Court Opinion

ID: 9632712
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:22:41.704926+00
Date Added: 2024-06-11T12:58:47.317409
License: Public Domain

MARTONE, Justice,
dissenting.
The court’s conclusion that the agreement to arbitrate was outside the plaintiff’s reasonable expectations is without basis in law or fact. I fear today’s decision reflects a preference for litigation over alternative dispute resolution that I had thought was behind us. I would affirm the court of appeals.
We begin with the undisputed facts that the court ignores. Appendix “A” to this dissent is the agreement to arbitrate. At the top it states in bold capital letters “PLEASE READ THIS CONTRACT CAREFULLY AS IT EFFECTS [sic] YOUR LEGAL RIGHTS.” Directly under that in all capital letters are the words “AGREEMENT TO ARBITRATE.” The recitals indicate that “the Parties deem it to be in their respective best interest to settle any such dispute as expeditiously and economically as possible.” The parties agreed that disputes over services provided would be settled by arbitration in accordance with the rules of the American Arbitration Association. They further agreed that the arbitrators appointed by the American Arbitration Association would be licensed medical doctors who specialize in obstetrics/gynecology. Plaintiff, an adult, signed the document.
Under A.R.S. § 12-1501, a written contract to submit to arbitration any controversy that might arise between the parties is “valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract.” The statute applies to any controversy. Under A.R.S. § 12-1503, if the arbitration agreement provides a method of appointment of arbitrators, “this method shall be followed.” Under A.R.S. § 12-1518, the American Arbitration Association is expressly acknowledged as an entity that the state itself may use in connection with arbitration. There is judicial review of any award. A.R.S. § 12-1512. Thus, on the face of it, the contract to arbitrate is plainly reasonable and enforceable unless there are grounds to revoke it. A.R.S. § 12-1501.
The court seizes upon the doctrine of reasonable expectations to revoke this contract. But there is nothing in this record that would warrant a finding that an agreement to arbitrate a malpractice claim was *154not within the reasonable expectations of the parties. On this record, the exact opposite is likely to be true. For all we know, both sides in this case might wish to avoid litigation like the plague and seek the more harmonious waters of alternative dispute resolution.1 Nor is there anything in this record that would suggest that arbitration is bad. Where is the harm? In the end, today’s decision reflects a preference in favor of litigation that is not shared by the courts of other states and the courts of the United States.
In Doyle v. Giuliucci, 62 Cal.2d 606, 43 Cal.Rptr. 697, 699, 401 P.2d 1, 3 (1965), Chief Justice Roger J. Traynor of the California Supreme Court said, in connection with a medical malpractice claim, that “[t]he arbitration provision in such contracts is a reasonable restriction, for it does no more than specify a forum for the settlement of disputes.” And, in Madden v. Kaiser Foundation Hospitals, 17 Cal.3d 699, 131 Cal.Rptr. 882, 890, 552 P.2d 1178, 1186 (1976), the California Supreme Court outlined “the benefits of the arbitral forum”:
[t]he speed and economy of arbitration, in contrast to the expense and delay of jury trial, could prove helpful to all parties; the simplified procedures and relaxed rules of evidence in arbitration may aid an injured plaintiff in presenting his case. Plaintiffs with less serious injuries, who cannot afford the high litigation expenses of court or jury trial, disproportionate to the amount of their claim, will benefit especially from the simplicity and economy of arbitration; that procedure could facilitate the adjudication of minor malpractice claims which cannot economically be resolved in a judicial forum.2
The Federal Arbitration Act, 9 U.S.C. § 2, is just like Arizona’s, A.R.S. § 12-1501. There was a time when judicial antipathy towards arbitration prevailed. Poor Justice Frankfurter had to say in dissent in Wilko v. Swan, 346 U.S. 427, 439, 74 S.Ct. 182, 189, 98 L.Ed. 168 (1953) that “[tjhere is nothing in the record before us, nor in the facts of which we can take judicial notice, to indicate that the arbitral system ... would not afford the plaintiff the rights to which he is entitled.”
Justice Frankfurter’s views have now been vindicated. The Supreme Court of the United States has upheld arbitration agreements under the Federal Arbitration Act in a variety of contexts, from the commercial setting in Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (Securities Exchange Act of 1934 and RICO claims) and Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989) (Securities Act of 1933) to employment discrimination claims. Gilmer v. Interstate/Johnson Lane Corp., — U.S.-, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (Age Discrimination in Employment Act claim).
Indeed, in Gilmer, the Supreme Court expressly rejected the arguments that regrettably this court has accepted. — U.S. at---, 111 S.Ct. at 1654-55. The Supreme Court has expressly rejected the “outmoded presumption” and “suspicion of arbitration as a method of weakening the protections afforded in the substantive law.” Rodriguez de Quijas, 490 U.S. at 481, 109 S.Ct. at 1920.
Against this background, how does this court reach its conclusion that arbitration *155is beyond the reasonable expectations of the parties? Its reliance on Obstetrics and Gynecologists v. Pepper, 101 Nev. 105, 693 P.2d 1259 (1985), Darner Motor Sales, Inc. v. Universal Underwriters Insurance Co., 140 Ariz. 383, 682 P.2d 388 (1984), and the Restatement (Second) of Contracts § 211 (1979), is misplaced.
Pepper is a brief per curiam opinion of the Nevada Supreme Court which merely affirmed the finding of a trial court. The trial court held a hearing to determine whether there was an enforceable arbitration contract. However, the trial court did not make findings of facts and conclusions of law. That court simply denied a motion to stay pending arbitration. The Nevada Supreme Court said “[t]he district court could certainly have found that the arbitration agreement was an adhesion contract.” 693 P.2d at 1260. It- then said “[s]ince appellant’s counsel failed to pursue the entry of findings of facts and conclusions of law, we are bound to presume that the district court found that respondent did not give a knowing consent to the arbitration agreement prepared by appellant clinic.” Id., 693 P.2d at 1261. If Pepper stands for anything, it stands for the proposition that “knowing consent” is a factual question, and that an appellate court will affirm a factual finding if there is any evidence to support it. The basis for the court’s decision was “knowing consent” under Nevada law, not reasonable expectations under ours.
Nor are Darner and the Restatement support for this court’s conclusion. Darner held that an adhesive contract term that is “contrary to the negotiated agreement made by the parties,” 140 Ariz. at 387, 682 P.2d at 392, will not be enforced because it collides with expectations that “have been induced by the making of a promise.” 140 Ariz. at 390, 682 P.2d at 395 (quoting 1 Corbin, Contracts § 1 at 2 (1963)). The defendant here did not promise the plaintiff that malpractice claims could be litigated. Thus, the agreement to arbitrate is not contrary to any negotiated deal.
Gordinier v. Aetna Casualty & Surety Co., 154 Ariz. 266, 742 P.2d 277 (1987), of course, extended Darner to the entire scope of the Restatement (Second) of Contracts § 211 (1979). But even that section does not support today’s decision. Under Restatement (Second) of Contracts § 211(3), standardized agreements are enforceable except where a party has reason to believe that the other party would not manifest assent if he knew that the writing contained a particular term. Comment f to § 211 tells us:
Such a belief or assumption may be shown by the prior negotiations or inferred from the circumstances. Reason to believe may be inferred from the fact that the term is bizarre or oppressive, from the fact that it eviscerates the nonstandard terms explicitly agreed to, or from the fact that it eliminates the dominant purpose of the transaction. The inference is reinforced if the adhering party never had an opportunity to read the term, or if it is illegible or otherwise hidden from view.
Plainly, there are no facts in this case to support any of these factors. There were no prior negotiations that were contrary to arbitration. An agreement to arbitrate is hardly bizarre or oppressive. It is a preferred method of alternative dispute resolution that our legislature has expressly acknowledged in A.R.S. § 12-1501. Arbitration does not eviscerate any agreed terms. Nor does it eliminate the dominant purpose of the transaction. The plaintiff here had an opportunity to read the document, the document was legible and was hardly hidden from plaintiff’s view. This arbitration agreement was in bold capital letters. Thus, the reasonable expectations standard of the Restatement (Second) of Contracts § 211 does not support this court’s conclusion.
There is another reason why § 211(3) fails to support the court’s conclusion. The Restatement (Second) of Contracts chapter 8 describes the whole range of unenforceable contracts. Its introductory note states:
*156A particularly important change has been effected by statutes relating to arbitration, which have now been enacted in so.many jurisdictions that it seems likely that even in the remaining states, there has been a change in the former judicial attitude of hostility toward agreements to arbitrate future disputes____ Such agreements are now widely used and serve the public interest by saving court time. The rules stated in this Chapter do not preclude their enforcement even in the absence of legislation.
Restatement (Second) of Contracts ch. 8, intro, note at 4 (emphasis added). It is difficult to reconcile the court’s reliance on the Restatement in light of this.
The court tells us that there is no explicit waiver of the fundamental right to a jury trial in the arbitration agreement. But under Rule 38(d), Ariz.R.Civ.P., the failure of a party to serve a demand for a jury trial and file it constitutes a waiver by that party of a trial by jury. In contrast to the criminal process, no complicated proceeding is required to waive a trial by jury in a civil case. It is ironic that the majority prefers litigation, in which the plaintiff would lose her right to trial by jury by failing to know about it and demand it under Rule 38, but then somehow assumes that a document which in bold capital letters informs the plaintiff that it affects her legal rights and is denominated in bold capital letters as “agreement to arbitrate” is insufficient warning.
At bottom, all that could explain the court’s decision is a preference for litigation over arbitration. The court expresses sympathy for the plaintiff as though arbitration were harmful to her interests. But Arizona public policy has long supported arbitration as good, not evil. Court annexed arbitration of civil actions under A.R.S. § 12-133 is now an entrenched part of our culture. About 90% of these cases end at arbitration and are not appealed.3 Arizona Supreme Court Commission on the Courts, Report of the Commission on the Courts 36 (1989). Indeed, the Commission on the Courts specifically recommended that medical malpractice cases be subject to alternative dispute resolution procedures. Id. at 38. It noted that many lawyers will not take a malpractice case unless the damages exceed $100,000. “A large number of potential plaintiffs, therefore, may never receive the representation and opportunity for compensation they deserve. Both plaintiff and defense attorneys indicate that they would prefer a different form of dispute resolution.” Id. at 39.
Ironically, this court was instrumental in establishing an alternative dispute resolution fund under which we promote alternative dispute resolution and administer the fund. A.R.S. § 12-135.
And, we recently amended our rules of civil procedure to encourage trial judges to “[cjonsider alternative dispute resolution.” Ariz.R.Civ.P. 16(c)(ll). The committee comment to this 1991 amendment notes that “Rule 16(c)(ll) is intended by the Com-' mittee to be a strong suggestion that the court explore the possibility of alternative dispute resolution including binding and non-binding arbitration____” Rule 16(c)(ll), Ariz.R.Civ.P. comment (emphasis added).
Today’s decision sends a mixed message. In light of all of these developments, how can it be that an agreement to arbitrate “fell outside plaintiff’s reasonable expectations?” The court’s answer, Part III, ante, at 152, 840 P.2d at 1017, merely confuses the concept of a contract of adhesion with the doctrine of reasonable expectations. The court says it will enforce arbitration agreements “freely and fairly entered,” ante, at 153, 840 P.2d at 1018, and that “the document involved is a contract of adhesion.” Id. But the court’s own framework of analysis acknowledges that its “conclusion that the contract was one of adhesion is not, of itself, determinative of its enforceability.” Ante, at 151, 840 P.2d at 1016. It acknowledges that once it is determined that an adhesive contract ex*157ists, one looks to (1) reasonable expectations and (2) conscionability. Id. No one doubts that this was a contract of adhesion. And the court holds that because “the contract fell outside plaintiff’s reasonable expectations” it is unenforceable, and therefore it is not necessary “to determine whether the contract is also unconscionable.” Ante, at 152, 840 P.2d at 1017. Thus the court does not reach conscionability.
The only basis for the court’s decision is “reasonable expectations,” but words such as “freely and fairly entered,” or “contract of adhesion” are irrelevant to that inquiry. If it is not “free” it is a contract of adhesion. If it is “unfair” it is unconscionable. Nowhere does the court’s “Comment on The Dissent” provide the basis for its legal conclusion that this adhesive agreement to arbitrate fell outside of plaintiff’s reasonable expectations. In the end we are left to conclude that people reasonably expect litigation over alternative dispute resolution. For all these reasons, I dissent.
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. According to a national survey on American attitudes towards dispute resolution, 82% of the American public, once informed, is willing to use dispute resolution, particularly mediation and arbitration. NIDR Releases Findings of National Survey on Public Attitudes Towards DR, Forum, Summer 1992 at 26.

. Following these decisions, the California legislature adopted Cal.Civ.Proc.Code § 1295, which expressly regulates such provisions. California has acknowledged the validity of contracts in compliance with the statute even where the patient is illiterate and, as here, claims not to remember signing it. Bolanos v. Khalatian, 231 Cal.App.3d 1586, 283 Cal.Rptr. 209, 211 (1991).
Michigan has a statute similar to California’s, Mich.Stat.Ann. §§ 27A.5040-27A.5065, and its court has rejected arguments that arbitration agreements in compliance with the statute are adhesive, unconscionable, or deny people their rights to jury trials. Morris v. Metriyakool, 418 Mich. 423, 344 N.W.2d 736 (1984).

. In 1987 and 1988, in Maricopa County, there were 290 appeals from 2,945 terminated arbitration cases.