Opinion ID: 736206
Heading Depth: 1
Heading Rank: 5

Heading: Unconscionability and Failure of the Contract to Meet the Parties' Reasonable Expectations

Text: 41 The franchisees argue that issues of fact remain with respect to their defenses that the arbitration clause is void and unenforceable because it is (1) unconscionable, and (2) fails to meet their reasonable contractual expectations, see Restatement (Second) of Contracts § 211. In their answers in the district court, most of which were filed in October 1994, the franchisees alleged that the franchise agreement was an adhesion contract that effectively forced them to arbitrate disputes under the agreement, yet allowed DAI to resolve such disputes through eviction proceedings. They also complained that the contract did not mention the alleged excessive costs of arbitration. Id. 42 The franchisees waived this argument by not raising it in the district court in their papers opposing DAI's motion, filed in February 1996, to forgo trial and receive judgment as a matter of law on all defenses to arbitration. In any event, the franchisees' claims are meritless. They urge us to remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds 'for the revocation of any contract.'  Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444 (1985). Yet the franchisees have not presented a well-supported claim in this regard. In Doctor's Associates, Inc. v. Jabush, 89 F.3d 109 (2d Cir.1996), we rejected a claim by Subway franchisees, who had been sued by DAI in eviction proceedings, that the arbitration clause was unconscionable. Id. at 112-13. We explained that the franchisees were not unfairly surprised or oppressed by DAI's resort to eviction proceedings because the plain terms of the sublease authorized such action. Id. at 113 (citing David L. Threlkeld & Co. v. Metallgesellschaft Ltd., 923 F.2d 245, 249 (2d Cir.1991)). In Stuart, we rejected the franchisees' argument that the costs of arbitration rendered the contract unconscionable, observing that the franchise agreement clearly stated that the franchisees would have to pay standard arbitration costs. Stuart, 85 F.3d at 980-81. Thus, even if the franchisees had properly raised these arguments, they would fail under the reasoning of our prior cases. 43