The Supreme Court of Tennessee reversed the lower courts’ rulings that a non-mutual arbitration provision in an installment contract on the sale of a manufactured home was unconscionable and unenforceable. In doing so, however, the court rejected the argument that the state court precedent on unconscionability of arbitration agreements was preempted by the FAA ala the U.S. Supreme Court’s Concepcion decision. Because the state court precedent did not adopt a per se rule that any degree of non-mutuality of remedies in an arbitration provision in an adhesion contract renders the provision unconscionable, the doctrine was not implicated by Concepcion and was not preempted by the FAA. Indeed, the court held, state law would determine unconscionability based on “all the facts and circumstances of a particular case.” The fact that the state law “makes mutuality of remedies an important consideration in determining unconscionability does not overly burden arbitration agreements, so long as all of the circumstances of the particular agreement are taken into account.” Berent v. CMH Homes, Inc., Case No. E2013-01214-SC-RLL-CV (Tenn. June 5, 2015).
This post written by Michael Wolgin.
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