Arbitration Provisions Can Prohibit Jury Trial, but Not Class Actions
In ‘Cottonwood Financial v. Estes’ (2009AP760) the plaintiff
sued the defendant in small claims court for an unpaid payday
loan debt, and the defendant counterclaimed alleging violation
of the Wisconsin Consumer Act. The plaintiff then moved for a
stay of proceedings and an order compelling arbitration pursuant
to an arbitration agreement that was part of every payday loan
contract. The circuit court granted the stay, and the defendant
appealed. On appeal, the defendant argued that the arbitration
agreement was substantively unconscionable because it took away
her right to a jury trial, because it impermissibly limited her
right to discovery, and because it limited her ability to join a
class action lawsuit, among other things. The court of appeals
reversed, holding that an arbitration agreement is substantively
unconscionable if it restrictions the right of a consumer to
participate in a class action lawsuit. The court further held,
however, that there is no fundamental right to a jury trial
under the Wisconsin Consumer Act.
