Opinion ID: 199988
Heading Depth: 1
Heading Rank: 3

Heading: Discovery on the Costs of Arbitration

Text: 22 In Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) a TILA plaintiff argued that her arbitration agreement's silence with respect to costs and fees creates a risk that she will be required to bear prohibitive arbitration costs if she pursues her claims in an arbitral forum, and thereby forces her to forgo any claims she may have. Id. at 90, 121 S.Ct. 513 (internal quotation marks omitted). The Court rejected this argument on the ground that [t]he risk that [plaintiff] will be saddled with prohibitive costs is too speculative to justify the invalidation of the arbitration agreement. Id. at 91, 121 S.Ct. 513. The Court indicated that the outcome might have been different if the plaintiff had demonstrated during discovery a likelihood that she would in fact have incurred prohibitive costs: 23 where ... 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. [Plaintiff] did not meet that burden. How detailed the showing of prohibitive expense must be before the party seeking arbitration must come forward with contrary evidence is a matter we need not discuss; for in this case neither during discovery nor when the case was presented on the merits was there any timely showing at all on the point. 24 Id. at 92. Here, however, no such showing is possible because Conseco has agreed to cover the costs of arbitration. Conseco's offer to pay the costs of arbitration and to hold the arbitration in the Larges' home state of Rhode Island mooted the issue of arbitration costs. The district court did not err in refusing to permit the Larges to take discovery on the costs of arbitration. 25 We explained the controlling principle in Ortiz-Gonzalez v. Fonovisa, 277 F.3d 59 (1st Cir.2002). A party who had agreed not to collect any award of attorney's fees nevertheless appealed the district court's denial of its claim for attorney's fees, on the ground that a judgement for attorney's fees would be valuable to deter other potential plaintiffs from filing frivolous claims. Id. at 64. We held that, [a]lthough possibly being of some value in future situations, a judgment by the district court on the issue of attorney's fees would be superfluous because of the agreement [not to collect]. Id. at 65. We explained that [c]ourts are not required to go through the symbolic step of entering a judgment which the beneficiary has already agreed not to collect for no other reason than to establish a precedent for use in future cases. Id. Likewise here, the district court was not required to permit discovery on an issue that no longer had any bearing on the outcome of the dispute before it. 26 The Larges cite Perez v. Globe Airport Security Services, Inc., 253 F.3d 1280 (11th Cir.2001), for the proposition that an arbitration agreement is invalid on its face if it limits the judicial remedies available to the plaintiffs. The arbitration agreement in Perez stipulated that all fees and costs would be borne equally by the parties. Id. at 1282. The Eleventh Circuit held that the agreement was illegal because it required the plaintiff to waive her statutory right under Title VII to recover fees and costs if she prevailed. Id. at 1285. Perez is not on point, however, because the arbitration clause here does not deprive the Larges of any statutory rights in connection with the costs of arbitration. The arbitration clause states: The parties agree and understand that the arbitrator shall have all powers provided by law and the note. These powers shall include all legal and equitable remedies, including, but not limited to, money damages, declaratory relief, and injunctive relief. It does not limit the power of the arbitrator to award statutory relief to the Larges pursuant to 15 U.S.C. § 1640(a)(3) (authorizing award of costs and attorney's fees to prevailing parties). 27 Affirmed.