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Strand v. U.S. Bank National Association ND3/31/2005
CERTIFIED QUESTIONS ANSWERED.
[ ] Invoking N.D.R.App.P. 47, the United States District Court for the Central District of California has certified the following questions to this Court:
1) Is a "no class action" provision in an arbitration agreement unconscionable under North Dakota contract law?
2) If yes, is the remainder of the arbitration agreement enforceable?
We conclude that, under the facts presented in the order certifying the questions, the no class action provision in the arbitration agreement is not unconscionable under North Dakota law.
I.
[ ] Dennis Strand, a resident of Oregon, was issued a credit card by U.S. Bank, National Association ND ("the Bank"). The credit card agreement states that it is governed by North Dakota law. In October 2001, the agreement between the parties was amended, including addition of a new provision for arbitration of disputes arising from the credit card agreement. That provision states, in pertinent part:
By requesting an Account from us and accepting this Agreement, you agree that if a dispute of any kind arises out of this Agreement, either you or we can choose to have that dispute resolved by binding arbitration. If arbitration is chosen by any party, neither you nor we will have the right to litigate that claim in court or to have a jury trial on that claim, or to engage in pre-arbitration discovery, except as provided for in the arbitration rules. In addition, you will not have the right to participate as a representative or member of any class of claimants pertaining to any claim subject to arbitration. . . .
Any claim, dispute or controversy (whether in contract, regulatory, tort, or otherwise, whether pre-existing, present or future and including constitutional, statutory, common law, intentional tort and equitable claims) arising from or relating to (a) the credit offered or provided to you, (b) the actions of you, us or third parties or (c) the validity of this arbitration provision (individually and collectively, "Claim") must, after an election by you or us, be resolved by binding arbitration in accordance with this arbitration provision and the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect when the Claim is filed . . . . There shall be no authority for any Claims to be arbitrated on a class action basis. An arbitration can only decide our or your Claim and may not consolidate or join the claims of other persons who may have similar claims. . . . This arbitration provision shall be governed by the Federal Arbitration Act, 9 U.S.C. ยงยง 1 through 16.
[ ] In February 2002, Strand brought an action against the Bank, on behalf of himself and all others similarly situated, in the United States District Court for the Central District of California. Strand contends he and other cardholders were wrongly charged excess finance charges and late fees as a result of the Bank's failure to credit payments on the dates they were received. Strand further argues that the "no class action" provision in the credit card agreement is unconscionable, but is severable from the rest of the arbitration provision, and seeks to proceed with arbitration on a class-wide basis. The federal district court has certified to this Court two questions: Whether a "no class action" provision in an arbitration agreement is unconscionable under North Dakota contract law and, if so, whether the remainder of the arbitration agreement is enforceable.
II.
[ ] Unconscionability is a doctrine which allows courts to deny enforcement of a contract because of procedural abuses arising out of the contract's formation and
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