The arbitration clause is "one-sided," "adhesive," "favors LexisNexis at every turn, and as a practical matter makes it practically unfeasible" to assert individual claims, as it requires arbitration to be brought in Dayton, Ohio, where LexisNexis is located. Oh, and it also requires the customer to split the tab and cover his own legal fees, regardless of the case outcome.
So why did the Sixth Circuit just enforce such an arguably (but not legally) unconscionable clause? Blame the Supreme Court.
The Fee Dispute
Craig Crockett's law firm signed up for LexisNexis's monthly rate plan for unlimited access to certain legal research databases, with additional resources available at extra cost. Crockett alleges that the company promised to display a warning sign whenever the subscriber was about to access a database outside of his plan.
He further alleged that the firm was charged extra fees without encountering such warnings and that, despite the misunderstanding, LexisNexis insisted on payment. Oddly enough, he re-upped his service when his prior firm dissolved and he formed a new firm.
In 2010, he filed a class action arbitration demand with the American Arbitration Association. LexisNexis countered by filing suit in federal court in Ohio, seeking a declaration that class action arbitration was not allowed by the plan's arbitration clause.
Supreme Court's Absurd Holdings
If you've been following the High Court over the past couple of years, you might recall that arbitration has popped up repeatedly. And pretty much every decision has gone against consumers' interests.
In one case, the Supreme Court noted that "[a]n implicit agreement to authorize class-action arbitration" should not be inferred "solely from the fact of the parties' agreement to arbitrate." Crockett's agreement with LexisNexis only mentions disputes "arising from or in connection with this Order." The clause impliedly limits remedies to bilateral, rather than class-action arbitration.
But what about unconscionability? After all, the court wouldn't enforce a clause that effectively amounts to no remedy at all, would it?
It will, albeit reluctantly:
"The idea that the arbitration agreement in this case reflects the intent of anyone but LexisNexis is the purest legal fiction. But all of these things -- the one-sided nature of the arbitration clause, and its adhesive nature -- were also present in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013). And there the Supreme Court held that, all of those concerns notwithstanding, the absence of a class-action right does not render an arbitration agreement unenforceable."
The courts did have one excellent suggestion for Mr. Crockett: turn to the market. The Sixth Circuit repeated the district court's observation that LexisNexis's competitor, Westlaw, "lacks any arbitration clause, much less a clause of the sort at issue here" in its customer agreement.
(In the interest of disclosure, both Westlaw and FindLaw are ThomsonReuters companies, and yes, we are both pretty amazing.)
- Elsevier, Inc. v. Crockett, et al. (Sixth Circuit Court of Appeals)
- Amex v. Italian Colors: Another Arb. Decision Favors Clear Clauses (FindLaw's In House Blog)
- SCOTUS Issues Another Pro-Business Class Action Ruling (FindLaw's In House Blog)