Jerri Plummer v. Rhett McSweeney; David Langevin; McSweeney Langevin, LLC; Whitney Shoemaker, D.O.; Women‘s Health And Surgery Center, LLC; Plaintiff Funding Holding, Inc., doing business as LawCash; Vincent Chhabra; Michael Chhabra; LawFirm Headquarters, LLC; Surgical Assistants, Inc.; Wesley Blake Barber; Kasia Osadzinska, M.D.; Boston Scientific Corporation; Alpha Law, LLP; Richard Martindale; John Does, 1-97 (originally named as 1-99); Ron Lasorsa; Diane Sugimoto
No. 18-3059
United States Court of Appeals For the Eighth Circuit
October 23, 2019
Appeal from United States District Court for the Eastern District of Arkansas - Little Rock. Submitted: September 24, 2019. Bеfore GRUENDER, ARNOLD, and GRASZ, Circuit Judges.
This case is about the enforceability of an agreement to arbitrate disputes between a law firm and its client. Though we share some of the client‘s and the district court‘s concerns about the events giving rise to this lawsuit, we hold that the district court erred in refusing to enforce the agreement. We therefore reverse and remand.
Arkansas resident Jerri Plummer received a wholly unexpected phone call one day in October 2014 from someone named Yolanda. Yolanda knew that Plummer had had a transvaginal mesh implanted about six years earlier, and Yolanda asserted that the mesh was defective and that Plummer could die if she did not have it removed. Yolanda informed Plummer that she could arrange for Plummer to undergo surgery in Florida to have the mesh removed and could connect her with an attorney who could help her obtain compensation for the surgery and for her travel to Flоrida. Since Yolanda knew some of her medical history and since Plummer had recently experienced minor pain she attributed to the mesh, she agreed to Yolanda‘s arrangement. Plummer explains that, after the call, she felt as if she “had a ticking time bomb inside of” her. Plummer traveled to Florida and had the mesh removed about two months later.
Plummer maintains that the surgery has caused her substantial and ongoing medical problems. She sued a horde of defendants in thе medical and legal fields for fraud, constructive fraud, breach of fiduciary duty, civil conspiracy, unjust enrichment, violations of the Arkansas Deceptive Trade Practice Act, and malpractice. Among those sued were Minnesota attorneys Rhett McSweeney and David Langevin and their law firm, McSweeney Langevin, LLC, whom we refer to collectively as “McSweeney Langevin.” McSweeney Langevin moved the district court to compel arbitration in light of а retainer agreement that Plummer had signed. That agreement contained a provision beginning with the phrase “Alternate Dispute
The district court held that the parties had entered into a contract, but it declined to enforce it on the ground that the contract was unconscionable under Washington D.C. law, which the parties agree is appropriate under a choice-of-law provision in the agreement. As the district court saw it, “the defendant attorneys and their firm, through agents acting on their behalf, somehow got their hands on Plummer‘s cell phone number and, after instilling fear of death in her, solicited her to not only undergo a surgical procedure in another state, but also to allow them to represent her” in a lawsuit against the mesh‘s manufacturer. The district court found significant Plummer‘s statement that she felt she “was in a life or death situation and there was no time to dicker over details with people who informed [her] of [her] possible impending death and offered a procedure to save [her] life and to seek justice on [her] behalf.” Further, the court pointed out that McSweeney and Lаngevin were attorneys, but Plummer had a tenth-grade education, was inexperienced in reading contracts, and did not know what arbitration was. The district court also noted that the retainer agreement was sent to Plummer electronically along with several other documents she was asked to sign. Finally, the court found that Plummer could not afford the costs of arbitration: Her income was minimal, and her share of the arbitration costs and her travel costs made аrbitration inaccessible.
McSweeney Langevin appeals the district court‘s denial of the motion to compel arbitration—a decision we review de novo. See Shockley v. PrimeLending, 929 F.3d 1012, 1017 (8th Cir. 2019). We are a little uncertain about the procedural
McSweeney Langevin maintains first that an arbitrator should decide the matter of unconscionability, not a court, because Plummer‘s arguments about unconscionability, аnd the district court‘s acceptance of them, are directed at the retainer agreement as a whole and not just the arbitration provision within it. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445–46 (2006). McSweeney Langevin, however, failed to raise this matter to the district court, and this is not merely a new argument; it is an entirely new issue, see Hintz v. JPMorgan Chase Bank, N.A., 686 F.3d 505, 508 (8th Cir. 2012), so we review it for plain error at most. But we have held before that “the requirement to proceed in federal court can hardly be considered a miscаrriage of justice” necessitating plain-error relief. See Wiser v. Wayne Farms, 411 F.3d 923, 927–28 (8th Cir. 2005).
We therefore take up the matter of unconscionability ourselves. Under the FAA, agreements to arbitrate “shall be valid, irrevocable, and enforceable, save upon
We begin with substantive unconscionability, which in this case involves Plummer‘s ability to pay for arbitration. Though the arbitration provision does not mention who will pay the costs of arbitration, it does say that arbitration will рroceed before JAMS, and JAMS rules provide that parties will pay a pro rata share of costs unless they agree otherwise. According to the district court, Plummer provided evidence that her share of costs was extremely high compared to her income, rendering arbitration prohibitively expensive.
We do not decide whether the district court correctly found that Plummer had carried her burden to show that arbitration was prohibitively expensivе. On appeal, McSweeney Langevin has offered to pay Plummer‘s share of the arbitration costs, which, it asserts, cures any substantive unconscionability in the contract. Plummer maintains that we should not consider post-hoc offers like this one since others bound by the same contract terms might be dissuaded from pursuing claims because of the high costs of arbitration. We recognize that other courts agree with her. See, e.g., Spinetti v. Serv. Corp. Int‘l, 324 F.3d 212, 217–18 n.2 (3d Cir. 2003); Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 676–77 (6th Cir. 2003) (en banc). Plummer also points out thаt D.C. courts have noted that unconscionability is determined at the time the contract is made. See Urban, 464 A.2d at 99–100 n.7.
We also point out that our court has allowed defendants to cure substantive-unconscionability difficulties by offering to pay for arbitration, though admittedly we were not applying D.C. law. See E.E.O.C. v. Woodmen of World Life Ins. Soc‘y, 479 F.3d 561, 567 (8th Cir. 2007). And we have done so even when the offer was made as late as during oral argument. See Dobbins v. Hawk‘s Enters., 198 F.3d 715, 717 & n.4 (8th Cir. 1999). We think that permitting McSweeney Langevin to cure substantive unconscionability in this way is sensible since D.C. law allows a court to sever an unconscionable term from a contract and enforce the rest of it. See Kenyon, 979 A.2d at 1186. So it seems we can do the same here. See Faber v. Menard, Inc., 367 F.3d 1048, 1054 (8th Cir. 2004). We don‘t detect any substantive unconscionability in the present circumstances.
Usually a plaintiff must show both procedural and substantive unconscionability to render a contract unenforceable, but “in an egregious situation, one or the other may suffice.” See Urban, 464 A.2d at 99. The district court here said that, even without a showing of substantive unconscionability, Plummer had demonstrated an “egregious” instance of procedural unconscionability. One D.C.
To determine whether an agreement is procedurally unconscionable, D.C. courts consider all the circumstances surrounding the transaction, such as the parties’ bargaining power, the parties’ opportunity to understand the contract‘s terms, the manner in which the contract was entered, the relative expertise of the parties, and the length of time in which the contract was completed. See Associated Estates LLC v. BankAtlantic, 164 A.3d 932, 943 (D.C. 2017). But this all appears to boil down to dеciding “whether the party seeking to void the contract lacked a ‘meaningful choice.‘” Id. D.C. courts often use the phrase “procedural unconscionability” interchangeably with “an absence of choice.” See, e.g., Woodroof v. Cunningham, 147 A.3d 777, 789 (D.C. 2016).
We fail to see how Plummer lacked a meaningful choice. We recognize she received the retainer agreement merely three days before she departed for surgery in Florida. We also understand that the message was sent to her electronically along with other documents requiring her signature, and that the message requesting her signature stated that it was “URGENT.” But by this time, Plummer had had more than a month to get to the bottom of the phone call from Yolanda—a call that should have raised her antennae. During that time she could have spoken to other attorneys or even her doctors about the situation.
Plummer maintains that she could not have bargained with McSweeney Langevin over the agreement‘s terms anyway. But we think this assertion is too speculative. For one thing, the terms of the agreement belie it. And given that she did not attempt to bargain with McSweeney Langevin over the agreement‘s terms, it is difficult to see why she thinks she could not have. See Woodroof, 147 A.3d at 789. Even if we assume she could not have bargained with McSweeney Langevin over terms, there is no showing thаt she could not have obtained legal services elsewhere. “The mere fact that a contract is take-it-or-leave-it does not render a party ‘powerless’ and without ‘real choice‘” if she can get services elsewhere in the market. See Ruiz, 156 F. Supp. 3d at 181.
Plummer also points to her failure to read the retainer agreement as a reason supporting procedural unconscionability. But “one who signs a contract has a duty to read it” and “cannot escape being bound by its terms merely by contending that [s]he did not read them.” See Curtis v. Gordon, 980 A.2d 1238, 1244 (D.C. 2009). It is also of little relevance in the circumstances that other documents requiring her signature were sent to her at the same time, see Pan Am Flight 73 Liaison Grp. v. Dave, 711 F. Supp. 2d 13, 24 (D.D.C. 2010), or that the agreement was sent to her electronically. See Fox, 920 F. Supp. 2d at 98.
In short, we cannot say that the circumstances giving rise to this lawsuit, though admittedly troubling, render the retainer agreement at issue procedurally
Plummer advances an alternative ground for affirmance: She maintains that the agreement is unenforceable because McSweeney and Langevin violated their ethical duties as attorneys when they failed to explain the ramifications of the arbitration provision to her. In particular, Plummer maintains that McSweeney and Lаngevin failed to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation,” as relevant ethical rules require. See
“A contract that is contrary to public policy is generally unenforceable.” Shtauber v. Gerson, 239 F. Supp. 3d 248, 253 (D.D.C. 2017). Though D.C. courts have not said whether their rules of professional conduсt are an expression of D.C. public policy that can render a contract unenforceable, see id., one federal district court interpreting D.C. law said they were, see Moskowitz v. Holman, PLLC, No. 1:15-cv-336, 2016 WL 356035, at * 11 (E.D. Va. Jan. 28, 2016), and a D.C. federal district court said the rules were an expression of public policy but that whether a contract entered into in violation of those rules is unenforceable depended on the circumstances. See Shtauber, 239 F. Supp. 3d at 255. We assume for the sake оf argument that the arbitration provision would be unenforceable if McSweeney and Langevin indeed violated
Haynes involved a situation very similar to ours. There, an attorney and someone “at the threshold of an attorney-client relationship” entered into a retainer agreement containing an arbitration provision that said, in essence, that disputes would be resolved by “arbitration, rather than court аction.” Id. at 1288–90. The D.C. high court acknowledged that the provision “was somewhat terse in explaining the rights [the client] would relinquish by agreeing to arbitration” but nevertheless held that the contract contained enough information about arbitration that the attorney did not violate his ethical obligations. See id. at 1290–91. And so the court enforced it.
Plummer argues that Haynes is distinguishable and no longer good law in any event. She first points out that Haynes involved fraudulent inducement and not unconscionability. We see this as a distinction without a difference. Both cases involve the matter of whether an attorney‘s nondisclosure makes an arbitration agreement unenforceable. Plummer also argues that the legal landscape has changed since Haynes was decided. She observes that the ethics opinion that the Haynes court viewed as its polestar, see D.C. Bar Comm. on Legal Ethics, Op. 190 (1988), has been “repealed.” Opinion 190 provided that, when a retainer agreement contains an arbitration clause, “the attorney has the obligation to make a full disclosure to thе client of all the ramifications of an agreement to arbitrate, including eliminating the right to sue in court and have a jury trial.”
Plummer also points out that, since Haynes, the American Bar Association released an ethics opinion on the effect of its Model Rule 1.4(b) (on which D.C. Rule 1.4(b) is based) on the use of arbitration provisions in retainer agreements. See ABA Comm. on Ethics & Prof‘l Responsibility, Formal Op. 02-425 (2002). The ABA opined that “the lawyer should make clear that arbitration typically results in the client‘s waiver of significant rights, such as the waiver of the right to a jury trial, the possible waiver of broad discovery, and the loss of the right to appeal.” It also notes other effects that an attorney “might explain” as well. Some courts have even expanded on this opinion, requiring attorneys to discuss with clients a wide assortment of the potential consequences that could attend agreeing to arbitrate
But ABA ethics opinions do not bind us or the D.C. courts, see United States v. Straker, 258 F. Supp. 3d 151, 156–57 (D.D.C. 2017), and this one in particular says nothing that convinces us that the D.C. high court would no longer follow Haynes. Plummer relies too heavily on non-binding ethiсs opinions. We instead rely on an actual, on-point case from the relevant court. Given that the D.C. high court in Haynes brushed aside Opinion 211, an opinion from closer to home that also imposed heightened requirements on arbitration provisions in retainer agreements, we have no reason to think it would treat the ABA opinion differently if confronted with it. We repeat that it‘s the rules of ethics themselves, not opinions about those rules, that potentially reprеsent an expression of D.C. public policy, the violation of which could render an agreement unenforceable. We therefore reject Plummer‘s attempt to cast doubt on Haynes‘s continuing vitality and its application to this case. The disclosures here were broader than those in Haynes, so we necessarily decline to hold that the arbitration provision at issue here is unenforceable.
We reverse and remand with instructions to the district court to grant the motion to compel and to order arbitration at McSweeney Langevin‘s expense.
ARNOLD
CIRCUIT JUDGE