793 F. Supp. 2d 1280
D. Colo.2011Background
- Plaintiffs Bernal and Krol, former students, sue multiple Westwood-affiliated entities alleging Colorado Consumer Protection Act violations.
- Plaintiffs claim deceptive practices regarding cost, job prospects, accreditation, and credit transfers, plus high-pressure admissions tactics.
- Arbitration agreements were signed as part of enrollment: a standalone arbitration waiver and embedded provisions directing binding arbitration by AAA in Denver.
- Mensch arbitration previously sought to determine class arbitration eligibility; Arbitrator Baker ruled no explicit class arbitration and not unconscionable under Colorado law; decision confirmed by state court.
- This case is stayed pending resolution of Defendants' motion to compel arbitration; Concepcion issued after Baker’s decision, prompting a re-evaluation of unconscionability under FAA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Baker's decision binding via collateral estoppel? | Bernal and Krol were bound by Mensch arbitration ruling. | Concepcion alters legal landscape; estoppel not binding. | Collateral estoppel not barred; Concepcion warrants reexamination. |
| Are the Arbitration Agreements unconscionable post-Concepcion? | Adhesive, standardized forms with unequal bargaining power render them unconscionable. | Concepcion supersedes per se unconscionability; arbitration should be enforced. | Arbitration agreements are not unconscionable under Concepcion framework; enforceable. |
Key Cases Cited
- Buckeye Check Cashing v. Cardegna, 546 U.S. 440 (2006) (arbitration clause severability; enforceability threshold rests on the clause itself)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts states from disfavoring arbitration in adhesion contracts)
- Discover Bank v. Superior Court, 36 Cal. 4th 148 (Cal. 2005) (Discover Bank rule on class-action waivers preemption by FAA)
- Davis v. M.L.G. Corp., 712 P.2d 985 (Colo. 1986) (Colorado unconscionability factors guiding contract provisions)
- Adams v. Merrill Lynch, 888 F.2d 696 (10th Cir. 1989) (arbitration clauses are not inherently unfair)
- Mullan v. Quickie Aircraft Corp., 797 F.2d 845 (10th Cir. 1986) (Colorado unconscionability factors applied to contracts)