NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JAN 23 2013
MOLLY C. DWYER, CLERK
DOYLE WHEELER; CARRI WHEELER, No. 11-35984 U.S. COURT OF APPEALS
husband and wife, individually and on
behalf of similarly situated Washington D.C. No. 2:10-cv-00202-LRS
residents,
Plaintiffs - Appellees,
v. MEMORANDUM*
NOTEWORLD LLC, DBA NoteWorld
Servicing Center; NATIONWIDE
SUPPORT SERVICES INC., a California
corporation; JOHN DOES, A-K; JANE
DOES, A-K,
Defendants,
and
FREEDOM DEBT CENTER, a California
corporation,
Defendant - Appellant.
Appeal from the United States District Court
for the Eastern District of Washington
Lonny R. Suko, District Judge, Presiding
Argued and Submitted December 3, 2012
Seattle, Washington
Before: SCHROEDER, McKEOWN, and TALLMAN, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Plaintiffs Doyle and Carrie Wheeler brought a consumer debt diversity
action against Defendants Noteworld LLC, Freedom Debt Center (“Freedom”), and
others, arising from the Wheelers’ engagement of Freedom to provide them with
debt settlement services. Freedom appeals the denial of its motion to compel
arbitration. We affirm.
The district court concluded, and the parties do not dispute, that three
provisions of the arbitration section of the Debt Settlement Agreement were
substantively unconscionable: the 30-day limitation period for claims; the loser-
pays-all provision; and the provision requiring the Wheelers to arbitrate their
Washington claim in Orange County California.
Under Washington law, severance of unconscionable provisions from a
section of an agreement is not possible where the unconscionable provisions
permeate that section. McKee v. AT&T Corp., 191 P.3d 845, 860 (Wash. 2008).
This contract’s arbitration section has only four sentences and three of these
contain an unconscionable provision. The section is materially similar to the one
in McKee where four provisions of a consumer services contract were held to be
substantively unconscionable and to permeate the dispute resolution section. The
Supreme Court of Washington treated the McKee arbitration section differently
from the arbitration provisions contained in the employment contracts at issue in
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Adler v. Fred Lind Manor, 103 P.3d 773 (Wash. 2004) and Zuver v. Airtouch
Communications, Inc., 103 P.3d 753 (Wash. 2004). In those cases, severance of
the unconscionable provisions was ordered because there were only two, and the
rest of the provisions in the lengthy arbitration agreements could stand on their
own. Here, as in McKee, the remaining provisions cannot. The unconscionable
provisions “taint the entire [] section, such that severance would essentially require
us to rewrite the [] agreement.” McKee, 191 P.3d at 860–61. Regardless of
whether the severance issue is one of law to be decided de novo or a discretionary
determination, we must affirm the district court in this case. There was no error of
law or abuse of discretion.
AFFIRMED.
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