RECENT DEVELOPMENTS IN

MARK E. BUDNITZ

8 1999 Mark E. Budnitz

TABLE OF CONTENTS

I. Jurisdiction and Venue 2

II. Effect of Magnuson-Moss and state Lemon laws 3

III. Motions to Compel Arbitration 4

A. Cases Denying Motion to Compel 4

B. Grant of Motion to Compel Arbitration 6

IV. Change in Terms 9

V. McCarren-Ferguson 10

VI. Mutuality 10

VII. Class Actions 11

VIII. Unconscionability 13

A. Cases finding unconscionability 13

B. Cases finding no unconscionability 15

IX. Nonsignatories 17

X. The Arbitration Proceedings 19

XI. Judicial Review 20

XII. Bibliography 20

Jurisdiction and Venue

Transouth Financial Corp. v. Bell , 149 F.3d 1292 (11^th Cir. 1998)

Consumer filed a lawsuit in state court against defendants who included both foreign corporations and an Alabama resident corporation. Persons alleged to be agents of the foreign corporations also were sued. Consumer alleged that defendants engaged in various fraudulent misrepresentations, concealment of material facts, and negligence in hiring agents involved in consumer=s loans. Removal to federal court was precluded because there was no complete diversity of citizenship between plaintiff and all the state defendants, and there was no other independent basis for federal jurisdiction. Consequently, the foreign corporations filed an action in federal court seeking orders staying the state court suit and compelling the consumer to arbitrate pursuant to the FAA.

The district court dismissed the federal lawsuit, abstaining for reasons of comity and wise judicial administration. The court also found that the Anti-Injunction Act barred the federal court from litigating the case.

On appeal, the court found the district court had abused its discretion in abstaining. Rather than applying abstention rules directly to the case before it, the court found the facts were materially indistinguishable from those in First Franklin Fin. Corp v. McCollum, 144 F.3d 1362 (11^th Cir. 1998). In First Franklin, the court found there was no danger of piecemeal litigation because the only issue before the federal court was the arbitrability of the dispute. Second, the state court had not yet ruled on First Franklin=s motion to compel arbitration at the time the district decided to abstain. Therefore, nothing had happened in state court to weigh in favor of federal court deferral. Third, the weight of the law was against abstention because the FAA governs motions to compel arbitration. Finally, although the state court had greater ability to provide complete relief, that factor was not sufficient to outweigh the factors against abstention.

The court, however, agreed with the district court and the consumer that the federal Anti-Injunction Act prohibited the district court from enjoining the concurrent state court proceedings. The case involved the application of an exception under the Act which provides that a federal court is not prohibited from enjoining a state court proceeding where an injunction is necessary to aid the federal court=s jurisdiction. Following Eleventh Circuit precedent, the court held that this exception can apply in in personam actions. However, where there is concurrent jurisdiction arising out of the same transaction, as here, ordinarily neither forum should interfere with the other=s jurisdiction. In the present case an injunction was not necessary to prevent the state court from interfering with the federal court=s authority to decide the case. No court had found the underlying dispute arbitrable and compelled arbitration. However, if the district court does order arbitration, it might be appropriate to order a stay of the state court proceedings in order to prevent interference with the federal court=s ability to rule on the validity of the arbitration proceedings it compelled.

Effect of Magnuson-Moss and state Lemon laws

Southern Energy Homes v. Lee, No. 1970105 (Ala. 1999)

Court held that Magnuson-Moss Act prohibits arbitration clauses in a manufacturer=s written warranty and Act supersedes the FAA. The decision follows the reasoning of Wilson. See also Herron v. South Atlantic Manufactured Homes, 1999 Westlaw 6949 (Ala. 1999)(granting writ of mandamus directing trial court to vacate order compelling arbitration; court citing Southern Energy, Isbell and Wilson.

Wilson v. Waverlee Homes, 954 F. Supp. 1530 (M.D. Ala. 1997); aff=d without opinion, 127 F.3d 40 (11^th Cir. 1997)

Consumers sued manufacturer of mobile homes for violations of the Magnuson-Moss Act. The manufacturer provided the consumers with a written product warranty which contained no arbitration provision. There was an arbitration clause in the contract between the dealer and the consumers. The manufacturer sought to Apiggyback@ on the dealer=s arbitration clause. The court held that the arbitration clauses in the contracts before it were unenforceable because they provided for binding arbitration. In regard to written warranties, Magnuson-Moss guarantees consumers a judicial forum with one exception for Ainformal dispute settlement mechanisms@ which are non-binding and are merely a prerequisite to seeking relief in court, not a bar to the judicial forum. The court found support in the text of the Act, its legislative history, and FTC regulations. The court noted that the manufacturer would have violated the Act if its warranty contract with the consumer had contained a binding arbitration clause. And the court opined that allowing the manufacturer to use theories such as third party beneficiary and estoppel to take advantage of the arbitration clause in the contract between the seller and the consumer Awould be the complete and utter evisceration@ of the Act and lead to collusion between sellers and manufacturers. The court pointed out that it did not have before it the more fundamental issue of whether the FAA and arbitration agreements in general are unenforceable as to all claims based on the Act. See the Boyd case, infra, where the same court further commented on its decision in the instant case.

See also Ex parte Isbell v. Southern Energy Homes, 708 So.2d 571 (Ala. 1997) which in dicta agrees with Waverlee on the Magnuson-Moss issue.

Boyd v. Homes of Legend, 981 F. Supp. 1423 (M.D. Ala. 1997)

In Waverlee, supra, the nonsignatory manufacturer=s right to enforce an arbitration clause in a purchase contract was at issue, and the parties made no attempt to distinguish the treatment of written and non-written warranties under Magnuson-Moss. In contrast, the instant case involved a mobile home dealer who was a signatory to the purchase contract and who did not provide the consumers any written warranty. The issue was whether that dealer could enforce an arbitration clause under Magnuson-Moss. The court held that Waverlee did not extend to this case involving only non-written warranties. Therefore, Magnuson-Moss did not preclude the dealer from compelling arbitration of the breach of warranty claims against the dealer. The court reached this conclusion based on the text of the Act, the legislative history, case law involving comparable statutes, and a Federal Trade Commission statement.

The court acknowledged that under Gilmer, courts have the obligation not to enforce contracts which result from overwhelming economic power, and that Congress had been particularly concerned with unequal bargaining power when considering Magnuson-Moss. The court found, however, that Congress= intent was to provide statutory protection to alleviate that inequality only in regard to written warranties, not implied warranties which are not the product of the bargaining process, but rather the result of legislative and judicial processes.

The court noted that it was not faced with the difficult situation where the consumer has both written and non-written warranty claims and the issue is whether Magnuson-Moss restricts arbitration of the non-written as well as the written, particularly if both claims were intertwined.

Harrison v. Nissan Motor Corp., 111 F.3d 343 (3rd Cir. 1997)

Consumer requested arbitration pursuant to Pennsylvania=s Lemon law. When the defendant never responded, the consumer filed a suit in federal court based on diversity, alleging, among other things, violations of the lemon Law and Magnuson-Moss. Under the Lemon Law, the ADR procedure must comply with Magnuson-Moss= informal mechanism. The court determined that the essence of arbitration is that the parties arbitrate their dispute through to completion. In contrast, under the Lemon Law and Magnuson-Moss, the dissatisfied consumer has the right to go to court. Therefore, the dispute resolution procedure under these laws does not constitute Aarbitration@ which is governed by the FAA.

Motions to Compel Arbitration

A. Cases Denying Motion to Compel

Randolph v. Green Tree Financial Corp, 1999 Westlaw 412591, 1999 U.S. App. Lexis 13697 (11^th Cir. 1999)

Arbitration clause held unenforceable because it fails to provide minimum guarantees that consumer will not be saddled with prohibitive costs and therefore precluded from opportunity to vindicate statutory rights.

Knepp v. Credit Acceptance Corp., 1999 Westlaw 61694 (Bankr. N.D. Ala. 1999)

The court denied arbitration, finding there is an inherent conflict between the Bankruptcy Code and the FAA. Debtors in bankruptcy cannot afford arbitration proceedings and money the debtor would have to spend on arbitration will result in less money to fund the debtor=s confirmed plan and to pay creditors.

In the Matter of S&R Company of Kingston v. Latona Trucking, 159 F.3d 80 (2d Cir. 1998)

In a commercial case, court held that because of the parties= active participation in prior litigation on the merits of the dispute, it was proper for district court, rather than arbitrator, to decide whether parties had waived their right to arbitration. Second, the court here found the parties had waived their right. The court listed the relevant factors as (1) the amount of time between the commencement of litigation and the request for arbitration, (2) the amount of litigation which occurred, and (3) proof the opposing party was prejudiced, including proof the movant took advantage of pretrial discovery which would not have been available in arbitration. Finally, the court refused to enforce the AAA=s Ano waiver@ clause which was incorporated into the parties= agreement. (ANo judicial proceeding by a party relating to the subject matter of the arbitration shall be deemed a waiver of the party=s right to arbitrate.@) The court agreed with prior decisions interpreting that clause to do no more than permit the parties to seek provisional remedies or other judicial proceedings without affecting the agreement to arbitrate the underlying dispute.

Med Center Cars v. Smith, 1998 Westlaw 560255 (Ala. 1998)

Consumers, but not seller, signed Abuyer=s orders@ containing arbitration clauses. The seller=s name was printed on the buyer=s order. The buyer=s order also provided that the order was not valid unless accepted by the seller. Relying on prior Alabama law, the court held that the order was not enforceable. The purpose of a signature is to show mutuality and assent; lack of a signature shows lack of mutuality and assent. Although both the consumers and the seller signed a sales contract, that document did not contain an arbitration clause.

Sobremonte v. Superior Court of Los Angeles, 61 Cal. App. 4^th 980, 72 Cal. Rptr. 2d 43 (1998)

Consumers sued Bank of America National Trust & Savings for improper setoff against their accounts. (One of the consumers= Versatel bank cards was stolen, resulting in an overdraft and the bank=s subsequent setoff.) The bank filed a petition to compel arbitration. Consumers opposed the motion on two grounds. They contended that the arbitration was invalid and unenforceable because of lack of sufficient notice and mutual assent. In addition, they claimed the bank waived its right to compel arbitration. Reversing the lower court=s decision, the court found for the consumers based on the bank=s waiver. The court held that Ato properly invoke the right to arbitrate, a party must (1) timely raise the defense and take affirmative steps to implement the process, and (2) participate in conduct consistent with the intent to arbitrate the dispute.@

First, the bank unreasonably delayed its demand for arbitration. Although the bank had raised the arbitration issue in its answers to the first and second amended complaints, it did not take A>active steps=@ to secure arbitration. The bank had notice from the consumers long before the lawsuit that the consumers intended to pursue their dispute by legal means. After filing their answers, the bank did nothing to pursue their arbitration claim until 10 months after service of the complaint and 6 weeks before trial. During those 10 months, the bank actively litigated the case, expending resources of the court and the parties on various pleadings, court hearings, and discovery. The court inferred that the bank unreasonably delayed their motion to compel arbitration in order to take advantage of the wide discovery available through judicial proceedings. The court relied on Davis v. Continental Airlines, 59 Cal. App. 4th 205 (1997).

Crucial to the court=s finding of waiver was its determination that the consumers were prejudiced by the bank=s delay in seeking arbitration. They were prejudiced by having to spend substantial time and money to prepare for trial under circumstances which suggested that the bank delayed in order to gain the advantages of a judicial forum before demanding arbitration. Moreover, the court referred to the bank=s numerous tactics in court to limit its liability and frustrate the consumers= discovery. While arbitration is Athe preferred method@ of resolving disputes, its advantages of speed and low cost were no longer available to the consumers who had already spent so much time and money on the litigation. Finally, the court rejected the bank=s contention that they could not have moved to compel until the case against two nonsignatory defendants had been dismissed.

AJM Packaging Corp. v. Crossland Construction Co., 962 S.W.2d 906 (Mo. Ct. App. 1998)

This case involved commercial parties, not consumers, but is informative because it illustrates the importance of following trial and evidentiary rules. In addition, the case illustrates that, not only is it vital to draft clear and unambiguous arbitration agreements, but also it is essential that other provisions in the contract do not throw doubt upon the parties= intentions in regard to the arbitration provision.

The court upheld the trial court=s denial of a motion to compel arbitration on two grounds. First, the arbitration provision was in a separate document from the standard form agreement containing other terms of the agreement. The attorney for the movant never formally introduced the document containing the arbitration clause into evidence.

Second, even assuming the arbitration agreement had been properly introduced into evidence, the documents also contained a provision stating that reference to arbitration Ashall be deleted@ and all disputes were to be decided by the courts of Missouri. Since a party who had not agreed to arbitrate cannot be forced to do so, the court had to decide whether, under contract law, the contract should be construed to show an agreement to arbitrate. Given the ambiguity, the court resorted to the rule that a contract should be construed as a whole, giving effect to every part, in order to determine the true intent of the parties. The court held that the contract could be construed to mean that the parties meant to supplant the arbitration provision. Such a construction gave >effect= to both provisions at issue by recognizing the arbitration clause, but construing the other provision as the one the parties meant to be binding.

Hurley State Bank v. French, No.97-C-1645-W (N.D. Ala. Sept. 10, 1997), appeal pending.

An arbitration provision was added to the consumer=s cardholder agreement after execution of the original credit card agreement through a change in terms procedure. The court denied the petition to compel arbitration, finding that the bank failed to show that the consumer Aspecifically agreed to arbitrate the issues in this cause....@

Pagter v. First Alliance Mortgage, No. CV766996 (Cal. Super. Ct. Dec. 12, 1997)

The consumers were senior citizens, the husband suffering from end-stage renal disease which necessitated his being connected to a dialysis machine for ten hours each day. The consumers alleged that the defendant=s salesman, after spending considerable time convincing them to take out a loan, then rushed them through the execution of the documents, never disclosing that an arbitration agreement was included. The court found that the arbitration agreement Awas concealed from the [consumers] through the defendants [sic] fraud.@ The court denied the defendants petition to compel arbitration.

B. Grant of Motion to Compel Arbitration

Thompson v. Skipper Real Estate Co., 1999 Westlaw 14696 (Ala. 1999)

Even though a real estate sale was intrastate in nature, it did have an effect on the provision of services in interstate commerce because the consumers received financing from a company headquartered in another state, their title insurance from an out-of-state corporation, and their homeowner=s insurance from a state operating out of a third state.

The company did not waive their right to arbitrate even though the company waited until eleven months after the consumers filed a lawsuit to move to arbitrate. Eight of those months were spent battling over the company=s effort to change the action to another venue. The court held that this did not amount to substantial involvement in the litigation process which amounted to waiver of the right to arbitrate, and that the defendant had the right to establish in the courts the proper venue for the lawsuit before it moved to compel arbitration. The court pointed out that there would not have been an eleven month delay if the consumers had not opposed the company=s motion to transfer the action to another county. Finally, the court ruled, without giving reasons, that the consumers would not suffer substantial prejudice by having the dispute sent to arbitration.

Vaule Auto Credit v. Talley, 1999 Westlaw 6994 (Ala. 1999)

A minor may disavow the entire contract, but may not disavow only the arbitration provision and ratify the remainder of the contract.

In re OakwoodMobile Homes, 1999 Westlaw 64252 (Tex. 1999)

Company did not waive its right to demand arbitration where the consumers wrote to the company twice requesting arbitration, the company never responded, and the consumers then filed a lawsuit. The court stated that the burden was not on the company to initiate arbitration or to assist the consumers in starting the process. If the consumers wanted to arbitrate a dispute, the burden was on them to do so.

Knepp v. Credit Acceptance Corp, 1999 Westlaw 61694 (Bankr. N.D. Ala. 1999)

The court held there was no agreement to arbitrate where the arbitration provision was included in the buyer=s order. The buyer=s order was not signed by both parties even though it contains the phrase Athe undersigned acknowledges and agrees@ and two separate lines for signatures. The court concluded that without both signatures there was no agreement to arbitrate. In addition, the buyer=s order was not attached to the sales contract or executed contemporaneously, and the sales contract did not refer to the buyer=s order. The Aseparability doctrine@ requires considering the arbitration clause as a separate contract. Because the seller never signed the buyer=s order, there was a lack of mutuality of assent, and consequently no valid arbitration agreement .

Nationwide v. Dyer, 969 S.W.2d 518 (Tex. Ct. App. 1998)

Husband and wife purchased a mobile home from Nationwide. Only the husband signed the retail installment contract and an arbitration agreement in the form of an addendum. Reversing the trial court=s denial of the creditor=s motion to compel, the court held that the wife, as a third party beneficiary, was bound by the arbitration agreement. In addition, because her claims of breach of contract and express warranties were so closely connected to her husband=s, she was bound by the arbitration agreement. The court also rejected the wife=s claim that the arbitration provision was invalid absent her signature because the mobile home was part of the couple=s homestead. Lastly, the court held that the creditor did not waive its right to enforce the arbitration because of any delay on its part. Under Texas law, delay alone is not sufficient to waive sch a right. Compare Sobremonte, supra.

McCarthy v. Providential Corp., 122 F.3d 1242 (9th Cir. 1997)

Senior citizen homeowners brought action, and district court granted sellers= motion to compel arbitration. The Ninth Circuit dismissed consumers= appeal because an order compelling arbitration is interlocutory, not a final decision. In doing so, the court followed the Eighth Circuit decision in Gammaro v. Thorp Consumer Discount Co., 15 F.3d 93 (8th Cir. 1994). In a dissent, one judge would distinguish the usual case in which the court stays the action pending the outcome of arbitration, from this case, in which the court disposed of all the issues before it along with its order compelling arbitration.

AllStar Homes v. Waters, 711 So.2d 924 (Ala. 1997)

The arbitration agreement in this case involving the consumer=s purchase of a mobile home provided that A[a]ll disputes...arising from or relating to...the validity of the arbitration clause...shall be resolved by...arbitration.@ The dealer argued that under this language the parties agreed to arbitrate the initial issue of arbitrability. The court declared:

AThe FAA provides no mechanism whereby the parties may wholly circumvent the court=s authority to determine whether the parties have agreed to waive their right to have their disputes heard in a judicial forum. Although the United States Supreme Court has signaled that it is possible for parties to agree to arbitrate at least some issues of arbitrability, it has clearly held that the preliminary decision as to whether there is any such agreement is for the courts to make.@

Therefore, the court held it was proper for the trial court to determine whether there was Aclear and unmistakable evidence@ that the parties had actually voluntarily agreed to submit the issue of arbitrability to the arbitrator, and the related issues of whether the agreement was a contract of adhesion, fraudulently induced, or otherwise revocable. The court also stated that in determining these issues, the trial court is not permitted to entertain a presumption in favor of arbitration.

Fidelity National Title Ins. Co. v. Jericho Management, 1997 Westlaw 564473 (Ala. 1997); rev=d and remanded, 722 So.2d 740 Ala. 1998)

The arbitration clause included the phrase A[u]nless prohibited by applicable law....@ Applicable Alabama law prohibited arbitration. The title insurance company argued that the phrase applied equally to the FAA and all other laws, and the FAA preempts state law, thereby prohibiting enforcement of the state law. The court rejected that argument, denying the motion to compel. The court applied traditional rules of construction which required giving meaning and effect to the terms of the contract. Refusing to give effect to state law would render the phrase meaningless. In addition, the court feared that refusing to give effect to the phrase would surprise unsuspecting purchasers of land title policies who would reasonably assume the phrase meant that state law prohibiting predispute arbitration agreements applied.

Ryan Warranty Services v. Welch, 694 So.2d 1271 (Ala. 1997)

The arbitration agreement provided: AIn the event of a disagreement between you and us concerning costs, either of us may make a written demand for arbitration.@ The agreement defined costs as the usual and fair charges for parts and labor. The consumer sued alleging breach of contract, bad faith, and fraud. The court upheld the lower court=s finding that the parties intended the clause to be limited only to the issue of costs, and did not require arbitration of the consumer=s claims.

Hill v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997)

Consumer who ordered computer over the phone is bound by arbitration contract even though contract was not delivered until carton was shipped to consumer=s home, where consumer had 30 days to return the computer if consumer did not want to be bound by terms of contract.

Change in Terms

Badie v. Bank of America, 79 Cal. Rptr.2d 273 (Cal. Ct. App. 1998), review & request to depublish denied (Cal. Feb. 1999).

Bank of America sent credit card customers bill stuffers informing them that henceforth disputes would be decided by arbitration Aor by reference.@ The original account agreements contained a statement that the bank could change terms or add new terms. The court began its analysis by applying ordinary principles of contract formation and interpretation. Since arbitration is a matter of contract, it was necessary to determine whether both parties had agreed to arbitrate. The trial court had glossed over this issue, assuming the arbitration clause was valid because California law favors arbitration. In ascertaining the intent of the parties, the court was impressed by the fact that although the change in terms provision was broadly worded and contained no limitation, all the terms included in the original agreement pertained to the consumer/creditor relationship. Matters related to dispute resolution were not mentioned. Therefore, nothing in the original agreement alerted consumers of the possibility that the bank might add the arbitration provision. Furthermore, if any uncertainty remained as to the meaning of the contract=s terms, California law requires that they be construed against the party who wrote the contract, especially when it is a contract of adhesion, as here. In addition, California law requires waiver of the right to a jury trial guaranteed under the state=s constitution to be unambiguous and unequivocal. The court found the language of the bill stuffer was potentially misleading. Moreover, it was designed to Adownplay the true significance@ of the arbitration provision and reduce the likelihood consumers would notice, understand, and object to the change in terms.

Hurley State Bank v. French, No.97-C-1645-W (N.D. Ala. Sept. 10, 1997), appeal pending

Court refused to compel arbitration where arbitration provision was added to consumer=s cardholder agreement through a change in terms procedure. The court was influenced by the fact that the consumer had not signed any arbitration agreement. The court held that the bank had failed to show that the consumer Aspecifically agreed to arbitrate the issues in this case.@

Perry v. Beneficial National Bank USA, No. CV 97-218 (Ala. Cir. Ct. May, 19, 1998)

The credit card agreement did not include an arbitration provision. However, that original contract between the consumer and Rhodes Furniture did provide that the agreement could be unilaterally changed at any time as long as the card issuer provided notice to the cardholder. When Beneficial purchased the account, it added the arbitration clause and informed consumers. The court found the change in terms enforceable and granted the motion to compel arbitration. See also Perry, 1998 Westlaw 279174 (Ala. Cir. Ct. May 15, 1998)

Stiles v. Home Cable Concepts, 994 F. Supp. 1410 (M.D. Ala. 1998)

The arbitration provision was added through a change of terms notice. The court rejected the consumer=s argument that it was not enforceable because the consumer never signed the arbitration provision. Although Alabama law requires a contract to be signed, it does not require that every provision, including later amendments, be signed. The consumer assented to the contract as a whole, and that contract provided that its terms could be changed unilaterally. Furthermore, Utah law governed the cardholder agreement, and the contract as amended was enforceable under that state=s law as well.

McCarren-Ferguson

Knepp v. Credit Acceptance Corp., 1999 Westlaw 61694 (Bankr. N.D. Ala. 1999)

Court held the FAA impaired Alabama=s insurance statutes.

State of Alabama on the relation of Smith v. DeBellis, No.CV-98-____ (Circuit Ct. Ala. ) Resident of Alabama has sued the Commissioner of the Alabama Insurance Department. The consumer alleges that since Congress has reserved the regulation of insurance to the states, Alabama law, and not the FAA, applies to the business of insurance. Furthermore, the Alabama Code provides that all contracts of insurance applied for in the state are subject to state law. Therefore, Alabama=s anti-arbitration statute applies to insurance contracts. The Complaint further alleges that the Insurance Commissioner violated the anti-arbitration statute when he approved insurance policies containing arbitration clauses. In addition, the Commissioner allegedly has issued guidelines for the approval of arbitration provisions in insurance contracts, but has held no public hearings on the inclusion of arbitration clauses, nor notified any policyholders of his actions. For relief, the consumer requests a court order directing the Department of Insurance to withdraw all arbitration clauses which it has allowed, and ordering the Department and Commissioner to no longer allow arbitration clauses. Finally, the Complaint asks for a declaratory judgment that the arbitration clauses are null and void.

Clayton v. Woodmen of the World Life Ins. Soc., 981 F. Supp. 1447 (M.D. Ala. 1997)

Court held that McCarran-Ferguson does not preclude application of the FAA. Alabama law prohibits the enforceability of pre-dispute arbitration agreements. That law, however, applies to all contracts, not only insurance contracts. The McCarran-Ferguson Act precludes application of the FAA only if the FAA would invalidate, impair, or supersede a state law which regulates the business of insurance. Because the Alabama law applies to all contract disputes, it is not a state statute regulating the business of insurance.

Mutuality

Harris v. Green Tree Financial Corp., 1999 Westlaw 445642 (3^rd Cir. 1999).

Consumers alleged they were victims of deceptive practices in regard to a home improvement financing scheme in which they were fraudulently induced to obtain home equity loans to finance sub-standard repairs. Consumers attacked the arbitration clause as unconscionable and directly contradicting another clause in the contract providing that the borrower could sue to enforce the contract. The court reversed the trial court which had found a lack of mutuality. The Third Circuit ruled that there is no requirement of complete mutuality as a matter of federal law or a requirement of equivalency of obligation. The court read Pennsylvania case law as holding that as long as there is consideration, the mutuality of obligation is present.

See Stirlen v. Supercuts, 51 Cal. App. 4th 1519 (Ct. App. 1997)(employment case in which court found agreement Aegregiously one-sided@ because it was binding only on the employee and required relinquishing punitive damages and relief under state and federal civil rights laws).

Lackey v. Green Tree Financial Corp., 330 S.Caro. 388, 498 S.E.2d 898 (So. Caro. App. 1998)

Court rejected the claim that arbitration agreement was unconscionable because it lacked mutuality of remedy where the lender was allowed to use the judicial forum to foreclose on the collateral. The court held that under the FAA it could not assume that the arbitration forum to which the consumer was confined was less beneficial than the judicial forum unless the consumer could prove he or she had been prejudiced by arbitration.

Goodwin v. Ford Motor Credit Co., 970 F. Supp. 1007 (M.D. Ala. 1997)

Court found the arbitration agreement was not void for lack of mutuality. The court followed a comment in the Restatement of Contracts which stated Athe law does not require that the parties have similar remedies in case of breach, and the fact that specific performance or an injunction is not available to one party is not sufficient reason for refusing it to the other party.@

Class Actions

Blue Cross of California v. Superior Court, 78 Cal. Rptr.2d 779 (Cal. Ct. App. 1998)

Consumers sued Blue Cross for selling and administering health plans which allegedly violate laws related to pre-existing condition and other exclusions. The arbitration agreement between the parties was silent on the issue of classwide arbitration. California case law, however, expressly permits such arbitration. The court held that under these circumstances, an order compelling classwide arbitration does not contradict either the policy behind the FAA and or the terms of the arbitration contract. Furthermore, the California rule is not preempted by section 4 of the FAA. Blue Cross argued that the parties agreed to individual arbitration pursuant to the rules of the AAA. The court opined in dicta that, should a class be certified, a court nevertheless could order classwide arbitration.

Navarro-Rice v. First USA Bank, Civil No. 97009-06901 (Or. Cir. Ct 1998)

The consumer filed a class action alleging the bank=s credit card agreement entitled consumers to a fixed rate, but the rate was unilaterally increased to a variable rate over 20%. After the class action was filed, the bank sent customers a notice stating that, unless they closed their accounts by December 30, 1997, their cardholder agreement would be amended to require arbitration. Arbitration under the amendment would cover all claims Anow in existence or that may arise in the future.@ In regard to class actions, claims advanced in those cases would be exempt from the arbitration requirement only if they Ahave been finally certified as class actions and ...notice of class membership has been given as directed by the court before@ the effective date of the arbitration agreement. Because the class had not been certified as of December 30, 1997, the members of the class were not exempted and were subject to arbitration unless they closed their accounts before the end of the year.

Consumers sought a preliminary injunction to maintain the status quo and protect the class members by prohibiting the bank from enforcing the arbitration agreement with the plaintiff or potential class members in regard to issues raised by the complaint. The court entered an order restraining the bank from enforcing the arbitration provision as to the plaintiff and the potential class.

Bazzle v. Green Tree Financial Corp., No. 97-CP-18-258 (So. Caro. Ct. App. March 16, 1998)

Consumers attacked the arbitration provision because it failed to notify them of their right to select a closing attorney and an insurance broker as required by the state Consumer Protection Code. In addition, the consumers alleged the lender violated state law (and an Attorney General letter) by preparing closing documents without legal counsel. The court certified a consumer class consisting of persons who obtained financing on home improvement contracts secured by real property mortgages from dealers who assigned them to Green Tree. The court also granted the lender=s motion to compel arbitration. The court then stated: AIn the event a foreclosure action is filed, the prosecution of the foreclosure is hereby stayed. This order applies to all members of plaintiffs= class who elect to be a part of this action.@

The lender moved for reconsideration, contending that class arbitration is not authorized either under the agreement or under the FAA. It argued that arbitration and class certification are mutually exclusive unless the agreement permits class arbitration. The lender claimed the agreement did not specifically provide for class arbitration, and an additional term allowing class arbitration should not be implied. The consumer alleged the broad language of the arbitration provision did not restrict class arbitration.

The court denied the motion for reconsideration, holding: AThe arbitration provision in the contract...is so broad that one can easily infer that both parties intended to include class arbitration.@ The court was influenced by its finding that the agreement was ambiguous, the lender drafted the agreement, the consumers had to sign in order to obtain a loan, consumers had no opportunity to negotiate terms, and the lender deals with unsophisticated borrowers.

Med Center Cars v. Smith 1998 Westlaw 560255 (Ala. 1998)

Court refuses to permit classwide arbitration where arbitration agreement did not provide for such arbitration.

Perry v. Beneficial National Bank, No, CV 97-218 (Ala. Cir. Ct. May, 18, 1998)

The court granted a motion to compel arbitration of the case brought by the named plaintiff. The court then went on to state: AThe court is unaware of any provision which provides for arbitration of a class. However, the court is of the opinion that class allegations will not defeat an arbitration. If there is a valid arbitration agreement as to an individual plaintiff that plaintiff would be taken out of the class and would have to submit to arbitration. Consequently, that person could not adequately represent the class.@ See also Perry, 1998 Westlaw 279174 (Ala. Cir. Ct. May 15, 1998)

Randolph v. Green Tree Financial Corp., 991 F. Supp. 1410 (M.D. Ala. 1997)

The class action provisions of TILA do not preclude requiring arbitration. Class actions are procedural mechanisms and do not confer statutory rights.

Unconscionability

A. Cases finding unconscionability

Knepp v. Credit Acceptance Corp., 1999 Westlaw 61694 (Bankr. N.D. Ala. 1999)

The court found an arbitration clause unconscionable by applying the four factors Alabama courts consider in unconscionability cases. First, there was no meaningful choice. The court found that increased use of the clauses in industries such as automobile sales leaves consumers with little choice if they need to buy this type of goods. In addition, the court found the terms unreasonably favorable to one party because they require consumers to abandon their right to the judicial process by means of a standard form contract under circumstances where there is not a knowing, voluntary and informed waiver of legal rights. Third, there was unequal bargaining power and unequal expertise which was particularly crucial since the court found that automobiles are a necessity. Finally, the court found the terms were oppressive for this debtor in bankruptcy. The cost of arbitration is high whereas the judicial process is free. Moreover, this debtor could not afford to pay those costs because all of his disposable income was being spent funding his confirmed Chapter 13 plan.

Arnold v. United Companies Lending Corp. , 1998 Westlaw 865105 (W. Va. 1998)

A loan broker solicited the elderly consumers for a loan. The arbitration provision stated that the lender could seek judicial fora in order to collect debt or to foreclose, to seek a deficiency judgment or any comparable procedures through which the lender could acquire title to secured property. In finding the provision unconscionable, the court applied the West Virginia Consumer Credit and Protection Act which contains an unconscionability provision similar to the Uniform Consumer Credit Code. The court focused on the relative positions of the parties, the adequacy of the bargaining position, the meaningful alternative available to the consumers, and the existence of unfair terms. The court found the relative positions of the parties was A>grossly unequal.=@ There was no comparable, meaningful alternative available to the consumers. Furthermore, their bargaining position was inadequate. AGiven the nature of this arbitration agreement, combined with the great disparity in bargaining power, one can safely infer that the terms were not bargained for and that allowing such a one-sided agreement to stand would unfairly defeat the [consumers=] legitimate expectations.@ Finally, the terms of the agreement were A>unreasonably favorable=@ to the lender, preserving their right to court access while denying such access to the consumers. The court found this A>is inherently inequitable and unconscionable because in a way it nullifies all the other provisions of the contract.=@

Williams v. Aetna Finance Co., 83 Ohio St.3d 464, 700 N.E.2d 859 (1998)

ITT Financial Services conspired with a home equity pitchman to defraud consumer to providing pitchman access to loan proceeds so he could further his fraudulent home repair business. Court declared that in essence trial court had found the arbitration clause in the loan agreement the parties executed was unconscionable. Court agreed with that assessment, expressing doubt there was any true agreement to submit to arbitration. The court noted the similarities between the instant case=s facts and arbitration agreement and those in Patterson v. ITT Consumer Finance Corp., 18 Cal. Rptr.2d 563 (Cal. App. 1993) in which the court found the arbitration provision unconscionable. In light of ITT=s conduct, the court upheld the punitive damages award of $1.5 million even though the consumer was awarded only $15,000 in compensatory damages.

Brower v. Gateway 2000, 246 A.D.2d 246, 676 N.Y.S.2d 569 (1998)

Consumers purchased computers and software by telephone or mail orders. A written agreement containing an arbitration provision was sent to consumers along with the ordered goods. The arbitration clause provided that arbitration would be conducted in accordance with the rules of the International Chamber of Commerce, that the arbitration proceeding would take place in Chicago, and would be decided by a sole arbitrator. The rules of the ICC provided that a consumer with a claim is required to pay an advance fee of $4,000; $2,000 of this fee would not be refunded, even if the consumer prevailed. (The court noted that most Gateway products cost less than $4,000.) The rules applied a Aloser pays@ requirement in which the consumer would have to pay Gateway=s legal fees if the consumer lost the arbitration. All correspondence had to be sent to France. The court rejected the consumer=s contention that the arbitration clause was unenforceable as a contract of adhesion. The agreement provided that the consumer could return the goods within 30 days; therefore, if the consumer did not want to be bound by the arbitration clause, he could return the goods and buy the goods elsewhere. The court also relied, in part, on the 30 day return provision in finding there was no procedural unconscionability. However, the court found substantive unconscionability in the excessive costs imposed on consumers which resulted in consumers, as a practical matter, having no available forum. Moreover, the court held that substantive unconscionability alone may be sufficient under New York law. The court therefore vacated the portion of the arbitration agreement which required arbitration before the ICC and remanded the case in order to permit the parties to seek appointment of an arbitrator pursuant to the FAA.

Myers v. Terminex Int=l, 91 Ohio Misc. 2d 41, 697 N.E.2d 277 (Ohio Ct. Comm. Pleas 1998)

The court found unconscionable and unenforceable an arbitration clause because of the amount charged consumers in the form of a nonrefundable filing fee. The amount of the fee was not disclosed to the consumer in the agreement and exceeded the amount she paid on the contract for services. The court found that the clause was A>so one-sided as to oppress or unfairly surprise=@ the consumer.

Hong v. First Alliance Mortgage Co., No. 784938-3 (Cal. Super. Ct. Dec. 3, 1997)

The court found the arbitration contract was a contract of adhesion. Furthermore, the court found that there was oppression because of the vast inequality of bargaining power which resulted in no negotiation and the absence of meaningful choice. There also was surprise because of the process used in obtaining signatures to the arbitration agreement. The consumers were not afforded a reasonable opportunity to read the agreement and discover the disparity of obligations. The court also noted that the lender had not previously disclosed, much less discussed, the arbitration portion of the Ablizzard of documents.@ The consumers were not given a copy of the arbitration agreement after they signed it. Because the agreement permitted the lender to foreclose judicially or nonjudicially, obtain an injunction against waste, bring actions for a receiver, etc., while denying the consumer the right to judicial remedies for any reason, the court held the terms of the agreement were substantively unconscionable.

B. Cases finding no unconscionability

Harris v. Green Tree Financial Corp., 1999 Westlaw 445642 (3^rd Cir. 1999).

Court found no procedural unconscionability despite arbitration clause being in small print on back of contract and clause did not appear at all in work orders consumers were required to sign. The court held there was no substantive unconscionability despite the fact that only the company could litigate disputes. The court regarded this as overlapping the consumers= claim there was no mutuality, a claim the court rejected.

Ex Parte Napier v. Manning, 723 So.2d 49 (Ala. 1998)

Consumer presented evidence that she was 77 years old, never completed high school, had poor eyesight, had difficulty reading, and could not read small print. The court, however, found the consumer had not met its burden of proving unconscionability. The court pointed out that the consumer presented no proof that her request for assistance after she notified defendant she could not see or understand was refused, that she was unable to obtain the product (a mobile home and insurance)from another source without having to sign an arbitration provision, or that arbitration is oppressive or unfair.

Lackey v. Green Tree Financial Corp., 330 S. Caro. 388, 498 S.E.2d 898 (S. Caro. Ct. App. 1998)

The court agreed with the trial court that the arbitration provision was a take-it-or leave-it adhesion contract. While a finding that the contract was adhesive is the beginning point in the analysis, that did not make it unconscionable. Because South Carolina courts have not thoroughly considered unconscionability in the context of arbitration contracts, the court followed Goodwin v. Ford Motor Credit. See infra.

The trial court found the arbitration provision unconscionable on three grounds, all of which the court of appeals rejected. The trial court objected to the agreement=s failure to inform consumers of their right to have an attorney at the loan closing as required by the state=s Consumer Protection Code. The appellate court found it was not clear that this section of the Code applied to the instant transaction. In addition, state case law did not clearly make a contract unenforceable where it prevents a party from consulting a lawyer. Moreover, nothing in the arbitration agreement prevented the consumers from obtaining counsel.

Second, the trial court objected to a clause in the arbitration agreement stating that Green Tree was to select the arbitrator, but the consumer had the right to veto that choice. The trial court opined that the veto was a A>hollow right.=@ The court on appeal found the veto power was significant; it meant that if the consumer exercised the veto, under the FAA, the court would select the arbitrator. This process ensured the appointment of a neutral arbitrator.

Third, according to the trial court the contract was unconscionable because it lacked mutuality since the lender could use a judicial forum to foreclose. The court of appeals found there was mutuality of obligation because consideration flowed to each party. There also was mutuality of remedy. Under the agreement, if the lender brought an action in court, any consumer counterclaim was subject to arbitration. The court interpreted the FAA as precluding the court from viewing arbitration as inherently less beneficial than the judicial forum. Therefore, unless the consumers could prove that they would be prejudiced by arbitration, there was no unconscionability due to lack of mutuality of remedy.

Roberson v. The Money Tree, 954 F. Supp. 1519 (M.D. Ala. 1997)

Consumers sued a finance company and two insurance companies for misrepresenting to consumers that they were required to purchase credit insurance as a condition to receiving a loan. On a motion to compel arbitration, the court refused to find the arbitration clause unconscionable. The consumers failed (1) to prove that arbitration deprived them of remedies they would have in a judicial proceeding, (2) to show the arbitration clause was being used to waive the consumers= rights to sue for intentional torts, or (3) to demonstrate that the terms of the clause bore no reasonable relationship to business risks.

See Goodwin v. Ford Motor Credit Co., 970 F. Supp.1007 (M.D. Ala. 1997)(relying on Roberson, court finds consumers have not presented proof of unconscionability).

But see Harris v.Green Tree Financial Corp, supra. (arbitration clause unconscionable where only creditor had option to seek judicial relief).

Nonsignatories

Med Center Cars v. Smith, 1998 Westlaw 560255 (Ala. 1998)

Consumers filed a class action alleging fraud in connection with the financing of automobile extended service contracts as part of the purchase of the automobiles without including the cost of the contracts in the finance charge section of the sales documents. The complaint included allegations of conspiracy against nonsignatories. The nonsignatories claimed that these conspiracy allegations provided the necessary connection and commonality between the signatories and the nonsignatories. The court held that the arbitration clauses were not broad enough to include the claims against the nonsignatories. They were limited to disputes between the buyer and seller only, and the nonsignatories were not sellers under the agreement.

Wilson v. Waverlee Homes, 954 F. Supp. 1530 (M.D. Ala. 1997); aff=d without opinion, 127 F.3d 40 (11^th Cir. 1997)

Consumers entered into installment sales and financing contracts for the sale of mobile homes which contained arbitration clauses. Consumers sued the manufacturer which was not a party to those contracts. Although acknowledging that there are exceptions, the court found the general rule is that one that is not a party to a contract cannot compel arbitration. Among exceptions are third party beneficiaries where the parties to the contract intended to benefit the third party. In addition, nonsignatories may be bound to arbitration contracts under principles of agency. Where it is the nonsignatory who wants to take advantage of the arbitration contract, equitable estoppel may permit it to do so where the claims against the nonsignatory are intertwined with the underlying contract obligation. Here, the consumers sued under their warranty agreement with the manufacturer. Although the manufacturer and the defendant seller had Acommon and parallel duties@ to the consumer, and could be sued on the same tort theory, that was not enough to invoke equitable estoppel.

Boyd v. Homes of Legend, 981 F. Supp. 1423 (M.D. Ala. 1997)

Manufacturer of mobile homes sought to compel arbitration by relying on arbitration clause in contract between consumer and dealer. The court held that the manufacturer had not proven third party beneficiary status. The manufacturer argued that the phrase AAll disputes...relating to this Contract or the parties thereto....@ was broad enough to encompass it. The court rejected this contention, finding that the contract was Aexpressly and unambiguously@ limited to the dealer and the consumer. The court also rejected arguments that there was an agency relationship between the manufacturer and dealer and the manufacturer=s reliance on equitable estoppel.

Ex parte Isbell, 708 So.2d 571 (Ala. 1997)

The arbitration clause between the consumer and the mobile home dealer covered A[a]ll disputes, claims or controversies arising from or relating to this Contract or the relationships which result from this contract.@ The court held that the language was not broad enough to allow the manufacturer to compel arbitration. The court was influenced by another provision which stated that the arbitration clause applied exclusively to buyers, the retailer and the financing institution, all of whom signed the purchase contract. Furthermore, the claims against the manufacturer had nothing to do with the terms and conditions in the contract with the dealer. Finally, the manufacturer was not entitled to rely on equitable estoppel since its warranty stated that it was not liable for any agreement made by the dealer.

Ex Parte Napier v. Manning, 723 So.2d 49 (Ala. 1998)

Consumers purchased mobile home, executing a retail installment contract containing an arbitration provision. In addition, they were required to buy an insurance policy. The court held the arbitration provision was broad enough to cover the consumers= claims against the insurance company. The insurance coverage for potential physical damage to the mobile home was an Aindispensable element@ of the contract. Without that insurance, Green Tree Financial would have refused to provide financing. In addition, the consumers= claims against the nonsignatory insurance company was intertwined with claims against signatories. The consumers claimed the insurance was forced placed insurance, misrepresentations had been made, and kickbacks were paid. Finally, the consumers alleged there was a conspiracy and the insurance company was part of the conspiracy. The court distinguished the facts from those in Med Center, supra.

Roberson v. The Money Tree, 954 F. Supp. 1519 (M.D. Ala. 1997)

Consumers signed an arbitration contract with finance company. Consumers sued both finance company and credit insurance company, alleging persons serving as agents of both companies misrepresented that purchase of credit insurance was a requirement for obtaining a loan. The court held that the nonsignatory insurance company could compel the consumers to resolve the dispute only pursuant to the arbitration clause where the consumers= claims against both defendants were closely intertwined and arose in connection with the same loan transaction. The consumers= complaints implicated all the defendants inseparably.

Goodwin v. Ford Motor Co., 970 F. Supp. 1007 (M.D. Ala. 1997)

The court followed the approach taken in the Roberson case. The consumers were equitably estopped from preventing assignee FMMC from enforcing arbitration contracts because the claims they asserted against the assignee were Ainextricably bound up with obligations created by and deriving from the execution@ of the installment sales contracts.

Ex parte Dickinson v. Chris Myers Pontiac-Nissan-GMC, 711 So.2d 984 (Ala. 1998)

Consumers, husband and wife, signed a retail installment sales contract when they purchased their automobile. It did not contain an arbitration clause. The Buyer=s Order, however, did contain the clause, but only the husband signed that document. The dealer tried to compel the non-signatory wife to arbitrate. The court distinguished cases where a signatory tries to avoid arbitrating with a non-signatory and the issues are intertwined with issues involving the signatories. Since arbitration is Astrictly a matter of contract,@ and the wife never signed the contract, she was not bound. The court did not give weight to the fact the car was to be jointly owned by the husband and wife. A dissenting opinion found the relationship sufficiently close and her claims so intertwined with the underlying contract obligations that the non-signatory should be bound.

Grundstad v. Ritt, 106 F3d 210 (7th Cir. 1997)

In a commercial case involving a non-competition agreement, the court reversed the district court and held a guarantor was not compelled to arbitrate where the guarantor was not a signatory to the contract containing the arbitration clause. In this case, the guaranty appeared immediately beneath the signature line of the agreement. The guaranty provided that the guarantor guaranteed Aall of the provisions of the within Agreement, and especially the performance of Atlantic hereunder.@ The court held that language, Astanding alone, does not unambiguously express [the guarantor=s] intent to be personally bound by the arbitration clause within the Agreement. Nowhere within the document does the guaranty even refer to any undertaking by the guarantors to be bound personally to arbitrate disputes. The guaranty simply states that [the guarantors] >hereby guarantee= the Agreement.@ The court distinguished cases where the guaranty explicitly incorporates the underlying agreement by reference. A mere reference to the main contract, however, is not sufficient to establish consent.

Prudential Ins. Co. v. Schulte, 133 F.3d 225 (3d Cir. 1998)

Former sales agents for insurance company sued the company for wrongful firing and company moved to compel arbitration based on arbitration provision contained in the applications for registration the sales agents filed with the National Association of Securities Dealers. The court found that it was clear from the text and purpose of the form filed by the sales agents that the parties to the agreement intended to benefit third party non-signatories such as the employer. The court distinguished a case where the non-signatory parent corporation had in effect created for itself an option to accept or reject the arbitration clause. Dayhoff v. H.J. Heinz Co., 86 F.3d 1287 (3d Cir.), cert. denied, 117 S. Ct. 583 (1996).

The Arbitration Proceedings

Montes v. Shearson Lehman Bros., 128 F.3d 1456 (11th Cir. 1997)

In an employment arbitration case, the Eleventh Circuit followed every other circuit except the Fifth, and adopted the Amanifest disregard of the law@ standard. In doing so, the court was careful to note it interpreted the standard narrowly. An arbitration award would not be vacated merely because the arbitrator made a legal mistake. Rather, manifest disregard required a showing that the arbitrator was conscious of the law and deliberately ignored it. Despite this narrow interpretation, the court=s application in the instant case was arguably expansive. Counsel for the employer urged the arbitration panel to ignore the law. There was nothing explicit in the record that demonstrated that the arbitrators were conscious of the law and deliberately ignored it. Rather, the court reasoned as follows:

The arbitrators expressly took note of this plea [of the attorney to ignore the law] in their award when summarizing the parties= arguments. There is nothing in the award or elsewhere in the record to indicate that they did not heed this plea. In the absence of any stated reasons for the decision and in light of the marginal evidence presented to it, we cannot say that this is not what the panel did.

The court further stated, that although arbitrators do not have to state the reasons for their decisions, Athere is nothing in the decision itself or anywhere else in the record that refutes the inference that the law was ignored under the circumstances in this case.@ The court remanded and referred the case to a new arbitration panel.

Halligan v. Piper Jaffray, 148 F3d 197 (2d Cir. 1998)

In this case brought under the Age Discrimination in Employment Act, the parties both agreed on the applicable law and explained that law to the arbitrators. The court reviewed the evidence and found that the arbitrators either ignored the law or the evidence or both. Although arbitrators are not required to explain their awards, the court would take the absence of an explanation into consideration where it appears the panel manifestly disregarded the law. The absence of a reasoned award reinforced the court=s confidence that there was manifest disregard. The court acknowledged that it could remand the case to the arbitrators for a written explanation of their award. The court declined to do so, however, because it found that any explanation Awould have strained credulity.@

Judicial Review

Lapine Technology Corp. v. Kyocera Corp., 130 F3d 884 (9th Cir. 1997)

Two commercial parties entered into an arbitration agreement. The terms of the agreement illustrate how different such agreements, subject to actual negotiation between sophisticated parties, can be from the adhesion arbitration contracts imposed upon consumers. The arbitration agreement provided that the arbitrators= decisions be based on the evidence presented, the terms of the agreement between the parties, and California law. The arbitrators were required to state the bases of the award and include detailed findings of fact and conclusions of law. The federal district court could confirm the arbitrator=s award by vacating, modifying or correcting it based on any grounds referred to in the FAA, where the arbitrator=s findings of fact are not supported by substantial evidence, or where the arbitrator=s conclusions of law are erroneous. The court held that judicial review is not confined to the grounds listed in the FAA where the parties, as in this agreement, have contracted for heightened judicial scrutiny. The purpose of the FAA was to enforce arbitration agreements according to the terms the parties agreed to, not to ignore those terms and impose the FAA=s grounds.

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