Opinion ID: 1780860
Heading Depth: 3
Heading Rank: 1

Heading: Was the arbitration clause procedurally unconscionable?

Text: ¶ 52. The Gatlins argue that the arbitration clause is procedurally unconscionable, because Sanderson Farms unilaterally drafted it, the Agreement containing the clause was presented on a take-it-or-leave-it basis, and they were told the company would discontinue delivering chickens if they refused to sign. In determining whether a contract is procedurally unconscionable, this Court looks to the formation of the contract as follows: The indicators of procedural unconscionability generally fall into two areas: (1) lack of knowledge, and (2) lack of voluntariness. A lack of knowledge is demonstrated by a lack of understanding of the contract terms arising from inconspicuous print or the use of complex, legalistic language, disparity in sophistication of parties, and lack of opportunity to study the contract and inquire about contract terms. A lack of voluntariness is demonstrated in contracts of adhesion when there is a great imbalance in the parties' relative bargaining power, the stronger party's terms are unnegotiable, and the weaker party is prevented by market factors, timing or other pressures from being able to contract with another party on more favorable terms or to refrain from contracting at all. Burdette Gin Co., 726 So.2d at 1207. Procedural unconscionability is most strongly shown in contracts of adhesion presented to a party on a take it or leave it basis. Id. at 1208. ¶ 53. The U.S. Supreme Court has forbidden, however, any state restriction on arbitration agreements that would require greater information or choice in the making of agreements to arbitrate than in other contracts. Casarotto, 517 U.S. at 687, 116 S.Ct. 1652 (quoting 2 I. Macneil, R. Speidel, T. Stipanowich, & G. Shell, Federal Arbitration Law § 19.1.1, at 19:4-19:5 (1995)). ¶ 54. The Gatlins claim that the agreement which contains the arbitration clause was unilaterally drafted by Sanderson Farms, pointing out that the agreement refers to Sanderson Farms by name, but Mr. Gatlin is simply referred to as the Grower, except for his signature. The Gatlins further claim that because of financial pressures, chiefly their $250,000 debt owed to Sanderson Farms, they were effectively forced to sign. Sanderson Farms does not dispute that the agreement including the arbitration clause was presented on a take-it-or-leave-it basis and that it would not continue to deliver chickens if Mr. Gatlin refused to sign. ¶ 55. Although the Gatlins' argument goes primarily to the lack of voluntariness, and not the lack of knowledge, Sanderson Farms responded to both, claiming that the undisputed facts show: Sanderson Farms began developing a new Broiler Production Agreement and held a series of meetings with its growers in 1996 at which the growers were given the opportunity to ask questions and provide input regarding the proposed terms of the new agreement. Prior to the meetings, the growers received letters providing them with notice of the meetings and copies of the proposed agreement; the growers were invited to seek legal counsel regarding the terms of the agreement and to bring legal counsel to the meetings, and several did. The terms of the agreement were discussed at the meetings and changes were made in responses to and in an attempt to address the concerns raised and comments received and drafts were sent out to the growers detailing the changes made. In fact, changes were made specifically to the arbitration provision as a result of comments made and discussions had at the meetings. Mr. Gatlin attended the meetings and asked questions and made comments. Mr. Gatlin signed the new Broiler Production Agreement on January 1, 1997, only after having been afforded multiple opportunities to review and provide input regarding the terms and to seek legal counsel. ¶ 56. Notes of those meetings in the record indicate that Mr. Gatlin attended at least one meeting and participated in the discussion: 5. Roy GatlinWhy does the grower have to pay for vitamins? Why are they included in the standard cost? . . . . 16. Roy GatlinFeed mill is better than it used to be. ¶ 57. Additionally, Sanderson Farms denies occupying a monopolistic position in the industry. It claims that in 1997, the year Mr. Gatlin signed the agreement, there were at least seven other major poultry processing companies in the state of Mississippi, and other poultry growers in Jones County were growing for other companies at that time. Hence, in the view of Sanderson Farms, Mr. Gatlin could have taken his business elsewhere rather than accept the arbitration clause. ¶ 58. In our recent decision in Taylor, we held an arbitration clause unenforceable on procedural unconscionability grounds where it was preprinted on the document in type less than one-third the size of many other terms in the document, appears in very fine print and regular type font, whereas all of the details concerning the vehicle Taylor purchased [were] in boldface print. Taylor, 826 So.2d at 716-17. Except for being preprinted, none of these conditions applies to the arbitration clause that Mr. Gatlin signed. Indeed, a special all-bold, all-capitalized notice regarding the arbitration provision was placed just above his signature on the Agreement. ¶ 59. Moreover, Mr. Gatlin's arguments about his lack of voluntariness do not apply strictly to the arbitration clause, but rather to his entering into the Agreement as a whole. Therefore, the rule of Prima Paint, as properly extended to unconscionability by the Fifth Circuit in Haydu, applies. His claims regarding ... unconscionability are ones that, in the event of arbitration, would be decided by an arbitrator, not the [trial] court, since they go to the formation of the entire contract rather than to the issue of misrepresentation in the signing of the arbitration agreement. Haydu, 637 F.2d at 398 (emphasis added). ¶ 60. We have recently applied the rule of Prima Paint in a case of alleged unconscionability in forming an arbitration agreement, holding that where a claim of procedural unconscionability went to the formation of a sales contract as a whole, not to the arbitration agreement in particular, the dispute was to be arbitrated under the FAA. Russell v. Performance Toyota, Inc., 826 So.2d 719, 725-26 (Miss.2002) (citing Rojas v. TK Communications, Inc., 87 F.3d 745, 749, 751 n. 3 (5th Cir.1996)). [11] ¶ 61. Gatlin has failed to meet his burden of presenting substantial evidence that his entering into the arbitration clause itself, as opposed to his making the Agreement as a whole, was procedurally unconscionable. Whatever pressures he faced to sign the Agreement (such as those expounded upon in the plurality opinion) were not specific to the arbitration clause. Moreover, any assertions that Gatlin somehow failed to realize the gravity of his agreement to arbitrate, so that state unconscionability law prevails (as the plurality argues), are barred by Casarotto. This Court cannot hold that Gatlin was entitled to special protections merely because the Agreement contained an arbitration clause. Therefore, Gatlin's alleged lack of voluntariness is reserved by the FAA for the arbitral forum.