927 F.3d 878
5th Cir.2019Background
- Bowles worked for OneMain since 1998 and repeatedly acknowledged arbitration provisions in employment materials; in 2016 she electronically certified she had read and agreed to a new Employee Dispute Resolution/Arbitration Agreement that included a delegation clause.
- OneMain terminated Bowles in 2017; Bowles filed EEOC charges then sued in federal court under ADEA and Title VII.
- OneMain moved to compel arbitration under the Federal Arbitration Act based on the 2016 Arbitration Agreement.
- Bowles opposed, arguing (1) no meeting of the minds (she did not understand she was agreeing to arbitration) and (2) the Agreement was procedurally unconscionable (procured by misrepresentation, lack of meaningful bargaining, and gross power imbalance).
- The district court found mutual assent (meeting of the minds) but concluded the procedural unconscionability challenge went to enforceability and therefore must be decided by the arbitrator under the Agreement’s delegation clause; it compelled arbitration and dismissed the action.
- The Fifth Circuit affirmed the district court on mutual-assent but reversed and vacated as to referring procedural unconscionability to the arbitrator, holding procedural unconscionability under Mississippi law goes to contract formation and thus is for the court to decide; the case was remanded for the district court to rule on that claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there was a meeting of the minds such that a valid arbitration agreement was formed | Bowles: she did not intend to agree to arbitration and was unaware of the document’s nature | OneMain: Bowles electronically certified she read and agreed to the Agreement | Court: Affirmed district court — Bowles’s unilateral failure to read does not negate assent under Mississippi law |
| Whether procedural unconscionability must be decided by the court or the arbitrator | Bowles: procedural unconscionability challenges formation and is for the court | OneMain: unconscionability goes to enforceability and delegation clause sends it to the arbitrator | Court: Reversed district court — procedural unconscionability under Mississippi law goes to formation and is for the court to decide |
Key Cases Cited
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (federal courts apply ordinary state-law contract principles to decide whether parties agreed to arbitrate)
- Lloyd's Syndicate 457 v. FloaTEC, L.L.C., 921 F.3d 508 (two-step arbitration inquiry: court decides formation; arbitrator decides delegated questions)
- GGNSC Batesville, LLC v. Johnson, 109 So. 3d 562 (Miss.) (elements of contract formation under Mississippi law)
- West v. West, 891 So. 2d 203 (Miss.) (procedural unconscionability goes to contract formation)
- Banc One Acceptance Corp. v. Hill, 367 F.3d 426 (5th Cir.) (district court must adjudicate procedural unconscionability under Mississippi law)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (arbitrability challenges that attack the contract as a whole may be for arbitrator, but attacks on the specific arbitration agreement are for courts)
- Carey v. 24 Hour Fitness, USA, Inc., 669 F.3d 202 (5th Cir.) (standard of review for motions to compel arbitration)