Originally from:

Journal of American Arbitration (JAA) - Vol. 6, No. 2

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ARTICLES

The Tennessee Court of Appeals Holds
Class Arbitration Waiver Clause in Credit
Card Agreement Not Unconscionable Under
Utah Law in Spann v. Am. Express Travel
Related Servs.
By Jennifer M. Stull

I. OVERVIEW
After receiving unauthorized charges on her credit card
statement, cardholder Louise Spann filed a class action lawsuit
against her credit card provider, American Express Company
(“AmEx”). Spann v. Am. Express Travel Related Servs. Co., No.
M2004-02786, 2006 WL 2516431, at *4 (Tenn. Ct. App. Aug. 30,
2006). Spann claimed that AmEx’s marketing and selling
strategies violated various consumer protection statutes and that its
actions resulted in intentional and negligent representation,
conversion, and unjust enrichment. Id. Vetahmary Higgins, who
also received unauthorized charges on her statement, was added as
a plaintiff to the lawsuit. Id. AmEx filed a motion to compel
separate arbitrations for each of the plaintiffs’ claims pursuant to a
2003 cardholder agreement amendment containing an arbitration
provision and a class arbitration waiver. While both Spann and
Higgins acknowledged that their claims against AmEx were
subject to arbitration, they argued that the class arbitration waiver
clause was unconscionable. Id.
Spann and Higgins claimed that the class arbitration waiver
clause was unenforceable due to its inherent unfairness to
cardholders and the manner in which it was added to their
agreements with AmEx. Id. at *4. Higgins initially obtained her
AmEx card through AmEx Travel. Id. at *1. Her 1994
cardmember agreement disclosed that the card issuer retained the
“right to change this Agreement at any time” and would notify the
cardholder of any changes. Id. It also provided that it would
“consider that you [i.e. Higgins] have accepted the changes if you
keep or use the Card after we send our notice” and that the
cardholder could reject any changes and terminate the account at