Global Client Solutions, LLC v. Ossello

March 2 2016

DA 15-0301
Case Number: DA 15-0301

IN THE SUPREME COURT OF THE STATE OF MONTANA

2016 MT 50

GLOBAL CLIENT SOLUTIONS, LLC,

Third-Party Defendant and Appellant,

v.

SUSAN M. OSSELLO,

Defendant, Third-Party Plaintiff and Appellee.

APPEAL FROM: District Court of the Second Judicial District,
In and For the County of Butte-Silver Bow, Cause No. DV-13-289
Honorable Kurt Krueger, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Brendon J. Rohan, Emma R. Armstrong, Poore, Roth & Robinson,
Butte, Montana

Richard W. Epstein, Greenspoon Marder, P.A., Fort Lauderdale, Florida

For Appellee:

A. Clifford Edwards, Triel D. Culver, Edwards, Frickle & Culver,
Billings, Montana

Submitted on Briefs: November 18, 2015

Decided: March 2, 2016

Filed:

__________________________________________
Clerk
Chief Justice Mike McGrath delivered the Opinion of the Court.

¶1 Global Client Solutions appeals from the District Court’s order denying Global’s

motion to dismiss and to compel arbitration. We affirm.

¶2 Global presents issues for review which we restate as follows:

Issue 1: Whether the District Court erred in reserving to itself the determination of
arbitrability.

Issue 2: Whether the District Court erred in determining that the arbitration
provision was unconscionable and therefore not enforceable against Ossello.

BACKGROUND

¶3 In July 2012 Susan Ossello faced more than $40,000 in unsecured debt that she

owed to Bank of America, Discover Bank and Citibank. She received an unsolicited

mailing from an entity called World Law, advertising that it could provide her with debt

relief services. The solicitation represented that World Law would furnish legal counsel

concerning her debt issues; that it would negotiate with her creditors for a reduction of

her debt; that it would prevent her from going into bankruptcy; and that under its plan she

could be debt free in two to four years. Ossello called a phone number provided in the

mailing and talked to a sales agent for World Law.1

¶4 Ossello alleges that the agent represented that if she enrolled in the debt reduction

program, World Law’s attorneys would represent her and contact her creditors to

1
This is an appeal from the denial of a motion to dismiss, so there is no factual record in
this case. The facts in this Opinion are taken primarily from the allegations of Ossello’s
complaint and the contents of Global’s Dedicated Account Agreement, attached to Global’s
motion to dismiss. Ossello’s third-party complaint alleges that Global and World Law acted in
concert and are jointly and severally liable for her claims.
2
negotiate reduced settlements of her credit card debts. The agent also told Ossello that

these attorneys would represent Ossello if she got sued by a creditor. The agent then sent

several form agreements to Ossello by email. She and the agent reviewed the forms over

the phone, including a Client Services Agreement on behalf of World Law and a

Dedicated Account Agreement on behalf of Global Client Solutions. The agent

explained to her how to sign the agreements by entering her name into a box on the

computer screen. Ossello electronically signed the agreements.

¶5 Global’s Dedicated Account Agreement (DAA) established a non-interest-bearing

account in an undisclosed bank, funded by an automatic monthly withdrawal of $589.29

from Ossello’s existing bank account. The agent represented, and Ossello believed, that

Global would use the proceeds in the account to pay her debts as they were negotiated

and reduced. In reliance upon the advice of the agent and in a belief that she would

benefit from a debt reduction plan, Ossello stopped making payments on her credit card

debt. A year later, in September 2013, Discover Bank brought a collection action against

her in Montana District Court.

¶6 Ossello contacted World Law or Global about the Discover Bank action. They

sent her a form answer denying the material allegations of Discover Bank’s complaint,

and directed her to file it pro se. In November 2013 Ossello filed the form answer, which

denied that she had ever applied for or received a credit card from Discover Bank; denied

that she had any agreement with Discover Bank; and denied that she ever received

monthly statements from Discover Bank. Ossello claims that World Law and Global

3
knew that the representations in the answer were not based in fact, and that they never

provided her with any material legal services. Ossello contends that World Law and

Global never contacted her creditors to obtain any debt reduction for her and that “no

payments were ever made to [her] creditors from the Dedicated Account.”

¶7 Ossello obtained an attorney and on June 18, 2014, filed an amended answer to

Discover Bank’s complaint, and a third-party complaint against World Law and Global.

The complaint alleges that World Law and Global used deceptive and fraudulent

representations to solicit her participation in an illegal debt settlement plan. Ossello

alleges that World Law and Global misrepresented to her that attorneys were providing

her with legal services, and deceptively promised to significantly reduce her debt without

ever actually doing so. The counts of the complaint allege claims for violation of the

Montana Consumer Debt Management Services Act; violation of the Montana Consumer

Protection Act; fraudulent misrepresentation and deceit; negligent misrepresentation;

illegality, unconscionability and contract of adhesion; unjust enrichment; unauthorized

practice of law; and civil conspiracy.

¶8 World Law failed to appear and defaulted in August 2014. Global, however, filed

a motion to compel arbitration and to dismiss the third-party complaint for lack of

jurisdiction.

¶9 The Global Dedicated Account Agreement that Ossello received on her computer

and signed by email stated that Ossello had “approved certain transactions to be taken in

[her] account application.” The DAA gave Global authority to disperse funds from the

4
account based on directions from Ossello or based on instructions from the “Sponsor as

defined in [her] account application.” The DAA gave Global the authority to act on the

Sponsor’s instructions “without further confirmation” from Ossello. The DAA

authorized Global to deduct monthly fees and service charges from Ossello’s money

deposited into the account. Global could unilaterally increase those fees and charges “for

any increase in the associated costs and expenses.” Global also had the authority to

transfer Ossello’s account to another FDIC-insured institution, which was also not

otherwise identified.

¶10 Attached to the DAA as Exhibit A was a single-page document entitled Dedicated

Account Agreement and Application. That document provides that the “Dedicated

Account” is to be administered at a bank selected by Global for the purpose of

accumulating funds to “repay [Ossello’s] debts in connection with a debt settlement

program . . . sponsored by the organization identified below.” That document further

provides that only the applicant “(or Authorized Contact, if any) may authorize deposits

to and creditor payments from my Dedicated Account.” The “authorized contact” refers

to the Sponsor, but the “World Law” entity is not listed in either document or identified

as the “Sponsor.” The application form has a line for the “Sponsor’s” Global Account

number but it is left blank, and in a box labeled “Sponsor” the term “Company Code” is

listed.

5
¶11 The Global documents authorize “the Sponsor” to direct disbursement of funds

from the account. However, nowhere is the Sponsor, the bank holding the account, or the

account number identified.

¶12 The application also contains a schedule of fees and charges. That schedule lists

an account maintenance fee of $9.45 and a wire deposit fee of $10.00 as the only monthly

fees not related to “disbursement services.” Ossello’s complaint alleged that as of June

2014 Global had deducted $12,502.38 from her bank account and deposited the money

into the account. She alleged at the time her third-party complaint was filed, that Global

had taken $6567.90 from the account in fees but that she had received no debt relief or

actual legal services. She also asserted that according to Global, the account then had a

remaining balance of $5712.13.

¶13 The DAA also contained a lengthy arbitration clause. The clause requires

arbitration of “any controversy, claim or dispute . . . arising out of or relating to” the

Dedicated Account Agreement. The arbitration clause states that it applies to the

“breach, termination, enforcement, interpretation or validity [of the Agreement],

including the termination of the scope or applicability of this agreement to arbitrate.” It

provides that the arbitration would take place either in Oklahoma under the laws of that

state, or in the state in which the consumer resides under the laws of that state. It

provides that the arbitration would be “administered by the American Arbitration

Association (“AAA”) pursuant to its rules and procedures,” before an arbitrator selected

by the AAA. It also provides for sharing costs of the arbitration, with the customer’s

6
share being limited to $2000. It explains that binding arbitration means that both parties

give up the right to trial by jury, the right to appeal from the ruling in most instances, and

the right to conduct extensive discovery.

¶14 The arbitration clause further provides that if a party fails to engage in arbitration,

unsuccessfully challenges the award, or fails to comply with the award, the other party is

“entitled to costs of suit, including a reasonable attorney’s fee for having to compel

arbitration or defend or enforce the award.” Thereby, Global would be entitled to claim

from Ossello all its attorney fees in the current case, if it were to prevail.

¶15 Significantly, though the DAA arbitration clause broadly requires both parties to

arbitrate “any controversy, claim or dispute . . . relating to this Agreement or the breach,

termination, enforcement, interpretation or validity thereof,” Global reserved to itself in a

separate paragraph of the DAA the right to bring “collection actions” in court against

Ossello and require her to pay all costs and attorney fees related thereto. The DAA

provides that if Ossello’s bank account had a “negative balance” at any time, and Ossello

failed to pay “upon demand,” she was responsible for that deficit and “collection actions

may be pursued against you. If any such collection action is undertaken, you agree to pay

all court costs and collection fees, including reasonable attorney’s fees to the extent

permitted by applicable law.” Therefore, if Ossello’s bank account could not cover

Global’s periodic deductions for expenses, Global could sue her in a court of law to

collect the deficit, along with its costs and attorney fees.

7
¶16 The District Court found that Ossello had directly challenged the arbitration clause

in the Dedicated Account Agreement by specifically alleging in her third-party complaint

that the Agreement was unconscionable and that it wrongfully waived her right to a jury

trial.2 Therefore, the District Court concluded that it had jurisdiction to determine the

validity of the arbitration clause. The District Court then determined that under Montana

law,3 a challenged arbitration clause is treated “as a contract on equal footing with other

contracts” and that unconscionability may be determined by inquiring whether the

contract is one of adhesion and whether the contract unreasonably favors the drafter.

¶17 The District Court held, in part, that the arbitration clause in Global’s contract was

unconscionable and therefore unenforceable. The analysis employed by the District

Court considered first whether the contract was a contract of adhesion, and secondly

whether the contract unreasonably favored the drafter (Global), citing Kelker v.

Geneva-Roth Ventures, 2013 MT 62, ¶ 59, 369 Mont. 254, 303 P.3d 777. The District

Court summarized the contentions of each side regarding the terms of the arbitration

agreement and determined that it was unconscionable. The District Court cited the

context in which the agreement was presented to Ossello (in a phone call by a person who

provided assurances that “attorneys” were involved or would be involved to handle

everything for her); the fact that the entire transaction with the sales person on the phone

2
Global concedes that Ossello properly raised a challenge to the validity of the
arbitration clause.
3
The arbitration clause in the Dedicated Account Agreement provides that the validity
and enforceability of the Agreement and issues of arbitrability may be decided under the law of
the consumer’s state of residence.
8
consumed only about 15 minutes; that Ossello was not told that she had the right to ask

for a change in any provision of the agreement; and that she was not told and did not

know that she was agreeing to abide by a form of dispute resolution that required her to

forego the right to seek relief in court.

¶18 The District Court determined that the Dedicated Account Agreement was a

contract of adhesion because it was drafted by the stronger party and Ossello had only the

choice of accepting it or rejecting it without specific negotiation. The District Court

concluded that the arbitration clause was unconscionable and not enforceable, and it

therefore denied Global’s motion to dismiss and motion to compel arbitration. Global

appeals.

STANDARD OF REVIEW

¶19 This Court reviews a district court’s decision on a motion to dismiss, de novo.

Estate of Big Spring, 2011 MT 109, ¶ 20, 360 Mont. 370, 255 P.3d 121. This Court also

reviews de novo a district court’s order concerning a motion to compel arbitration.

Kelker, ¶ 9. A motion to dismiss is considered in a light most favorable to the

non-moving party and the factual allegations of the non-moving party are taken as true.

Kortum-Managhan v. Herbergers, 2009 MT 79, ¶ 12, 349 Mont. 475, 204 P.3d 693.

DISCUSSION

¶20 This case involves the intersection of federal and state laws concerning arbitration.

The Federal Arbitration Act governs arbitration issues arising from transactions in

interstate commerce. Iwen v. U.S. West Direct, 1999 MT 63, ¶ 23, 293 Mont. 512, 977

9
P.2d 989. The FAA was enacted in 1925 to quell “widespread judicial hostility to

arbitration agreements.” A T & T Mobility v. Concepcion, 563 U.S. 333, 339, 131 S. Ct.

1740, 1745 (2011). A primary purpose of the FAA is to ensure that arbitration

agreements exist upon the “equal footing” as all other contractual provisions. Buckeye

Check Cashing v. Cardegna, 546 U.S. 440, 443, 126 S. Ct. 1204, 1207 (2006). Under the

FAA:

A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy
arising out of such contract or transaction, or the refusal to perform the
whole or any part thereof, or an agreement in writing to submit to
arbitration an existing controversy arising out of such a contract,
transaction or refusal, shall be valid, irrevocable and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. The final clause of the statute is often referred to as the “savings clause,”

the effect of which is that the FAA “does not require the enforcement of arbitration

agreements” that would be subject to “generally applicable [state law] contract defenses

such as fraud, duress, or unconscionability.” Mortensen v. Bresnan, 722 F.3d 1151, 1158

(9th Cir. 2013). However, an arbitration agreement cannot be invalidated by state law

defenses that “apply only to arbitration or that derive their meaning from the fact that an

agreement to arbitrate is at issue.” Concepcion, 563 U.S. at 339, 131 S. Ct. at 1746.

¶21 Montana law favors arbitration and the State has adopted the Uniform Arbitration

Act, Title 27, chapter 5, MCA. Under Montana law, when parties agree to arbitrate

disputes, a district court upon application must order them to proceed to arbitration.

Section 27-5-115, MCA. There is a presumption of arbitrability and doubts should be

10
resolved in favor of arbitration. Kalispell Education Assoc. v. Bd. of Trustees, 2011 MT

154, ¶ 18, 361 Mont. 115, 255 P.3d 199.

¶22 The prevailing rule is that whether a particular dispute is subject to arbitration is a

threshold issue to be decided by the courts unless the parties explicitly agree to assign

that issue itself to arbitration. Bridge Fund Capital v. Fastbucks, 622 F.3d 996, 1000

(9th Cir. 2010). Where a party specifically challenges the validity of the arbitration

clause, and not just the entire contract that contains it, then it is the court that determines

the validity of the arbitration clause. Buckeye, 546 U.S. at 444, 126 S. Ct. at 2775.

¶23 The initial inquiry when any court is asked to compel arbitration is whether the

parties have agreed to arbitrate. Kalispell Education Assoc., ¶ 11. It is a “fundamental

principle that arbitration is a matter of contract.” Concepcion, 563 U.S. at 339, 131 S. Ct.

at 1746, (citing Rent-A-Center v. Jackson, 561 U.S. 63, 130 S. Ct. 2772 (2010)). An

enforceable agreement to arbitrate must therefore have the same elements as any contract:

namely, identifiable parties with the capacity to contract; the consent of the parties; a

lawful object; and consideration. Section 28-2-102, MCA; Thornton v. Songstad, 263

Mont. 390, 394, 868 P.2d 633, 635 (1994). The consent of the parties requires that there

be “mutual assent or a meeting of the minds on all essential terms to form a binding

contract.” Keesun Partners v. Ferdig Oil Co., 249 Mont. 331, 337, 816 P.2d 417, 421

(1991).

¶24 With these general principles of arbitration and contract law as a backdrop, we

now turn to the issues before the Court.

11
¶25 Issue 1: Whether the District Court erred in reserving to itself the determination
of arbitrability.

¶26 Global raises several arguments in support of its contention that the District Court

did not have the authority to determine whether the present dispute was arbitrable. First,

Global maintains that Ossello’s claims must go directly to arbitration because she did not

specifically challenge the validity of the arbitration clause as required by Buckeye.

However, Global also concedes that Ossello challenged the arbitration clause in response

to Global’s motion to compel arbitration. This was sufficient to meet Ossello’s

obligation to challenge the arbitration clause. Bridge Fund Capital, 622 F.3d at 999.

¶27 Second, Global argues that its arbitration provision contains a “delegation term”

that requires an arbitrator and not a court to decide any threshold issues of arbitrability.

We begin with the fundamental principle under the FAA that it is the responsibility of the

court and not the arbitrator to determine the threshold issue of arbitrability—i.e., the

validity of a challenged arbitration clause. Kelker, ¶ 12; Buckeye, 546 U.S. at 444, 126

S. Ct. at 2775. However, the parties to an agreement to arbitrate may agree to a

“delegation provision” that assigns to the arbitrator the determination of the initial issues

of arbitrability. Rent-A-Center, 561 U.S. at 68, 130 S. Ct. at 2777. The Supreme Court

has held that the terms of an enforceable delegation provision must be “clear and

unmistakable” on the face of the arbitration agreement. First Options v. Kaplan, 514

U.S. 938, 944, 115 S. Ct. 1920, 1924 (1995). “Courts should not assume that the parties

agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e] evidence that

they did so.” Rent-A-Center, 561 U.S. at 68-69, 130 S. Ct. at 2778.

12
¶28 Global contends that the following language in its arbitration clause constitutes a

delegation provision that must be enforced:

In the event of any controversy, claim or dispute between the parties arising
out of or relating to this Agreement or the breach, termination,
enforcement, interpretation, or validity thereof, including the termination of
the scope or applicability of this Agreement to arbitrate, shall be
determined by arbitration. . . . (Emphasis added.)4

Global maintains that this provision evidences Ossello’s agreement to arbitrate

arbitrability, preempting the rule of Buckeye and Kelker that enforceability of an

arbitration provision is for a court to decide. We disagree.

¶29 There is no “clear and unmistakable” agreement in Global’s language or elsewhere

in the facts of this case to arbitrate questions of arbitrability. It is black-letter law that

contract language should be interpreted most strongly against the party responsible for

the language. Section 28-3-206, MCA; West v. Club at Spanish Peaks, 2008 MT 183,

¶ 53, 343 Mont. 434, 186 P.3d 1228. The fact that Global felt compelled to argue in its

brief that the word “termination” in its delegation clause should actually be read as

“determination” underscores the lack of clarity in this provision. As written, the

language is ambiguous and confusing. It does not clearly delegate to the arbitrator the

determination of the scope or applicability of the agreement to arbitrate; rather it

delegates to the arbitrator the “termination of the scope or applicability of this agreement

to arbitrate.” This language, written by Global, makes no sense and we are unable to

4
In its brief, Global inserts the prefix “de” in front of the italicized “termination” in this
language, contending that “determination” was the term intended. There is no “de” in the
original language and we decline to allow Global to alter the language that it drafted to suit its
purposes on appeal.
13
plainly construe its meaning. The purported delegation provision here therefore falls far

short of the required clear and unmistakable standard adopted by the United States

Supreme Court. This provision therefore cannot displace the prevailing rule that the

validity of the arbitration clause is to be determined by the court. The District Court

properly proceeded to determine the enforceability of the arbitration provision.

¶30 Global further argues that Ossello should be precluded from now contesting the

enforceability of the delegation clause because she failed to contest it in the District

Court. However, at the time that Ossello filed her brief in the District Court in opposition

to Global’s motion to compel arbitration, Global had not raised any argument with

respect to a delegation provision. To the contrary, Global argued strenuously that the

District Court should consider the arbitration requirement on its merits and order Ossello

into arbitration. In other words, Global initially argued its position as if there were no

delegation provision at issue in the case. It was only after Ossello filed her brief in

opposition to Global’s motion to compel arbitration that Global raised the delegation

clause argument upon which it now relies. Under these circumstances, we will not

conclude that Ossello waived her right to oppose the delegation clause.

¶31 Global next argues that reference in the arbitration clause to the “American

Arbitration Association” constitutes a delegation provision. The arbitration clause in the

DAA provides that the arbitration be “administered by the American Arbitration

Association (“AAA”) pursuant to its rules and procedures. . . . .” (Emphasis added.)

Administration of the conduct of arbitration proceedings pursuant to AAA rules suggests

14
implementation of procedural and logistical rules; it declares nothing concerning

delegation. There is no language in the arbitration clause that imposes a clearly-defined

and unmistakable agreement to supplant the general rule that courts determine

arbitrability.

¶32 Global alternatively argues that it is the “general rule” that incorporation of the

AAA rules into an arbitration clause constitutes an agreement to arbitrate arbitrability.

We cannot agree. The cases cited by Global almost exclusively involve arbitration

disputes between sophisticated parties in commercial settings, not dealings between a

debt relief organization and a debt-ridden consumer. See, e.g., Oracle America v. Myriad

Group, 724 F.3d 1069 (9th Cir. 2013) (dispute between two computer software

companies, in which the Court applied the “general rule” on AAA incorporation but

“express[ed] no view as to the effect of incorporating arbitration rules into consumer

contracts.”). In the present case, the AAA rules are not part of the record and neither the

DAA nor Global’s arguments specify which of the multiple sets of commercial or

consumer AAA rules are supposedly incorporated here. We cannot therefore conclude

that Global’s mere reference to administering an arbitration pursuant to AAA rules

constitutes a substantive agreement with Ossello to forego the general rule that

arbitrability is to be decided by the court.

¶33 For the foregoing reasons, we reject Global’s argument that the District Court

erred in reserving to itself the determination of whether the DAA was subject to

15
arbitration. We next turn to the merits of the enforceability of the arbitration clause

against Ossello.

¶34 Issue 2: Whether the District Court erred in determining that the arbitration
provision was unconscionable and therefore not enforceable against Ossello.

¶35 For the reasons set forth below, we conclude that Global’s purported right to

compel Ossello to arbitrate fails for the fundamental reason that it is unconscionable

under Montana contract law. Under Montana law, a contract provision can be

unconscionable and therefore unenforceable if “when considered in its context, [it] is

unduly oppressive, unconscionable or against public policy.” Iwen, ¶ 27.5

Unconscionability in Montana contract law is a concept adapted from the Uniform

Commercial Code, and requires a determination that the contractual term is unreasonably

favorable to the drafter, and there is no meaningful choice on the part of the other party

but to accept the provision.6 Iwen, ¶ 32 (citing Leibrand v. National Farmers Union, 272

Mont. 1, 898 P.2d 1220 (1995)).

¶36 In Iwen, we addressed whether an arbitration clause contained in a contract for

telephone book advertising was binding upon an attorney customer who filed a complaint

5
Iwen also considered, alternatively, whether the disputed contract provision was within
the reasonable expectations of the party attacking it. Iwen, ¶ 27. We expressly decide the
present case without consideration of Ossello’s reasonable expectations as to the DAA with
Global. See Mortensen.
6
Global concedes that the DAA is a contract of adhesion, although preferring to refer to
it as a “standard form contract.” Global contends that the law, evidently the FAA, is intended to
protect contracts of adhesion because they are now common and essential to business. Montana
law will not find an arbitration clause or any other provision unenforceable simply because it is
in a contract of adhesion. Day v. CTA, Inc., 2014 MT 119, ¶ 11, 375 Mont. 79, 324 P.3d 1205
(upholding an arbitration clause in a contract between a property owner and an architectural
engineering firm).
16
against U.S. West for damages because his paid advertisement was incomplete and his

telephone number and address were missing. Iwen, ¶ 7. The arbitration provision

obligated the parties to arbitrate “any controversy or claim arising out of or relating to

this agreement, or breach thereof,” but provided that any action by the publisher (U.S.

West) for the collection of amounts due under the agreement was exempted from the

arbitration obligation. This Court found the arbitration clause unreasonably favorable to

the drafter because it required the customer to arbitrate all controversies, but allowed the

company to sue in a court of law to collect amounts due under the contract from the

consumer. Iwen, ¶ 31. We concluded the arbitration provision lacked mutuality of

obligation, was one-sided, and contained terms unreasonably favorable to the drafter. We

said:

Certainly, this does not mean arbitration agreements must contain mutual
promises that give the parties identical rights and obligations, or that the
parties must be bound in the exact same manner. This simply restates the
rule of law that disparities in the rights of the contracting parties must not
be so one-sided and unreasonably favorable to the drafter . . . that the
agreement becomes unconscionable and oppressive.

Iwen, ¶ 32.

¶37 The arbitration provision at issue in this case similarly obligates both parties to

arbitrate any controversy or dispute arising out of the DAA, including matters with

respect to breach or enforcement of the agreement. See Opinion, ¶ 13. However, a

separate provision in the DAA provides that if Ossello’s account has a negative balance

at any time, “collection actions may be pursued against you. If any such collection action

is undertaken, you agree to pay all court costs and collection fees, including reasonable

17
attorney’s fees, to the extent permitted by applicable law.” Thus, as in Iwen, Ossello is

obligated to arbitrate all controversies arising from the breach of the DAA, but if Ossello

breaches the agreement, Global has the right to sue her in a court of law and to recover

damages plus court costs, collection fees, and attorney fees. As we further observed in

¶ 31 of Iwen, as a practical matter, the only reason that U.S. West would seek a remedy

against Iwen would be for an unpaid bill, and for that purpose it had free reign to seek a

remedy before a court of law, while Iwen would be forced to seek any and all remedies

against U.S. West in arbitration. The same is true here. Global is entitled to sue Ossello

in a court of law for breach of the agreement, but she cannot sue it for breach of the

agreement. In sum, the obligation to arbitrate is one-sided, not mutual.

¶38 We are mindful that Iwen pre-dates Concepcion and Mortensen. In Concepcion,

the Supreme Court concluded that a California state law rule that deemed unconscionable

class-action waivers in consumer contracts of adhesion was preempted by the FAA

because it “stands as an obstacle to the accomplishment and execution of the full

purposes and objectives of Congress.” Concepcion, 563 U.S. at 352, 131 S. Ct. at 1753

(internal citations omitted). In Mortensen, the Ninth Circuit interpreted Concepcion to

mean that “[a]ny general state-law contract defense, based in unconscionability or

otherwise, that has a disproportionate effect on arbitration is displaced by the FAA.”

Mortensen, 722 F.3d at 1159. Based upon Concepcion and Mortensen, Global maintains

here that any generally applicable state rule that stands as an obstacle to the objectives of

the FAA is preempted by the Act. We do not agree with this broad statement.

18
¶39 Notably, several state and federal courts since Concepcion have concluded that

lack of mutuality of obligation in an arbitration clause remains an appropriate basis for

considering the enforceability of an arbitration clause. See Figueroa v. THI of N.M. at

Casa Arena Blanca, LLC, 306 P.3d 480 (N.M. App. 2013) (holding that notwithstanding

the pronouncements in Concepcion, an arbitration agreement in which the drafter

unreasonably reserved to itself the claims it would most likely bring for the courts while

subjecting the weaker party to arbitration of all claims, was unenforceable) (cert. denied

by THI of New Mexico at Casa Arena Blanca, LLC v. Figueroa, 133 S. Ct. 2736 (2013));

Brewer v. Mo. Title Loans, 364 S.W.3d 486 (Mo. 2012) (concluding inter alia that

Concepcion does not bar a finding that an arbitration clause is unenforceable where a title

company reserves its right to obtain its primary remedies through the court system, but

requires the party with lesser bargaining power to obtain her only meaningful remedy

through individual arbitration) (cert. denied by Mo. Title Loans, Inc. v. Brewer, 133 S. Ct.

191 (2012)); Noohi v. Toll Bros., 708 F.3d 599 (4th Cir. 2013) (affirming district court

ruling that an arbitration provision was unenforceable for lack mutuality of consideration

because it bound only the purchaser to arbitration) (cert. dismissed by Toll Bros. v. Noohi,

134 S. Ct. 48 (2013)); Lou v. MA Labs., Inc., 2013 U.S. Dist. LEXIS 70665 (N.D. Cal.

2013) (concluding that the lack of mutuality in an arbitration provision renders the clause

unconscionable and therefore unenforceable). The fact that the United States Supreme

Court has denied certiorari in three of the foregoing cases illustrates that Concepcion has

19
not wholly preempted an unconscionability defense premised upon a lack of mutuality of

obligation in actions in which an arbitration clause is challenged.

¶40 As noted, the District Court found inter alia that the arbitration clause in Global’s

contract was unconscionable because it unfairly favored the drafter. We agree. This is

the same conclusion underpinning our analysis in Iwen. We conclude that the District

Court’s finding of unfavorable treatment and unconscionability was correct because the

arbitration clause lacked mutuality. As was the case in Iwen, Global retained in the DAA

important rights not provided to Ossello. Global had the right to sue Ossello in a court of

law at any time the Dedicated Account lacked funds to cover Global’s payment demands

or withdrawals. Because virtually the only breach of contract with which Global would

be concerned would be lack of payment, Global reserved to itself the right to litigate its

primary claim while requiring Ossello to arbitrate any and all claims she might have

under the DAA. This arbitration provision unreasonably favors Global to the detriment

of Ossello and is therefore unconscionable and unenforceable.

¶41 Concepcion and Mortensen cautioned against courts invoking state law defenses to

upend an otherwise valid arbitration clause. That is not what has occurred here. This

arbitration clause is invalid not due to a disproportionate application of state law, but

rather because Global—like the drafters in the cases noted above—chose to compel

arbitration for Ossello while reserving to itself the right to pursue its remedies in a court

of law. Such one-sided arbitration clauses do not serve the objectives of the FAA.

20
 CONCLUSION

¶42 For the foregoing reasons, we conclude that the District Court did not err in

reserving to itself the determination of arbitrability, nor did it err in declaring that the

arbitration provision is unconscionable and therefore not enforceable against Ossello.

¶43 Affirmed.

/S/ MIKE McGRATH

We Concur:

/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
/S/ JAMES JEREMIAH SHEA
/S/ BETH BAKER

Justice Michael E Wheat, concurring.

¶44 I concur with the majority to affirm the District Court’s decision that the

arbitration clause in Global’s purported contract was unenforceable against Ossello. I

take this opportunity to expand upon the state of the law under the Federal Arbitration

Act and the extremely narrow tight rope that state courts are forced to walk when

attempting to apply existing state law to cases before them. The issue is long past

whether there is a contract of adhesion. Most citizens now regularly participate in

contracts of adhesion to provide themselves with goods and services that at least seem to

be essential to modern life.

¶45 The elephant in the room is not state hostility toward arbitration. As noted in the

majority opinion, Montana has a state arbitration act and Montana courts will uphold and

21
enforce an arbitration requirement when the parties have agreed to it. Kalispell

Education Assoc., ¶ 22. If there is any hostility, it is toward those who hide behind the

FAA, and behind the court decisions interpreting it, to escape any material consequence

of running fraudulent confidence schemes. In the present case, if Ossello proves the

material allegations of her complaint, it is clear that she was induced into a fraudulent

scheme to take $589.29 from her every month, but to provide little or nothing in return.

¶46 Under the interpretation urged by the Dissent, Ossello would be required to pay up

to $2000 to participate in arbitration, while at the same time she would presumably be

precluded from raising any of the claims against World Law and Global that she alleges

in her complaint. Those claims include fraudulent and negligent misrepresentation,

violations of the Montana Consumer Protection Act, violations of the Montana Consumer

Debt Management Services Act, unjust enrichment, and the unauthorized practice of law.

¶47 More significantly, within the arbitration process Ossello would be placed in the

untenable and inconsistent position of acknowledging that the arbitration provision is

binding and valid, but that the contract that includes it is not enforceable because it was

induced by fraud and deceit.

¶48 In the face of schemes like this, state courts are told that they cannot consider the

merits of the situation; that arbitration clauses are inherently severable from the

underlying purported contract; that the victim of the fraud must mount a separate

challenge against the arbitration clause itself; that the victim of the fraud must mount a

separate challenge to the delegation provision in the arbitration clause; and that a

22
challenge to the arbitration clause must stand or fall upon grounds unique to that clause.

State courts are told that they may not determine that there was a unified fraudulent

scheme to victimize a consumer, but that they may only consider the arbitration clause in

artificial isolation. Further, state courts are told that if they decide too many cases against

those who hide behind fraudulently-induced arbitration clauses, their state law will be

ignored as being hostile to arbitration. Here, for example, if Ossello proves the material

allegations of her complaint, there was a scheme to fraudulently induce here to hand over

money to Global every month.

¶49 As the majority opinion properly notes, arbitration is a matter of contract law, and

the FAA was enacted to place arbitration on the same footing as all other contractual

provisions. Under the express and simple terms of 9 U.S.C. § 2, arbitration clauses are

enforceable “save upon such grounds as exist at law or in equity for the revocation of any

contract.” Supposedly, because agreements to arbitrate are contracts, the initial inquiry

should be whether the parties have entered a contract to arbitrate. That issue is or should

be determined under basic hornbook contract law—identifiable parties with the capacity

to contract, their consent to the contract, a lawful object, and consideration. It should go

without saying that purported assent to a contract which is induced by fraud is no assent

and therefore there can be no contract. But, a state court that so concludes under 9 U.S.C.

§ 2 risks having the conclusion vacated as evidencing a hostility toward arbitration.

¶50 The plain language of the FAA exception to enforceability of arbitration clauses,

“save upon such grounds as exist at law or in equity for the revocation of any contract,” is

23
rendered meaningless under the approach cited by the Dissent. Surely Congress, in

enacting the FAA, did not intend to enable con men and charlatans to place themselves

and their fraudulent schemes out of the reach of our courts simply by inserting arbitration

language or a “delegation” clause into an otherwise fraudulent contract.

¶51 I concur.

/S/ MICHAEL E WHEAT

Chief Justice Mike McGrath and Justice James Jeremiah Shea join the Concurrence of
Justice Michael E Wheat.

/S/ MIKE McGRATH
/S/ JAMES JEREMIAH SHEA

Justice Laurie McKinnon, dissenting.

¶52 In my opinion, this case is controlled by Rent-A-Center, West, Inc., v. Jackson,

561 U.S. 63, 130 S. Ct. 2772 (2010), and the requirement that a delegation provision

contained within an arbitration clause must be specifically challenged as unenforceable. I

would further conclude that the specific language of the delegation provision and the

DDA’s incorporation of the AAA rules provide “clear and unmistakable” evidence that

the question of arbitrability was to be decided by an arbitrator. Finally, while

non-mutuality is a defense under state law to a contract, not every degree of

non-mutuality renders an agreement unconscionable and unenforceable. Under the

24
provisions of this agreement, I would conclude that the non-mutuality of remedies, if any,

did not render the arbitration agreement unenforceable.

¶53 Ossello has not made any challenge to the enforceability of the delegation term

that is different from her challenge to the arbitration clause in general. Although Ossello

acknowledged Global had moved to compel arbitration and that Global requested “the

arbitrator (and not this Court) should decide the arbitration clause is enforceable,” she

failed to challenge the delegation clause specifically arguing instead that “she cannot be

required to arbitrate anything, not even arbitrability, until a court has made a threshold

determination that the parties did, in fact, agree to arbitrate.” Ossello fails to recognize

that while the threshold question of arbitrability is for the court to decide, the parties, as

they did here, may agree to delegate resolution of that controversy to an arbitrator.

Accordingly, “unless [Ossello] challenged the delegation provision specifically, [this

Court] must treat it as valid under § 2 [of the Federal Arbitration Act], and must enforce

it under §§ 3 and 4, leaving any challenge to the validity of the Agreement as a whole for

the arbitrator.”1, 2, 3 Rent-A-Center, 561 U.S. at 72, 130 S. Ct. at 2779.

1
9 U.S.C. § 2, the “primary substantive provision of the Act,” Moses H. Cone Memorial
Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941 (1983), provides:
A written provision in . . . a contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of such
contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any contract.
2
Under 9 U.S.C. § 3, a party may apply to a federal court for a stay of the trial of an action upon
“any issue referable to arbitration . . . .”
3
Under 9 U.S.C. § 4, a party “aggrieved” by the failure of another party to arbitrate may petition
a federal court for an order directing that arbitration proceed. Section 4 reads, in part:
25
¶54 The delegation provision is an agreement to arbitrate threshold issues concerning

the arbitration agreement. The United States Supreme Court has recognized that “parties

can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties

have agreed to arbitrate or whether their agreement covers a particular controversy.”

Rent-A-Center, 561 U.S. at 67, 130 S. Ct. at 2777. The Court explained that because § 2

states that a “written provision” “to settle by arbitration a controversy” is “valid,

irrevocable, and enforceable” without mention of the validity of the contract in which it is

contained, a party’s challenge to another provision of the contract as a whole, does not

prevent a court from enforcing a specific agreement to arbitrate. Rent-A-Center, 561 U.S.

at 69, 130 S. Ct. at 2778. Thus, as a matter of “substantive federal arbitration law, an

arbitration provision is severable from the remainder of the contract.” Buckeye, 546 U.S.

at 445, 126 S. Ct. at 1209. If a specific challenge is not made to the delegation clause,

then it must be treated as valid under § 2.

¶55 The Court’s severability analysis in Rent-A-Center stems from its earlier decision

in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801 (1967),

in which the Court held that consideration of a contract revocation defense is generally a

matter for the arbitrator, unless the defense is specifically directed to the arbitration

clause. Prima Paint, 388 U.S. at 404, 87 S. Ct. at 1806. In Prima Paint, the Court

The court shall hear the parties, and upon being satisfied that the making of the
agreement for arbitration or the failure to comply therewith is not in issue, the
court shall make an order directing the parties to proceed to arbitration in
accordance with the terms of the agreement. . . . If the making of the arbitration
agreement or the failure, neglect, or refusal to perform the same be in issue, the
court shall proceed summarily to the trial thereof.

26
addressed “whether a claim of fraud in the inducement of the entire contract is to be

resolved by the federal court, or whether the matter is to be referred to the arbitrators.”

Prima Paint, 388 U.S. at 402, 87 S. Ct. at 1805. Guided by § 4 of the FAA, the Court

held that “if the claim is fraud in the inducement of the arbitration clause itself—an issue

which goes to the ‘making’ of the agreement to arbitrate—the federal court may proceed

to adjudicate it.” Prima Paint, 388 U.S. at 402, 87 S. Ct. at 1806. However, consistent

with the principle of the FAA that arbitration is a matter of contract, the parties may

agree to have the arbitrator decide arbitrability. Thus, in Rent-A-Center, the Court

extended its Prima Paint severability analysis and recognized that a delegation of

arbitrability is severable from the contract itself and, as a separate and independent

provision of the agreement, must be specifically challenged as unenforceable.

¶56 The Court has treated the holding in Prima Paint as a rule of severability: when a

party challenges a contract, but not specifically the agreement to arbitrate, the agreement

to arbitrate is enforceable apart from the contract. Justice Stevens noted in his dissent in

Rent-A-Center that “Prima Paint and its progeny allow a court to pluck from a potentially

invalid contract a potentially valid arbitration agreement.” Rent-A-Center, 561 U.S. at

85, 130 S. Ct. at 2786 (Stevens, J., dissenting) (emphasis in original). Rent-A-Center thus

added a “new layer” of severability: courts must now sever from a potentially invalid

agreement an even narrower provision that refers particular arbitrability disputes to an

arbitrator. This new layer of severability is consistent with the principle that “[a]n

agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the

27
party seeking arbitration asks the federal court to enforce, and the FAA operates on this

additional arbitration agreement just as it does on any other.” Rent-A-Center, 561 U.S. at

70, 130 S. Ct. at 2777-78. When an arbitration agreement contains a delegation provision

and the plaintiff raises a challenge to the contract as a whole, the federal courts may not

review his claim because it has been committed to the power of the arbitrator. Instead,

the plaintiff must “challenge[ ] the delegation provision specifically.” Rent-A-Center,

561 U.S. at 72, 130 S. Ct. at 2779 (emphasis added).4

¶57 The challenge Ossello makes is indistinguishable from the challenge made by

Jackson and found to be insufficient in Rent-A-Center. Jackson opposed the motion to

compel filed by Rent-A-Center on the ground that “the arbitration agreement in question

is clearly unenforceable in that it is unconscionable,” Rent-A-Center, 561 U.S. at 66, 130

S. Ct. at 2775; that “the entire arbitration agreement, including the delegation clause, was

unconscionable,” Rent-A-Center, 561 U.S. at 73, 130 S. Ct. at 2779 (emphasis added);

4
The Court in Rent-A-Center was careful to note that application of the severability rule was
required regardless of whether the underlying contract was itself an arbitration agreement. The
Court, appearing to respond to the dissent, stated:
To be sure this case differs from Prima Paint, Buckeye, and Preston, in that the
arbitration provisions sought to be enforced in those cases were contained in
contracts unrelated to arbitration—contracts for consulting services, see Prima
Paint, check-cashing services, see Buckeye, and “personal management” or
“talent agent” services, see Preston. In this case, the underlying contract is itself
an arbitration agreement. But that makes no difference. Application of the
severability rule does not depend on the substance of the remainder of the
contract. Section 2 operates on the specific “written provision” to “settle by
arbitration a controversy” that the party seeks to enforce. Accordingly, unless
Jackson challenged the delegation provision specifically, we must treat it as valid
under § 2, and must enforce it under §§ 3 and 4, leaving any challenge to the
validity of the Agreement as a whole for the arbitrator.
Rent-A-Center, 561 U.S. at 71-72, 130 S. Ct. at 2779 (internal citations omitted).
28
and that “the arbitration agreement as a whole is substantively unconscionable.”

Rent-A-Center, 561 U.S. at 73, 130 S. Ct. at 2779.

¶58 Because Jackson’s opposition only challenged the arbitration agreement as a

whole and “none of Jackson’s substantive unconscionability challenges was specific to

the delegation provision,” the Court found it unnecessary to consider Jackson’s claim and

enforced the agreement as § 2 of the FAA required. Rent-A-Center, 561 U.S. at 73, 130

S. Ct. at 2780. See also Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015); Parnell v.

Cashcall, Inc., 804 F.3d 1142 (11th Cir. 2015).

¶59 Ossello makes the same mistake made by the plaintiff in Buckeye and

Rent-A-Center. She argues only that the DDA as a whole is illegal, without any

argument specifically that the delegation clause is unenforceable. Jackson made a similar

argument which was adopted by the Ninth Circuit Court of Appeals: “a party [who]

challenges an arbitration agreement as unconscionable, and thus asserts that he could not

meaningfully assent to the agreement, [leaves] the threshold question of

unconscionability . . . for the court.” Rent-A-Center, 561 U.S. at 67, 130 S. Ct. at 2776.

¶60 However, the Supreme Court considered this argument in Rent-A-Center and

specifically rejected it. Accordingly, this Court’s conclusion that Ossello challenged the

arbitration clause itself and thus necessarily challenged the delegation provision, Opinion,

¶ 26, is in direct conflict with Rent-A-Center.

¶61 Although I would find that § 2 requires that the delegation clause be enforced

because it has not been specifically challenged, I would nonetheless conclude that there is

29
“clear and unmistakable” evidence that the parties agreed to submit the question of

arbitrability to an arbitrator. The disputed arbitration clause provides:

In the event of any controversy, claim or dispute between the parties arising
out of or relating to this Agreement or the breach, termination,
enforcement, interpretation, or validity thereof, including the termination of
the scope or applicability of this Agreement to arbitrate, shall be
determined by arbitration.

¶62 At Ossello’s urging, the Court has found an ambiguity because “termination”

appears out of place. Global argued there was a clerical error and that it should have read

“determination.” Regardless of whether the phrase is “termination” or should be

“determination,” the language remains clear and unmistakable—the “enforcement,”

“interpretation,” “validity,” and “the scope or applicability of [the] Agreement to

arbitrate” shall be determined by arbitration. Any conclusion to the contrary is

unsupportable and an attempt to manufacture an ambiguity. This is an express delegation

clause which constitutes clear and unmistakable evidence that the parties agreed to

submit the question of arbitrability to an arbitrator.

¶63 Additionally, the DDA provides that the “parties agree, the arbitration shall be

administered by the American Arbitration Association pursuant to its rules and

procedures . . . .” The Commercial Arbitration Rules and Mediation Procedures provide

at R-7 that the “arbitrator shall have the power to rule on his or her own jurisdiction,

including objections with respect to the existence, scope or validity of the arbitration

agreement.”5 Thus, even in the absence of an express delegation clause, the

5
The rule was amended in October of 2013, without any change in substance, and is now
codified as R-14.
30
incorporation of the AAA rules operates as a delegation to an arbitrator of the question of

arbitrability. While the Court dismisses Global’s argument that the AAA rules were

incorporated into the DDA on the basis that Global did not make them a part of the

record, Global has provided the Court with a reference cite to the current AAA Consumer

Arbitration Rules and Mediation Procedures and specifically quoted for the Court the

relevant portion of R-7 regarding jurisdiction of the arbitrator.6 The content of the rules

does not appear to be in dispute and may be readily confirmed by visiting the reference

cite provided by Global, as many courts have routinely done under similar circumstances.

See, e.g., Terminix Int’l Co LP v. Palmer Ranch LtD P’Ship, 432 F.3d 1327, 1332 (11th

Cir. 2005) (citing www.adr.org as the source in identifying and quoting specific AAA

rules incorporated into the parties’ arbitration agreement for purposes of ascertaining

whether parties had clearly and unmistakably agreed that the arbitrator should decide

validity of arbitration clause).

¶64 Where an arbitration agreement incorporates rules conferring authority upon an

arbitrator to decide gateway questions, courts have found clear and unmistakable

evidence that the parties have contracted around the default rule that the court (rather than

an arbitrator) must adjudicate objections to the validity of the arbitration agreement. See

U.S. Nutraceuticals, LLC v. Cyanotech Corp., 769 F.3d 1308, 1311 (11th Cir. 2014)

(“When the parties incorporated into the 2007 contract the rules of the Association, they

clearly and unmistakably contracted to submit questions of arbitrability to an

6
Global’s reference cite to the current AAA Consumer Arbitration rules is at p. 39 of their
Opening Brief; Global sets forth R-7 at p. 15 of their Opening Brief.
31
arbitrator.”). See also Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687

F.3d 671, 675 (5th Cir. 2012) (“We agree with most of our sister circuits that the express

adoption of [AAA rules into an arbitration agreement] presents clear and unmistakable

evidence that the parties agreed to arbitrate arbitrability.”); Terminix Int’l Co LP v.

Palmer Ranch LtD P’Ship, 432 F.3d 1327, 1332-33 (11th Cir. 2005) (“By incorporating

the AAA Rules, including Rule 8, into their agreement, the parties clearly and

unmistakably agreed that the arbitrator should decide whether the arbitration clause is

valid. . . . In the ordinary case, we would decide these questions only because they go to

the validity of the arbitration clause itself, which is by default an issue for the court, not

the arbitrator. Here, however, the parties have contracted around that default rule . . . .”);

Southland Health Services, Inc. v. Bank of Vernon, 887 F. Supp. 2d 1158, 1167 (N.D.

Ala. 2012) (“The arbitration agreements here clearly demonstrate the parties’ intent to

empower the arbitrator with the authority to determine his own jurisdiction. Each

agreement states that it is subject to the rules of the AAA. . . . Because the agreements

empower the arbitrator to determine jurisdiction, this Court is bound by its obligation to

rigorously enforce agreements to arbitrate.”) (citation and internal quotation marks

omitted); Knowles v. Community Loans of America, Inc., 2012 U.S. Dist. LEXIS 165321,

at *5 (S.D. Ala. Nov. 20, 2012) (“One way to show a clear and unmistakable intent to

arbitrate arbitrability is by agreeing that the arbitration will be conducted in accordance

with formalized arbitration rules, which rules provide for arbitration of arbitrability.”).

32
¶65 In Oracle America, Inc. v. Myriad Group A.G., 724 F.3d 1069 (9th Cir. 2013), the

Ninth Circuit observed, consistent with the above authority, that “[v]irtually every circuit

to have considered the issue has determined that incorporation of the [AAA] arbitration

rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate

arbitrability.” Oracle, 724 F.3d at 1074. The court found this consensus persuasive in

holding that incorporation of the UNCITRAL rules—which contain a jurisdictional

provision “almost identical” to the one in the AAA rules—constituted “clear and

unmistakable evidence that the parties agreed the arbitrator would decide arbitrability.”

Oracle, 724 F.3d at 1074-75. When the question regarding incorporation of the AAA

rules arose again in Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015), the court

clearly and unambiguously stated: “we hold that incorporation of the AAA rules

constitutes clear and unmistakable evidence that contracting parties agreed to arbitrate

arbitrability.” Brennan, 796 F.3d at 1130.

¶66 Accordingly, the Court cannot reach any of the arguments regarding mutuality or

unconscionability if the DDA reflects the parties’ clear and unmistakable intent to have

the arbitrator decide threshold disputes concerning such gateway matters as validity and

arbitrability. Global has made a compelling showing that the parties clearly and

unmistakably intended to arbitrate the question of arbitrability, both through the text of

the delegation clause itself and the express incorporation of the AAA rules empowering

the arbitrator to rule on his or her own jurisdiction. The relevant authorities (including

33
Brennan, Oracle, Terminix and its progeny) have consistently and rigorously enforced

such provisions—which is precisely what this Court should do as well.

¶67 Finally, the Court has chosen an alternative route to find that the arbitration clause

is unenforceable, concluding the remedies are non-mutual and “[s]uch one-sided

arbitration clauses do not serve the objectives of the FAA.” Opinion, ¶ 41. In electing

this alternative route, the Court has avoided the issue primarily raised by the parties—

whether Montana’s “reasonable expectations/fundamental rights” rule, first enunciated in

Kortum-Managhan v. Herbergers NBGL, 2009 MT 79, 349 Mont. 475, 204 P.3d 693,

disproportionally impacts arbitration agreements and is consequently preempted by the

FAA under the reasoning of Concepcion. See Mortenson v. Bresnan Commc’ns LLC,

722 F.3d 1151, 1161 (9th Cir. 2013). I would conclude that Montana’s reasonable

expectations/fundamental rights rule is contrary to the FAA as interpreted by Concepcion

and conclusively answer that question for litigants and the trial courts.

¶68 Regarding the Court’s alternative pursuit of unenforceability, a lack of mutuality

of remedies in a contract is a type of “one-sidedness” that is likely peculiar to arbitration

agreements. Thus, care must be taken to consider the admonition in Concepcion that,

under the doctrine of preemption, state courts cannot adopt “defenses that apply only to

arbitration or that derive their meaning from the fact that an agreement to arbitrate is at

issue.” Concepcion, 563 U.S. at 339, 131 S. Ct. at 1746. Unconscionability frequently

includes a one-sided contract. Therefore, a court must consider all of the circumstances

34
of the particular agreement and refrain from adopting an automatic rule that

non-mutuality of remedies renders an arbitration agreement unenforceable.

¶69 The Court finds that the remedies are non-mutual because of the following

provision contained within the DDA:

Default and Collection of Accounts: If your Account is suspended,
cancelled or otherwise terminated for any reason and your Account has a
negative balance, you agree to pay the negative balance upon demand,
Should you fail to remit the full amount of such negative balance, you shall
remain responsible for the deficit and collection actions may be pursued
against you. If any such collection action is undertaken, you agree to pay
all court costs and collection fees, including reasonable attorney’s fees, to
the extent permitted by applicable law.

Contrary to the Court’s reasoning and conclusion, this provision does not give Global the

right to bypass arbitration. Arbitration is a matter of contract and when construing a

contract we must consider the entirety of the agreement. In addition to the provision

relating to default and collection, the DDA provides any “controversy,” “claim,” or

“dispute” arising out of the DDA must be submitted to arbitration. These several

provisions taken together and construed consistently, in the context of the entire

agreement, lead to the conclusion that the default and collection provision concern the

execution of the arbitration award following arbitration of any dispute. Furthermore, a

review of the DDA demonstrates that the Court’s attempt to “carve out” a non-mutual

remedy is misplaced: all disputes are to be submitted to arbitration; arbitration applies

equally to Ossello and Global; arbitration is to occur in the county in which Ossello

resides; the arbitrator must be neutral and independent; the arbitrator must abide by

ethical codes; the arbitration must proceed before a national arbitration forum; both

35
parties give up their right to appeal; and the parties share equally the cost of arbitration,

unless Ossello’s costs exceed $2,000—in which case Global will pay the excess.

¶70 Considering the DDA in its entirety, I cannot agree with the Court that the

non-mutual remedies, to the extent they may even exist, renders this arbitration

agreement unenforceable. Indeed, the Court’s focus on complete mutuality and

one-sidedness will likely disproportionately affect arbitration agreements in violation of

Concepcion. Concepcion makes clear that state courts may apply state common law

defenses, to the extent they do not disproportionately affect arbitration agreements. Here,

I cannot find that mutuality is so lacking that it necessarily indicates substantive

unconscionability; nor is the DDA so lacking in fairness, due to blatant one-sidedness,

that it cannot escape being unconscionable.

¶71 I would conclude that Ossello has failed to specifically challenge the delegation

provision and that § 2 of the FAA requires that an arbitrator decide the question of

arbitrability. Nonetheless, the language of the arbitration clause and the incorporation

into the DDA of the AAA rules are clear and unmistakable evidence of the parties’ intent

to submit the question of arbitrability to an arbitrator. Finally, I do not agree that this

arbitration agreement is unenforceable because it is one-sided and lacking in mutuality.

No matter what state law infirmity Ossello raises, whether the arbitration agreement fails

for lack of mutuality in remedies, lack of consideration, failure of consideration, fraud in

the inducement, unconscionability, or being declared fraudulent and void because Global

was not a licensed debt settlement provider, the Supreme Court has held—clearly and

36
repeatedly—that such an infirmity is irrelevant to enforceability. Only a discrete

challenge directed specifically at the delegation provision itself and a showing that it is

invalid under generally applicable state laws—which do not disproportionately affect

arbitration agreements—will render the agreement unenforceable.

¶72 I would reverse the District Court’s judgment denying Global’s motion to compel

arbitration and allow an arbitrator to decide the question of arbitrability. To the extent we

conclude otherwise, I dissent.

/S/ LAURIE McKINNON

Justice Jim Rice joins in the dissenting Opinion of Justice McKinnon.

/S/ JIM RICE

37