Originially from: World Arbitration and Mediation Review (WAMR)

Certiorari Sought in Case Raising Major Issues for Arbitration
by
Daniel Q. Posin, Securities Arbitration Editor
As reported in the July issue of WAMR (Vol. 13, No. 7, at page
185), the West Virginia Supreme Court has held that an arbitration clause
that bars the award of punitive damages and bars the use of class actions is
unconscionable and unenforceable. That case is Dunlap v. Friedmans
Inc.,567 S.E.2d 265 (W.Va. 2002). The questions of punitive damages
and class actions are among the most pungent issues in the arbitration field
today.
Here are some of the highlights of this important case: The court
found that, “Unconscionability is an equitable principle, and the
determination of whether a contract or a provision therein is
unconscionable should be made by the court.”
The court also found that exculpatory provisions in a contract of
adhesion that would prohibit or substantially limit a claimant from
enforcing and vindicating rights and protections or from seeking and
obtaining statutory or common-law relief are unconscionable, unless the
court determines that exceptional circumstances make the provisions
conscionable.
In a holding of major importance, the court also found that the
Federal Arbitration Act does not bar a state court from considering