Puleo v. Chase Bank USA, N.A.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 08-3837

FRANCIS J. PULEO, TRISH C. PULEO,
ON BEHALF OF THEMSELVES AND ALL OTHER
PENNSYLVANIA RESIDENTS SIMILARLY SITUATED,

v.

CHASE BANK USA, N.A,

Francis J. Puleo; Trish C. Puleo,
Appellants

On Appeal from the District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-07-cv-04800)
District Judge: Honorable Lawrence F. Stengel
_____________

Argued February 17, 2010

Before: McKEE, Chief Judge, SLOVITER, SCIRICA,
RENDELL, AMBRO, FUENTES, SMITH, FISHER,
CHAGARES, and JORDAN, Circuit Judges
 (Opinion Filed: May 10, 2010)

Mark R. Cuker, Esq.
Michael J. Quirk, Esq. [ARGUED]
Williams, Cuker & Berezofsky
1515 Market Street, Suite 1300
Philadelphia, PA 19102

Counsel for Appellants

Robert S. Stern, Esq.
Nancy R. Thomas, Esq. [ARGUED]
Morrison & Foerster
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013

Jeffrey S. Saltz, Esq.
1500 John F. Kennedy Boulevard, Suite 1930
Philadelphia, PA 19102

Counsel for Appellee

OPINION OF THE COURT

FUENTES, Circuit Judge, with whom McKEE, Chief Judge,
and SLOVITER, SCIRICA, SMITH, and JORDAN, Circuit
Judges, join.

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 This case focuses on the proper boundaries between the
decision-making responsibilities of courts and arbitrators.
Appellants Francis and Trish Puleo (“the Puleos”) brought suit
challenging retroactive interest-rate increases on the account
balances of their Chase Bank credit cards. Although the Chase
Bank Cardmember Agreement governing their credit cards
contains an Arbitration Agreement expressly barring class
actions, the Puleos brought their suit in a representative
capacity, arguing that the class action waiver was
unconscionable. After Chase moved to compel arbitration, the
Puleos urged the District Court to order the parties to arbitrate
their class claims, notwithstanding the Arbitration Agreement’s
ban on class actions, but argued that the question of whether the
class action waiver was unconscionable was a question for the
arbitrator, not the court. The District Court rejected their
arguments, concluding, first, that the Puleos’ challenge to the
enforceability of the class action waiver was a question of
arbitrability for the court to decide, and, second, that the entirety
of the Arbitration Agreement was enforceable.
In this appeal, the Puleos challenge only the first of these
conclusions. They argue that the District Court never should
have addressed the unconscionability of the class action waiver
and instead should have left that issue to be decided by an
arbitrator. Appellee Chase Bank takes the contrary position,
arguing that it was proper for the District Court to assess the
unconscionability of the class action ban because the Puleos’
unconscionability challenge to the class action waiver presented
a question of arbitrability for the court to decide. For the
reasons that follow, we hold that the District Court properly
exercised its responsibility to decide issues of arbitrability and
we thus will affirm.

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 I.
A.
The facts in this case are straightforward and
uncontested. The Puleos use credit cards issued by Chase Bank.
They argue that Chase Bank improperly increased the interest
rates on their account balances, and did so retroactively.
Specifically, Francis Puleo claims that in March 2006, Chase
retroactively increased his interest rate from 4.99% to 29.99%,
causing him to incur $267 in increased finance charges. Trish
Puleo claims that in November 2005, Chase retroactively
increased her interest rate from 14.74% to 25.99%, causing her
to incur $162 in increased finance charges. Trish Puleo also
claims that similar increases were imposed in January 2006 and
January 2007, causing her to incur increased finance charges of
$263 and $341, respectively.
Chase argues that such increases are permitted by the
Puleos’ Chase Bank Cardmember Agreements, as well as by
state and federal law. The lawfulness of the retroactive interest
rate increase, however, is not at issue in this appeal. Rather, this
appeal focuses on the forum in which the enforceability of the
class action waiver will be determined, not the substance of the
Puleos’ challenge to the retroactive interest rate increases.
B.
The Chase Bank Cardmember Agreement addresses a
wide range of issues relative to the relationship between a bank
and its credit card holders. Included in this Cardmember
Agreement is a sweeping “Arbitration Agreement” that states in
block lettering that “ARBITRATION REPLACES THE RIGHT
TO GO TO COURT.” (App. 62.) In particular, the Arbitration

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Agreement provides:
Either you or we may, without the other’s
consent, elect mandatory binding arbitration of
any claim, dispute or controversy by either you or
us against the other . . . arising from or relating in
any way to the Cardmember Agreement . . . . This
Arbitration Agreement governs all Claims,
whether such Claims are based on law, statute,
contract, regulation, ordinance, tort, common law,
constitutional provision, or any legal theory of
law such as respondeat superior, or any other
legal or equitable ground and whether such
Claims seek as remedies money damages,
penalties, injunctions, or declaratory or equitable
relief. Claims subject to the Arbitration
Agreement include claims regarding the
applicability of this Arbitration Agreement or the
validity of the entire Cardmember agreement or
any prior Cardmember agreement.
(Id. at 63.) The Arbitration Agreement also expressly bars class
actions, whether as part of litigation or arbitration:
YOU WILL NOT BE ABLE TO BRING A
CLASS ACTION OR OTHER
REPRESENTATIVE ACTION IN COURT . . . ,
NOR WILL YOU BE ABLE TO BRING ANY
CLAIM IN ARBITRATION AS A CLASS
ACTION OR OTHER REPRESENTATIVE
ACTION. YOU WILL NOT BE ABLE TO BE
PART OF ANY CLASS ACTION OR OTHER
REPRESENTATIVE ACTION BROUGHT BY

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 ANYONE ELSE, OR BE REPRESENTED IN A
CLASS ACTION OR OTHER
REPRESENTATIVE ACTION.
...
Neither you nor we agree to any arbitration on a
class or representative basis, and the arbitrator
shall have no authority to proceed on such basis.
This means that even if a class action lawsuit or
other representative action, such as that in the
form of a private attorney general action, is filed,
any Claim between us related to the issues raised
in such lawsuits will be subject to an individual
arbitration claim if either you or we so elect.
(Id. at 62-63.) Finally, the Arbitration Agreement features a
severability clause, which states that “if any portion of this
Arbitration Agreement is deemed invalid or unenforceable, the
remaining portions shall nevertheless remain in force.” (Id. at
63.)
Despite the express ban on class actions, the Puleos
initially brought this case as a putative class action in
Pennsylvania state court on behalf of themselves and other
similarly situated Chase credit card holders in Pennsylvania.1

1
We note that the Puleos could not have commenced this
matter as a class arbitration before the American Arbitration
Association (“AAA”). According to a policy announced in July
2005, the AAA does not accept demands for class arbitration
where, as here, “the underlying agreement prohibits class
claims,” unless the parties obtain a court order requiring the

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Chase removed the case to federal court on grounds of diversity.
Once in federal court, Chase filed a “Motion to Compel
Arbitration and Dismiss the Action,” in which it sought a court
order directing the Puleos “to submit their individual disputes to
arbitration in accordance with their agreement with Defendant.”
(Id. at 43.) The Puleos opposed Chase’s motion in part. They
argued that, instead of enforcing the Arbitration Agreement in
accordance with its express terms, the District Court should
compel the parties to submit their class claims to arbitration in
order for the arbitrator to determine whether or not the class
action waiver was unconscionable and, therefore, unenforceable.
The District Court granted Chase’s motion in its entirety.
In its ruling, the Court compelled arbitration but held that the
validity of the class action waiver was a “‘gateway dispute’” and
a “‘question of arbitrability’ for a court to decide.”2 (Id. at 3

parties to submit class claims to arbitration. (App. 108.) In
other words, in order to pursue this matter as a class arbitration,
the Puleos first had to commence the proceedings in court in
order to obtain an order mandating the submission of class
claims to arbitration.
2
The District Court also upheld the validity of the class
action waiver, relying upon Gay v. CreditInform, 511 F.3d 369,
394-95 (3d Cir. 2007), and rejecting the Puleos’ argument that
the class ban was unconscionable. The Puleos do not appeal this
aspect of the District Court’s Opinion. The only question before
us, therefore, is who decides whether or not the class action
waiver is unconscionable. We do not address the District
Court’s substantive determination that the class action waiver is

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(quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
84 (2002) (additional citations omitted).) The Puleos filed this
timely appeal. After the case had been argued before a panel of
the Court, we elected sua sponte to rehear the matter en banc.
II.
We have jurisdiction over this appeal pursuant to 9
U.S.C. § 16(a)(3) and 28 U.S.C. § 1291. We exercise plenary
review over questions regarding the validity and enforceability
of an agreement to arbitrate. See Edwards v. HOVENSA, LLC,
497 F.3d 355, 357 (3d Cir. 2007) (citing Lloyd v. HOVENSA,
LLC, 369 F.3d 263, 273 (3d Cir. 2004)).

not unconscionable.
However, we are mindful of the possible tension between
Gay and our subsequent opinion in Homa v. Am. Express Co.,
558 F.3d 225 (3d Cir. 2009). In Gay, we explained that certain
Pennsylvania cases finding that class action waivers are
unconscionable were preempted by the FAA. See Gay, 511
F.3d at 395. In Homa, we explained that Gay’s discussion of
preemption “appears to be dicta,” and held that New Jersey
cases concerning the unconscionability of class action waivers
were not preempted by the FAA. See Homa, 558 F.3d at 229-
30. While perhaps dicta itself, it is worth noting our agreement
that Gay’s discussion of Pennsylvania law was indeed dicta,
since our holding in Gay was that Virginia law governed the
parties’ arbitration agreement. Gay, 511 F.3d at 390. In any
event, the New Jersey case law at issue in Homa did not evince
hostility toward arbitration clauses, which was the concern about
Pennsylvania law expressed in Gay. Compare Homa, 558 F.3d
at 230 with Gay, 511 F.3d at 394-95.

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 III.
A.
Congress enacted the Federal Arbitration Act (“FAA”)
“to reverse the longstanding judicial hostility to arbitration
agreements . . . and to place arbitration agreements upon the
same footing as other contracts.” Spinetti v. Serv. Corp. Intern.,
324 F.3d 212, 218 (3d Cir. 2003) (quoting Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)). The
FAA ensures that arbitration agreements “are enforceable to the
same extent as other contracts” by establishing “a strong federal
policy in favor of the resolution of disputes through arbitration.”
Alexander v. Anthony Int’l, L.P., 341 F.3d 256, 263 (3d Cir.
2003) (quotation marks and citations omitted). To this end, the
FAA provides that arbitration agreements are “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, and it entitles any “party aggrieved by the alleged failure,
neglect, or refusal of another to arbitrate under a written
agreement for arbitration” to obtain a “[court] order directing
that such arbitration proceed in the manner provided for in such
agreement.” 9 U.S.C. § 4; see also Parilla v. IAP Worldwide
Servs., VI, Inc., 368 F.3d 269, 275-76 (3d Cir. 2004).
Although the Supreme Court has continuously reinforced
the “liberal federal policy favoring arbitration agreements,”
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983), it has at the same time recognized that courts
applying the FAA have a limited but important threshold role to
play when a litigant moves to compel arbitration. In particular,
the Court has held that “[t]he question whether the parties have
submitted a particular dispute to arbitration, i.e., the question of

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arbitrability, is an issue for judicial determination unless the
parties clearly and unmistakably provide otherwise.” Howsam,
537 U.S. at 83 (quoting AT&T Techs., Inc. v. Commc’ns
Workers, 475 U.S. 643, 649 (1986)) (alteration in original,
internal quotations removed); see also First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938, 943-44 (1995).
The types of issues that present questions of arbitrability
are, as the Supreme Court has explained, limited. In Howsam,
the Court noted that,
[l]inguistically speaking, one might call any
potentially dispositive gateway question a
“question of arbitrability,” for its answer will
determine whether the underlying controversy
will proceed to arbitration on the merits. The
Court’s case law, however, makes clear that, for
purposes of applying the interpretive rule, the
phrase “question of arbitrability” has a far more
limited scope.
537 U.S. at 83.
Specifically, as the Supreme Court discussed in Howsam
and elaborated in Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444
(2003), a question of arbitrability arises only in two
circumstances—first, when there is a threshold dispute over
“whether the parties have a valid arbitration agreement at all,”
and, second, when the parties are in dispute as to “whether a
concededly binding arbitration clause applies to a certain type
of controversy.” Bazzle, 539 U.S. at 452; see also Howsam, 537
U.S. at 84; Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529,
532 (3d Cir. 2005); cf. Certain Underwriters at Lloyd’s London

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v. Westchester Fire Ins. Co., 489 F.3d 580, 585 (3d Cir. 2007)
(“[O]nly when there is a question regarding whether the parties
should be arbitrating at all is a question of arbitrability raised for
the court to resolve.”) (internal quotation marks and citation
omitted). Such questions of arbitrability are presumptively
committed to the court unless the parties have “clearly and
unmistakably” agreed that the arbitrator should decide the issue
of arbitrability. AT&T Techs., 475 U.S. at 649; see also First
Options, 514 U.S. at 944.
The Supreme Court has contrasted questions of
arbitrability with disputes over arbitration procedure, which do
not bear upon the validity of an agreement to arbitrate.
“[P]rocedural questions which grow out of the dispute and bear
on its final disposition are presumptively not for the judge, but
for an arbitrator, to decide,” as are “allegation[s] of waiver,
delay, or a like defense to arbitrability.” Howsam, 537 U.S. at
84 (citations omitted). Likewise, the Supreme Court has made
clear that questions of “contract interpretation” aimed at
discerning whether a particular procedural mechanism is
authorized by a given arbitration agreement are matters for the
arbitrator to decide. Bazzle, 539 U.S. at 453; see also PacifiCare
Health Sys., Inc. v. Book, 538 U.S. 401, 407 (2003) (where an
arbitration agreement is ambiguous, “the antecedent question of
how the ambiguity is to be resolved” is one for the arbitrator);
Certain Underwriters, 489 F.3d at 587-88 (whether an
arbitration agreement foreclosed consolidated arbitration is a
question of contract interpretation for the arbitrator).
Hence, in Howsam, the Court concluded that the parties’
dispute over whether the plaintiff had commenced the
proceedings within the National Association of Securities

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Dealers’ six-year filing period was a matter for the arbitrator,
not the court, to decide. 537 U.S. at 83-84. The Court likened
the issue to matters like “waiver, delay, or a like defense,”
which are presumptively for the arbitrator, explaining that the
issue was an “aspec[t] of the [controversy] which called the
grievance procedures into play.” Id. at 85 (citations omitted).
And in PacifiCare, where the parties’ contracts were ambiguous
as to whether an arbitrator would be authorized to award treble
damages on the claims that the plaintiffs brought pursuant to the
Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§ 1961 et seq., the Court held that it fell to the arbitrator, not the
court, to resolve the contractual ambiguity. 538 U.S. at 407.
In stark contrast with the question of arbitration
procedure at issue in Howsam and the question of contractual
interpretation discussed in PacifiCare, when a party challenges
the validity of an arbitration agreement by contending that one
or more of its terms is unconscionable under generally
applicable state contract law, a question of arbitrability is
presented.3 See Doctor’s Assocs., Inc. v. Casarotto, 517 U.S.

3
Our dissenting colleagues appear to suggest that an
unconscionability challenge to “a single provision of an
arbitration agreement” does not necessarily raise a question of
arbitrability. Dissenting Op. at p. 14 (emphasis in original). As
recently as last year, we recognized that an unconscionability
challenge to a single provision of an arbitration agreement—also
a class action waiver provision—does in fact present a question
of arbitrability. See Homa v. Am. Express Co., 558 F.3d 225,
226 (3d Cir. 2009); see also In re Am. Express Merchs.’ Litig.,
554 F.3d 300 (2d Cir. 2009) (addressing the alleged

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681, 687 (1996) (“[G]enerally applicable contract defenses, such
as . . . unconscionability, may be applied to invalidate arbitration
agreements without contravening § 2 [of the FAA].”) (emphasis
added); see also Homa v. Am. Express Co., 558 F.3d 225, 226
(3d Cir. 2009) (same); cf. Green Tree Fin. Corp.-Alabama v.
Randolph, 531 U.S. 79, 92 (2000) (addressing the burden of “a
party [who] seeks to invalidate an arbitration agreement on the
ground that arbitration would be prohibitively expensive”).
The Courts of Appeals are unanimous in recognizing that
an unconscionability challenge to the provisions of an
arbitration agreement is a question of arbitrability that is
presumptively for the court, not the arbitrator, to decide.4 See

unconscionability of a single provision).
4
An attack on the validity of the contract as a whole, as
opposed to the arbitration clause in particular, does not present
a question of arbitrability. See Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 445-46 (2006) (“[U]nless the challenge
is to the arbitration clause itself, the issue of the contract’s
validity is considered by the arbitrator in the first instance.”). In
Buckeye, for example, where the plaintiffs alleged that the
contract as a whole was illegal on account of its imposition of
usurious interest rates, the issue was one for the arbitrator, not
the court. As the Supreme Court explained in that case,
“because respondents challenge the Agreement, but not
specifically its arbitration provisions, those provisions are
enforceable apart from the remainder of the contract.” Id. at
446. “The flip side of this rule, however, is that when a party
specifically challenges the validity of arbitration provisions

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Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 121 (2d
Cir. 2010) (“[I]t is clear that questions of contractual validity
relating to the unconscionability of [an] arbitration agreement
must be resolved first, as a matter of state law, before
compelling arbitration pursuant to the FAA.”) (citation omitted);
Cicle v. Chase Bank USA, 583 F.3d 549, 554 (8th Cir. 2009);
Dale v. Comcast Corp., 498 F.3d 1216, 1219 (11th Cir. 2007);
Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 975-77
(6th Cir. 2007); Kristian v. Comcast Corp., 446 F.3d 25, 52-53
(1st Cir. 2006); Parilla, 368 F.3d at 276; Spahr v. Secco, 330
F.3d 1266, 1270-71 (10th Cir. 2003); Ingle v. Circuit City
Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003); Snowden v.
CheckPoint Check Cashing, 290 F.3d 631, 638 (4th Cir. 2002);
We Care Hair Dev., Inc. v. Engen, 180 F.3d 838, 842-43 (7th
Cir. 1999); Webb v. Investacorp, Inc., 89 F.3d 252, 259 (5th Cir.
1996). The logic underpinning this consensus is readily
apparent—an unconscionability challenge to an arbitration
agreement presents a question of arbitrability because such a
challenge calls the “valid[ity]” of the arbitration agreement itself
into question. Bazzle, 539 U.S. at 452.
It is against this backdrop that we review the Puleos’
contention that the District Court impermissibly intruded upon
the province of the arbitrator when it addressed their argument
that the Arbitration Agreement’s class action waiver is
unconscionable.

within a larger contract, apart from the validity of the contract
as a whole, a court decides the threshold question of the
enforceability of the arbitration provisions.” Jackson v.
Rent-A-Center West, Inc., 581 F.3d 912, 915 (9th Cir. 2009).

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 B.
As our discussion thus far makes plain, under the law of
this Circuit and others, the well-settled general rule is that when
a contractual party challenges the validity of an arbitration
agreement by contending that one or more of its terms is
unconscionable and unenforceable, a question of arbitrability is
presented. As Chase correctly argues, we have consistently
employed this approach, holding that a party’s unconscionability
challenge to the enforcement of one or more terms of an
arbitration agreement presents a gateway matter for judicial
determination. See, e.g., Parilla, 368 F.3d at 276 (“Applying the
relevant state contract law, a court may . . . hold that an
agreement to arbitrate is unenforceable based on a generally
applicable contractual defense, such as unconscionability.”)
(emphasis added, quotation marks and citations omitted);
Alexander, 341 F.3d at 264; Spinetti, 324 F.3d at 214.
In the Puleos’ argument that this general rule should not
apply to their case, we discern four principal contentions. The
Puleos argue: (1) that because they are “willing” to arbitrate
(albeit not under the express terms of their Arbitration
Agreement), no question of arbitrability is presented here; (2)
that under the Supreme Court’s decision in Green Tree v.
Bazzle, the arbitrator should determine whether an otherwise
binding arbitration agreement bars class actions; (3) that because
the parties’ Arbitration Agreement contains a severability
clause, the District Court erred in considering the
unconscionability of any of its terms; and (4) that, even if their
challenge to the class action waiver raised a question of
arbitrability, the Arbitration Agreement demonstrates that the
parties clearly and unmistakably intended to arbitrate questions

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of arbitrability. We are not persuaded by any of these
arguments, which we address in turn below.
1.
The Puleos’ first contention as to why their challenge to
the class action waiver does not raise a question of arbitrability
stems from the fact that they are amenable to arbitration in the
abstract. That is, although the Puleos oppose the enforcement
of the express terms of their Arbitration Agreement—which
makes clear that arbitration is to occur on an individual basis
only, and that “the arbitrator shall have no authority to proceed”
on a class or representative basis, (App. 63)—they do not
oppose having their contractually proscribed class claims sent to
arbitration for the arbitrator to rule on the unconscionability of
the class action waiver. Because they oppose the enforcement
of the terms of their own Arbitration Agreement, but not the
requirement of arbitration in general, the Puleos argue that their
challenge to the class action waiver merely presents a question
of arbitration procedure, not a gateway question of arbitrability.
See Howsam, 537 U.S. at 84 (noting that “procedural questions
which grow out of the dispute and bear on its final disposition
are presumptively not for the judge, but for an arbitrator, to
decide”) (quotation marks and citation omitted).
We do not agree. As an initial matter, under the FAA, a
district court does not issue an order compelling arbitration in
the abstract. Rather, as the Supreme Court has recognized, § 4
of the FAA “confers only the right to obtain an order directing
that ‘arbitration proceed in the manner provided for in [the
parties’] agreement.’” Volt Info. Sciences, Inc. v. Board of
Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 475 (1989)
(quoting 9 U.S.C. § 4) (alterations in original). In other words,

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in the absence of a threshold question regarding the validity of
the arbitration agreement itself or the applicability of an
arbitration agreement to a given dispute, the FAA “requires
courts to enforce privately negotiated agreements to arbitrate .
. . in accordance with their terms.”5 Id. at 478 (emphasis added);
cf. Allstate Settlement Corp. v. Rapid Settlements, Ltd., 559
F.3d 164, 169 (3d Cir. 2009) (“Arbitration is fundamentally a
creature of contract, and an arbitrator’s authority is derived from
an agreement to arbitrate.”) (quotation marks and citation
omitted). The terms of the parties’ Arbitration Agreement are
clear—the Agreement makes plain that an arbitrator has “no
authority to proceed” over a class arbitration. (App. 62-63.)
Enforcing the Agreement “in accordance with [its] terms” means
granting precisely the relief that Chase requested before the
District Court—an order compelling the parties to arbitrate their
claims on an individual basis. Volt, 489 U.S. at 478; see also
Livingston v. Assocs. Fin., Inc., 339 F.3d 553, 559 (7th Cir.
2003) (“The Arbitration Agreement at issue here explicitly
precludes the Livingstons from bringing class claims or
pursuing class action arbitration, so we are therefore obliged to
enforce the type of arbitration to which these parties agreed,
which does not include arbitration on a class basis.”) (quotation
marks and citations omitted). Under the FAA and the terms of
the Arbitration Agreement, then, the District Court could not

5
The Supreme Court recently reemphasized this point in
Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., in which the
Court stated that “the central or primary purpose of the FAA is
to ensure that private agreements to arbitrate are enforced
according to their terms.” --- S. Ct. ----, 2010 WL 1655826, at
*11 (Apr. 27, 2010) (quotation marks and citation omitted).

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have compelled class arbitration without first addressing
whether the class action waiver was unconscionable.
The Puleos’ argument regarding their class claims is self-
contradictory. In order to present their class claims to an
arbitrator, the Puleos needed to obtain a court order that
invalidated the Arbitration Agreement’s class action waiver and
that compelled class arbitration. This is because unless it
addressed the validity of the ban on class arbitration, the District
Court could not have ordered the parties to submit their dispute
to class arbitration without running afoul of the FAA’s directive
that arbitration agreements be enforced in accordance with their
terms. See 9 U.S.C. § 4; see also Volt, 489 U.S. at 478. And
without a court order compelling class arbitration, the Puleos
could not have presented their class claims to the arbitrator—the
rules of the American Arbitration Association (“AAA”) make
plain that where, as here, a contract bans class arbitration, the
AAA will not hear class claims “unless an order of a court
directs the parties to the underlying dispute to submit any aspect
of their dispute involving class claims, consolidation, joinder or
the enforceability of such provisions, to an arbitrator.” (App.
108.) By arguing that the District Court should have compelled
class arbitration without addressing the validity of the express
contractual ban on class arbitration, the Puleos would have us
ignore the plain language of both 9 U.S.C. § 4 and their own
Arbitration Agreement.6 We decline to indulge the Puleos’

6
Like the Puleos, the dissent overlooks the significance
of the parties’ Arbitration Agreement and the statutory text of §
4 of the FAA. The Puleos manifestly are not “willing to proceed
to arbitration according to the concrete terms of their arbitration

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desire to have it both ways—i.e., to have the District Court
compel the parties to arbitrate class claims without first
addressing the validity of the class action waiver.
Moreover, notwithstanding the fact that they are
amenable to arbitration in the abstract, by challenging the
enforceability of the class action waiver, the Puleos are
necessarily challenging the validity of the agreement to arbitrate.
The provision targeted by the Puleos goes to the heart of the
arbitrator’s authority to hear claims arising under the
Cardmember Agreement, in that it provides unambiguously that
“the arbitrator shall have no authority to proceed” on a class or
representative basis. (App. 63 (emphasis added).) A challenge
to this provision, which designates a clear boundary of arbitral
authority, is a far cry from procedural questions over “whether
prerequisites such as time limits, notice, laches, estoppel, and
other conditions precedent to an obligation to arbitrate have
been met,” which are matters for the arbitrator. Howsam, 537
U.S. at 85 (citation and emphasis omitted). An arbitrator can
resolve these latter procedural issues, as well as the merits of the
underlying dispute, without deciding the existence and scope of
his or her own jurisdiction, which arbitrators are neither well-
suited, nor generally permitted, to assess. See, e.g., Sandvik AB
v. Advent Int’l Corp., 220 F.3d 99, 111 (3d Cir. 2000)
(“[A]llow[ing] the arbitrators to determine their own jurisdiction

agreement.” Dissenting Op. at p. 2. The District Court could
not both order class arbitration and compel arbitration “in the
manner provided for in [the parties’] agreement,” without
considering whether the class arbitration waiver is
unconscionable. 9 U.S.C. § 4.

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. . . is not permitted in the federal jurisprudence of arbitration,
for the question whether a dispute is to be arbitrated belongs to
the courts unless the parties agree otherwise.”) (citing First
Options, 514 U.S. at 944). The same cannot be said for the class
arbitration ban—under the express terms of the Arbitration
Agreement, a challenge to this provision necessarily calls into
question the very authority of the arbitrator to preside over the
dispute, and, by extension, the validity of the Agreement itself.7
This is a question of arbitrability for the court to resolve,
irrespective of the Puleos’ amenability to arbitration in the
abstract.
In explaining the types of issues that present questions of
arbitrability, the Supreme Court has emphasized the significance
of the parties’ reasonable expectations. As the Court discussed
in Howsam, the term “question of arbitrability” is “applicable in
the kind of narrow circumstance where contracting parties
would likely have expected a court to have decided the gateway
matter, where they are not likely to have thought that they had
agreed that an arbitrator would do so, and, consequently, where
reference of the gateway dispute to the court avoids the risk of
forcing parties to arbitrate a matter that they may well not have
agreed to arbitrate.” Howsam, 537 U.S. at 83-84 (emphasis

7
The dissent’s suggestion that the class arbitration
waiver is not intertwined with the arbitrator’s jurisdiction is
incorrect. The Agreement clearly states that the arbitrator “shall
have no authority to proceed” over a class arbitration, and the
parties are bound by that language. See Allstate, 559 F.3d at
169 (“Arbitration is fundamentally a creature of contract[.]”)
(citation omitted).

-20-
added). Given the Arbitration Agreement’s provision expressly
restricting the arbitrator’s authority to preside over a class
arbitration, we think it obvious that the “contracting parties
would likely have expected a court” to decide whether that very
provision is unconscionable. Id.
In concluding that the Puleos’ challenge to the class
action waiver is a challenge to the validity of the Arbitration
Agreement, we concur with the Court of Appeals for the Second
Circuit, which recently addressed a largely identical appeal. In
the case of In re Am. Express Merchs.’ Litig., 554 F.3d 300 (2d
Cir. 2009), the Second Circuit considered the enforceability of
an arbitration provision barring class actions within a very
similar cardmember agreement. The court addressed the same
question now before us—whether the court or arbitrator should
pass judgment on the enforceability of an explicit class action
waiver. In that case, as in ours, the plaintiffs were “amenable to
proceeding to arbitration,” id. at 321, although they sought to
arbitrate on a class-wide basis. The district court in that case
agreed with the position advocated by the Puleos; it referred the
decision concerning the enforceability of the class action waiver
to the arbitrator, holding that “enforceability of the collective
action waivers is a claim for the arbitrator to resolve. Issues
relating to the enforceability of the contract and its specific
provisions are for the arbitrator, once arbitrability is
established.” In re Am. Express Merchs.’ Litig., No. 03-CV-
9592, 2006 WL 662341, at *6 (S.D.N.Y. Mar. 16, 2006). The
Second Circuit, however, soundly rejected the decision of the
district court, noting that a challenge to the explicit class action
bar was, in essence, a challenge to the agreement to arbitrate:
The plaintiffs are plainly challenging the Card

-21-
 Acceptance Agreement’s arbitration clause
insofar as they dispute the enforceability of its
class action waiver and, by extension, the validity
of the parties’ agreement to arbitrate. Their
challenge is to the arbitration clause itself, rather
than to the entirety of the Card Acceptance
Agreement. This appeal therefore involves a
gateway dispute about whether the parties are
bound by a given arbitration clause, a dispute
which raises a question of [arbitrability] for a
court to decide.
In re Am. Express Merchs.’ Litig., 554 F.3d at 311 (internal
quotation marks and citations omitted). We agree with the
Second Circuit that a challenge to the enforceability of an
explicit class action waiver within an arbitration agreement is a
challenge to the validity of the parties’ agreement to arbitrate,
and thus a question for the court to decide.
2.
Contrary to the Puleos’ contentions, the Supreme Court’s
plurality opinion in Bazzle does not compel a contrary
conclusion. The Puleos rely upon Bazzle in arguing that a
party’s “stand-alone challenge to [a] class action waiver does
not raise an issue of arbitrability” because it is merely a
procedural matter for the arbitrator to decide. (Appellants’ Br.
at 20.) But Bazzle does not stand for the broad proposition for
which the Puleos cite it. In Bazzle, the Supreme Court
confronted “a problem concerning the contracts’ silence. Are
the contracts in fact silent, or do they forbid class arbitration . .
. ?” 539 U.S. at 447. The Court explained that this matter of
contract interpretation in the face of contractual silence was for

-22-
the arbitrator. Id. at 451. As the Bazzle plurality concluded,
“the question—whether the agreement forbids class
arbitration—is for the arbitrator to decide.” Id.
The dispute in Bazzle, therefore, did not present a
question relating to the validity of the arbitration agreement—it
was a dispute about what the contract actually said. Here, by
contrast, there is no doubt over “what kind of arbitration
proceeding the parties agreed to.” Id. at 452 (noting that a
dispute over the “kind of arbitration proceeding” agreed to could
properly be decided by an arbitrator, but a dispute over the
validity of an arbitration clause or its applicability to an
underlying dispute was not a proper question for the arbitrator)
(emphasis omitted). The question Bazzle confronted is thus
inapplicable to agreements like the one at issue herein, which
expressly and unmistakably proscribes class arbitration and
which leaves no question as to “whether the agreement forbids
class arbitration.” Bazzle, 539 U.S. at 451; see, e.g., Kristian v.
Comcast Corp., 446 F.3d 25, 54 (1st Cir. 2006) (“Bazzle does
not apply here because of the clarity of the prohibition against
class arbitration.”); In re Am. Express Merchs.’ Litig., 554 F.3d
at 311 n.10 (same).
Moreover, Bazzle certainly did not hold that an
unconscionability challenge to a class action waiver provision
in an arbitration agreement is a matter for the arbitrator, not the
court, to decide. The issue in Bazzle was the existence, not the
validity, of a class action waiver, see Kristian, 446 F.3d at 54,
and, post-Bazzle, courts have consistently treated challenges to
the enforceability of class action waivers as matters for judicial,
not arbitral, resolution. See, e.g., Homa, 558 F.3d at 233; In re
Am. Express Merchs.’ Litig., 554 F.3d at 311-12; Gay v.

-23-
CreditInform, 511 F.3d 369, 394-95 (3d Cir. 2007); Kristian,
446 F.3d at 54; Iberia Credit Bureau, Inc. v. Cingular Wireless
LLC, 379 F.3d 159, 174-75 (5th Cir. 2004). We therefore
conclude that the Puleos’ reliance upon Bazzle is misplaced.
3.
Nor can we agree with the Puleos’ contention that
because the parties’ Arbitration Agreement contains a
severability clause, the District Court erred in considering the
unconscionability of the class action waiver. The severability
clause provides that “if any portion of this Arbitration
Agreement is deemed invalid or unenforceable, the remaining
portions shall nevertheless remain in force.” (App. 63.) Relying
on this provision, the Puleos argue that the District Court, faced
with their contention that the class action waiver was
unconscionable, should have ignored the question of
unconscionability and instead directed its attention to the
question of whether the class action waiver, if found
unconscionable, could ultimately be severed from the remainder
of the Arbitration Agreement. Had the District Court done so,
say the Puleos, it would have concluded that their
unconscionability challenge to the class action waiver does not
call the validity of the Arbitration Agreement as a whole into
question, because whether or not the waiver is unconscionable,
it would not impact the requirement of arbitration.
Once again, however, the plain language of the parties’
Arbitration Agreement undermines the force of the Puleos’
argument. The severability clause upon which the Puleos rely
is phrased in the conditional: “if any portion of this Arbitration
Agreement is deemed invalid or unenforceable, the remaining
portions shall nevertheless remain in force.” (App. 63

-24-
(emphasis added).) The clause thus provides for a two-step
analysis—first, assess whether any provision of the Arbitration
Agreement is unenforceable, and if so, then assess the
severability of the unenforceable provision. The District Court
followed precisely this order of analysis in addressing the
Puleos’ challenge to the class action waiver, and, given the
express language of the parties’ Agreement, it can hardly be
faulted for having done so. Because it held, at the first step of
the analysis, that the waiver provision was not unconscionable,
the District Court did not reach (and indeed, should not have
reached) the secondary issue of severability. As the Court of
Appeals for the Second Circuit explained when confronted by
a litigant’s effort to invoke a severability clause under
comparable circumstances:
The severability clause . . . has no relevance to
this appeal. According to its terms, the
severability clause applies “[i]n the event that any
provision of this Agreement, or the application of
such provision shall be held by a court of
competent jurisdiction to be contrary to law . . . .”
The district court, however, did not hold any
provision of the arbitration agreement to be
contrary to law. . . . Thus, the district court did not
trigger any application of the severability clause
and, as a result, the question of whether or not the
clause can “save” the arbitration agreement is not
properly raised on this appeal.
Ragone, 595 F.3d at 123.
This analysis is in accord with the approach to the issue
of severability that we have consistently adopted when

-25-
addressing unconscionability challenges to arbitration
agreements. That is, when confronted by a litigant’s claim that
a provision of an arbitration agreement is unconscionable, we
have always considered, first, whether the provision is in fact
unenforceable, and, if so (and only if so), whether the
unenforceable provision may be severed from the remainder of
the arbitration agreement. See, e.g., Parilla, 368 F.3d at 276
(“We set forth below the relevant principles of
unconscionability and will apply those principles to the
arbitration terms at issue in this case. We will then determine
whether it is appropriate to sever any unenforceable provisions
from the parties’ agreement to arbitrate.”) (emphasis added);
Alexander, 341 F.3d at 270 (applying unconscionability first,
severability second order of analysis); Spinetti, 324 F.3d at 221-
22 (same); cf. Delta Funding Corp. v. Harris, 426 F.3d 671, 675
(3d Cir. 2005) (“Is the arbitration agreement at issue in this case,
or any provision thereof, unconscionable under New Jersey law,
and if so, should such provision or provisions be severed.”)
(citation omitted, emphasis added). Other Circuits employ this
same two-step order of analysis, contrary to the Puleos’
contention that we should put the severability cart before the
unconscionability horse. See, e.g., In re Cotton Yarn Antitrust
Litig., 505 F.3d 274, 292 (4th Cir. 2007); Hadnot v. Bay, Ltd.,
344 F.3d 474, 478 (5th Cir. 2003); Gannon v. Circuit City
Stores, Inc., 262 F.3d 677, 683 (8th Cir. 2001). The two-step
nature of this inquiry—unconscionability first, severability
second—is likewise implicit in the language of the Restatement
(Second) of Contracts, which explains severability as an
“if/then” concept. See Restatement (Second) of Contracts §
184(1) (“If less than all of an agreement is unenforceable under
the rule stated in § 178, a court may nevertheless enforce the rest

-26-
of the agreement in favor of a party who did not engage in
serious misconduct if the performance as to which the
agreement is unenforceable is not an essential part of the agreed
exchange.”) (emphasis added).
The Puleos’ suggestion that a court intrudes upon the
province of the arbitrator any time it addresses the
unconscionability of a provision of an arbitration clause that it
subsequently finds is severable from the agreement runs
contrary to our precedent and that of our sister circuits. In
Spinetti, for example, we found two terms of an arbitration
agreement unconscionable, but determined that the
unenforceable terms could be severed from the remainder of the
contract. 324 F.3d at 219-20; accord Scovill v. WSYX/ABC,
425 F.3d 1012, 1017 (6th Cir. 2005) (finding provision of
arbitration agreement unconscionable and then severing
unconscionable term pursuant to severability clause); Hadnot,
344 F.3d at 478 (same); Gannon, 262 F.3d at 680-81 (same).
The Puleos would apparently have us hold that in each of these
cases, the court overstepped its bounds by addressing the issue
of unconscionability in the first instance, since in each case, the
provisions in question, whether or not unconscionable, were
ultimately severable from an otherwise enforceable arbitration
agreement. We see no basis in our cases, nor in the Supreme
Court’s arbitration jurisprudence, for such a holding.
Particularly in light of the conditional language of the
severability clause in the parties’ Arbitration Agreement, we
disagree with the Puleos’ suggestion that the District Court erred
in considering their unconscionability argument before
addressing the severability of the class action waiver.
4.

-27-
 Finally, the Puleos argue that even if their
unconscionability challenge to the class action waiver presented
a question of arbitrability, the parties intended to present such
questions to the arbitrator, not the court. As we have noted,
under the Supreme Court’s arbitration jurisprudence, while the
general rule is that questions of arbitrability are for the court to
resolve, parties can contract around this rule if they desire to
arbitrate arbitrability. See First Options, 514 U.S. at 944-45.
The Supreme Court has made clear, however, that courts
“should not assume that the parties agreed to arbitrate
arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence
that they did so.” Id. at 944 (quoting AT&T Techs., 475 U.S. at
649) (alterations in original). As First Options explains, “given
the principle that a party can be forced to arbitrate only those
issues it specifically has agreed to submit to arbitration, one can
understand why courts might hesitate to interpret silence or
ambiguity on the ‘who should decide arbitrability’ point as
giving the arbitrators that power, for doing so might too often
force unwilling parties to arbitrate a matter they reasonably
would have thought a judge, not an arbitrator, would decide.”
Id. at 945 (citation omitted). We have described the burden on
a litigant seeking to prove that the parties intended for the
arbitrator to decide questions of arbitrability as “onerous.”
Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207, 221 (3d Cir.
2007).
We agree with Chase that the Puleos have not met this
burden. The provision of the Arbitration Agreement upon
which the Puleos rely states that “[c]laims subject to this
Arbitration Agreement include Claims regarding the
applicability of this Arbitration Agreement or the validity of the
entire Cardmember Agreement or any prior Cardmember

-28-
Agreement,” and it further states that “the term ‘Claim’ is to be
given the broadest possible meaning.” (App. 63.) The first set
of claims described in this provision—claims “regarding the
applicability of this Arbitration Agreement,” (App. 63 (emphasis
added)—are certainly not at issue in this dispute. Claims
regarding “whether an arbitration clause in a concededly binding
contract applies to a particular type of controversy” are indeed
questions of arbitrability.8 See Howsam, 537 U.S. at 84. Under
the terms of the parties’ contract, if any party in this case
actually questioned whether the Puleos’ complaint about
Chase’s retroactive interest rate increases fell within the scope
of the Arbitration Agreement, such a question would be for the
arbitrator. But there is no question in this case concerning the
scope or applicability of the Arbitration Agreement. That is,
Chase and the Puleos agree that the Puleos’ complaint about the
retroactive interest rate increase falls within the scope of the
Arbitration Agreement; they disagree only about whether the
class action waiver provision of the Arbitration Agreement is
valid. Because there is no dispute in this case “regarding the
applicability of this Arbitration Agreement” to the substantive

8
The Supreme Court set forth examples of claims
challenging the applicability of an arbitration clause in
Howsam—a dispute regarding “whether a labor-management
layoff controversy falls within the arbitration clause of a
collective-bargaining agreement” is a question concerning the
applicability of an arbitration agreement, as is a disagreement
over “whether a clause providing for arbitration of various
‘grievances’ covers claims for damages for breach of a no-strike
agreement.” Howsam, 537 U.S. at 84 (citations omitted). No
such question of applicability is presented in this case.

-29-
dispute between the parties, (App. 63), the first clause of the
provision relied upon by the Puleos does not “clearly and
unmistakably” show that the parties intended to arbitrate the
validity of the class action waiver. Howsam, 537 U.S. at 83
(citation omitted); see also Ehleiter, 482 F.3d at 215, 222.
Nor is there a dispute between Chase and the Puleos
concerning “the validity of the entire Cardmember Agreement
or any prior Cardmember Agreement.” (App. 63.) Arbitration
jurisprudence distinguishes between a “challenge . . . to the
arbitration clause itself,” and a challenge targeting the contract
as a whole. Buckeye, 546 U.S. at 445-46; see also Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04
(1967). The parties’ Arbitration Agreement makes clear that the
latter category of challenges—disputes concerning “the validity
of the entire Cardmember Agreement,” (App. 63)—are for the
arbitrator. The Arbitration Agreement is silent, however, with
regard to who decides challenges “to the arbitration clause
itself,” Buckeye, 546 U.S. at 446, and the Supreme Court has
made clear that “silence or ambiguity on the ‘who should decide
arbitrability’ point” must be resolved in favor of judicial
resolution of questions of arbitrability. First Options, 514 U.S.
at 945. The Puleos do not contest “the validity of the entire
Cardmember Agreement,” (App. 63), by, e.g., alleging that the
entire contract is illegal and void. See Buckeye, 546 U.S. at
446. Instead, they challenge “the validity of arbitration
provisions within a larger contract, apart from the validity of the
contract as a whole,” a matter which the Arbitration Agreement
cannot be read to refer to the arbitrator. Jackson, 581 F.3d at
915. In sum, the Puleos have failed to adduce clear and
unmistakable evidence that the parties intended to arbitrate
questions concerning the validity of the arbitration agreement,

-30-
which is fatal to their argument that the District Court should
have referred such a question of arbitrability to the arbitrator.
See First Options, 514 U.S. at 945.
IV.
For the foregoing reasons, we conclude that the Puleos’
challenge to the Arbitration Agreement’s class action waiver
presents a question of arbitrability that the District Court
appropriately addressed. We will therefore affirm the District
Court’s order compelling the parties to arbitrate their claims on
an individual basis.

-31-
RENDELL, Circuit Judge, with whom Circuit Judges AMBRO,
FISHER and CHAGARES join, dissenting.

Judge Fuentes writes persuasively for the majority in
concluding that when a party urges that the “unconscionability”
of a provision invalidates an arbitration agreement, the issue
should be decided in the first instance by a court, not an
arbitrator. I, too, might be persuaded were it not for the unique
features of the specific situation before us, not the least of which
is the fact that the arbitrability of the dispute between the parties
is not at issue, because the parties both agree that the case
should go to arbitration and they do not urge that the presence
of the class action waiver affected the formation of the
agreement to arbitrate, or its validity. The majority fails to
acknowledge this.

I.

It is important to begin by focusing on the Supreme
Court’s opinion in Howsam v. Dean Witter Reynolds, Inc.,
which clearly limits the types of issues a court should decide.
537 U.S. 79 (2002). There, the Supreme Court made it clear
that courts should only consider gateway issues of “arbitrability”
in a “limited” and “narrow” set of circumstances; namely, when
there is a dispute about whether the parties are bound by a given
arbitration clause at all, or when there is a disagreement about
whether an arbitration clause in a concededly binding contract
applies to a particular type of dispute. Id. at 83-84.
Accordingly, unless the pertinent question is (1) are the parties
bound to arbitrate, or (2) did the parties agree to arbitrate the
issue being raised, the matter must be referred to the arbitrator.
With that in mind, I turn to the specific fact pattern presented.
 The features of this case, from the standpoint of the
issues presented, and the fact pattern before the District Court,
are very unusual indeed. First and foremost, the parties both
agree that the plaintiffs’ case should be arbitrated. No one is
contending that the parties are not bound to arbitrate,
notwithstanding the majority’s view to the contrary. The
proceedings in the District Court confirm this. Chase filed a
motion to compel arbitration. The District Court’s Order of
August 12, 2008, explicitly noted that the Puleos “support
[Chase’s] motion [to compel arbitration] to the extent that it
seeks arbitration and dismissal of their claims in court” and that
the Puleos “are asking the court to grant [Chase’s] motion by
compelling the parties to arbitrate all of their claims, including
their claims challenging the validity of the contract provision
barring class action proceedings in arbitration.” Dist. Ct.
Order 1 n.1 (App. 2). This is not, as the majority suggests,
simply an expression of amenability to arbitration “in the
abstract.” Majority Op. at 16. The Puleos are willing to proceed
to arbitration according to the concrete terms of their arbitration
agreement – all twelve paragraphs of it. This makes a huge
difference. The significance of this fact and its bearing on who
the appropriate decisionmaker is cannot be overstated.

Since it is clear that the parties agree that the case will go
to arbitration – whether as a class action or as plaintiffs’
individual suit – there is no issue of “arbitrability,” and there is
no issue as to the arbitrator’s jurisdiction. No one – neither the
court nor the arbitrator – needs to decide the “jurisdiction” of the
arbitrator. The arbitrator has jurisdiction over the case; the case
will be arbitrated – no ifs, ands, or buts. There remains only the
question of how the case will go forward – whether as a class

2
action or an individual suit. But that question is akin to the
question in Bazzle, “what kind of arbitration proceeding the
parties agreed to,” and that question is one that an arbitrator is
perfectly “well situated to answer.” Green Tree Fin. Corp. v.
Bazzle, 539 U.S. 444, 452-53 (2003) (emphasis in original).1

The majority makes much of the language from the

1
The majority is correct that Bazzle involved a contract that
was arguably unclear as to whether or not it forbade class
actions. The contract here is not unclear on this point.
However, the majority dismisses Bazzle too quickly. In Bazzle,
as here, there was an issue as to whether an arbitration could
proceed as a class action or whether it must proceed as an
individual suit. The Supreme Court did not hesitate in allowing
the matter to go to an arbitrator, even given this uncertainty, and
even given the possibility that the arbitrator might find that,
indeed, the contract did bar class actions. The important point
is not that the situation is identical to that in Bazzle; it is that the
basic question is the same: whether or not a particular
arbitration agreement, properly understood and enforced in
accordance with the relevant law, bars class actions. This
question is not a “question of arbitrability” that has to be
decided by a court – the Supreme Court explicitly held
otherwise. In Bazzle, this question was raised because the
contract was unclear; here, the question is raised because of an
unconscionability challenge to the class action waiver. But the
basic question – should the arbitration proceed on an individual
basis or as a class action – is the same. And, as the Supreme
Court makes clear in Bazzle, this question is not a question of
arbitrability. 539 U.S. at 452-53.

3
arbitration agreement that states that “the arbitrator shall have no
authority to proceed” with arbitration on a class basis, citing that
phrase four times, once with emphasis. Majority Op. at 16, 18,
19, 20 n.7. This language is, of course, part of the arbitration
agreement’s bar on class actions, which, if found by the
arbitrator to be unconscionable, will be irrelevant. The majority
interprets this phrase as suggesting that the arbitrator will be in
the position to decide “the existence and scope of his or her own
jurisdiction” if the arbitrator is allowed to decide whether the
class action waiver is unconscionable. Majority Op. at 20.
However, the concern over an arbitrator’s deciding “his own
jurisdiction” arises when there is uncertainty as to whether a
particular dispute is one that the parties agreed to arbitrate. See,
e.g., First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,
943-45 (1995). That determination is uniquely reserved for a
court, as the Supreme Court has made clear in Howsam. 537
U.S. at 84. A court should decide whether the arbitrator has
jurisdiction over a certain matter, i.e., did the parties agree to
arbitrate it? A challenge to a class action waiver in the
arbitration agreement does not implicate the arbitrator’s
jurisdiction. The use of the word “authority” simply indicates
that the arbitrator is not to conduct an arbitration as a class
action. (Curiously, the sentence at issue is followed by a
sentence indicating that either party can elect not to proceed as
a class action; presumably, if neither so “elects,” the case would
in fact proceed as a class action.)

Second, and a very close second in terms of significance:
the Puleos did not urge that the unconscionability of the class

4
action waiver implicated the dispute’s arbitrability.2 Nor did the
District Court consider, let alone decide, any issue bearing on
the validity of the arbitration agreement. Chase asked the
District Court to enforce both the class action waiver and the
rest of the arbitration agreement. The Puleos’ response urged
that the class action waiver was unconscionable, but did not
suggest that the arbitration agreement was invalid or
unenforceable. So there was no challenge presented to the
“validity” of the arbitration agreement.3 They challenge only

2
The majority’s repeated use of the phrase “validity of the
agreement” and related phrases (e.g. Majority Op. at 19, 20, 21,
31) to describe what the Puleos are challenging cannot convert
this case into one involving the validity of the arbitration
agreement: repetition does not make it so. This phrase, let
alone this concept, simply does not appear in the District Court’s
Order. Instead, the District Court properly characterizes the
Puleos as “challenging the validity of the contract provision
barring class action proceedings in arbitration” and as
“challenging the validity of the arbitration clause’s express class
action prohibition.” Dist. Ct. Order 2-3 n.1 (App. 2-3). The
issue presented is: how should the case proceed – individually,
or as a class action? The District Court decided that the waiver
was not unconscionable. That is the ruling that we are to
review.
3
It is for this reason that the majority’s extended discussion
of “severability” largely misses the mark. The Puleos have
never challenged the validity of the arbitration agreement. And,
as noted above, Chase filed a motion to compel arbitration. The
issue of severability arises only because Chase now raises the

5
one aspect of that agreement, and do not suggest that this
challenge has any bearing on the validity of the agreement as a
whole. Moreover, there is no allegation that the
unconscionability of the class action waiver affected the
formation of the agreement to arbitrate, or rendered either

specter that an attack on one part of the arbitration agreement
could invalidate the whole arbitration agreement. We need not
even reach this issue if we find, as we should, that the Puleos are
not challenging the validity of the arbitration agreement. Even
so, Chase’s argument that seeks to nullify – or revise – the very
severability provision that it included in the form agreement is
quite weak: if the class action waiver was so integral as to not
be severable, why did Chase include an explicit severability
clause in the arbitration provision that failed to except out the
class action waiver? Many contracts of this sort either explicitly
prohibit severance of the class action waiver, or except the class
action waiver from the severability clause. See, e.g., Homa v.
Am. Express Co., 558 F.3d 225, 234 (3d Cir. 2009) (Weis, J.,
concurring) (contract included a provision in the arbitration
clause that stated that if the class action waiver were deemed
invalid or unenforceable, then the entire arbitration provision
would not apply); Chalk v. T-Mobile USA, Inc., 560 F.3d 1087,
1098 (9th Cir. 2009) (arbitration agreement included a provision
prohibiting severance of the class action waiver); Dale v.
Comcast Corp., 498 F.3d 1216, 1219 n.3 (11th Cir. 2007)
(noting that “[t]he severability clause in the Arbitration
Provision states: ‘In [sic] the class action waiver clause is found
to be illegal or unenforceable, the entire Arbitration Provision
will be unenforceable.’”). Surely Chase should not be permitted
to rewrite the agreement that it prepared.

6
party’s assent involuntary.4 This makes this case unique; the
context in which the argument as to the “unconscionability” of
a class action waiver typically arises involves the plaintiff’s
claim that the waiver’s unconscionability renders the arbitration
provision invalid or unenforceable, thus implicating the
agreement to arbitrate. The cases that the majority relies on
involve that scenario.5 That simply is not the case here.

4
There is no claim that the presence of the class action waiver
renders the parties’ promises illusory, or so one-sided, or so
overreaching as to nullify the agreement. Were that the case, a
bank’s inclusion of such a provision would always result in its
having to litigate in court rather than arbitrate. This cannot be.
5
The majority’s long list of Court of Appeals decisions that
are “unanimous” in “recognizing that an unconscionability
challenge to the provisions of an arbitration agreement is a
question of arbitrability that is presumptively for the court, not
the arbitrator, to decide,” Majority Op. at 13-15, are all factually
distinguishable. In particular, all of those cases either (1)
include an explicit challenge to the validity or applicability of
the entire arbitration agreement (not just one provision of it) or
(2) raise fundamental challenges to whether the parties were
bound by the agreement at all. Not a single one of them
presents a situation like the one before us in which both parties
concede the appropriateness of arbitration. See Ragone v. Atl.
Video at Manhattan Ctr., 595 F.3d 115, 123 (2d Cir. 2010)
(plaintiff specifically challenged arbitrability); Cicle v. Chase
Bank USA, 583 F.3d 549, 555 (8th Cir. 2009) (plaintiff
contended that the arbitration agreement was unconscionable);
Dale, 498 F.3d at 1218-19 & n.3 (plaintiffs “disputed having

7
 Accordingly, since there is no issue as to whether the
parties are bound to arbitrate, the only remaining question is
whether the issue of the unconscionability of the class action
waiver is a dispute that the parties agreed to arbitrate. Howsam,
537 U.S. at 83. Here, no one is contending that this issue was
somehow reserved for the court by agreement, or was not one
that was agreed to be arbitrated. Indeed, it would be difficult to
do so, as the “Claims” subject to arbitration are as broad as can

received” the contract and challenged the entire arbitration
agreement); Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d
967, 972 (6th Cir. 2007) (plaintiff contested the validity of the
entire arbitration agreement); Kristian v. Comcast Corp., 446
F.3d 25, 31, 37 (1st Cir. 2006) (numerous challenges to
formation and to provisions of the arbitration agreement);
Parilla v. IAP Worldwide Servs., VI, Inc., 368 F.3d 269, 274 (3d
Cir. 2004) (plaintiff urged that the entire agreement to arbitrate
was unenforceable); Spahr v. Secco, 330 F.3d 1266, 1268-69
(10th Cir. 2003) (challenge to the arbitration agreement on the
basis of mental capacity); Ingle v. Circuit City Stores, Inc., 328
F.3d 1165, 1180 (9th Cir. 2003) (the arbitration agreement was
“permeated with objectionable provisions”); Snowden v.
CheckPoint Check Cashing, 290 F.3d 631, 636, 639 (4th Cir.
2002) (challenge to the validity of the whole contract, including
the arbitration agreement, as void ab initio); We Care Hair Dev.,
Inc. v. Engen, 180 F.3d 838, 843 (7th Cir. 1999) (the entire
arbitration clause was unconscionable); Webb v. Investacorp,
Inc., 89 F.3d 252, 257 (5th Cir. 1996) (the arbitration clauses
were “not valid and enforceable”).

8
be.6

6
The arbitration agreement requires the parties to arbitrate

all Claims, whether such Claims are
based on law, statute, contract,
regulation, ordinance, tort, common
law, constitutional provision, or
any legal theory of law such as
respondent superior, or any other
legal or equitable ground and
whether such Claims seek as
remedies money, damages,
penalties, injunctions, or
declaratory or equitable relief.
Claims subject to this Arbitration
Agreement include Claims
regarding the applicability of this
Arbitration Agreement or the
validity of the entire Cardmember
A g r e e me n t o r a n y p r i o r
Cardmember Agreement. This
Arbitration Agreement includes
Claims that arose in the past, or
arise in the present or the future.
As used in this Arbitration
Agreement, the term Claim is to be
given the broadest possible
meaning.

App. 63 (emphasis added).

9
 Moreover, whether the case will proceed as a class action
is clearly a “procedural question,” and the Supreme Court, and
we, have stated time and again that matters of procedure are to
be decided by the arbitrator. Howsam, 537 U.S. at 84; Certain
Underwriters at Lloyd’s London v. Westchester Fire Ins. Co.,
489 F.3d 580, 586-87 (3d Cir. 2007). One would thus expect an
arbitration provision to specify matters of procedure that are not
to be arbitrated. Since the issue of the class action waiver’s
unconscionability is not an issue of arbitrability, and is not
reserved for the court by agreement, it should have been referred
by the District Court to the arbitrator.7

II.

The majority opinion proceeds from the notion that issues
of unconscionability must always be decided by courts. Perhaps
if the unconscionability issue implicates the validity of the

7
The majority’s extended discussion (pp. 28-31) of First
Options is beside the point. The majority stresses both that
questions of arbitrability are for a court to decide, and that a
court “should not assume that the parties agreed to arbitrate
arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence
that they did so.” First Options, 514 U.S. at 944 (quoting AT&T
Techs., Inc. v. Commc’ns Workers, 475 U.S. 643, 649 (1986)
(alterations in original)). However, whether to arbitrate
arbitrability is not before us; there is no issue of arbitrability.

10
arbitration agreement, and, in turn, arbitrability, this is correct.8
However, where the issue is “arbitrable,” it violates the very
policy behind arbitration to have the court decide the issue
before referring it to arbitration.9

The majority correctly notes that the Supreme Court has
continuously reinforced a “liberal federal policy favoring
arbitration agreements.” Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983). The majority
also correctly emphasizes that the Supreme Court has made it
clear that courts have only a limited role to play – appropriately

8
However, I submit that even if there were a challenge to the
validity of the arbitration agreement based on unconscionability
of the class action waiver, this could be viewed as presenting an
issue of enforceability, rather than a threshold issue as to
whether the parties entered into a binding agreement. We have
routinely held that an unconscionability challenge is a defense
to the enforcement of a contract, see, e.g., Parilla, 368 F.3d at
275-76, and in Howsam, the Supreme Court stated that defenses
to enforcement are not matters of arbitrability. 537 U.S. at 84-
85 (“[T]he presumption is that the arbitrator should decide
allegations of waiver, delay, or a like defense to arbitrability.”
(internal quotation marks omitted)).
9
Indeed, in Buckeye, the validity of the entire agreement –
which contained an arbitration agreement – was challenged, and,
in keeping with the parties’ arbitration agreement, the Supreme
Court held that the matter should be referred to the arbitrator.
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,
445-46 (2006).

11
resolving “[t]he question whether the parties have submitted a
particular dispute to arbitration,” Howsam, 537 U.S. at 83 –
when the agreement between two parties leaves the answer to
that question uncertain. Additionally, the majority appropriately
stresses that what counts as this kind of “question of
arbitrability” is to be construed in a limited fashion, quoting
Howsam:

Linguistically speaking, one might
call any potentially dispositive
gateway question a “question of
arbitrability,” for its answer will
determine whether the underlying
controversy will proceed to
arbitration on the merits. The
Court’s case law, however, makes
clear that, for purposes of applying
the interpretive rule, the phrase
“question of arbitrability” has a far
more limited scope.

537 U.S. at 83. Unfortunately, however, after this careful
presentation of much of the relevant Supreme Court
jurisprudence, the majority fails to appreciate the nuances in the
situation at hand, and, as a result, runs roughshod over the
parties’ agreement to arbitrate. The majority relies on the
Supreme Court’s decision in Doctor’s Associates, Inc. v.
Casarotto, 517 U.S. 681, 687 (1996), but, in doing so, it blurs a
vital distinction between (1) cases in which a party challenges

12
one term (or a few terms) of an arbitration agreement, but does
not challenge the validity of the entire arbitration agreement and
indeed concedes arbitrability; and (2) cases in which a party
challenges the validity of the entire arbitration agreement. The
Supreme Court’s decision in Doctor’s Associates fits in the
latter category, as the relevant arbitration clause was challenged
in its entirety. Here, we are presented with the former.10

In a similarly problematic vein, the majority asserts that
“[t]he Courts of Appeals are unanimous in recognizing that an
unconscionability challenge to the provisions of an arbitration
agreement is a question of arbitrability that is presumptively for
the court, not the arbitrator, to decide.” Majority Op. at 13
(emphasis added). The majority’s formulation, however, elides
the same crucial distinction: whether the unconscionability
challenge is to a provision of an arbitration agreement or to all
the provisions of an arbitration agreement (i.e., to the arbitration
agreement itself). The majority’s formulation suggests that this
is a distinction without a difference, but the Supreme Court
jurisprudence regarding the appropriate role for courts in this
context tells us otherwise.

10
The other two cases cited by the majority are similarly
inapposite. Homa did not discuss what might constitute a
question of arbitrability and simply repeats the language from
Doctor’s Associates. Homa, 558 F.3d at 226. And in Green
Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 89
(2000), the Supreme Court was considering a challenge that an
entire “agreement to arbitrate [was] unenforceable” because the
agreement said nothing about the costs of arbitration.

13
 The Supreme Court has been very clear: courts should
not find “questions of arbitrability” except in those cases in
which such questions are clearly and definitely present. See,
e.g., Buckeye, 546 U.S. at 444 (there is a question of arbitrability
only where there is a challenge “specifically” to the validity of
the agreement to arbitrate). Only when a party challenges the
“validity of the arbitration agreement” in toto – whether on
grounds of unconscionability, or some other ground – is
a question of arbitrability presented. The cases cited by the
majority stand for this proposition. The Supreme Court’s
admonition in Howsam, however, makes it clear that courts
should not conclude that parties are challenging the validity of
the entire arbitration agreement unless that is unequivocally the
case. The majority runs afoul of this admonition in assuming
that the Puleos are challenging the “validity of the arbitration
agreement” in toto simply by virtue of challenging the class
action waiver.

No case cited by the majority supports the proposition
that an unconscionability challenge to a single provision of an
arbitration agreement necessarily raises a question of
arbitrability, particularly where, as here, the party raising the
unconscionability challenge concedes the validity of the rest of
the arbitration agreement and has agreed to go to arbitration.11

As we have stressed, “[a]rbitration is fundamentally a
creature of contract, and an arbitrator’s authority is derived from
an agreement to arbitrate.” Allstate Settlement Corp. v. Rapid
Settlements, Ltd., 559 F.3d 164, 169 (3d Cir. 2009) (internal

11
See supra n.5.

14
quotation marks and citation omitted). The Supreme Court
recently reaffirmed that it is the parties’ expectations and
intentions that control, and that the parties are generally free to
structure their arbitration agreements as they see fit. Stolt-
Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. --- , No. 08-
1198, 2010 WL 1655826, at *11-12 (Apr. 27, 2010). Thus, it is
not for us to decide what should and should not be arbitrated.
Here, the parties agreed that “all Claims” should be submitted
to arbitration. The dispute over whether the class action waiver
should be enforced is a claim that the parties agreed to arbitrate.
The District Court should not have decided this issue. Doing so
violated the parties’ agreement.

CONCLUSION

In order to follow the Supreme Court’s directives in
Howsam, and to give effect to the parties’ agreement to
arbitrate in this case, we should conclude that this challenge
to the class action waiver in the concededly valid arbitration
agreement entered into by the Puleos does not raise an issue
of arbitrability, and should have been referred by the District
Court to the arbitrator.

15