Following the Supreme Court’s decision in AT&T Mobility, LLC v. Concepcion (see my prior blog post), a key battleground is going to be what defenses to arbitration of a named plaintiff’s claim remain viable.  We know that the mere fact that the arbitration provision does not allow a class arbitration is not enough to render it unenforceable.  But there are other defenses under state law that plaintiffs might try to use.  One of those is that some states’ law limits or precludes the enforceability of certain kinds of “adhesion” contracts or some provisions therein.  Plaintiffs sometimes argue, and courts sometimes find, that insurance contracts sold to individuals on a standard form, with no opportunity for bargaining over the contract terms are purportedly “adhesion” contracts.  A recent decision by a Colorado federal court, however, says that Concepcion bars a generalized adhesion contract defense to an arbitration provision.

In Daugherty v. Encana Oil & Gas (USA), Inc., 2011 U.S. Dist. LEXIS 76802 (D. Colo. July 15, 2011), the plaintiffs entered into independent contractor agreements with the defendant, under which they worked as pumpers who serviced and maintained the defendant’s natural gas wells.  The plaintiffs claimed that under the Fair Labor Standards Act they should have been treated as employees and paid overtime.  Id. at *2-3, 7. The defendant sought to compel arbitration of their individual claims under an arbitration clause in the independent contractor agreements.  The plaintiffs submitted affidavits stating that they were not aware of the arbitration clause, no one explained it to them, and they did not believe they had any ability to negotiate the contract terms.  Id. at *25.  The court concluded that, prior to Concepcion, it probably would have found the arbitration clause unconscionable under applicable Colorado law, but based on Concepcion, the arbitration clause was enforceable:

Plaintiffs’ argument has some validity and the Court would likely have found that the arbitration agreement at issue here unconscionable pursuant to the Davis analysis if it were issuing this decision pre-Concepcion. But the Court has to take the legal landscape as it lies and cannot ignore the Supreme Court’s clear message. Plaintiffs are essentially arguing that the adhesive nature of the contracts at issue here (i.e., standardized forms, lack of ability to negotiate, power disadvantage, etc.) makes the arbitration agreement unconscionable.

In Concepcion, the Supreme Court rejected the idea that arbitration agreements are per se unconscionable when found in adhesion contracts. The Court recognized that California’s rule applied only to adhesion contracts and observed that “the times in which consumer contracts were anything other than adhesive are long past.” The Court noted that states were “free to take steps addressing the concerns that attend contracts of adhesion – for example, requiring class-action-waiver provisions in adhesive arbitration agreements to be highlighted” but ruled that “[s]uch steps cannot, however, conflict with the FAA or frustrate its purpose to ensure that private arbitration agreements are enforced according to their term.”

The fact that the contract at issue in Concepcion was an adhesion contract did not affect the Supreme Court’s analysis and, indeed, the majority in Concepcion appeared to be little troubled by that fact. As a result, this Court has no alternative but to discount the weight to be attributed to the adhesive nature of the arbitration clause at issue here. Accordingly, the Court finds that the arbitration agreement contained within the ICAs is not unconscionable.

Id. at *26-27 (emphasis added; citations omitted).  The court found, however, that provisions of the arbitration clause requiring the plaintiffs to contribute to the cost of the arbitration, and requiring them to pay the defendant’s attorneys’ fees if the defendant prevailed, were unenforceable, but those provisions were severable from the remainder of the arbitration provision.  Id. at *27-36.  Subject to those limitations, the court compelled arbitration.

This decision is helpful to insurers that are seeking to compel an arbitration or appraisal of a named plaintiff’s claim in a putative class action.  As this court concluded, generalized defenses based on the purported adhesive nature of an insurance contract should not bar enforcement of the arbitration or appraisal provision.  


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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.