Opinion ID: 1532391
Heading Depth: 2
Heading Rank: 1

Heading: Is the Arbitration Agreement Unconscionable and Therefore Unenforceable?

Text: Petitioners first ask us to decide whether the arbitration clause contained in the Disclosure Agreement is invalid because it is unconscionable and therefore unenforceable. Because the arbitration agreement states that it was made pursuant to a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, our examination therefore must necessarily begin with the Federal Arbitration Act (the FAA), which is set forth at 9 U.S.C. § 1 et seq. The FAA applies to nearly all arbitration agreements, and, like all federal law, it preempts inconsistent state law. See Southland Corp. v. Keating, 465 U.S. 1, 16, 104 S.Ct. 852, 861, 79 L.Ed.2d 1 (1984) (United States Supreme Court stating that, [i]n creating a substantive rule applicable in state as well as federal courts, Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements) (footnote omitted). Section 2 of the FAA, which the United States Supreme Court has made clear state courts are also bound to recognize and enforce, see Southland, 465 U.S. at 14-15, 104 S.Ct. at 860-61, provides that a written provision ... to settle by arbitration a controversy thereafter arising out of such contract or transaction... shall be valid, irrevocable, and enforceable, save upon any grounds at law or in equity for the revocation of any contract. 9 U.S.C. § 2. In enforcing § 2 of the FAA, however, state courts are not bound by the federal procedural provisions of the FAA, which are found in §§ 3 and 4 of the FAA, but may generally apply their own procedures. See Southland, 465 U.S. at 16 n. 10, 104 S.Ct. at 861 n. 10 (stating that, [i]n holding that the [FAA] preempts a state law that withdraws the power to enforce arbitration agreements, we do not hold that §§ 3 and 4 of the [FAA] apply to proceedings in state courts) (alterations added). Therefore, in enforcing § 2 of the FAA, we must look to the pertinent Maryland law relating to arbitration agreements to decide whether the circuit court properly ordered petitioners to arbitrate their claims against Sovereign Bank in light of petitioners' assertion that the arbitration agreement itself is invalid in that it is unconscionable and therefore unenforceable. The Maryland Uniform Arbitration Act (MUAA) is set forth in Md.Code (1974, 2002 Repl. Vol.), §§ 3-201 et seq. of the Courts and Judicial Proceedings Article and was purposefully meant to mirror the language of the FAA. In nearly identical language to that found in § 2 of the FAA, the MUAA provides that a written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy arising between the parties in the future is valid and enforceable, and is irrevocable, except upon grounds that exist at law or in equity for the revocation of a contract. Section 3-206(a) of the Courts and Judicial Proceedings Article. As we stated in Holmes v. Coverall North America, 336 Md. 534, 649 A.2d 365 (1994): The Maryland Arbitration Act has been called the `State analogue ... to the Federal Arbitration Act.' See Regina v. Envirmech, 80 Md.App. 662, 667, 565 A.2d 693, 696 (1989). The same policy favoring enforcement of arbitration agreements is present in both our own and the federal acts. Compare Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765, 785 (1983) (noting the `liberal federal policy favoring arbitration agreements') with Gold Coast Mall, 298 Md. at 103, 468 A.2d at 95 (noting the `legislative policy favoring enforcement of executory agreements to arbitrate'). We therefore rely on decisions interpreting the Federal Arbitration Act in reaching our decision. Holmes, 336 Md. at 541, 649 A.2d at 368. Judge Battaglia, for the Court, most recently explained arbitration's favored status in Cheek v. United Healthcare of the Mid-Atlantic, Inc., 378 Md. 139, 835 A.2d 656 (2003): We have described arbitration as `the process whereby parties voluntarily agree to substitute a private tribunal for the public tribunal otherwise available to them.' Gold Coast Mall, Inc. v. Larmar Corp., 298 Md. 96, 103, 468 A.2d 91, 95 (1983); see also Charles J. Frank, Inc. v. Associated Jewish Charities of Baltimore, Inc., 294 Md. 443, 448, 450 A.2d 1304, 1306 (1982). The Maryland Uniform Arbitration Act ... `expresses the legislative policy favoring enforcement of agreements to arbitrate.' Allstate Ins. Co. v. Stinebaugh, 374 Md. 631, 641, 824 A.2d 87, 93 (2003). See also Holmes v. Coverall North America, Inc., 336 Md. 534, 546, 649 A.2d 365, 371 (1994) (observing that the Arbitration Act embodies `the legislative intent to favor arbitration'); Crown Oil & Wax Co. of Delaware, Inc. v. Glen Constr. Co. of Virginia, Inc., 320 Md. 546, 558, 578 A.2d 1184, 1189 (1990) (`Maryland courts have consistently stated that the [Arbitration Act] embodies a legislative policy favoring the enforcement of executory agreements to arbitrate.'); Gold Coast Mall, Inc., 298 Md. at 103, 468 A.2d at 95; Charles J. Frank, Inc., 294 Md. at 448, 450 A.2d at 1306. Cheek, 378 Md. at 146, 835 A.2d at 660. This public policy favoring such agreements is understandable, as arbitration agreements are generally a less expensive and more expeditious means of settling litigation and relieving docket congestion. The favorable status which arbitration agreements are afforded in Maryland has been made explicitly evident by the Legislature in the enactment of the MUAA. Under the MUAA, where a dispute arises concerning any aspect of an agreement that is alleged to be subject to an arbitration clause, § 3-207 of the Courts and Judicial Proceedings Article allows parties to petition a court to compel arbitration and states: § 3-207. Order to arbitrate. (a) Refusal to arbitrate.  If a party to an arbitration agreement described in § 3-202 refuses to arbitrate, the other party may file a petition with a court to order arbitration. (b) Denial of existence of arbitration agreement.  If the opposing party denies existence of an arbitration agreement, the court shall proceed expeditiously to determine if the agreement exists. (c) Determination by court.  If the court determines that the agreement exists, it shall order arbitration. Otherwise it shall deny the petition. Whether a valid arbitration agreement exists in the case sub judice depends on contract principles since arbitration is a matter of contract. Cheek, 378 Md. at 147, 835 A.2d at 661. The United States Supreme Court has stated that generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements.... Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 1656, 134 L.Ed.2d 902 (1996). Therefore, an arbitration agreement may be challenged on grounds of unconscionability, which petitioners do here. An unconscionable bargain or contract has been defined as one characterized by extreme unfairness, which is made evident by (1) one party's lack of meaningful choice, and (2) contractual terms that unreasonably favor the other party. BLACK'S LAW DICTIONARY 1560 (8th ed. 2004). See also RESTATEMENT (SECOND) OF CONTRACTS § 208 cmt. b (1981) (observing that, [t]raditionally, a bargain was said to be unconscionable in an action at law if it was `such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other') (citation omitted). One of the leading treatises on the law of contracts describes what is meant by unconscionability: The concept of unconscionability was meant to counteract two generic forms of abuses: the first of which relates to procedural deficiencies in the contract formation process, such as deception or a refusal to bargain over contract terms, today often analyzed in terms of whether the imposed-upon party had meaningful choice about whether and how to enter the transaction; and the second of which relates to the substantive contract terms themselves and whether those terms are unreasonably favorable to the more powerful party, such as terms that impair the integrity of the bargaining process or otherwise contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law, fine-print terms or provisions that seek to negate the reasonable expectations of the nondrafting party, or unreasonably and unexpectedly harsh terms having nothing to do with price or other central aspects of the transaction. 8 Richard A. Lord, Williston on Contracts § 18:10 (4th ed. 1998). The United States Court of Appeals for the Fourth Circuit also explained the particular characteristics of both procedural and substantive unconscionability in Carlson v. General Motors Corp., 883 F.2d 287 (4th Cir.1989), stating: `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)). See also Harris v. Green Tree Financial Corp., 183 F.3d 173, 181 (3d. Cir.1999) (referring to procedural unconscionability as the process by which an agreement is reached and the form of an agreement, including the use therein of fine print and convoluted or unclear language and substantive unconscionability as contractual terms that are unreasonably or grossly favorable to one side and to which the disfavored party does not assent). Petitioners contend that the arbitration clause contained in the Disclosure Agreement should be deemed unconscionable for three distinct reasons: (1) petitioners had no meaningful choice about the arbitrations clause, (2) the arbitration clause is unreasonably favorable to the lender and its assignee, Sovereign Bank, and (3) the arbitration clause requires borrowers to pay excessive fees to have their claims heard in an arbitral forum. Thus, they claim that there exists both procedural and substantive unfairness amounting to unconscionability in the Disclosure Agreement. We shall examine each of petitioners' contentions in turn.
Petitioners initially contend that the arbitration agreement was procedurally unconscionable because they: were provided no opportunity to review the [Disclosure Agreement] on the night of the closing and were provided no opportunity to review the [Disclosure Agreement] beyond a cursory perusal and, thus, never noticed or read [the arbitration clause]. Had [petitioners] realized how [the arbitration clause] altered their rights to a jury trial and to bring any future claim relating to a loan as a part of a class action, they would not have signed the [Disclosure Agreement] [Alterations added.] Petitioners' claim that they were oblivious as to the arbitration clause is specious at best. Of the seventeen separate paragraphs that constitute the entirety of the Disclosure Agreement signed by petitioners, only paragraph 17, the arbitration clause, has been underlined in the original agreement. Therefore, it has been made conspicuously distinct from the rest of the clauses in the Disclosure Agreement. See BLACK'S LAW DICTIONARY 329 (8th ed. 2004) (defining conspicuous as [C]learly visible or obvious. Whether a printed clause is conspicuous as a matter of law [usually] depends on the size and style of the typeface. Under the UCC, a term or clause is conspicuous if it is written in a way that a reasonable person against whom it is to operate ought to notice it.) (alteration added). Furthermore, the arbitration clause is placed directly above petitioners' signatures, thereby weakening any argument that petitioners were not aware of its existence because it was buried somewhere within a voluminous contract. See Commercial Credit Corp. v. Leggett, 744 So.2d 890, 895 (Ala.1999) (Supreme Court of Alabama holding that arbitration provision was not unconscionable because the provision appeared in a conspicuous boxed-in section of the disclosure agreement and borrower affixed her signature directly beneath at the end of the arbitration provision); see also Russell v. Performance Toyota, Inc., 826 So.2d 719, 726 (Miss.2002) (Supreme Court of Mississippi holding that arbitration agreement between dealership and pickup truck buyer was not procedurally unconscionable where arbitration agreement in the Purchase Agreement is preceded by boldface and capitalized headings and was almost immediately succeeded by the signature line). As this Court stated in the case of Merit Music Service, Inc. v. Sonneborn, 245 Md. 213, 221-22, 225 A.2d 470, 474 (1967), the law presumes that a person knows the contents of a document that he executes and understands at least the literal meaning of its terms. See also Vincent v. Palmer, 179 Md. 365, 375, 19 A.2d 183, 189 (1941) (stating that, as a general rule, when one signs a release or other instrument, he is presumed in law to have read and understood its contents, and he will not be protected against an unwise agreement); Owens v. Graetzel, 149 Md. 689, 696, 132 A. 265, 268 (1926) (stating that parties to mortgage are bound by its terms and must be held to know its meaning as thereby expressed). In the nearly-century-old case of Smith v. Humphreys, 104 Md. 285, 65 A. 57 (1906), Judge Boyd expressed the Court's generally critical view of such defenses to the enforcement of a contract: Any person who comes into a Court of equity admitting that he can read, and showing that he has average intelligence, but asking the aid of the Court because he did not read a paper involved in the controversy, and was thereby imposed on, should be required to establish a very clear case before receiving the assistance of the Court in getting rid of such document. It is getting to be too common to have parties ask Courts to do what they could have done themselves if they had exercised ordinary prudence, or, to state it in another way, to ask Courts to undo what they have done by reason of their own negligence or carelessness. Id. at 290-91, 65 A. at 59. The stance that this Court took in Humphreys in regard to the justifiably difficult hurdle that a signatory to a contract must make before a court will rescind a contract because of its unfair terms remains firm and is based on one of the most commonsensical principles [5] in all of contract law, i.e., that a party that voluntarily signs a contract agrees to be bound by the terms of that contract. In its simplest terms, petitioners argue that they should not be held to an agreement that they signed but did not take the time to read. There must exist something more before we can find the arbitration clause at issue to be unconscionable. See Smith v. EquiFirst Corp., 117 F.Supp.2d 557, 565 (S.D.Miss.2000) (stating that a failure by plaintiffs to so inform themselves of what they were signing does not make the [arbitration] agreement unconscionable or unenforceable) (alteration added). Petitioners next argue that the arbitration agreement should be set aside because the arbitration clause was provided on a take-it-or-leave-it basis, with no opportunity for negotiation. In effect, petitioners contend that the Disclosure Agreement amounts to a contract of adhesion. A contract of adhesion has been defined as one that is drafted unilaterally by the dominant party and then presented on a `take-it-or-leave-it' basis to the weaker party who has no real opportunity to bargain about its terms. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 cmt. b (1971); see also BLACK'S LAW DICTIONARY 342 (8th ed. 2004) (defining adhesion contract as [a] standard-form contract prepared by one party, to be signed by the party in a weaker position, [usually] a consumer, who adheres to the contract with little choice about the terms) (alteration added). A contract of adhesion is not automatically deemed per se unconscionable. As Judge Wilner, then Chief Judge of the Court of Special Appeals, correctly stated in Meyer v. State Farm Fire & Cas. Co., 85 Md.App. 83, 582 A.2d 275 (1990): The fact that a contract is one of adhesion does not mean that either it or any of its terms are invalid or unenforceable. A court will, to be sure, look at the contract and its terms with some special care. As in most cases, it will refuse to enforce terms that it finds unconscionable and will construe ambiguities against the draftsman; but it will not simply excise or ignore terms merely because, in the given case, they may operate to the perceived detriment of the weaker party. Id. at 89-90, 582 A.2d at 278. Therefore, even assuming arguendo that the Disclosure Agreement signed by petitioners is in fact a contract of adhesion, [6] that is not the end of the inquiry  we must examine the substance of the particular provision at issue, the arbitration clause, to decide whether it is unconscionable. To that end, we must consider whether the terms in the arbitration clause are so one-sided as to oppress or unfairly surprise an innocent party or whether there exists an egregious imbalance in the obligations and rights imposed by the arbitration clause.

Petitioners contend that the arbitration clause is substantively unconscionable for numerous reasons, the first being that it requires that all disputes that the borrower may have must be arbitrated, but carves out the remedies that a lender or lender's assignee might pursue against a defaulting borrower from the operation of the provision.... There is no mutuality in the arbitration clause because there are no important remedies that a lender/assignee could pursue against the borrower that have not been excluded from arbitration. Petitioners claim that the language in the arbitration clause evidences the following: Nothing in this agreement shall be construed to limit the right of any party to 1) foreclose against real or personal property or other security by an exercised power of sale under a security instrument or applicable law, 2) exercise self-help remedies, or 3) obtain provisional or ancillary remedies with regard to such securities, including without limitation, injunctive relief, sequestration, attachment, garnishment, or the appointment of a receiver from a Court having competent jurisdiction before, during or after the pendency of any arbitration. [Emphasis omitted.] Petitioners overreach in their assessment of their lack of judicial remedies pertaining to possible disputes under the arbitration clause, which they claim amounts to an impermissible lack of mutuality in the arbitration agreement. In Cheek v. United Healthcare , supra, we recognized that [t]he determination of whether there is an agreement to arbitrate... depends on contract principles since arbitration is a matter of contract, and that [t]o be binding and enforceable, contracts ordinarily require consideration. Cheek, 378 Md. at 147, 835 A.2d at 661 (citing Harford County v. Town of Bel Air, 348 Md. 363, 381-82, 704 A.2d 421, 430 (1998)). Cheek involved whether a valid and enforceable arbitration agreement between an employer and an employee existed where the employer declared in a summary of its arbitration policy that it reserved the right to alter, amend, modify, or revoke the [arbitration agreement] at its sole and absolute discretion at any time with or without notice. Cheek, 378 Md. at 142-43, 835 A.2d at 658 (alteration added). We held that the arbitration agreement in that instance was not valid and enforceable because the employer's promise to arbitrate disputes was illusory under the language of the arbitration agreement. Id. at 144, 835 A.2d at 659. Of particular importance to the case sub judice is the following discussion in Cheek: [M]utual promises to arbitrate act as `an independently enforceable contract.' In an enforceable arbitration agreement... each party has promised to arbitrate disputes arising from an underlying contract, and `each promise provides consideration for the other.' Thus, in a motion to compel arbitration, a court must determine whether `there is a mutual exchange of promises to arbitrate,' and `[o]nce a court determines that the making of the agreement to arbitrate is not in dispute, its inquiry ceases, as the agreement to arbitrate has been established as a valid and enforceable contract.' Id. at 153-54, 835 A.2d at 665 (citations omitted). Petitioners argue that there is an oppressive lack of mutuality in the arbitration agreement because the clause provides the lender with an option  foreclosure or arbitration  that is not provided to the borrower. Mutuality, however, does not require an exactly even exchange of identical rights and obligations between the two contracting parties before a contract will be deemed valid. See Harford County v. Town of Bel Air, 348 Md. 363, 383, 704 A.2d 421, 431 (1998) (stating that `[i]t is well settled that the Courts of Law... will not inquire into the adequacy of the value exacted for the promise so long as it has some value') (quoting Blumenthal v. Heron, 261 Md. 234, 242, 274 A.2d 636, 640 (1971)). Therefore, there need not exist an identical mutuality of remedy between petitioners and Sovereign Bank before the arbitration agreement will be deemed valid. We do not find that the exceptions to the arbitration agreement, which allow Sovereign Bank to litigate certain specific claims instead of having to submit them to arbitration, are so unfairly oppressive as to make the agreement unconscionable. Unlike Cheek, the arbitration clause at issue here is not illusory  Sovereign Bank is bound to arbitrate certain disputes, just as are petitioners, instead of pursuing them in a judicial forum. The mere fact that the arbitration agreement does except from its purview, however, a foreclosure proceeding, does not destroy mutuality and make the arbitration agreement so one-sided as to make it unconscionable. An arbitrator cannot order foreclosure so the foreclosure action, of necessity, is preserved. See Harris v. Green Tree Financial Corp., 183 F.3d 173, 179-81 (3d. Cir.1999) (Third Circuit rejecting borrower's argument that an arbitration provision in a secondary mortgage contract was unconscionable because the lender retained the right to sue in court to enforce its security agreement). In Conseco Finance Servicing Corp. v. Wilder, 47 S.W.3d 335 (Ky.Ct.App.2001), the Court of Appeals of Kentucky had before it a case where the assignee of a sales contract and security agreement for mobile homes brought suit under the contract to repossess the mobile home of purchasers who had ceased to make payments on their mobile home. The mobile home owners filed suit to have the contract rescinded for breach of warranties and other various violations. The assignee responded to the suit by moving to compel arbitration pursuant to an arbitration clause in the contract. Arguing before the Kentucky appellate court, the mobile home owners urged, inter alia, that the arbitration clause was unconscionable because the lender had reserved under the arbitration agreement the right to seek judicial redress of its likeliest claims  foreclosure proceedings  while reserving the right to arbitrate any claim by the purchasers who defaulted on their payments. [7] In rejecting this argument, the court initially noted that there is no inherent reason to require that the parties have equal arbitration rights. Id. at 343. The court then stated: The exceptions ... are not unreasonable. Arbitration is meant to provide for expedited resolution of disputes, but the claims the agreement permits Conseco to litigate  basically claims asserting its security interest  may be litigated expeditiously. Such claims have come to be heavily regulated by statute, allowing for streamlined procedures and effective protections for both sides. It does not strike us as unreasonable, much less oppressive, to forego arbitration of such claims. Id. (footnote omitted). See also Torrance v. Aames Funding Corp., 242 F.Supp.2d 862, 872 (D.Or.2002) (holding that agreement to arbitrate not rendered unconscionable simply because [mortgage lender] is not required to arbitrate all claims) (alteration added). The valid justification for a mortgage lender to retain the right to pursue certain remedies in a judicial forum as exceptions to an agreement to arbitrate was also made clear by the Court of Appeals of South Carolina in Lackey v. Green Tree Financial Corp., 330 S.C. 388, 498 S.E.2d 898 (S.C.Ct.App.1998), where that court explained that such exemptions are understandably warranted based on business realities: Secured transactions allow lenders to take greater risks because their ability to protect a loan is enhanced by the legal right to recover and sell the collateral in the event of default. Judicial remedies for the recovery of property, such as ... the foreclosure action, provide specific procedures for protection of collateral and the parties during the pendency of the proceedings. These protections relate to both parties, and are facilitated by the enforcement procedures specified in the law. Thus, we conclude this [arbitration] clause does bear a reasonable relationship to the business risks. Id. at 401, 498 S.E.2d at 905 (alteration added). Maryland foreclosure proceedings, like those of both Kentucky and South Carolina, do not act solely to protect the interests of the mortgage lender against a defaulting debtor but instead provide protections for both sides. See Simard v. White, 383 Md. 257, 318, 859 A.2d 168, 204 (2004) (stating that our Court [has] recognized that while the mortgage is intended to secure the debt, both the interests of debtor and of creditor command certain protections, even in the event of default) (alteration added). We agree with these other jurisdictions and their findings that the act of a mortgage lender in providing certain exceptions for itself in the arbitration agreement, such as the ability to pursue foreclosure proceedings in a judicial forum, does not in and of itself make the arbitration agreement unconscionable where the mortgage-debtor/borrower is not provided with identical exceptions to the arbitration agreement. The arbitration agreement at issue, which includes exceptions to that agreement that enable the mortgage lender, presently Sovereign Bank, to pursue certain judicial remedies including foreclosure, is not made unconscionable where petitioners are not provided with identical exceptions to the arbitration agreement.
Petitioners argue that the arbitration clause, which explicitly makes unavailable to them a class-action procedure, makes the arbitration agreement unconscionable. The arbitration clause expressly provides that any dispute subject to arbitration shall not be adjudicated as a class action or consolidated class proceeding (emphasis omitted). Numerous courts, both federal and state, have rigorously enforced no-class-action provisions in arbitration agreements and found them to be valid provisions of such agreements and not unconscionable. See, e.g., Snowden v. CheckPoint Check Cashing, 290 F.3d 631, 638 (4th Cir.2002), cert. denied, 537 U.S. 1087, 123 S.Ct. 695, 154 L.Ed.2d 631 (2002) (stating [w]e [] reject Snowden's argument that the Arbitration Agreement is unenforceable as unconscionable because without the class action vehicle, she will be unable to maintain her legal representation given the small amount of her individual damages); Med Center Cars, Inc. v. Smith, 727 So.2d 9, 20 (Ala.1998) (stating that to require class-wide arbitration would alter the agreements of the parties, whose arbitration agreements do not provide for class-wide arbitration); Rains v. Foundation Health Systems Life & Health, 23 P.3d 1249, 1253 (Colo.App.2001) (stating that arbitration clauses are not unenforceable simply because they might render a class action unavailable); Edelist v. MBNA America Bank, 790 A.2d 1249, 1261 (Del.Super.Ct.2001) (finding that, because [t]he surrender of [the] class action right was clearly articulated in the arbitration amendment[,] [t]he Court finds nothing unconscionable about it and finds the bar on class actions enforceable) (alterations added); Rosen v. SCIL, LLC, 343 Ill.App.3d 1075, 278 Ill.Dec. 770, 799 N.E.2d 488, 494 (2003) (finding arbitration clause enforceable despite its prohibition on class actions); Ranieri v. Bell Atlantic Mobile, 304 A.D.2d 353, 759 N.Y.S.2d 448 (2003) (stating that given the strong public policy favoring arbitration ... and the absence of a commensurate policy favoring class actions, we are in accord with authorities holding that a contractual proscription against class actions ... is neither unconscionable nor violative of public policy) (citations omitted); AutoNation USA Corp. v. Leroy, 105 S.W.3d 190, 200 (Tex.App.2003) (enforcing arbitration clause which prohibited class-action claims, stating that there is no entitlement to proceed as a class action). Moreover, in our decision in Gilman v. Wheat, First Securities, Inc., 345 Md. 361, 692 A.2d 454 (1997), we held that a forum-selection clause, which was part of an arbitration agreement, requiring the parties to litigate their disputes in Virginia, which did not provide a class-action procedure, was not unreasonable and should be enforced. Id. at 382, 692 A.2d at 465. In reaching this conclusion, we stated that: We are unaware of any case  and none has been cited to us  in which the unavailability of a class action procedure, either generically or in a particular case, has been regarded as sufficient to render an otherwise valid forum-selection clause unenforceable. ...  It is important to recall once again that the clause in question was part of an arbitration agreement, under which Gilman agreed to arbitrate any disputes he had with Wheat arising from the account, that, under that clause, he expressly waived his right `to seek remedies in court, including the right of jury trial,' and that he had a choice of fora in which to conduct the arbitration. Id. at 381-82, 692 A.2d at 464 (emphasis added). Following our holding in Gilman, we would be averse to a holding in the present case which would allow petitioners to avail themselves of a class action contrary to the provisions of a freely-signed agreement to arbitrate that includes a no-class-action provision which was conspicuously presented as part of the arbitration clause. Petitioners do point out cases in which courts have adhered to an unquestionably minority view that finds that a no-class-action provision in an arbitration agreement can make the agreement unconscionable and unenforceable. See Ting v. AT&T, 319 F.3d 1126, 1150 (9th Cir. 2003) (affirming federal district court's conclusion that the class action ban [in an arbitration agreement] violates California's unconscionability law) (alteration added); Acorn v. Household International, Inc., 211 F.Supp.2d 1160 (N.D.Cal.2002) (finding provision of arbitration agreement that prohibited class actions substantively unconscionable); Szetela v. Discover Bank, 97 Cal.App.4th 1094, 118 Cal.Rptr.2d 862 (2002) (same). Insofar as these cases are for the proposition that a no-class-action provision in an arbitration agreement is so one-sided as to make that agreement unconscionable, we are unpersuaded. We cannot ignore the strong policy, made clear in both federal and Maryland law, that favors the enforcement of arbitration provisions. We believe that the opinions to which petitioners cite that hold otherwise give short shrift to this principle. See Metro East Center for Conditioning and Health v. Qwest Communications International, Inc., 294 F.3d 924, 927 (7th Cir. 2002) (arguments based on the costs of arbitration and the preclusion of class actions are the sort of litany the Federal Arbitration Act is supposed to silence). Therefore, we do not find the no-class-action provision to be so one-sided or oppressive to petitioners as to render the arbitration agreement at issue unconscionable.
Petitioners next contend that the lender's failure to disclose the fees associated with an arbitration effectively concealed the significance of the arbitration clause and should render the arbitration agreement unconscionable. Sovereign Bank responds that the arbitration agreement cannot be invalidated on the basis of speculative costs and that arbitration, in contrast to the often substantial costs of litigation, may be a more cost-effective means for the petitioners to pursue their claims. Petitioners have submitted several cases from other jurisdictions in support of their contention that the potential accumulation of an unknown sum in arbitration fees serves to discourage them from pursuing their claim. The cases cited by petitioners, however, as noted by the Court of Special Appeals, involve arbitration fees severely in excess of the mandatory fees in the instant case. Sovereign Bank relies primarily on the factually-similar case of Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), in which the United States Supreme Court directly addressed the question of fees potentially incurred in respect to arbitration proceedings. In Green Tree Financial, 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. Id. at 82, 121 S.Ct. at 518. The Supreme Court affirmed the determination of the United States Court of Appeals for the Eleventh Circuit that the lower court's order compelling arbitration and dismissing the underlying litigation issues was a final, appealable order, but 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, 121 S.Ct. at 518-19. Acknowledging that the Green Tree Financial 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 pursing her claims in an arbitral forum, [t]he `risk' that [the buyer] will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement. Id. at 90-91, 121 S.Ct. at 522 (alteration added). Effectively, Green Tree Financial placed upon the party asserting the prohibitive expense the burden of showing the likelihood of incurring such costs. Id. at 92, 121 S.Ct. at 522. In addition, we note that although the arbitration clause in the present case specifically articulates neither the costs and fees of the arbitration, nor who is to pay these fees and costs, nor how they might be allocated, it delineates that the arbitration is to be conducted under the Code of Procedure of the National Arbitration Forum, whose fee schedule was noted as a model for fair cost and fee allocation in Green Tree Financial. See Id. 531 U.S. at 95 n. 2, 121 S.Ct. at 524 n. 2 (Ginsburg, J., concurring in part and dissenting in part). In a case decided shortly after Green Tree Financial, the United States Court of Appeals for the Fourth Circuit observed it would be inappropriate to apply a broad per se rule to the efficacy of an arbitral forum: The cost of arbitration, as far as its deterrent effect, cannot be measured in a vacuum or premised upon a claimant's abstract contention that arbitration costs are `too high.' Rather, an appropriate case-by-case inquiry must focus upon a claimant's expected or actual arbitration costs and his ability to pay those costs, measured against a baseline of the claimant's expected costs for litigation and his ability to pay those costs. Another factor to consider in the cost-differential analysis is whether the arbitration agreement provides for fee-shifting, including the ability to shift forum fees based upon the inability to pay. We note that parties to litigation in court often face costs that are not typically found in arbitration, such as the cost of longer proceedings and more complicated appeals on the merits. Bradford v. Rockwell Semiconductor Systems, Inc., 238 F.3d 549, 556 n. 5 (4th Cir.2001) (rejecting argument that arbitration clause containing a fee-splitting provision which required employee to share the arbitration costs and pay half the arbitrator's fee rendered the arbitration agreement per se unenforceable). In the case sub judice petitioners tally their anticipated costs of arbitration, based on the fee schedule of the National Arbitration Forum [8] at approximately $720.00. This figure is, indeed, approximate, because it includes both the mandatory filing fee to be paid by the consumer claimant ( i.e., petitioners) as well as fees that are likely to be paid by Sovereign Bank or that will be divided between both the petitioners and Sovereign Bank. The Court of Special Appeals noted that the arbitration would likely be more expedient and less procedurally cumbersome for petitioners than would a circuit court trial. Because the fees arising from the arbitration cannot be predicted in detail and petitioners have not shown them to be unduly burdensome, we cannot find the arbitration agreement's absence of a cost schedule or cost allocation to be unconscionable.
Petitioners next argue that the arbitration clause is substantively unconscionable because [t]he invocation of the arbitration clause in this case involves the waiver of a fundamental right  the right to trial by jury. The arbitration clause, which petitioners signed, states that [t]he parties acknowledge that they are waiving their right to jury trial by consenting to binding arbitration (emphasis omitted). Petitioners posit that they did not waive their fundamental right to a jury trial in a knowing and voluntary manner. Rather, they were rushed into signing documents that they were given no opportunity to review in advance without any explanation concerning the rights they were waiving. As we shall explain, petitioners contention on this point is unpersuasive. Article 23 of the Maryland Declaration of Rights, [9] guarantees the right to a jury trial in civil cases. Although the right to a jury trial is fundamental, parties can contractually waive their right to a jury trial. In order to have a valid waiver of a fundamental right such as the right to a jury trial, however, there ordinarily must exist a knowing and intelligent waiver of the right. See, e.g., Richardson v. State, 381 Md. 348, 366, 849 A.2d 487, 498 (2004) (waiver of Sixth Amendment fundamental right to counsel in criminal proceedings valid if knowing and intelligent); Maryland-National Capital Park and Planning Comm'n v. Washington National Arena, 282 Md. 588, 613-14, 386 A.2d 1216, 1233 (1978) (stating that constitutional rights, including the right to procedural due process, may be relinquished by agreement, provided any such waiver is `voluntary, knowing, and intelligently made.') (quoting D.H. Overmyer Co. v. Frick Co., 405 U.S. 174, 185, 92 S.Ct. 775, 782, 31 L.Ed.2d 124 (1972)). Petitioners' bald assertion that they should not be held to have waived their right to a jury trial after they signed the Disclosure Agreement because they did not know that the arbitration clause contained such a waiver is fundamentally lacking in persuasive effect. Because the right to a jury trial attaches in the context of judicial proceedings after it is determined that litigation should proceed before a court ... the `loss of the right to a jury trial is a necessary and fairly obvious consequence of an agreement to arbitrate.' Sydnor v. Conseco Financial Servicing Corp., 252 F.3d 302, 307 (4th Cir.2001) (emphasis added) (quoting Pierson v. Dean, Witter, Reynolds, Inc., 742 F.2d 334, 339 (7th Cir.1984)). Therefore, the loss of one's right to a jury trial is generally implicit in an agreement to arbitrate. [10] That, and more, was made succinctly clear by the intermediate appellate court in Meyer v. State Farm Fire & Cas. Co .: An agreement to arbitrate either future or existing disputes involves more than just the waiver of a right to jury trial, although that is certainly implicit in such an agreement. It constitutes an election to use an alternative dispute resolution mechanism that the law not only recognizes but encourages. If appellants' position were correct, the whole foundation of the Federal and uniform arbitration acts could be placed in jeopardy. Arbitration clauses are standard not only in insurance contracts but in construction contracts, employment agreements, and a variety of other contracts that may, in some instances, be regarded as being of adhesion. If the `weaker' party to such contracts were able to escape the duty to arbitrate on the premise that he was unaware of the arbitration clause and therefore had not validly waived his Federal or State Constitutional right to a jury trial, the viability of this favored method of dispute resolution would be significantly circumscribed. Meyer, 85 Md.App. at 91, 582 A.2d at 278-79. On the evening of February 17, 1998, petitioners signed the two-page Disclosure Agreement, which perhaps would have taken ten minutes at most to read. [11] If petitioners did not do so before they signed the agreement, they have no persons to blame but themselves. As expressed earlier in our discussion, we are loath to rescind a conspicuous arbitration agreement that was signed by a party whom now, for whatever reason, does not desire to fulfill that agreement. Other jurisdictions presented with this particular issue have held a waiver of jury trial provision embedded within an arbitration clause can generally only be found to be unenforceable if the waiver provision itself is dubiously inconspicuous in the entire agreement as a whole. See Gaylord Dep't Stores of Alabama, Inc. v. Stephens, 404 So.2d 586, 588 (Ala.1981) (jury trial waiver provision buried in paragraph thirty-four in a contract containing forty-six paragraphs); Fairfield Leasing Corp. v. Techni-Graphics, Inc., 256 N.J.Super. 538, 607 A.2d 703 (Law Div.1992) (holding jury trial waiver unconscionable and unenforceable where the clause was buried in extremely fine print in an adhesion contract, one-half the ordinary size of print, in the midst of many other clauses); see also Jean R. Sternlight, Mandatory Binding Arbitration and the Demise of the Seventh Amendment Right to a Jury Trial, 16 OHIO ST. J. ON DISP. RESOL. 669, 684-85 (2001) (stating that [t]he conspicuousness of the [jury trial waiver] clause depends upon such things as font size, typeface, and placement. Courts are more likely to uphold waivers that are displayed in large typeface, bold, [12] or capital lettering. They are also more likely to uphold waivers that are placed in a key location, such as near the signature line of an agreement ) (alteration added) (emphasis added) (footnote added) (footnotes omitted). Because the jury trial waiver was not presented in the Disclosure Agreement in an inconspicuous manner, as it appeared as part of the underlined and distinct arbitration clause, which was located immediately above petitioners' signatures, and a jury trial waiver is generally implicit in an agreement to arbitrate, we hold that the jury trial waiver did not unfairly usurp the fundamental right to a jury trial from petitioners. An arbitration clause by its most basic nature waives a party's right to have disputes resolved in litigation and creates the right to have them resolved by arbitration.