Tillman v. Commercial Credit Loans, Inc.

Justice NEWBY

dissenting!

I recognize that subprime lenders are under close scrutiny and that our General Assembly decided to outlaw the sale of single premium insurance some time after the execution of the contracts at issue. This case, however, is not about regulating subprime loans. Instead, the Court’s decision today implicates bedrock principles of contract law which should not be disturbed in response to policy concerns over a disfavored industry. For the first time in our *112history, a North Carolina appellate court has found a contract to be unconscionable.

Although the majority3 ostensibly applies general principles of state contract law to render this arbitration agreement unconscionable, in effect the majority finds it unconscionable precisely because it is an agreement to arbitrate. By holding that the collective effect of provisions unique to arbitration agreements renders the instant agreement unconscionable, the majority treats this contract differently from other contracts. Such an approach is precluded by federal law. See 9 U.S.C. § 2 (2000) (making arbitration agreements “valid, irrevocable, and enforceable save upon such grounds as exist at law or in equity for the revocation of any contract.” (emphasis added)); Perry v. Thomas, 482 U.S. 483, 493 n.9, 107 S. Ct. 2520, 2527 n.9, 96 L. Ed. 2d 426, 437 n.9 (1987) (“Nor may a court rely on the uniqúeness of an agreement to arbitrate as a basis for a state-law holding that enforcement would be unconscionable, for this would enable the court to effect what we hold today the state legislature cannot.”); Gay v. CreditInform,-F.3d-,-, 2007 WL 4410362, at *21 (3d Cir. Dec. 19, 2007) (No. 06-4036) (rejecting a plaintiff’s challenge to an arbitration agreement in which she “reliefd] on the uniqueness of the arbitration provision in framing her unconscionability argument” and “contende[d] that the provision is unconscionable because of what it provides, i.e., arbitration of disputes on an individual basis in place of litigation possibly brought on a class action basis”).

Because I believe that today’s holding is neither compelled by the facts under our state law nor complies with federal law, I respectfully dissent.

I. FEDERAL LAW

The contract in this case provides for a means of alternative dispute resolution, arbitration, which is favored in North Carolina. See, e.g., Cyclone Roofing Co. v. David M. LaFave Co., 312 N.C. 224, 229, 321 S.E.2d 872, 876 (1984). Our state’s policy is consistent with “a liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941, 74 L. Ed. 2d 765, 785 (1983). The Federal Arbitration Act (“FAA”) makes all arbitration agreements “valid, irrevocable, and enforceable, *113save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The purpose of the FAA was “to reverse the longstanding judicial hostility to arbitration agreements . . . and to place arbitration agreements upon the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S. Ct. 1647, 1651, 114 L. Ed. 2d 26, 36 (1991); see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-27, 105 S. Ct. 3346, 3354, 87 L. Ed. 2d 444, 455 (1985) (“[W]e are well past the time when judicial suspicion of the desirability of arbitration and of the competence of arbitral tribunals inhibited the development of arbitration as an alternative means of dispute resolution.”). “The [FAA] establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Cone Mem’l Hosp., 460 U.S. at 24-25, 103 S. Ct. at 941, 74 L. Ed. 2d at 785. Accordingly, the United States Supreme Court has recognized that arbitration can be an appropriate forum for the resolution of federal statutory claims and has enforced agreements to arbitrate such claims. See, e.g., Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 109 S. Ct. 1917, 104 L. Ed. 2d 526 (1989) (Securities Act of 1933); Shearson/Am. Express Inc. v. McMahon, 482 U.S. 220, 107 S. Ct. 2332, 96 L. Ed. 2d 185 (1987) (Securities Exchange Act of 1934 and Racketeer Influenced and Corrupt Organizations Act); Mitsubishi, 473 U.S. 614, 105 S. Ct. 3346, 87 L. Ed. 2d 444 (Sherman Act).

Likewise, in Burke County Public School Board of Education v. Shaver Partnership, this Court held that agreements to arbitrate disputes arising under any contract involving “substantial interstate activity” are enforceable under the FAA “notwithstanding conflicting state law.” 303 N.C. 408, 420, 422, 279 S.E.2d 816, 823, 824 (1981). There, we recognized the benefit of “uniformity” in the enforcement of arbitration agreements in state and federal courts. Id. at 422, 279 S.E.2d at 824.

It is important to note the interplay between state and federal law with respect to arbitration agreements: federal law makes an arbitration agreement enforceable except when common law principles, such as unconscionability, make it unenforceable. The common law defense must apply to contracts generally and not arise because the subject is an arbitration agreement. See Doctor's Assocs. v. Casarotto, 517 U.S. 681, 687, 116 S. Ct. 1652, 1656, 134 L. Ed. 2d 902, *114909 (1996) (“Courts may not, however, invalidate arbitration agreements under state laws applicable only to arbitration provisions. By enacting § 2, we have several times said, Congress precluded States from singling out arbitration provisions for suspect status . . . .”); Perry, 482 U.S. at 493 n.9, 107 S. Ct. at 2527 n.9, 96 L. Ed. 2d at 437 n.9 (“A court may not, then, in assessing the rights of litigants to enforce an arbitration agreement, construe that agreement in a manner different from that in which it otherwise construes nonarbitration agreements under state law.”).

Because this case is the first time this Court has held a contract unconscionable, and since the majority agrees that this arbitration agreement is unconscionable because of the collective effect of the arbitration agreement’s terms, today’s holding creates a preemption issue. The majority finds the agreement unconscionable based on provisions that would only exist in an arbitration agreement. Further, the principal opinion’s finding of unconscionability involves a misapplication of a United States Supreme Court test specifically applicable to arbitration costs. See Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 89-92, 121 S. Ct. 513, 521-23, 148 L. Ed. 2d 373, 382-84 (2000).

In short, the majority concludes this arbitration agreement is unconscionable because it contains provisions common to many arbitration agreements. This result is precisely the one rejected recently by the United States Court of Appeals for the Third Circuit. In Gay v. Credithxform, the Third Circuit specifically warned that state court analysis of an arbitration agreement cannot focus on the uniqueness of an arbitration agreement as grounds for unconscionability. 2007 WL 4410362, at *21. Additionally, the Eleventh Circuit has recently upheld an arbitration agreement in the face of challenges similar to those raised in this case, particularly in reference to the class action prohibition and the exceptions to arbitration. See Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 877 (11th Cir. 2005), cert. denied, 546 U.S. 1214, 126 S. Ct. 1457, 164 L. Ed. 2d 132 (2006). These decisions by federal courts of appeals in cases factually analogous to the instant case further underscore the federal preemption issues involved here.

II. STATE LAW

A. General Principles of Contract Law

This Court has emphasized the vital role contracts play in our free society:

*115“The right to contract is recognized as being within the protection of the Fifth and Fourteenth Amendments to the Constitution of the United States; and protected by state constitutions. It has been held that the right to make contracts is embraced in the conception of liberty as guaranteed by the Constitution.”

Alford v. Textile Ins. Co., 248 N.C. 224, 227, 103 S.E.2d 8,10-11 (1958) (internal citations and internal quotation marks omitted) (quoting Morris v. Holshouser, 220 N.C. 293, 17 S.E.2d 115 (1941)). Like any freedom, the liberty to contract is coupled with corresponding responsibility: “Liberty to contract carries with it the right to exercise poor judgment as well as good judgment. It is the simple law of contracts that ‘as a man consents to bind himself, so shall he be bound.’ ” Troitino v. Goodman, 225 N.C. 406, 414, 35 S.E.2d 277, 283 (1945) (citations omitted).

Equally well settled is the role courts should play in interpreting and enforcing contracts: “There can be no dispute that [a] contract between [private parties] . . . there being no mistake or fraud, both being sui juris, is a valid and binding one.” Peoples Bank & Tr. Co. v. Mackorell, 195 N.C. 741, 744, 143 S.E. 518, 520 (1928); see also id. at 745, 143 S.E. at 520 (noting further, by way of example, that even “ ‘though [a] contract was a foolish one, it would hold in law’ ” (citation omitted)). “The principle is generally conceded, and it is certainly equitable, that when the benefit and the burden of a contract are inseparably connected, both must go together, and liability to the burden is a necessary incident to the right to the benefit. Qui sentit commodum sentiré debet et onus.” Norfleet v. Cromwell, 70 N.C. 510, 516, 70 N.C. 634, 641 (1874) (citations omitted).

We have also recognized that the mere fact that one party to a contract is a large, heavily regulated commercial entity does not, per se, destroy the arm’s-length nature of the transaction. In considering enforcement of provisions of an insurance policy, we noted:

The insured and the defendant [insurance company] had the legal right to enter into the contract, and the parties are bound by its terms. In the absence of statutory provisions to the contrary, insurance companies have the same right as individuals to limit their liability and to impose whatever conditions they please, upon their obligations, not inconsistent with public policy; and the courts have no right to add anything to their contracts or to take anything from them.
*116... We must decide the case, therefore, not by what we may think would have been a wiser and more discreet contract on the part of the plaintiff, if he could have procured such a one, but by what is written in the contract actually made by them. Courts are not at liberty to rewrite contracts for the parties. We are not their guardians, but the interpreters of their words. We must, therefore determine what they meant by what they have said — what their contract is, and not what it should have been.

Powers v. Travelers Ins. Co., 186 N.C. 336, 337-38, 119 S.E. 481, 481-82 (1923) (internal citations and internal quotation marks omitted). Our jurisprudence counsels us to exercise caution in undertaking any judicial inquiry into the wisdom of a contract’s terms, such as the one plaintiffs ask us to do here.

B. Unconscionability Under Brenner

On one occasion alone, this Court has addressed the issue of whether a contract should be enforced because of unconscionability. In Brenner v. Little Red School House, Ltd., we recognized that it is only in the exceptional case that a contract will be found unconscionable:

A court will generally refuse to enforce a contract on the ground of unconscionability only when the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and where the terms are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other. In determining whether a contract is unconscionable, a court must consider all the facts and circumstances of a particular case. If the provisions are then viewed as so one-sided that the contracting party is denied any opportunity for a meaningful choice, the contract should be found unconscionable.

302 N.C. 207, 213, 274 S.E.2d 206, 210 (1981) (citations omitted). Applying this rigorous standard, no appellate court in North Carolina has held a contract unenforceable based on unconscionability.

In Brenner, the plaintiff sought to recover tuition paid in advance to a private school when his former wife refused to allow the plaintiff’s child to attend the school and the child did not attend a single day. Id. at 208-09, 274 S.E.2d at 208. Under the terms of the contract between the plaintiff and the school, tuition for the entire school year *117was “payable in advance on the first day of school, no portion refundable.” Id. at 208, 274 S.E.2d at 208.

Applying the articulated unconscionability test to “all the facts and circumstances” in Brenner, we found that there was no inequality of bargaining power because the plaintiff had other choices of schools, id. at 213-14, 274 S.E.2d at 210-11, and that the clause making advance tuition payments on the first day of school nonrefundable “[was] reasonable when considered in light of the expense to defendant in preparing to educate the child and in reserving a space for him,” id. at 213-14, 274 S.E.2d at 211.

As the majority correctly notes, plaintiffs have the burden to prove unconscionability since they have raised it as an affirmative defense to enforceability of this contract. Rite Color Chem. Co. v. Velvet Textile Co., 105 N.C. App. 14, 20, 411 S.E.2d 645, 649 (1992).

III. STANDARD OF REVIEW

Preliminarily, I question whether the majority applies the correct standard of review by deferring to the trial court’s findings of fact.4 We apply the deferential “competent evidence” standard to the trial court’s findings of fact in cases like Lumbee River Electric Membership Corp. v. City of Fayetteville, 309 N.C. 726, 309 S.E.2d 209 (1983), relied upon by the majority, when the trial judge sits as jury and takes live evidence. Id. at 740-41, 309 S.E.2d at 218-19. However, when as here, the trial court merely hears arguments on a motion and reviews the same cold record we review now, there is less reason to defer to the trial court as fact finder. For example, we review de novo the trial court’s rulings on summary judgment motions, which are argued on a record similar to the one in this case. Builders Mut. Ins. Co. v. N. Main Constr., Ltd., 361 N.C. 85, 88, 637 S.E.2d 528, 530 (2006) (citing Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470, 597 S.E.2d 674, 693 (2004)). Federal appellate courts apply de novo review to district court denials of motions to compel arbitration. See, e.g., Gay, 2007 WL 4410362, at *2; Safer v. Nelson Fin. Grp., Inc., 422 F.3d 289, 293 (5th Cir. 2005); Jenkins, 400 F.3d at 873; Kidd v. Equitable Life Assurance Soc’y, 32 F.3d 516, 518 (11th Cir. 1994), cert. denied, 522 U.S. 1028, 118 S. Ct. 626, 139 L. Ed. 2d 606 *118(1997). Additionally, a number of federal courts liken the standard of review for a motion to compel arbitration to the standard for a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. See, e.g., Par-Knit Mills Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 & n.9 (3d Cir. 1980); Hughes v. CACI, Inc.-Commercial, 384 F. Supp. 2d 89, 92-93 (D.D.C. 2005).5

However, even applying the competent evidence standard, I conclude that the facts, as found by the trial court, do not support the legal conclusion that this contract is unconscionable.

IV. PROCEDURAL UNCONSCIONABILITY

The principal opinion acknowledges that “procedural unconscionability involves ‘bargaining naughtiness’ in the form of unfair surprise, lack of meaningful choice, and an inequality of bargaining power.” Rite Color Chem. Co., 105 N.C. App. at 20, 411 S.E.2d at 648. Applying this test, it finds the following to be sufficient to establish procedural unconscionability: the closings were rushed and the arbitration clause not mentioned; the terms were non-negotiable; and the parties’ relative status, business and consumer, reflected inequality in bargaining power. Quite frankly, these factors exist in most, if not all, consumer contracts.6

Under federal case law interpreting the FAA, there is a question regarding this Court’s jurisdiction over plaintiffs’ argument that the arbitration agreement is a contract of adhesion. As noted by the principal opinion, the trial court did not extensively address the procedural unconscionability question, but did label the arbitration agreement “a standard-form contract of adhesion.” More than four *119decades ago, the United States Supreme Court held that claims challenging the making of an arbitration agreement specifically are distinguishable from those challenging the contract, in which the arbitration agreement is included, generally. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S. Ct. 1801, 180.6, 18 L. Ed. 2d 1270, 1277 (1967). The former are reviewable by a court, while the latter are for the arbitrator to decide. See id. (“[A] federal court may consider only issues relating to the making and performance of the agreement to arbitrate. In so concluding, we not only honor the plain meaning of the [FAA] but also the unmistakably clear congressional purpose that the arbitration procedure, when selected by the parties to a contract, be speedy and not subject to delay and obstruction in the courts.”); see also Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 448-49, 126 S. Ct. 1204, 1210, 163 L. Ed. 2d 1038, 1045-46 (2006) (“[T]he Prima Paint rule permits a court to enforce an arbitration agreement in a contract that the arbitrator later finds to be void. . . . We reaffirm today that, regardless of whether the challenge is brought in federal or state court, a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.”).

In this case, neither plaintiffs’ arguments nor the majority’s analysis regarding procedural unconscionability clearly distinguishes between challenges to the loan agreements and the arbitration agreements contained therein. They emphasize what happened at the loan closing, preparation of the documents by defendants, and the lack of sophistication of these subprime loan applicants. Addressing similar arguments, the United States Court of Appeals for the Eleventh Circuit found that claims regarding the absence of consumer bargaining power, the types of consumers targeted, and the consumers’ inability to change the contract terms related to allegations that the consumer loan contract as a whole was adhesive, and thus, those claims were to be decided by an arbitrator, not a court. Jenkins, 400 F.3d at 877.

However, even under this state’s contract law, the arbitration agreement is not procedurally unconscionable. Many of the factors highlighted by the majority were present in Brenner, but did not result in the contract being declared unenforceable. In Brenner, there was no discussion whether the defendant explained to the plaintiff the no refund policy; there was no indication the policy was negotiable; and presumably the provider of the service drafted the form agreement and held the keys to the schoolhouse. In our analy*120sis of “inequality of bargaining power,” we did not focus on who drafted the agreement or whether any of the specific terms were negotiable. Id. at 213-14, 274 S.E.2d at 211. Instead, we equated “bargaining power” with choices in the marketplace: “Plaintiff was not forced to accept [the] defendant’s terms, for there were other private and public schools available to educate the child.” Id. at 213, 274 S.E.2d at 211. Unlike compulsory schooling for children, borrowing funds is optional. Plaintiffs had the choice of whether to borrow. Further, although the trial court did not address the availability of loans from other lenders, one can assume other borrowing options existed in the subprime market. Under our controlling precedent, “[t]here was no inequality of bargaining power between the parties” since plaintiffs had other options. Id. They were “not forced to accept defendants’] terms.” Id.

It is also important to note that the arbitration agreement was not hidden or minimized. As the principal opinion observes, this is not a case questioning “whether an arbitration agreement had been properly executed” and “there is no question that plaintiffs signed the agreement.” The arbitration agreement alerted each plaintiff to its significance in a number of ways. Although contained in the loan document, the agreement was set off in a separate box and entitled “ARBITRATION PROVISION,” which was bolded, capitalized, and underlined. The provision was introduced by the following bold, capitalized font: “READ THE FOLLOWING ARBITRATION PROVISION CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO OBTAIN REDRESS THROUGH COURT ACTION.” As the provision comprised a portion of two pages, plaintiffs initialed the page transition. Directly above the borrower’s signature line for the arbitration agreement, the following bold, capitalized statement appeared: “READ THE ABOVE ARBITRATION PROVISION CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO OBTAIN REDRESS THROUGH COURT ACTION.” Both plaintiffs signed their respective arbitration agreements separately from the signatures required on the loan agreements — a fact that carries considerable legal significance. See Leonard v. S. Power Co., 155 N.C. 8, 11, 155 N.C. 10, 14, 70 S.E. 1061, 1063 (1911) (“[T]he law will not relieve one who can read and write from liability upon a written contract, upon the ground that he did not understand the purport of the writing, or that he has made an improvident contract, when he could inform himself and has not done so.”).

*121Defendants took steps to ensure plaintiffs would be aware of the provision by separating the arbitration agreement from other portions of the loan agreement; employing capitalization, bolding, and underlining; and requiring a separate signature. Furthermore, the loan closing was not the last opportunity plaintiffs had to review the documents and decline the loans. Contained within the arbitration provision is the borrower’s right to rescind the loan within three business days. Even if plaintiffs were rushed through the closing, they had three business days to read the documents and rescind the loans if desired.

In sum, the majority’s analysis criticizes aspects common to all consumer transactions and fails to find the “bargaining naughtiness” required for finding procedural unconscionability.

V. SUBSTANTIVE UNCONSCIONABILITY

The principal opinion describes substantive unconscionability as pertaining to whether the terms of the contract are harsh, one-sided, and oppressive.7 See Rite Color Chem. Co., 105 N.C. App. at 20, 411 S.E.2d at 648-49. The majority determines that the arbitration agreement here is substantively unconscionable based on the collective effect of its “prohibitively high” and “onerous” arbitration costs, onesidedness and lack of mutuality, and prohibition of class actions and joinder of claims. I cannot agree. An arbitration costs provision would not be found in any type of contract except an arbitration agreement. Plaintiffs also challenge the exceptions to arbitration, which again, would only be found in an arbitration provision. Finally, plaintiffs’ arguments in this case focus on the class action waiver’s interaction with the other two provisions that are unique to arbitration. Thus, the unconscionability analysis in this case not only fails under the exceedingly high substantive standard prescribed by our state case law, but also risks preemption by federal law to the extent it relies on features of the instant agreement that would not be found in contracts generally.

To prove substantive unconscionability under Brenner, plaintiffs must show that the “inequality of the bargain is so manifest as to shock the judgment” and that the terms of the arbitration agreement “are so oppressive that no reasonable person would make them on *122the one hand, and no honest and fair person would accept them on the other.” 302 N.C. at 213, 274 S.E.2d at 210. In Brenner, we evaluated substantive unconscionability, as we had with procedural unconscionability, in the context of the marketplace. We found the school’s “no refund” policy was reasonable in light of what the student’s parent received in return: preparation for his child’s education and a reserved place in the ,class. Id. at 213-14, 274 S.E.2d at 211. In this case, considering all the facts and circumstances, the terms of the arbitration agreement are “reasonable when considered in light of’ the overall transaction. See id,8

Generally speaking, the loan agreements executed between plaintiffs and defendants included a common exchange. Plaintiffs, who had impaired credit, received a loan. Defendants received a promise by each plaintiff to pay back the loan under terms that would minimize defendants’ risk of loss. These terms, including the interest rate, were less favorable than what was available in the conventional market, but defendants were assuming more risk by lending to plaintiffs based on their lower credit ratings. The terms of each agreement, like many other loan agreements in both the conventional and subprime markets, included an agreement to arbitrate claims. There is no question in this case whether it was reasonable for defendants to include an agreement to arbitrate in their extension of credit to plaintiffs. Plaintiffs merely challenge certain terms of that agreement: (1) the costs provisions; (2) the enumerated exceptions to arbitration; and (3) the prohibition on class actions and joinder of claims. Taken together or separately, these terms do not render the arbitration provision unconscionable.

*123A. Arbitration Costs

The focal point of the majority’s analysis is the conclusion that the hypothetical arbitration costs, as stated in the agreement, prevent plaintiffs from vindicating their rights. The principal opinion determines that the costs provision of this arbitration agreement presents a prohibited “barrier” under decisions by the United States Supreme Court and the United States Court of Appeals for the Fourth Circuit. However, the record in this case does not establish that the potential costs of arbitration will deter plaintiffs from “effectively vindicating” their claims of more than $15,000 each.9 This arbitration fee structure withstands the tests of Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S. Ct. 513, 148 L. Ed. 2d 373 (2000), and Bradford v. Rockwell Semiconductor Systems, Inc., 238 F.3d 549 (4th Cir. 2001).

In Green Tree, the United States Supreme Court addressed the issue of arbitration costs when the purchaser of a mobile home brought a purported class action against her lenders, asserting violations of the federal Truth in Lending Act for the lenders’ alleged failure to disclose certain finance charges. 531 U.S. at 82-83, 121 S. Ct. at 517-18, 148 L. Ed. 2d at 378-79. With respect to the plaintiff’s challenge to the arbitration agreement, the Supreme Court framed the issue as “whether [the plaintiff’s] agreement to arbitrate is unenforceable because it says nothing about the costs of arbitration, and thus fails to provide her protection from potentially substantial costs of pursuing her federal statutory claims in the arbitral forum.” Id. at 89, 121 S. Ct. at 521, 148 L. Ed. 2d at 382. Because of the scant record with respect to arbitration costs in Green Tree, the Court found plaintiff had failed to prove the costs were prohibitively expensive. Id. at 90-91, 121 S. Ct. at 522, 148 L. Ed. 2d at 383-84. The Court *124concluded that “[t]he ‘risk’ that [the plaintiff] will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement.” Id. at 91, 121 S. Ct. at 522, 148 L. Ed. 2d at 384. Ultimately, Green Tree clarified that: (1) costs are “prohibitive” if they preclude effective vindication of rights in the arbitral forum, id. at 90, 121 S. Ct. at 522, 148 L. Ed. 2d at 383, and (2) a party challenging an arbitration agreement must show “the likelihood of incurring [prohibitive] costs,” id. at 92, 121 S. Ct. at 522, 148 L. Ed. 2d at 384.

In Bradford, the United States Court of Appeals for the Fourth Circuit followed these two directives from Green Tree when it considered whether a fee-splitting provision rendered an arbitration agreement unenforceable. 238 F.3d at 552. The plaintiff sought redress for his age discrimination claims simultaneously through arbitration and in federal district court. Id. at 551-52. In reviewing the costs issue, the Fourth Circuit stated that part of the key inquiry was whether “the expected cost differential between arbitration and litigation in court... is so substantial as to deter the bringing of claims.” Id. at 556. As to the particular case before it, the Fourth Circuit found that the plaintiff had not been deterred from vindicating his rights because he had in fact utilized the arbitral forum. Id. at 558.

Initially, I note that defendants argue plaintiffs cannot prove prohibitive costs because the arbitration agreement requires arbitration under the AAA’s Consumer Rules enacted subsequent to the execution of plaintiffs’ arbitration agreements. Under changes to the rules, if plaintiffs (or any consumers) arbitrate, they will be liable for at most $375 in arbitration costs. The majority rejects this argument by stating “it is inappropriate to rewrite an illegal contract.”10 However, this is not a situation in which defendants are attempting to rewrite a contract provision. Rather, to use AAA as mandated by the arbitration agreement, defendants are required to comply with the new rules by paying most of the arbitration fees. As a result, plaintiffs cannot show they will actually incur prohibitive costs. Green Tree, 531 U.S. at 92,121 S. Ct. at 522, 148 L. Ed. 2d at 384. Other courts have held that an after-the-fact offer from a defendant “to bear the costs of arbitration that [the plaintiff] is unable to afford” prevented the plaintiff from “demonstrat[ing] that arbitration would be prohibitively expensive.” Anders v. Hometown Mortgage Servs., Inc., *125346 F.3d 1024, 1029 (11th Cir. 2003); see Large v. Conseco Fin. Servicing Corp., 292 F.3d 49, 56 (1st Cir. 2002) (holding that “[the defendant’s] offer to pay the costs of arbitration and to hold the arbitration in the [plaintiffs’] home state ... mooted the issue of arbitration costs”).

The principal opinion also notes in response to defendants’ offer to apply the AAA’s Consumer Rules that the arbitration agreement provides that “[t]he terms of this Provision shall control any inconsistency between the rules of [AAA] and this Provision.” However, the arbitration agreement contains a severability clause, which should be used to excise this particular sentence. We construe contracts as a whole, give effect to the intent of the parties, and enforce contracts when unenforceable provisions can be severed. See, e.g., Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523, 528, 379 S.E.2d 824, 828 (1989); Rose v. Vulcan Materials Co., 282 N.C. 643, 658-59, 194 S.E.2d 521, 531-32 (1973); In re Receivership of Port Pub. Co., 231 N.C. 395, 397-98, 57 S.E.2d 366, 367-68 (1950). By severing this sentence, the intent of the contract is effectuated through permitting AAA to conduct the arbitration and thereby allowing AAA’s Consumer Rules to apply. See, e.g., State v. Philip Morris USA, Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225 (2005). I do not believe severing this one sentence amounts to rewriting the entire agreement. See Whittaker Gen. Med. Corp., 324 N.C. at 528, 379 S.E.2d at 828 (“If the contract is separable . . . and one part is reasonable, the courts will enforce the reasonable provision.”); see also Vecellio & Grogan, Inc. v. Piedmont Drilling & Blasting, Inc., 183 N.C. App. 66, 73, 644 S.E.2d 16, 21 (“By striking the offending language [in the indemnification clause] the Court does not rewrite the contract or substitute its own terms in the provision for those of the parties.” (citing Int’l Paper Co. v. Gorporex Constructors, Inc., 96 N.C. App. 312, 316, 385 S.E.2d 553, 555 (1989))), disc. rev. denied, 361 N.C. 575, 651 S.E.2d 564 (2007).

This Court’s refusal to save this arbitration agreement through incorporating the AAA Consumer Rules or applying its severability clause raises the specter of preemption, because it appears we are treating this contract differently from other contracts. The FAA, as interpreted by the United States Supreme Court, does not permit this. See Doctor’s Assocs., 517 U.S. at 687, 116 S. Ct. at 1656, 134 L. Ed. 2d at 909; see also Kristian v. Comcast Corp., 446 F.3d 25, 64-65 (1st Cir. 2006) (finding an arbitration agreement’s limitation on the recovery of attorney’s fees and costs and its class arbitration bar unenforce*126able in an antitrust case, but severing those provisions so that arbitration could proceed).

Even if the costs provisions were applied as written, plaintiffs have not offered more than speculation that they would incur costs. The written terms of the arbitration provision in this case provide that the costs are shifted to the non-prevailing party under two circumstances: when the initial arbitration proceeding exceeds eight hours and after a de novo appeal. The trial court’s findings cited by the principal opinion do not address the likelihood that: (1) plaintiffs’ initial arbitration hearings would last more than eight hours; (2) the arbitration of plaintiffs’ claims would involve an appeal; or (3) plaintiffs would not prevail. The trial court’s finding that “the average daily rate of AAA arbitrator compensation in North Carolina is $1,225.00” is not probative of whether the costs are prohibitive without corresponding findings that plaintiffs’ arbitration would actually last more than eight hours and plaintiffs are likely to lose. Under the arbitration agreement, plaintiffs must pay $125 to initiate arbitration. In civil court, plaintiffs must pay a $95 filing fee. N.C.G.S. § 7A-305 (2007). Thus, the initial financial hurdle to use both forums is marked by a difference of only $30. Because the trial court did not make any findings as to the likely length of plaintiffs’ arbitrations or their likelihood of success, it could not fairly determine the costs plaintiffs would incur beyond the filing fee.

The principal opinion correctly states that Bradford requires a comparison of the costs of litigation with the costs of arbitration. However, in this case, the trial court did not perform such an analysis. The evidence presented and relied upon by the trial court compares the costs of litigating a class action and arbitrating as an individual. In actuality, the evidence at issue compares the costs of winning a class action and losing an individual arbitration. Clearly, this is not the proper analysis. The record in this case does not offer proof from which a court can make the correct comparison: the cost to litigate an individual claim in court versus the cost to arbitrate the same claim.

B. Exceptions to Arbitration

The agreement requires arbitration for all actions in which, as here, a claim exceeds $15,000, except for foreclosure actions. The majority holds this provision unconscionable under Brenner because it is “so one-sided that the contracting party is denied any opportunity for a meaningful choice.” The majority bases this conclusion on *127a finding that since 1996, defendants have pursued about 2,000 collection actions in court (of the 68,000 loans made), with an average claim of $7,000, but have pursued no claims in arbitration. The majority concludes the exceptions were “specifically carve [d] out” for the corporate drafter to avoid arbitration. I do not agree.

The arbitration agreement’s exclusion from arbitration of claims under $15,000 is not manifestly unreasonable; it was not even designed by this lender. As defendants point out, the American Arbitration Association (“AAA”), which would administer any arbitration between these parties, requires that claims under $15,000 be excluded from arbitration. The $15,000 threshold for arbitration is not arbitrary or specifically designed to favor defendants. This policy of the third-party administrator is intended to benefit consumers by allowing access to the courts for small claims. See Jenkins, 400 F.3d at 879 (noting that a “provision providing access to small claims tribunals was intended to benefit, not injure, consumers”). Here, plaintiffs have the option of pursuing their individual claims in civil court by limiting their damages to $15,000 each or seeking a larger recovery in arbitration.

Additionally, the arbitration agreement’s exclusion of foreclosure actions is not unreasonable because our statutes give North Carolina superior courts “exclusive jurisdiction” over any action affecting the title to land located in this state. See N.C.G.S. § 43-1 (2007). Moreover, our foreclosure statutes contain provisions protecting homeowners. E.g., id. § 45-21.16 (2007) (outlining specific requirements for notice and hearing prior to sale); id. § 45-21.20 (2007) (allowing satisfaction of mortgage after notice and before sale is completed); id. § 41-21.34 (2007) (permitting application to enjoin sale on equitable grounds).

C. Prohibition on Class Actions and Joinder of Claims

The majority affirms the trial court’s conclusion that the prohibition on class actions and joinder of claims is a factor to consider in the overall unconscionability analysis. The majority reasons that the prohibition hinders access to a tribunal for “cases with low damages” and benefits only the lender. This analysis ignores the facts of this case in which each plaintiff’s claim is greater than $15,000 and arbitration provides an expedient forum for plaintiffs to pursue their remedies.

The principal opinion states that plaintiffs’ damages total less than $4,500, but this amount does not take into account accrued *128interest and trebling, N.C.G.S. § 75-16 (2007), or that plaintiffs may recover attorney’s fees, id. § 75-16.1 (2007); see note 7 above. Moreover, the mandatory arbitration provision was only triggered in this case because each plaintiff claims damages in excess of $15,000. The “modesty” of the damages sought by plaintiffs is doubtful. When federal courts have held arbitration agreements unconscionable based in part on class action prohibitions, the damages at issue were considerably less than those at issue in this case. See, e.g., Dale v. Comcast Corp., 498 F.3d 1216, 1220 (11th Cir. 2007) ($11 per plaintiff); Ting v. AT&T, 319 F.3d 1126, 1134 (9th Cir.) (declaratory and injunctive relief), cert. denied, 540 U.S. 811, 124 S. Ct. 53, 157 L. Ed. 2d 24 (2003); see also Kristian, 446 F.3d at 54 (damages which if trebled would range “from a few hundred dollars to perhaps a few thousand dollars” in a complex antitrust case); Leonard v. Terminix Int’l Co., 854 So. 2d 529, 535 (Ala. 2002) (per curiam) (less than $500 per plaintiff); State ex rel. Dunlap v. Berger, 211 W. Va. 549, 562, 567 S.E.2d 265, 278 ($8.46 for one named plaintiff), cert. denied, 537 U.S. 1087, 123 S. Ct. 695, 154 L. Ed. 2d 631 (2002).

The trial court’s conclusion that it would be unlikely that attorneys would be willing to represent plaintiffs in the absence of a class action option, while labeled a factual finding, is essentially a legal argument that has been rejected by federal courts. Federal courts of appeals have concluded that the availability of attorney’s fees provides sufficient incentive for attorneys to represent clients raising claims similar to those of plaintiffs in this case. See Jenkins, 400 F.3d at 878 (recognizing that the availability of attorney’s fees provides plaintiffs with adequate access); Snowden v. Checkpoint Check Cashing, 290 F.3d 631, 638 (4th Cir.) (rejecting challenge to a class action waiver based on the plaintiffs’ argument that the small amount of individual damages sought would make them unable to obtain legal representation when attorney’s fees were available), cert. denied, 537 U.S. 1087, 123 S. Ct. 695, 154 L. Ed. 2d 631 (2002); Johnson v. W. Suburban Bank, 225 F.3d 366, 374 (3d Cir. 2000) (finding that class action waivers in arbitration proceedings do not “necessarily choke off the supply of lawyers willing to pursue claims on behalf of debtors”), cert. denied, 531 U.S. 1145, 121 S. Ct. 1081, 148 L. Ed. 2d 957 (2001); see also Livingston v. Assocs. Fin., Inc., 339 F.3d 553, 559 (7th Cir. 2003) (enforcing an arbitration provision specifically prohibiting class action arbitration).

Further, apart from plaintiffs’ attorney’s own averments, there is no evidence in the record that other attorneys would refuse to take *129the case of a client seeking more than $15,000 in damages.11 Many cases seeking damages lower than those sought here are litigated through our appellate court system. See, e.g., Wright v. Murray, -N.C. App. —,-, 651 S.E.2d 913, 914 (2007) (finding no abuse of discretion when trial court ordered $25,000 in attorney’s fees following the jury’s award of $7,000 to the plaintiff); Dysart v. Cummings, 181 N.C. App. 641, 645, 640 S.E.2d 832, 835 (seeking $10,500 in damages plus costs and attorney’s fees), aff’d per curiam, 361 N.C. 580, 650 S.E.2d 593 (2007). While it is uncontested that plaintiffs cannot afford to hire an attorney on an hourly basis, there is nothing in the arbitration agreement itself that precludes an attorney from taking a consumer’s case in arbitration on a contingency basis. The very fact that plaintiffs retained counsel on a contingency fee basis in this matter weighs against a finding that representation would be unavailable.

VI. APPLICATION OF RECENT FEDERAL CASES

The majority upholds the trial court, which concluded that the three provisions taken together made the arbitration agreement unconscionable. Implicit in this conclusion is that none of these provisions standing alone would result in unconscionability. Not only does state law not support the trial court’s conclusion, but the majority’s approach is inconsistent with federal decisions interpreting the FAA. As illustrated by two recent federal court of appeals cases with similar facts, when reviewing elements of an arbitration agreement *130that are unique to arbitration agreements, state law must defer to federal principles.

In Jenkins v. First American Cash Advance of Georgia, LLC, the Eleventh Circuit considered whether an arbitration agreement between a consumer and a payday lender was unconscionable. 400 F.3d at 870-71. The terms of the agreement were similar to, but more strident than, those found in this case. Costs for arbitration were advanced by the lender only upon a consumer’s request, and then the arbitrator had complete discretion to award attorney’s fees and costs to the prevailing party, if applicable law allowed. Id. at 872. The arbitration agreement contained a small claims exception similar to the one in this case, with one important difference: small claims decisions could be appealed to an arbitrator. Id.

The trial court in Jenkins found that the agreement was substantively unconscionable because it prohibited class actions and because it lacked mutuality of obligation in that its small claims exception would only benefit the lender. Id. at 876. The trial court noted that individually these provisions might be insufficient, but “considered together,” they made the arbitration agreement unconscionable. Id. The Eleventh Circuit disagreed. As to the class action waiver, even though none of the loans was greater than $500, id. at 871, the appeals court concluded that the availability of attorney’s fees was sufficient incentive for lawyers to represent consumers under the applicable arbitration agreement, id. at 878. Further, the court concluded that the class action prohibition would not have the practical effect of immunizing the lenders because the arbitration agreement permitted the consumer to vindicate all of her substantive rights. Id. Regarding the exception allowing small claims actions to be brought in a judicial forum, the court noted that this option was equally applicable to both consumer and lender. Id. at 879. The court found the exception was intended to benefit, not injure, consumers as part of a larger Consumer Due Process Protocol developed by AAA. Id. Moreover, the Eleventh Circuit concluded that the arbitral forum itself does not unfairly favor the lender because the arbitrator was permitted to award the consumer the full range of relief available under the applicable statute. Id. at 880.

Likewise, in Gay v. CreditInform, the Third Circuit considered whether an arbitration agreement between a consumer and a credit repair services company was unconscionable. 2007 WL 4410362, at *1. The court’s analysis focused on the class action waiver contained *131in the agreement, id. at *18-20, noting the “competing interests” at play: “the promotion of arbitration agreements and the protection of class actions prohibited by such agreements,” id. at *20. Quoting from an earlier decision, the Third Circuit observed “ ‘[w]hatever the benefits of class actions, the FAA requires piecemeal resolution when necessary to give effect to an arbitration agreement.’ ” Id. (quoting Johnson, 225 F.3d at 375 (alteration in original) (citation and internal quotation marks omitted)). The court specifically noted that state court analysis cannot focus on the uniqueness of an arbitration agreement. Id.12 It further found that such “reasoning if applied logically could result in a significant narrowing of the application of the FAA.” Id. at *21. The Third Circuit in Gay concluded: “[O]ur,obliga-tion is to honor the intent of Congress and that is what we are doing. If the reach of the FAA is to be confined then Congress and not the courts should be the body to do so.” Id.

These cases highlight the important principles implicated by today’s decision. Jenkins, with its similar facts, supports a conclusion that the instant arbitration agreement’s terms do not cross the high bar of unconscionability. Gay underscores the difficulty a state court has in attempting to parse an arbitration agreement’s terms under the FAA. Both decisions undercut the majority’s conclusion here, which finds an arbitration agreement unconscionable based upon the very terms that make it an arbitration agreement.

*132VII. CONCLUSION

At its core, this case is about plaintiffs’ challenge to an arbitration agreement that substitutes individual arbitration for class action litigation in court. Federal law does not permit plaintiffs to challenge this agreement simply because it designates an alternative forum for dispute resolution. Scherk v. Alberto-Culver Co., 417 U.S. 506, 519, 94 S. Ct. 2449, 2457, 41 L. Ed. 2d 270, 280 (1974) (recognizing that arbitration agreements are essentially forum selection clauses).

Further, under this Court’s case law, a plaintiff seeking to prove a contract unconscionable must show its terms “shock the judgment of a person of common sense” and “are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other.” Brenner, 302 N.C. at 213, 274 S.E.2d at 210. Since 1996, 68,000 loans were made containing this arbitration provision. Having considered “all the facts and circumstances of [this] particular case,” I do not believe the provisions of this agreement are shocking or so oppressive that a reasonable, honest, and fair person would not offer or agree to them. I believe “[t]he bargain was one that a reasonable person of sound judgment might accept.” Id. at 214, 274 S.E.2d at 211. Beyond that, we are not allowed to inquire “ ‘as to whether the contract was good or bad, whether it was wise or foolish.’ ” Id. (citation omitted).

Because plaintiffs have failed to prove procedural and substantive unconscibnability as required by Brenner, I do not believe this case presents the landmark occasion for invalidating a bargain due to unconscionability. Justice Oliver Wendell Holmes warned of cases such as this:

Great cases like hard cases make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment. These immediate interests exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend.

N. Sec. Co. v. United States, 193 U.S. 197, 400-01, 24 S. Ct. 436, 468, 48 L. Ed. 679, 726 (1904) (Holmes, J., Fuller, C.J., & White & Peckham, JJ., dissenting). I fear that certain “well settled principles of law” *133have been bent, not to straighten again. Accordingly, I would affirm the Court of Appeals.

Chief Justice PARKER joins in this dissenting opinion.

. The “majority” refers to those members of this Court embracing the principal opinion or the concurring opinion. The “principal opinion” refers to the opinion of Justice Timmons-Goodson. The “concurring opinion” refers to the opinion of Justice Edmunds.

. Despite contentions to the contrary, the parties did brief the standard of review issue. Both parties included “Standard of Review” sections in their briefs to this Court, with plaintiffs arguing that the Court of Appeals majority did not defer adequately to the trial court and defendants arguing that the deference was appropriate. I believe that this adequately preserves the issue for appellate review. Nonetheless, I do not find the standard of review to be dispositive in this case.

. It appears that an intermediate option we could have pursued in this case was remanding to the trial court, where any disputed facts revealed by the record could have been addressed in an evidentiary hearing with the opportunity to test statements through cross-examination; this Court has remanded for such hearings in a variety of contexts. See, e.g., Stephenson v. Bartlett, 355 N.C. 354, 381, 562 S.E.2d 377, 395 (2002) (legislative redistricting); State v. McHone, 348 N.C. 254, 259, 499 S.E.2d 761, 764 (1998) (criminal defendant’s motion for appropriate relief); Meiselman v. Meiselman, 309 N.C. 279, 306, 307 S.E.2d 551, 567 (1983) (minority shareholder suit to dissolve corporation).

. In the overall unconscionability analysis, the concurring opinion agrees with the principal opinion in concept, but not terminology. The concurring opinion collapses the procedural and substantive analyses under what it labels as Brenner’s “totality of the circumstances” test. While not using the term “procedural unconscionability,” the concurring opinion’s analysis does analyze inequality of bargaining power and the parties’ status as business and consumer. In substance, the majority of the members of this Court agree that these factors contribute to a finding of unconscionability.

. While not using the term “substantive unconscionability,” the concurring opinion criticizes the same arbitration terms as the principal opinion. The concurring opinion proceeds solely under Brenner, whereas the principal opinion uses federal case law in its analysis.

. Contracts for the sale of goods governed by North Carolina’s Uniform Commercial Code (“UCC”) are subject to the doctrine of unconscionability. See N.C.G.S. § 25-2-302 (2007). Although the arbitration agreement here is governed by common law, not the UCC, the UCC’s doctrine of unconscionability grew out of the common law. See Rite Color Chem. Co., 105 N.C. App. at 18, 411 S.E.2d at 647-48. The official comment to the statute states:

The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. [The statute] makes it clear that it is proper for the court to hear evidence upon these questions. The principle is one of the prevention of oppression and unfair surprise and not of disturbance of allocation of rislcs because of superior bargaining power.

N.C.G.S. § 25-2-302 cmt. 1 (emphasis added) (citation omitted). Consistent with Brenner, the UCC makes clear that the key inquiry is more about the commercial reasonableness of the contract terms than it is about the relative bargaining positions of the parties.

. Neither party has contested the fact that each plaintiff’s claim satisfies the $15,000 threshold triggering the arbitration agreement. The majority focuses on the insurance premiums paid instead of the values of the claims. Both plaintiffs alleged three causes of action seeking compensatory damages, costs, and attorney’s fees: (1) unfair and deceptive trade practices (“UDTP”) under N.C.G.S. § 75-1.1, (2) unjust enrichment, and (3) breach of duties of good faith and fair dealing. A brief review of the smaller claim, that of Tillman, reveals the value of the claim surpasses the threshold. Tillman’s compensatory damages are the amount she paid for the disputed insurance ($2,064.75) plus interest at her contract rate from the date the charges began until judgment, which amounts to approximately $5,000.00. The trebling of the compensatory damages under the UDTP statute meets the $15,000 threshold, even before adding costs and attorney’s fees and other potential recoveries. Richardson,having paid disputed insurance premiums of $4,208.75, would have a substantially higher claim.

. The principal opinion addresses defendants’ argument directly. While the concurring opinion is silent, it simply assumes the stated contract terms are the only ones to be considered.

. In several of its findings of fact, the trial court relies on information contained in the affidavit of plaintiffs’ attorney. Reliance on the affidavit raises two concerns. First, under Rule 3.7 of the North Carolina Rules of Professional Conduct, “[a] lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless: (1) the testimony relates to an uncontested issue; (2) the testimony relates to the nature and value of legal services rendered in the case; or (3) disqualification of the lawyer would work substantial hardship on the client.” N.C. St. R. Rev. R. Prof. Conduct 3.7 (Lawyer as Witness), 2007 Ann. R. N.C. 717, 812. In this case, the propriety of plaintiffs’ own counsel providing an affidavit concerning not merely “services rendered in [this] case” but also regarding his opinion whether it would be “feasible to pursue claims such as this on an individual basis” is questionable under the rule.

Second, defendants moved to compel discovery on matters related to litigation and arbitration costs. The trial court denied this motion. Subsequently, two days before the hearing on defendants’ motion to compel arbitration, plaintiffs’ counsel submitted the affidavit at issue addressing the same information counsel had refused to disclose during discovery. Defendants moved to strike this affidavit. The trial court did not rule on the motion to strike, but relied on the affidavit in its findings of fact regarding the costs of litigation. Given this reliance, at a minimum, defendants should have been given the opportunity to probe the substance of the affidavit.

. In Gay, the Third Circuit specifically criticized two Pennsylvania state court decisions, one of which involved the same arbitration clause used by defendants in this case. 2007 WL 4410362, at *18-21. In Lytle v. CitiFinancial Services, Inc., 2002 PA Super. 327, 810 A.2d 643, the Pennsylvania Superior Court vacated the trial court’s order dismissing the plaintiffs’ complaint and remanded for the trial court to hold a hearing on whether there existed “a business reality which precluded CitiFinancial from agreeing to be bound by the arbitration provisions.” Id. at ¶ 44, 810 A.2d at 668. If CitiFinancial were able to prove “a compelling basis for the one-sided arbitration clause,” then the trial court was to allow the plaintiffs to offer proof on the issues of costs of arbitration as contrasted to court proceedings and the feasibility of obtaining relief in the absence of a class action mechanism. Id. at ¶ 45, 810 A.2d at 668. The Third Circuit specifically stated that Lytle violated section 2 of the FAA “[t]o the extent. . . that [it held] that the inclusion of a waiver of the right to bring judicial class actions in an arbitration agreement constitutes an unconscionable contract.” Gay, 2007 WL 4410362, at *20.

Notably, the Pennsylvania Supreme Court, when reviewing a question on certification from the Third Circuit, disavowed Lytle’s holding: “While we believe that Lytle was well intentioned in its effort to guard against pernicious lending practices, our conclusion here is that it swept too broadly. Under Pennsylvania law, the burden of establishing unconscionability lies with the party seeking to invalidate a contract, including an arbitration agreement....” Salley v. Option One Mortgage Corp., 592 Pa. 323, 347, 925 A.2d 115, 129 (2007).