Eighth Circuit Flips Invalidation of Engagement-Letter Arbitration Clause

Under the Federal Arbitration Act, a court can invalidate an arbitration agreement based on the traditional contract defenses, including unconscionability. 9 U.S.C. §2 (arbitration clauses “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract”); Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1426 (2017). The Eighth Circuit has considered whether to strike down arbitration clauses as unconscionable in a variety of contexts, including credit-cardholder agreements (Cicle v. Chase Bank USA, 583 F.3d 549 (8th Cir. 2009)), employment agreements (EEOC v. Woodmen of World Life Ins. Soc’y, 479 F.3d 561 (8th Cir. 2007)), construction contracts (Pro Tech Indus. v. URS, 377 F.3d 868 (8th Cir. 2004)), and mobile-home purchase agreements (Dobbins v. Hawk’s Enters., 198 F.3d 715 (8th Cir. 1999)). But it was not until October 2019, in Plummer v. McSweeney, No. 18-3059, ____ F.3d. ___ (8th Cir. Oct. 23, 2019), that the Eighth Circuit analyzed the unconscionability of an arbitration clause in a retainer agreement between a law firm and its client. The Eighth Circuit concluded, without fully addressing the issue of unconscionability, that the law firm cured any potential substantive unconscionability by offering to pay the client’s share of the arbitration costs—but left open the possibility that arbitration fees might render an agreement unconscionable in another case.

The Plummer case dates back to an unsolicited call to the cellphone of Jerri Plummer, an Arkansas mother of three. According to her allegations, the caller, a stranger who identified herself only as Yolanda, warned that Plummer’s transvaginal mesh implant was defective and that Plummer would die if the implant were not removed. Plummer, who had received such a mesh implant several years earlier, listened as Yolanda told Plummer that Yolanda’s company would set Plummer up with a doctor and surgery center in Florida to get the mesh removed, as well as attorneys who could seek compensation for Plummer for the surgery by suing the mesh’s manufacturer. Yolanda also told Plummer that transportation to and from Florida for the surgery, as well as the surgery itself, would not cost Plummer anything.