Arbitration; Provision in contract prohibiting class action was void as unconscionable and a contract of adhesion

Michael Schnuerle, Amy Gilbert, Lance Gilbert and Robin Wolff v. Insight Communications Company, L.P. And Insight Communications Midwest, LLC 2008-SC-000789-DG December 16, 2010
2009-SC-000390-DG
December 16, 2010

Opinion of the Court by Justice Venters.  All sitting. Customers of broadband Internet service provider filed class action in circuit court for damages caused by temporary interruption of Internet service, despite language in service agreement banning class actions and requiring resolution of disputes by either arbitration or small claims court.  The Supreme Court held that the provision in Internet Service Agreement barring class action litigation is void as an exculpatory and unconscionable contract provision in a consumer adhesion contract.  Neither the small claims court provision, nor the incorporation of the American Arbitration Association’s rules and procedures rendered the class action ban procedurally and substantively conscionable.  A contractual provision imposing a confidentiality requirement upon the litigants to arbitration proceedings was held unenforceable. The service agreement’s general arbitration provision was held not unconscionable and was enforceable in class-action litigation upon remand.  The Supreme Court also held the service agreement’s choice of law provision was not enforceable. Justice Schroder concurred in part and dissented in part, stating that he would invalidate the arbitration clause as procedurally unconscionable.

 

 

 

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