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The Pennsylvania Superior Court decision in Thibodeau does not differ materially from the California Supreme Court decision in Discover Bank

The Pennsylvania Superior Court decision in Thibodeau does not differ materially from the California Supreme Court decision in Discover Bank

N.J

The analysis of California unconscionability law in Concepcion applies with equal force to Pennsylvania unconscionability law. In Thibodeau v. Comcast Corp., 912 A.2d 874, 885-86 (Pa. Super. Ct. 2006), the Pennsylvania Superior Court held that an arbitration clause with a class action waiver, contained in a Comcast cable television agreement, was unconscionable under Pennsylvania law. The court determined the class action waiver was procedurally unconscionable because plaintiff “was forced to accept every word of all 10 pages of the mass-delivered Comcast [C]ustomer [A]greement or have no cable television service whatsoever, since Comcast holds a government-authorized geographic monopoly.” Id. at 885. The court determined the class action waiver was substantively unconscionable because plaintiff’s damages, a $9.60 per month overcharge, were so small that individual arbitration was economically unfeasible, and without an available class action, defendants were effectively immunized from liability. Id. at 885-86.

Under Concepcion, state law requiring the availability of classwide arbitration undermines the FAA’s central purpose and is preempted by the FAA. See 131 S. Ct. at 1753. The FAA preempts Pennsylvania’s unconscionability law as to a class action waiver in an arbitration agreement. 3 The instant arbitration clause containing a class action waiver is valid under Section 2 of the FAA.

B. Unavailability of NAF

Plaintiff also argues that the arbitration provision is invalid and unenforceable because it selects the NAF as the exclusive arbitral forum, but the NAF is no longer available to administer arbitration. If a designated arbitrator is unavailable, Section 5 of the FAA 4 permits a court to appoint a substitute arbitrator in certain circumstances. Our court of appeals has not addressed the precise set of circumstances in which a court may appoint a substitute arbitrator, but other federal courts have held that Section 5 of the FAA generally permits a court to appoint a substitute arbitrator where the chosen arbitrator is unavailable, unless the selection of an arbitrator is “integral” to the arbitration agreement, as opposed to an “ancillary logistical concern.” See Reddam v. KPMG LLP, 457 F.3d 1054, 1060 (9th Cir. 2006), abrogated on other grounds by Atlantic Nat’l Trust LLC v. Mt. Hawley Ins. Co., 621 F.3d 931 (9th Cir. 2010); Brown v. ITT Cons. Fin. Corp., 211 F.3d 1217, 1222 (11th Cir. 2000).

An arbitral forum is an integral part of an arbitration agreement if the agreement includes an express statement designating a particular arbitral forum to administer arbitration. See In re Salomon Inc. S’holders Derivative Litig., 68 F.3d 554, 556-61 (2d Cir. 1995); Carideo v. Dell, Inc., No. 06-1772, 2009 WL 3485933, at *4 (W.D. Wash. ). In Solomon, the parties’ arbitration agreement provided that “all disputes were to be arbitrated by the NYSE and only the NYSE, in accordance with the NYSE Constitution and rules.” 68 F.3d at 557. A dispute arose between the parties, but the NYSE Board declined to serve as an arbitrator. Id. at 556. Because the parties “had contractually agreed that only the NYSE could arbitrate any disputes between them,” and the NYSE refused to administer the arbitration, the court held the arbitration agreement unenforceable and did not appoint a substitute arbitrator. Id. at 559.

Similarly, in Carideo, the parties’ arbitration agreement provided that disputes “shall be resolved exclusively payday loans OK and finally by binding arbitration administered by the National Arbitration Forum (NAF) under its Code of Procedure then in effect.” 2009 WL 3485933, at *4. The court determined that the NAF was an integral part of the arbitration agreement because the agreement expressly selected NAF as the exclusive arbitral forum. Id. at *4-5. Appointing “a substitute arbitrator would constitute a wholesale revision of the arbitration clause.” Id. at *6. NAF’s unavailability to administer arbitration rendered the arbitration clause unenforceable. Id.; see also Khan v. Dell, Inc., No. 09-3703, 2010 WL 328529, at *1-4 (D. ) (in an arbitration clause with identical language, NAF was an integral part of the parties’ agreement to arbitrate, so that the arbitration clause was rendered unenforceable by NAF’s unavailability).

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