Opinion ID: 76850
Heading Depth: 3
Heading Rank: 3

Heading: Access to Small Claims Tribunals

Text: The district court’s finding of substantive unconscionability was also based on the provision in the Arbitration Agreements permitting either party to seek adjudication in a small claims tribunal. The court found the Arbitration Agreements lacked mutuality of obligation because this provision only benefits Defendants. On its face, this provision does not favor one party over the other; rather, it provides that “[a]ll parties . . . shall retain the right to seek adjudication in a small claims tribunal for disputes within the scope of such tribunal’s jurisdiction.” The district court, however, found a borrower’s ability to pursue an action in a small 21 claims tribunal to be illusory. The court speculated that it is “hard to conceive of a claim by the payday lender that cannot be sought in a small claims tribunal,” but it is “easy to envision a plethora of claims a consumer might seek which are inaccessible in [such a tribunal] due to its limited jurisdiction.” Jenkins, 313 F. Supp. 2d at 1375. Additionally, the district court explained this provision favored Defendants because the judgments of small claims tribunals were appealable to an arbitrator.9 Under Georgia law, if at the time the agreement is to be enforced, “the contract contains mutual obligations equally binding on both parties to the contract, then the contract is not unilateral and unenforceable.” Jones v. Quigley, 315 S.E.2d 59, 60 (Ga. Ct. App. 1984). In this case, both Jenkins and Defendants had equal access to small claims tribunals. The only restriction, which applied equally to both parties, was that the claims sought in such a tribunal must fall within the tribunal’s limited jurisdiction. In stating it could “envision a plethora of claims” that consumers would not be able to raise in small claims courts, the district court apparently overlooked the many claims that consumers could bring in such tribunals. For example, if FNB 9 We note this claim alleged the Arbitration Agreements themselves were unconscionable due to a lack of mutuality of obligation; therefore, the district court had the authority, under the FAA, to adjudicate the issue. See 9 U.S.C. § 4 (2000). 22 charged a consumer an interest rate higher than that agreed upon in the contract, the consumer could, in most instances, pursue an action for the difference in a small claims court. Additionally, if FNB mistakenly imposed late charges on a consumer, he could presumably seek recovery in a small claims tribunal. Thus, we disagree with the district court’s unsupported speculation that the consumers’ ability to pursue an action in a small claims tribunal is illusory. We note, moreover, that the provision providing access to small claims tribunals was intended to benefit, not injure, consumers. The American Arbitration Association (AAA) has developed a set of principles, known as the Consumer Due Process Protocol, to protect consumers and ensure they are treated equitably in arbitration. See generally American Arbitration Association, Consumer Due Process Protocol, (Apr. 17, 1998), http://www.adr.org/protocols. Principle 5 of this Protocol expressly states that consumer arbitration agreements, like those at issue here, should offer all parties the option of seeking adjudication in a small claims tribunal. Id. The Comment to Principle 5 explains “access to small claims tribunals is an important right of Consumers” because it provides “a convenient, less formal, and relatively expeditious judicial forum for handling . . . disputes” involving small amounts of money. Id. By including a provision that offers access to such tribunals, the Arbitration Agreements at issue here merely 23 complied with the AAA’s Consumer Due Process Protocol. Such compliance further undermines the district court’s finding that the small-claims provision in the Arbitration Agreements only benefitted the payday lender. Cf. Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 94–95, 121 S. Ct. 513, 524 (2000) (Ginsburg, J., concurring) (explaining the drafter of the contract could have relied on the AAA’s Consumer Arbitration Rules to ensure the claims are arbitrated under a “consumer-protective fee arrangement”). We further note the district court did not provide support for its assertion that the small-claims provision favors Defendants because the judgments from small claims courts are appealable to an arbitrator. This aspect of the small-claims provision is equally binding on Jenkins and Defendants, as both parties are obligated to appeal such judgments to an arbitrator. Moreover, the arbitral forum does not unfairly favor Defendants. Jenkins, who has raised claims under Georgia usury laws and the Georgia RICO statute, is capable of vindicating all of her substantive rights in arbitration. In Bess v. Check Express, 294 F.3d 1298 (11th Cir. 2002), we held the terms of the arbitration agreement at issue in that case did not “grossly favor” the payday lender because, among other reasons, “nothing in the agreement prevent[ed] the arbitrator from awarding ‘the full panoply of relief’ available under [the applicable] law.” Id. at 1308; see also Green Tree Fin. Corp., 24 531 U.S. at 90, 121 S. Ct. at 521 (holding “even claims arising under a statute designed to further important social policies may be arbitrated because so long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the statute serves its functions”) (alteration in original) (citation and internal quotation marks omitted). The same is true in this case, as the Arbitration Agreements do not limit Jenkins’ right to relief.10 We conclude the small-claims provision is mutual and bilateral—it applies equally to both parties. Jenkins has not demonstrated that access to small claims tribunals unfairly benefits Defendants. The Arbitration Agreements, therefore, do not lack mutuality of obligation. In summary, we disagree with the district court’s reasons for finding the Arbitration Agreements unconscionable. The district court did not have the authority to decide the adhesion claim because that issue related to the loan agreements generally and, therefore, should have been submitted to an arbitrator. Although the district court did have the authority to adjudicate the arguments relating to the class action waiver and the small-claims provision, those 10 We note the Arbitration Agreements also permit Jenkins to either (1) choose the arbitrator from a list of national arbitration organizations, or (2) come to an agreement with Defendants in selecting a local arbitrator. 25 contractual conditions, for the reasons explained above, did not render the Arbitration Agreements unconscionable.