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Strand v. U.S. Bank National Association ND3/31/2005
valid and enforceable. The statute merely clarifies that amendment by written notice is allowed, and sets out the procedures for acceptance or rejection which must be abided with or the transaction will be unlawful. The statute does not address unconscionability, nor does it give credit card companies carte blanche to impose upon cardholders whatever terms they desire, regardless of how unfair, one- sided, or oppressive they may be.
[ ] Other courts considering similar arguments, that a finding of procedural unconscionability is precluded if the procedure employed was authorized by a statute, have concluded that the agreements are still subject to unconscionability analysis. See Shea v. Household Bank (SB), Nat'l Ass'n, 129 Cal. Rptr. 2d 387, 390-91 (Cal. Ct. App. 2003); Schmaltz v. Nissen, 431 N.W.2d 657, 662 (S.D. 1988). Under the Bank's theory it could use a bill stuffer to make any amendments it desired to the credit card agreement, including adding wholly new provisions which are substantively unconscionable, and although the Bank could not have enforced such provisions had they been included in the original agreement, they would now be insulated from unconscionability analysis by the statute. We refuse to sanction an interpretation of the statute and our law of unconscionability that would lead to such an absurd result.
[ ] We conclude the transaction in this case was procedurally unconscionable.
C.
[ ] The gravamen of Strand's claim that the "no class action" provision is substantively unconscionable is his assertion that he will be left without an effective remedy for the Bank's alleged wrongful conduct if the clause is enforced. Strand argues that, because his and other cardholders' individual damages are small, it is impractical to bring separate, individual arbitration proceedings for each claim, and no attorney will be willing to litigate such claims.
[ ] Substantive unconscionability focuses upon the harshness or one- sidedness of the contractual provision in question. Construction Assocs., 446 N.W.2d at 241. In Construction Assocs., at 243-44, this Court held that contractual provisions which limited or excluded the substantive remedies otherwise available at law and left the plaintiff without an effective remedy were substantively unconscionable.
[ ] Merely restricting the availability of a class action is not, by itself, a restriction on substantive remedies. The right to bring an action as a class action is purely a procedural right. Blaz v. Belfer, 368 F.3d 501, 504-05 (5th Cir. 2004); Johnson v. West Suburban Bank, 225 F.3d 366, 369 (3d Cir. 2000). A class action is not a substantive remedy. Blaz, at 505; Johnson, at 369. Thus, limitation of use of a class action or class arbitration does not prohibit any substantive remedy that would otherwise be available to Strand. The arbitration agreement between the parties specifically requires that the arbitrator "apply applicable substantive law." All substantive remedies available to Strand in a judicial action, including an award of attorney fees, would be available in arbitration.
[ ] Strand argues that no attorney will be willing to litigate these small claims on an individual basis, and that enforcement of the "no class action" provision would leave him and other cardholders without an effective remedy. Strand points to no empirical evidence that all attorneys would be unwilling to litigate these claims. Strand's attorney filed an affidavit stating that he would not accept individual cases involving the amounts at issue here. That is not, however, evidence that no attorney would be willing to accept such cases, particularly where attorney fees are available for
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