by Brian Wolfman
In Pleasants v. American Express, No. 07-3235 (Sept. 8, 2008), the Eighth Circuit has upheld an adhesion contract requiring pre-dispute mandatory arbitration and banning class actions in arbitration. The case involved a dispute over pre-loaded store cards (or gift cards). Applying Missouri law on unconscionability, the Eighth Circuit held that the contract was not procedurally unconscionable because the relevant contractual provisions were conspicuous (although it appears that they would not have been seen by the consumer until after he or she had purchased the card) and was not substantively unconscionable because the contract did not waive the damages and fees available to consumers under applicable substantive law. The Eighth Circuit distinguished a Missouri Court of Appeals case finding a class action ban unconscionable (read the decision and decide for yourself whether the Missouri case was properly distinguished). The Eighth Circuit also noted that in deciding questions of state law it was not bound by the decisions of intermediate state appellate courts (as opposed to state high courts).
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