Chad Carter v. Rent-A-Center, Inc.
16-15835
| 9th Cir. | Dec 12, 2017Background
- Plaintiff Chad Carter rented from Rent-A-Center and signed a Lease-Purchase Agreement containing an arbitration clause with a class-action waiver and a prominent opt-out procedure.
- Carter sued (including class claims); the district court compelled arbitration on an individual basis and dismissed the complaint without prejudice.
- Carter appealed the district court’s order compelling individual arbitration and moved for reconsideration, arguing Nevada unconscionability law invalidated the class-action waiver.
- The Ninth Circuit has jurisdiction to review because the district court both compelled arbitration and dismissed the action.
- The panel reviewed the validity of the arbitration agreement de novo and the denial of reconsideration for abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the class-action waiver is unconscionable under Nevada law so as to preclude individual arbitration | Carter: the waiver is unconscionable (contract of adhesion; disparity in bargaining power) | Rent-A-Center: waiver is enforceable; arbitration clause includes a clear opt-out, so no procedural unconscionability | Waiver enforceable; Carter’s unconscionability argument is foreclosed by Concepcion and fails on the merits |
| Whether dismissal without prejudice deprived appellate jurisdiction or was ambiguous | Carter: district court may have dismissed class claims with prejudice; seeks clarification | Rent-A-Center: district court’s dismissal was without prejudice and intended to close the case pending arbitration | Appellate jurisdiction exists; the dismissal, though labeled without prejudice, effectively closed the case for appellate purposes; no abuse of discretion in denying reconsideration |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules that disfavor arbitration, invalidating Discover Bank rule)
- Kilgore v. KeyBank, Nat. Ass’n, 718 F.3d 1052 (9th Cir. 2013) (Concepcion foreclosed Discover Bank–style challenges to class waivers)
- Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072 (9th Cir. 2014) (compelling arbitration and noting limits on unconscionability challenges to class waivers post-Concepcion)
- Interactive Flight Techs., Inc. v. Swissair Swiss Air Transp. Co., 249 F.3d 1177 (9th Cir. 2001) (dismissal plus compelled arbitration can create appellate jurisdiction despite “without prejudice” label)
- Tallman v. Eighth Judicial Dist. Ct., 359 P.3d 113 (Nev. 2015) (Nevada acknowledges Concepcion’s protection of class waivers from certain state-law rules that disfavor arbitration)
- Casa del Caffe Vergnano S.P.A. v. ItalFlavors, LLC, 816 F.3d 1208 (9th Cir. 2016) (standard of review: de novo review of arbitration-agreement validity)