O'Shea v. Direct Financial Solutions, Inc. - ED Pa. December 5, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1467P.pdf
The court held that the arbitration clause in a payday loan contract was not unconscionable, either procedurally or substantively, thus preventing the plaintiff from raising UDAP and related consumer claims in a judicial forum. The court found this result mandated by the Federal Arbitration Act, 9 USC sec. 1 et seq. Section 2 makes such a clause "valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the revocation of any contract." 9 USC, sec. 2 http://www.law.cornell.edu/uscode/html/uscode09/usc_sec_09_00000002----000-.html.
Unconscionability can be a ground for revocation, but a person challenging on this ground has the burden of showing that the provision is both procedurally and substantively unconscionable. Procedural unconscionability pertains to the process by which an agreement is reached and the form of an agreement, including the use of fine print or convoluted or unclear language, none of which was at issue here. Substantive unconscionability refers to terms that unreasonably favor one party, terms to which the unfavored party does not truly assent.
The Third Circuit has "repeatedly held that inequality in bargaining power, alone, is not a valid basis upon which to invalidate an arbitration agreement. Harris v. Green Tree Finance Corp., 183 F.3d, 173, 183 (3d Cir. 1999). The Harris court also held that mutuality of remedies - e.g., the ability of the lender but not the borrower to seek judicial enforcement - is not required of a valid arbitration clause. The instant court rejected the different reasoning in Bragg v. Linden Research Inc., 487 F.Supp. 2d 593 (ED Pa. 2007), which applied California law on unconscionability, not Pennsylvania law.
