“Commercial Rules”), instead

of the cheaper and simpler Rules for Consumer-Related Disputes (“Consumer Rules”), condemns them

to paying thousands of dollars in arbitration fees that they cannot afford. In particular, the Dixons argue

that the Commercial Rules oblige them to pay a $750 filing fee, a deposit of $750 per day for a hearing,

and half the arbitrator’s fee. (Defendants’ Memorandum, at 24-25.)25 The Dixons offer no estimate or

calculations of these costs, other than to say that they “may amount to thousands of dollars.” (Id. at

25.) Because the Consumer Rules provide for a less expensive fee structure, the Dixons contend,

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 19 of 22
26 To the extent that the Dixons’ unconscionability argument is predicated on their selfdepiction as unsophisticated “simple consumers” (Defendants’ Memorandum, at 22-23, 26), applicable

precedent squarely refutes their suggestion that a lack of sophistication equates to unsconscionability. 

See Ex parte Parker, 730 So.2d 168, 171 (Ala. 1999) (rejecting mobile home buyer’s

unconscionability argument where buyer had a 10th grade education, had extreme difficulty reading and

was being tutored in reading); Napier, 723 So.2d at 52 (arbitration agreement not unconscionable

where mobile home buyer was 77 years old, had poor eyesight, never finished high school and could

not read small print).

-20-

Patriot’s invocation of the Commercial Rules is symptomatic of a bad-faith effort to squeeze “simple

consumers” like them out of any remedy. The Court disagrees.26

“[W]here, as here, a party seeks to invalidate an arbitration agreement on the ground that

arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of

incurring such costs.” BankAmerica Housing Services, Div. of Bank of America, FSB v. Lee, 833

So.2d 609, 620 (Ala. 2002). The Alabama Supreme Court has recently had occasion to consider

whether the expenses associated with the Commercial Rules are so exorbitant as to render an

arbitration agreement unconscionable. In Leeman, the consumers contended that a provision in a

termite agreement requiring arbitration in accordance with the Commercial Rules was unconscionable,

based on evidence in the record that those rules require an initial filing fee of $3,250, a case service fee

of $1,250, and a potential for arbitrator fees as high as $8,000. 902 So.2d at 649-50. The Leeman

court held that the consumers had not made a sufficient showing of excessive arbitral costs, reasoning

that: (i) evidence of costs in other cases is not probative of the costs of arbitration in this case; (ii) the

Commercial Rules allow for reduction or deferral of expenses in cases of extreme hardship; (iii) the

Commercial Rules also allow the arbitrator to assess and apportion arbitral fees and expenses between

the parties, such that the consumer might have to pay nothing in the ensuing arbitration; and (iv) the

consumers had failed to demonstrate their inability to afford the initial costs of filing an arbitration claim.

Id. at 650-52.

More generally, Alabama courts have rejected unconscionability arguments predicated on the

cost of arbitration where the party seeking to avoid arbitration “does not provide any evidence, such as

her income, her family's expenses, or the estimated costs of the arbitration procedure, that would

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 20 of 22
27 Indeed, the Dixons’ fears of being encumbered with excessive fees under the

Commercial Rules may be a mirage. Patriot has presented uncontradicted authority and argument that,

notwithstanding the language of the Arbitration Agreement, the Dixons may be entitled to the benefit of

the Consumer Rules pursuant to Rule C-1 of the AAA’s Supplementary Procedures for Consumer

Related Disputes, effective July 1, 2003. (Plaintiff’s Brief (doc. 13), at 6.) Under those Supplementary

Procedures, the Consumer Rules may apply in any arbitration agreement between a consumer and a

business providing for use of AAA rules, where the business has a standardized, systematic application

of arbitration clauses and where the terms of purchase of products for personal or household use are

primarily non-negotiable. The Supplementary Procedures further expose the Dixons’ financial

unfairness argument as a red herring.

-21-

support an argument that the use of the Commercial Rules renders the arbitration clause unconscionable

from a financial standpoint.” Stevens, 852 So.2d at 133-34 (purchaser claimed that arbitration fees

would be $2,000, as compared to court filing fee of $200). In that regard, an unquantified risk that a

plaintiff “will be saddled with prohibitive costs is too speculative to justify the invalidation of an

arbitration agreement.” Id. at 134 (citation omitted); see also Fleetwood Enterprises, 784 So.2d at

281 (bare allegation by mobile home purchaser, unsupported by substantial evidence, that arbitration

agreement is unconscionable because she cannot afford to pay arbitration fees cannot defeat motion to

compel arbitration); Johnnie's Homes, Inc. v. Holt, 790 So.2d 956, 965 (Ala. 2001) (declining to find

arbitration provision unconscionable despite evidence that purchaser would have to pay $2,000

arbitration fee and that he has limited financial capacity).

In this case, the Dixons have failed to show that the arbitral costs to which they would be

exposed under the Commercial Rules would be excessive. Even if they had done so, their

unconscionability argument would fail because the record contains no evidence that the Dixons are

unable to pay the costs of arbitration under the Commercial Rules. There is thus no record basis for

finding that the designation of the Commercial Rules in the Arbitration Agreement will have any

meaningful impact on the Dixons’ ability to prosecute their claims against Patriot. The Dixons have

failed to establish their unconscionability defense on the basis of exorbitant fees.27

In light of this analysis, the undersigned is of the opinion that the Dixons have failed to meet their

burden of establishing that the Arbitration Agreement is unconscionable.

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 21 of 22
-22-

IV. Conclusion.

For all of the foregoing reasons, the Court finds that the Arbitration Agreement signed by the

Dixons and Patriot is valid, enforceable and binding on the parties. Accordingly, plaintiff’s Petition to

Compel Arbitration is granted. The Dixons and Patriot are hereby ordered to proceed to arbitration

in accordance with the terms of the Arbitration Agreement. Such arbitration proceedings shall

encompass all of the Dixons’ claims asserted against Patriot in the underlying state court action. Given

that the compulsion of arbitration was the sole raison d’etre of this lawsuit, the Clerk’s Office is

directed to close this file.

DONE and ORDERED this 7th day of November, 2005.

s/ WILLIAM H. STEELE 

UNITED STATES DISTRICT JUDGE

Case 1:05-cv-00321-WS-M Document 31 Filed 11/09/05 Page 22 of 22