Anthony R. Carrasco
Unconscionability, Vulnerability, and Other Sociopolitical Constructions of the Judicial Imagination
Updated: Mar 4, 2021
This thesis combines qualitative and normative analysis to explain the way the concept of vulnerability may operate within the unconscionability doctrine (UD), an American legal doctrine which permits courts the authority to invalidate whole or partial contracts they perceive as unfair. In this thesis, I seek to explain whether, how, and the extent to which judges presume or incorporate a conception of vulnerability when adjudicating cases involving the UD. This means investigating (1) who is often included and who is often excluded from the protections offered by the UD, (2) the formal or informal criteria and characteristics, if any, upon which judges base their considerations of vulnerability, and (3) the potentially racialized, gendered, classed, or religious components of the defendant’s or plaintiff’s identity which may factor into these judicial determinations. A 25% random sample of legal opinions in Alabama, Mississippi, and Arkansas involving unconscionability was systematically coded through qualitative content analysis. Finding reveal that despite being heralded as “the Law of the Poor,” among the three poorest states in the U.S., a large majority of rulings favored business interest. Additionally, vulnerability is shown here to function as an integral component in the conceptualization of fairness and at times its administration with state-by-state analysis suggesting both conceptual and practical tension between competing notions of vulnerability. Introduction
Does the unconscionably doctrine (UD) function the way we think it does? Perhaps more importantly, does the UD function the way we think it should? Whereas most scholarship considers and critiques the UD according to how the doctrine operates conceptually, the important question of how the UD operates empirically has been left largely unanswered. This thesis blends qualitative and normative analysis to systematically evaluate and reappraise the UD, not just as an idea, but as a matter of public policy.
The doctrine of unconscionability, as stated in Section 2-302 of the U.C.C., permits courts to invalidate whole contracts, or particular provisions in contracts, they find fundamentally unfair. A classic example of the UD at work is the case of Williams v. Walker-Thomas Furniture Co. (1964). Ora Lee Williams was approached in 1957 by a door-to-door sales person with the Walker Thomas Furniture Co. The sales person offered Williams an assortment of goods on credit. Williams had only received an 8th grade education, was raising seven children through a combination of work and welfare benefits, and was geographically isolated from other purchasing options due to housing segregation in the District of Columbia. When Williams missed a payment some years later, the Walker-Thomas Furniture Co. filed an order with the Marshall to repossess all goods leased since their first encounter. When brought to the D.C. Circuit Court, the UD was applied. The terms of the pro-rata contracts produced by the Walker-Thomas Furniture Co. were determined to be unconscionable. Williams was compensated by Walker-Thomas Furniture Co. for the goods they had wrongly sold and taken from her.
The case of Williams illustrates how the UD can operate as a way for courts to protect vulnerable parties. Many have considered the UD especially useful for protecting economically vulnerable parties -- sometimes even going as far as to call the doctrine the “Law of the Poor” (Flemming 2014). Moreover, the UD is believed to be especially useful for protecting parties belonging to marginalized racial groups, since groups economic vulnerability frequently tracks minority status. This case also illustrates how determinations of unconscionability can sometimes involve an embodied conception of vulnerability. The details of this particular case demonstrate how the formulation of this notion can involve appeals to racialized, gendered, and classed attitudes and beliefs. At one point, a pivotal question before the court was whether or not Mrs. Williams was a legitimately vulnerable party (Zalenese 2013). During the trial, the prosecution argued that, as a single mother on welfare, she had no business buying a stereo from their business and for that reason ought to be considered a careless and irresponsible mother, rather than a victim of an excessively unfair contract. Though this argument was unpersuasive to the D.C. Circuit Court, such a racialized, gendered, and classed accusation could carry significantly more weight before another court tasked with assessing the vulnerability of Mrs. Williams or any other party seeking the defense of the UD. In this thesis, I move beyond a purely theoretical appraisal of the UD to investigate how the empirical operation of the UD validates or undermines the way we theorize justice.
In this thesis, I seek to explain whether, how, and the extent to which judges presume or incorporate a conception of vulnerability when adjudicating cases involving the UD. This means investigating (1) who is often included and who is often excluded from the protections offered by the UD, (2) the formal or informal criteria and characteristics, if any, upon which judges base their considerations of vulnerability, and (3) the potentially racialized, gendered, classed, or religious components of the defendant’s or plaintiff’s identity which may factor into these judicial determinations.
Historically, the roots of the UD in the U.S. are based in the English common law of Equity. The first case alluding to the policy dates back to the 15th century, while some scholars speculate about possible connections to Roman law (Svensson 2010). The doctrine was first used exclusively in the context of bargains and sales as an opportunity for a court to nullify heavy handed deals. The doctrine would later expand to deals not only involving the sale or trade of goods, but would remain bound to situations of which material interests are concerned (Leff 1970, McCullough 2016). Following the American Revolution, the common law of England became the basis of the American legal system and thus many courts in the United adopted the doctrine of unconscionability (Svensson 2010, Flemming 2014). The first recorded instance of the UD’s application in the states was in Antebellum Tennessee to the defense of a freed "Negro woman, ignorant, old, addicted to drunkenness, then in bad health, and necessarily imbecile” (King v. Cohorn 1834).
The next development of note was the adoption of the UD into the Uniform Commercial Code (U.C.C). First proposed in 1940, the U.C.C. 2-302 was ratified in 1957, extending the UD to more substantive applications as opposed to the primarily procedural contexts concerning fraud, duress or mutual assent which dominated the English common law tradition of unconscionability (Svensson 2010).
The section provides that: “If the court as a matter of law finds the contract or any clause in the contract to have been unconscionable at the time the contract was made the court can refuse to enforce the contract, or it may enforce the remainder of the contract, without the unconscionable clause, or it may so limit the application of any unconscionable clauses to avoid any unconscionable result.”
All 50 states and the District of Columbia at least partially adopted the UD. During the welfare rights movement of the 1960’s, the UD allowed judges to protect consumers by refusing to enforce economically exploitive contracts (Caplovitz 1967). These consumer protections were later codified through subsequent legislative action in concert with the courts. The UD has been alleged by some to undermine legislative action through judicial activism, but as Flemming (2014) has argued, a political analysis of the UD reveals a symbiotic relationship between legal and political change in which the UD is a catalyst. This thesis is reaffirmed by the scholarship revealing the resurgence of the UD as a rebuttal to the proliferation of arbitration clauses (Stempel 2004). Knapp (2013) calls the UD a “signaling device by which courts identify instances where lawmakers should take corrective action.”
All the while, the UD has been the subject of vigorous philosophical concern. The earliest critics of the UD cautioned against its seemingly amorphous quality. The UD did not operate the way many legal scholars traditionally thought about contract law. The UD provided “no concrete guidelines” to deal with what were “essentially problems of social policy” (Leff 1967). The distinction was then proposed to best understand the UD as a standard as opposed to a rule (Ellinghaus 1969). Introduced by this distinction is the normative dimension of the UD which many jurists enter when tasked with navigating the moral grey area surrounding “the mixed question of fact and law” (State v. R&A Inc. 1999). This moral dimension of the UD required moral adjudication among the parties involved. Additionally, this moral adjudication requires an assessment of the parties involved, often considering capability and power, what this thesis calls “vulnerability”.
Theories of Unconscionability: Trap, Tool, or Trick?
To meaningfully contribute to the way we think about unconscionability in the United States, I here outline some theories of law before considering how these paradigms might understand the UD. This exercise is not to volunteer a definitive guide to how the UD ought to be understood, but instead set up several concepts integral to the interpretation of the data I will collect and essential in considering how such data speaks to the utility and disutility of these competing perspectives of law, society, and justice. Three theories will serve as the foundation of my analysis of the UD -- Marxist theory, liberal democratic theory, and Critical Race Theory. Though liberal democratic theory is the only of the three which has directly grappled with the legal and normative questions posed by the UD, I will begin with Marxist theory since Marxism sets up some foundational concepts of political economy, from which many liberal democratic theorists base their assessments of political and legal justice. I will next visit the liberal tradition to trace a theory of economic justice from Marx to a liberal democracy before turning to the Critical Race tradition for insights into the operation of power and race in modern social economies. The theories I will highlight are by no means an exhaustive inventory of the philosophical landscape, nor even of each camp, but taken together present an accurate picture of key themes at the heart of the UD such as freedom and power; democracy and inequality; paternalism and racism.
Freedom and Power Though Marxism has yet to analyze the UD specifically, as understood in the context of this thesis, Marxist theory provides a clear critique of political economic theories that emphasize a freedom-centered sanctity of contract. As Marx (1867) pointed out, the stage on which a contract is signed is presumed by this view to be defined by “freedom, equality,…and Bentham.” The contract is thought to be the product of freewill, not coercion. Both stand equal before the law. Both are pursuing their private self-interest (much like nineteenth century political philosopher Jeremy Bentham presumed). According to this freedom-centered outlook, to nullify a contract would break the “joint-will” forged by the parties involved, thereby compromising their freedom, equality, and self-interest.
Marxist theory pushes against this conception by insisting that the concept of freedom has no meaning outside of the context of power relations. As H.L.A Hart’s once famously mused, can it be legitimately called an act of “free will” for one to turn over their wallet to an armed robber? Furthermore, equality as a basis from which to exercise freedom means very little if one ignores the unequal power relations that define the dynamics prior to and following a transaction. As Marx noted, though the site of contract seems level in the imagination, the buyer of labor “now strides in front as capitalist; the possessor of labor-power follows as his laborer.” Any illusion of genuine equality evaporates in the daylight of real world power-relations. And lastly, private self-interest seems a fraudulent concept in the face of power. It is in both the laborer and the capitalist’s self-interest to see to their material needs, yet both however possess radically different means to do so and as a result pursue their so-called “self-interest.” The laborer can only pursue their “self-interest” by selling only commodity they have -- their labor. The capitalist on the other hand pursue their self-interest exclusively by buying and then manipulating labor to produce and sell new commodities. With power in mind, since all laborers and capitalists pursue their “self-interests” in the same way, “self-interest” amount to “class interest.” Given notions of superstructure, many Marxists insist that law, politics, and culture are controlled by the ruling class so reform from within legal systems seems (Stone 1985). These concerns applied to could form the basis of a criticism of how the UD may not meaningfully address the power inequities central to contract.
Democracy and Inequality Concerned for how power inequalities can warp important democratic values such as freedom, many liberal democratic theorists understand institutions like the UD as a means to level the scales. Disagreement and debate however encompasses much of the liberal democratic conception of unconscionability. An argument originating with John Stuart Mill (1859) alleges that part of freedom entails having the right to make bad decisions. Nullifying “unfair” contracts seems, from this point of view, usurps the will as expressed by free choice. Though Posner (1995) sees no irreconcilable differences between liberalism and paternalism, Shiffrin (2000) defends against allegations of paternalism by discussing the nuance of its application and its operation in democracy. Of all of the breeds of the paternalist critique, the deontological carries the most weight among democratic theorists. Paternalism is an attitude of judgmental superiority and for that reason is damaging to the dignity of a rational being (Shiffrin 2000).
Shiffrin argues that the UD can be applied paternalistically, but is not inherently paternalistic. When a court nullifies a contractual provision, it is not out of pity or concern for the disadvantaged party but is instead related to the state’s refusal to participate in abhorrent practices (Shiffrin 2000). This relates to a central value at the heart of the liberal democratic tradition concerning democratic legislation -- the law is authored, enforced, and interpreted by the people (Shapiro 2016). Similarly, people see themselves reflected in the law (Shiffrin 2000). The bargains of private parties enter the public realm when a contract beckons the force of the state to enforce the terms of the deal. However, to call on the powers of the state is to summon the will and consciousness of the people who compose such a political unit and with it a right of refusing to enforce legal protections of unconscionable agreements. This notion of a political community and complicity in public affairs is central to the liberal project generally and the UD specifically. It is largely for this reason that democratic liberal theorists such as Shapiro (2016) find in liberal democracy the most robust existing model by which to oppose domination.
Paternalism and Racism Though paternal governance seems inconsistent with the ethos of liberalism, governance through racial bifurcation, according the many Critical Race theorists, is not. In fact, the limited cases in which paternalism is justified by the liberal project seem to align with the project of racial injustice. As John Stuart Mill considered the question of governing “barbarians,” a Euro-centric imperial project seemed the only solution (Jahn 2005). For this reason, many Critical Race theorists are skeptical of liberal doctrines like the UD for what seems to be their disingenuous in its declaration of universal and egalitarian rights which are then seldom extended to women, people of color, and other marginalized groups. The liberal project is thought by some to operate via dynamic conceptions of personhood and sub-personhood (Mills 1997). Descriptively, the exclusion of specific groups is believed to be made by design, not error. Normatively, exclusivity is central to liberalism, not peripheral. The operation of personhood and sub-personhood involves the social construction, teaching, learning, and performance of racialized scripts of whiteness and non-whiteness (Gomez 2012, Carbado & Gulati 2013). Race therefore operates in a way largely undetected in law to maintain power inequities (Bell 1994, Katsely 1994, Mills 1997, Carbado & Gulati 2013, Zalesne 2013, Accordingly, the UD could itself operate as an instrument of racialization through the perpetual reformulation and enforcement of black/white binary and meta-blindness about racial differences (Medina 2013). To many Critical Race theorists, a color-blind approach to unconscionability could perpetuate systemic injustice through the both informal and formal denial of legal remedy.
This thesis seeks to explain judicial behavior and how these behaviors embody, complicate, and potentially undermine notions of justice. Since the nature of the question at the center of this thesis is as much empirical as it is normative, the methods used here blur the lines dividing the sociology of law and philosophy of law. Legal theory here is fashioned to operate as social theory in how the concepts outlined earlier will serve as a basis to interpret the data collected. The data, though legal in its nature, is taken to mean more about society, politics, and power than codified legal doctrine. With sociopolitical legal culture at its heart, much like how Geertz (1973) put it, the “analysis [to follow] is not an experimental science in search of law but an interpretive one in search of meaning.” Accordingly, qualitative content analysis is here used to discern meaning, identify patterns, and interpret phenomena. The data will then reflexively allow for a sociologically based reappraisal of legal theory.
Legal Opinion as Data For data, I have collected a random sample of legal opinions that invoke the unconscionability doctrine. I use qualitative content-coding to examine whether and how judges determine who is vulnerable and thus deserving of UD protection. Systematically examining judicial decisions promised the most reliable insight into the practical operational dynamics of the UD. The writings of the judiciary present the formal rationalizations of the court while also offering evidence of informal considerations which undergird the logic and rationale of judges. An examination of court decisions purely in the context of outcomes, interviews with judges directly, or individuals affiliated with the court may have offered useful information in understanding the way the UD operates, but present considerable problems. Only looking at the outcomes of trial involving the UD tells us little about the logic that shaped the results. Careful reading of the legal ruling is necessary to produce an accurate picture of whether and how judges evaluate and employ considerations of vulnerability. Additionally, in considering interview-based methodology, recall bias presents an important threat to the reliability of judges’ testimony in discussing the way they may evaluate and understand vulnerability. Accordingly, interview-based methods are non-ideal in the context of this thesis – one studying social forces such as identity and the law. Plaintiffs, defendants, and other individuals affiliated with the court proffered similar concerns. Since, systematic examinations of formal court documents associated with cases involving the UD allows for the formal empirical analysis of how the doctrine functions, content coding was selected as the most appropriate methodology.
Sampling I have limited my examination to a collection of legal opinions in 3 states – Alabama, Mississippi, and Arkansas. These three states were selected because they are among the poorest states in the United States. Since the UD is commonly believed to be the “law of the poor”, observing how the UD operates in the poorest states in the union seems a fruitful exercise in trying to understand how the doctrine most representatively operates. Reason holds that since the doctrine supports the rights of the poor, the doctrine’s utility in these states ought to be well illustrated. Furthermore, since each state perhaps incorporates the UD into their law differently, so including cases from each state will provide a robust view into how the doctrine works. Though understanding how the UD operates in each state specifically is worthwhile in and of its self, a look at all three offers a better picture of the doctrine itself as opposed to an idiosyncratic state-specific policy tradition.
I have collected cases at the state court level. I used the Westlaw database to collect electronic copies of case briefs, rulings, and judicial opinions. For each of the 3 states involved in my study, I extracted a random 25% sample of cases that invoke the UD. In the Westlaw database, there are 166 cases listed that invoke UD in the Alabama, 99 cases in the Mississippi, and 54 case in Arkansas. Given that the universe I am interested in studying consists of 319 cases, a 25% sample involved the in-depth coding and analysis of 79 cases – 41 from Alabama, 24 from Mississippi, and 14 from Arkansas. I randomly selected these cases from each state by arranging each sub-universe chronologically. I then selected a random number between one and five as my first case. I then collected additional cases by selecting an appropriate interval from which to systemically draw a chronologically representative sample. This method allowed me to examine trends over time. At times, this allowed to the testing of whether or not a given feature of the data was related to a particular event or historical moment.
In the event that I collected a case which used the phrase unconscionability outside of a legal context (i.e. that outfit is unconscionable), I removed the case and replaced it with the following case chronologically. This method allows for the universe to be feasibly examined and for my study to be easily reproduced.
Content-Analysis After reading all materials related to cases which invoke the UD, I systematically coded all information used to describe characteristics of the defendant and plaintiff. My codebook included a collection of terms related to race, ethnicity, sex, gender, class, religion, age, marital status, and education (the primary independent variables of this project). I recorded the outcome of each case and when possible analyzed how desired legal outcomes track the characteristics of the parties involved. At times, I could not record some characteristics. Most legal opinions made no mention of race. In such circumstances I drew conclusions based on suggestions in the facts but at times, I deemed some characteristics undeterminable such as race/ethnicity. I also coded for any mention or consideration of vulnerability. Vulnerability is a useful concept in this study and will be operationalized largely though examining and identifying discussions of unfairness, exploitation, oppression, and one-sidedness. The operative concept at the core of unconscionably is the conscience – sensitive to inequality, inequity, and wrongness. I coded the way the court documents identified, understood and discussed these normative considerations. In this study, vulnerability was largely understood in relation to the character and essence of the wronged party. Since in the evaluation of wrong there is a consideration of victimhood and perpetration of wrong, each of these sub-considerations were noted in the terms described by the courts.
Limitations Limitations of the study include the inability of generalizing results beyond the three states I studied. The three states I have purposely selected are not perfectly representative of the entire United States so the trends and dynamics I identify may not mirror other parts of the county. However, my study offers a reliable in-depth look into how the UD operates in very poor parts of the US. This is incredibly important and meaningful since the doctrine is commonly believed to be a policy which protects the rights of poor Americans, yet this has not been tested empirically until this point. And though my findings may not be able to speak to national trends or phenomenon, since the cases I examined apply the UD as it was designed to operate, my data speaks to operative dynamics which are central to the nature of the UD. Some of these dynamics are related to issues of identity, but my ability to make identity-based comparisons is limited. I have not in every case been able to determine the race, ethnicity, sex, gender, class, religion, age, marital status, and education of the plaintiff or defendant. I thus am unable to speak with certainty about how often some groups are treated in this way or that way, offered this opportunity or denied that remedy and so on. I am able to compare and analyze all explicit and desirable characteristics in light of positive and negative legal outcomes. However small the sample, appropriately curated, my data elucidates trends and dynamics of meaningful importance.
My analysis of the legal materials at the base of this critical analysis reveals two empirical trends. First, despite being heralded as “the Law of the Poor,” among the random samples of cases spanning the three poorest states in the country, a majority of rulings favored business interests. Second, this study demonstrates how vulnerability operates as an implicit and explicit standard in a substantial share of rulings with state-by-state analysis suggesting both conceptual and practical tension between competing notions of vulnerability.
Business Interests v. Non-Business Interests Most cases which summoned the doctrine of unconscionability involved commercial interests (see figure 1). Of the 79 cases studied, 74 cases involved commercial law which includes real estate, health insurance, and general business dealings. This proportion is roughly the same across all three states. No state contributed more than 2 non-commercial cases to the sample. The total 5 non-commercial cases within the sample were family law cases: four divorces and a will. Of the commercial law cases, across all three states, contractual arbitration clauses were the most frequently disputed of all legal issues.
Figure 1. Field of Law
Most cases which summoned the doctrine of unconscionability favored business interests (see figure 2). Only 19 of the 74 commercial cases sided with non-business interests -- individual consumers seeking the defense of the UD. I was interested in whether or not the courts perhaps have ruled differently across time so I reexamined the legal opinions chronologically. I detected some variation. Rulings between 1968 and 1988 favored business interests roughly as frequently as non-business interests, but from 1988-2018 courts were 50% more likely to rule in favor of business in comparison to non-business.
An example of a court ruling in which business interests are favored is that of Newell v. SCI Alabama Funeral Services, LLC (2017). The day of his wife’s passing, Robert Newell asked that his spouse be cremated as soon as possible and returned to him (estimated to take 5-10 days). A month later Newell, concerned over the status of his wife’s remains learned that she had not even been cremated yet. This especially disturbed Newell since he had not asked for her to be embalmed as he was under the impression that the cremation would be prompt (as agreed). When he sought legal remedy, Newell was reminded of the arbitration clause he signed on the day of his wife’s death. This clause denied Newell the right to sue. Newell alleged that such a clause was unconscionable. Newell argued that SCI Funeral Services had “overwhelming bargaining power over him” as “he was distraught and grieving.” It seemed deeply unfair to “require a grieving family member to “shop around” for a funeral home that does not require the execution of an arbitration agreement” according to Newell. The Alabama court however ruled that if one could not “shop around,” perhaps UD protections could be granted, but to prove that, one must demonstrate an attempt to “shop around” and fail. The court therefore favored business.
Figure 2. Commercial Legal Outcomes
Of note, almost 10 percent cannot be said to either favor nor disfavor business since both parties involved were businesses. This is a surprising phenomenon, since no previous analysis, normative or empirical, has considered the potential circumstance of the UD being invoked in an exclusively commercial context.
Consider the case of Advertiser Co. v. Electric Engineers Inc. (1988). Advertiser Co. produced and sold background music. Electric Engineers Inc. was a global franchise which purchased music rights to play in their many stores. When Electric Engineers Inc. wanted to include music from Advertiser Co. on their “on-hold” phone lines they entered a five-year contract, which Electric Engineers broke. Whether the contract was broken was not at issue before the courts. The issue at hand was a claim of unconscionability made by Electric Engineers. Electric Engineers alleged that the adhesion clause of the contract (the requirement to use the music exclusively for 5-years) was not understood upon signing and, even if understood, was excessively unfair. The court ruled against Electric Engineers Inc., stating that “the defendant in this case is a relatively large corporation” and “can hardly be heard to complain” that they were “unduly surprised by such a provision.” Ultimately, they were considered by no means a “vulnerable party”, a concept I will explore at greater length later.
But can a larger corporation be considered deserving of UD protections? The case of Associated Press v. Southern Arkansas Radio (1991) suggests that such circumstances are more than purely hypothetical. In a case disputing contractual profit shares, unequal bargaining power was the central legal issue. Since of the two media groups, Associated Press had more power over production and distribution, Southern Arkansas Radio claimed that the heavy handed terms of their agreement were only entered into via extreme market-based pressure – a sink or swim form of duress against which the radio station sought relief. Remedy was granted in the dissolution of the contract. Southern Arkansas Radio escaped what could have been thousands of dollars in debts by successfully identifying as a vulnerable party to a multi-million dollar media agreement. This phenomenon was most prominent in Arkansas (see figure 3).
Another trend unique to Arkansas is how frequently Arkansas favored non-business interests. Thought the state did not favor non-business interests as frequently as business interests, it is noteworthy that Arkansas deviates so dramatically from Alabama and Mississippi in this respect. Looking again first for chronological anomalies (i.e. a particular governorship or change in the judiciary), no historical spikes were discerned. To understand why Arkansas differs from the other states in this study, I turn to an analysis of vulnerability.
Physical Vulnerability v. Economic Vulnerability The data show that vulnerability as an implicit and explicit standard in a substantial share of rulings. State-by-state case analysis suggests both conceptual and practical tension between competing notions of vulnerability. The most significant difference Arkansas presents is an understanding of economic vulnerability among the judiciary – recognition that imbalances of economic power may undermine one’s capacity to resist an unfair deal. This understanding is missing in the legal accounts of Alabama and Mississippi which instead endorse a narrow theory of physical vulnerability. These courts would only recognize imbalances of physical power, such as a disability, when determining whether or not ones capacity to enter a fair contract was undermined.
Alabama and Mississippi cases invoking the UD provided protections exclusively to those who were physically unable to enter the contracts they contested. Many examples include people who were unable to read or understand the contracts in question. One defendant who was “elderly, [did] not have Internet access or an e-mail address, and [did] not know how to use online banking” was relieved of an arbitration clause uploaded to his online banking portal. Another defendant who “was 77 years old, did not finish high school, had poor eyesight, had difficulty reading, and could not read small print” was granted UD protections from an arbitration clause on a mobile home insurance policy. The protections of the UD were awarded with great reluctance, only to those who demonstrate physical disabilities. This narrow understanding of vulnerability excludes those who are simply poor.
Alabama and Mississippi rejected all claims of unconscionability made on the grounds of poverty-related power inequality. In the case of Fleetwood Enterprises, Inc. v. Bruno (2000), a car buyer sought UD protections as “she cannot afford to pay arbitration fees”. The court however rejects Bruno’s appeal citing in response the case of Green Tree Financial Corp. of Alabama v. Wampler (1999). The court quotes the standard of Alabama that that “on grounds of financial hardship, [the court] cannot allow a party's poverty…to justify a finding of unconscionability.” Furthermore in the case of Jim Burke Automotive, Inc. v. Murphy (1999), an uneducated man “traveled to the Burke car dealership in a taxicab, for which a Burke salesman paid the fare, and would have had no transportation home if he had not purchased a vehicle from Burke.” Murphy pleaded to the court to free him form an arbitration clause he neither freely entered nor understood. The court rejected his claim by saying that “the mere fact that Murphy did not have a motor vehicle... is insufficient” to establish unconscionably.
In contrast, the Arkansas judiciary operationalizes a notion of economic vulnerability that includes poverty-related power inequalities. Take for instance the case of Gulfco of Louisiana, Inc. v. Brantley (2013). Pamela and McArthur Brantley struggled to make ends meet. Pamela cleaned houses while McArthur moved boxes – neither had more than a high school education. When Pamela began suffering from medical problems, the two sought the services of a loan agent with Gulfco, a company rumored to provide “easy money, fast” regardless of income. In declining health, the Brentley family took out a loan for $1,500 and agreed to pay the loan back on monthly basis (roughly a hundred dollars a month). Soon, the monthly payments became incredibly difficult to manage in light of a decline in business for McArthur. The Brantley family shared these concerns to with a loan agent only to be offered an additional loan for $3,000 along with advice to “purchase a logging truck” so McArthur could go into business for himself (a suggestion of the lending agent). This venture soon failed and as result the family returned to Gulfco seeking help. This time they are given a $4,000 loan to cover their previous debts. The Brantley family puts their home as collateral. When they once again defaulted, Gulfco moved to take their home. The Arkansas courts stopped this by ruling that “Gulfco took advantage of their lack of sophistication and induced them to mortgage their home with knowledge that they did not have stable, full-time employment.” The court granted the Brantley family UD protections because “despite the Brantley's demonstrated inability to pay, Gulfco continued to loan them money.” In the eyes of the court, Gulfco took full advantage of the Pamela and McArthur’s economic vulnerability – their poverty and employment prospects.
The tension between competing visions of vulnerability within the states studied here may explain why the business-favorable ruling trends differ across states. Because the conception of vulnerability envisioned by Alabama and Mississippi excludes power inequities rooted in poverty, the judiciary may restrict UD protections to the physically vulnerable. In contrast, the understanding of economic inequality as a source of social and legal inequality outlined by the Arkansas courts may explain why non-business interests are more frequently given UD protections. Discussion
Based on the data gathered here, the explanatory power of Marxism, liberal-democratic theory, and Critical Race theory would benefit from reconsideration. Reflection on the way these theories explain the findings of this thesis promise a more rich understanding of each theory and the operation of the UD. Based on a Marxist perspective of law, concerns over the UD’s alleged cosmetic nature is supported by the finding that the economically vulnerable are less likely to have their interests advanced by the UD compared to business-interests. While advancing the interests of some economically disadvantaged individuals, the findings of this study do not support the UD as a systemic antidote to gross power asymmetries. Just as the Marxist perspective warned, the UD operates much like a mascot of the legal order, lauding the value of fairness, but ultimately doing little substantively to rectify the structural dynamics at work. Members of the legal community can gesture to the UD as an example of remedy in cases of gross injustice, however, the UD operates practically more as an opiate to the causalities of the capitalist legal order, rather than a cure.
The liberal-democratic reply might rebut by qualifying the role of the judiciary in the project of designing a just society. As the judiciary is conceived as the interpreter of law rather than its author in a democratic society, the function of the courts in the context of the UD is not intended to be systematic. As Knapp (2013) noted, as opposed to rectifying wrong, the UD largely functions as a signaling device to invite legislative reform. Furthermore, the UD as stated in the U.C.C. appear to invite a consideration of fairness in contact, but does not require such an assessment in every case of unfair contract, therefore shifting the burden of systematic rectification from the courts’ shoulders.
One problem with the liberal interpretation has to do with the complicated mandate/permissions offered by the UD as stated in the U.C.C. and implemented by the state courts in this study. While the UD as outlined in the U.C.C. does not speak to a systemic mandate to correct for each and every unfair contract, the UD as stated in the U.C.C. does not require a reading of the law within the context of either party’s vulnerability. Yet, vulnerability has been shown here to function as an integral component of both the formal and informal application of the UD. The Arkansas State Supreme Court put it well that “a consideration of unconscionability is a necessarily mixed question; one of both law and fact.” In other words, to determine whether or not a given contract is unconscionable, one must consider the facts of the case, not just the text of the contract. The identity of the parties, whether or not one is a multimillion dollar corporation or a resident of a nursing facility, makes a world of difference to a court tasked with the question of whether a contractual provision is fair. A deep rooted fear of gross power inequality informs the UD. Therefore, in practice, noting power is mandatory. Since the power at play is more frequently cloaked within contractual terms rather than openly articulated, a consideration of both party’s initial position, bargaining powers, and capabilities require review. This dimension of the UD seems to align with a liberal democratic vision of a lawful society, but at the same time opens the door for positionality to play a large role in jurisprudence.
A consideration of unconscionability without a consideration of positionality is generally desirable, according to some liberal democratic theorists, but is ultimately not possible. Fears around the incorporation of identity in adjudication are based in concerns over paternalism. The definition of paternalism Shiffrin (2000) outlines draws a distinction between pitying parties and refusing to be complicit in bad practices. While this distinction may operate effectively on the realm of theory, the two are collapsed in practice. As illustrated by the cases at the center of this thesis, the very understanding of whether or not a given practice is unconscionable depends on the positionality of the parties involved. For instance, in the online-banking case discussed earlier, the defendant’s age and ability to access/utilize technology was an integral element of understanding the moral quality of the banking practice in question. If the defendant had been less vulnerable, the contested arbitration clause would not have been considered unfair.
This case is not the UD being applied paternalistically, as Shiffrin (2000) warned. Rather, this case perfectly fits the definition of an anti-paternalistic use Shiffrin outlines. Shiffrin condemned judges using the UD to impose their “judgmental superiority” upon autonomous citizens. In other words, paternal pity usurps the legitimate will of a free people. The UD must therefore only be used to restrain state complicity in immoral dealings that violate the values of our political community. Accordingly, in the online-banking case, the judiciary should not invalidate the arbitration clause out of concern for the wellbeing of a particular party. Instead the court ought to first assess the moral quality of the practice in question and then decide whether lending legal authority to such a practice would make the court complicit in a deeply immoral arrangement. As my thesis shows, before the courts can assess the moral quality of a practice, the courts must assess the wellbeing of the parties involved.
The liberal democratic debate around the dangers of paternalism neglects the fact that an assessment of the circumstances surrounding a practice is required to speak to the moral quality of such a practice largely due to the social quality of justice. Justice only exists within the context of two or more actors. Justice concerns the collective project of individual agents. Political “oughts’ and ought-nots” only exist between members of civil society. Citizens are of varying capabilities and powers. In other words, members of the body-politic are of varying vulnerabilities. Changes in the capabilities and powers of the parties involved can transform the moral character of a given act. Positionality is an important part of the question of justice. An act done to one party, sufficiently vulnerable, could in respect to the afflicted party’s lack of capacity or power, evoke an injustice claim. The practice of slicing the flesh of another can transform the action from a morally abhorrent act to a laudable practice depending on the positionality of the primary actor -- sadist or surgeon.
In the case analyzed here, this is evident. Parties were considered vulnerable in respect to their lack of capacity or power, though defined differently by the jurisdictions analyzed here. This understanding of vulnerability allowed judges to determine whether an injustice had occurred, and which party was in the wrong. In the Electronic media groups suing one another, neither party were deemed vulnerable, so the UD was not applied. Then, in the online banking case, the elderly customer was considered vulnerable because of their lack of familiarly with the technologies used to inform him of the contractual term by which he was bound. If, hypothetically, the elderly customer had been younger, more tech-savvy, and perhaps had the services of legal counsel during the drafting of the contract, the courts likely wouldn’t have considered the defendant a vulnerable party. As a result, the courts would not have deemed the contract unfair – siding instead with the bank. The positionality of the parties involved in UD cases is a crucial component of the moral deliberation and adjudication required by the unique quasi-legal/quasi-moral questions evoked by the UD.
One could call the vulnerability considerations required in the process of moral deliberation, a thin-theory of paternalism. As opposed to a thick-theory of paternalism which asserts an attitude of judgmental superiority in the process of decision-making, a thin-theory of paternalism requires a reflective deliberation of fairness among parties of varying capability, power, and vulnerability. This phenomenon is embodied in how the jurists studied here took on responsibilities not so much of mechanical appliers of law, but rather deliberators of the good. This moral dimension of the work, at times explicitly mentioned, are an essential quality of the UD. While I cannot speak for other legal doctrines, a purely doctrinal approach to applying the UD is not possible descriptively, nor is it desirable normatively. The fears of paternalism are much to do with the thick approach, not the thin. Judgmental superiority is not asserted by the court, but rather the state is partially entering an otherwise private moral deliberation. Shiffrin (2000) insists that the state is not getting involved in the affairs of an exploitative contract by nullifying a clause; they are rather refusing to get involved actually since the enforcement of such a provision would require their power. This is not an accurate consideration. In applying the UD, the state is involved. The state ought not to be involved as an explicit advocate for one side, though that does in fact occur, as that would breathe life into a thick-theory of paternalism inconsistent with a liberal scheme of rights and autonomy. However, the state is not authentically refusing involvement by applying the UD. However briefly, the state enters the moral deliberation of contract to assess the situation and judge whether an unjust practice is in fact transpiring. This thin-theory of paternalism includes the state in a position of moral judgment involving others but concerning only itself. This is a complex relationship, but a relationship none-the-less. Moreover, this is a relationship of paternalistic involvement (thin) which is not inconsistent with a liberal theory of rights and autonomy.
Based on my empirical examination of judicial opinions in Alabama, Mississippi, and Arkansas involving unconscionability via qualitative content-analysis, this thesis finds that among these states, a large majority of rulings favored business interest. Furthermore, though all states favored business more often than non-business, Arkansas stands out as an outlier as being more sympathetic to non-business interests. State-by-state analysis shows both conceptual and practical tension between competing notions of vulnerability among states. This analysis suggests that Arkansas’ unique judicial rulings may be related to a unique judicial culture or history which is worthy of further study. Moreover, the findings of this thesis motivate several additional inquires in both the domain of legal philosophy and sociology.
In the realm of legal philosophy, original Neo-Marxist and Critical Race assessments of unconscionability would productively exercise and test such theories, while additional normative analysis of what I call here a thin-theory of paternalism also has merit. A rigorous neo-Marxist analysis of the UD would be a fruitful scene within which to test and potentially extend many Marxist notions of law and society. The concepts of class, superstructure, and hegemony are but a limited set of potential inquiry points regarding the alleged cosmetic nature of the UD. Another valuable future inquiry should focus on the notion of normative bourgeois behavior as assessed by the judiciary. Many of the legal opinions discussed here outline a picture of vulnerability and sympathy aligned with class. The courts seem to at times presume an attitude of classed judgment – concern for the industrious, shewed, and careful business owner who is bedeviled by the lazy and undeserving consumers who willfully practice poor decision making. This dynamic of judgement could also extend to new areas of Critical Race analysis focusing on the erasure of race from considerations of vulnerability or the assertion of race as conflated with assessments of moral character.
Lastly, in the realm of legal sociology, the phenomenon of businesses interests using the UD to sue one another is of significant value. While the identification of this trend is a contribution to legal scholarship, a sustained inquiry into “corporate unconscionability” or how business-interests transformed “fairness” into profitability would enormously contribute to our collective understanding of law and society. The phenomenon of business fashioning the UD to further their economic interests is an exciting phenomena which embodies many Marxist concerns over law, power, and capital.
Works Cited Beh, Hazel. Curing the Infirmities of the Unconscionability Doctrine, Hastings Law Journal, Vol. 66 (2015) Caplovitz, David. The Poor Pay More: Consumer Practices of Low-Income Families, xv–xvii (1967) Carbado, Devon & Gulati, Mitu. Acting White?: Rethinking Race in Post-Racial America, Oxford Press, 2013. Knapp, Charles, Unconscionability in American Contract Law: A Twenty-First Century Survey (2013). UC Hastings Research Paper No. 71. Crenshaw, Kimberle. Demarginalizing the Intersection of Race and Sex: A Black Feminist Critique of Antidiscrimination Doctrine, Feminist Theory and Antiracist Policies. University of Chicago Legal Forum, No. 1 (1989) Coates, Ta Nehisi. We Were Eight Years in Power: An American Tragedy. Penguin Random House, 2017. Deneen, Patrick. Why Liberalism Failed, New Haven Connecticut, Yale University Press, 2018. Derek Bell. Faces at the Bottom of the Well: The Permeance of Racism, Basic Books, 1992. Ellinghaus, M.P., In Defense of Unconscionability, 78 Yale L.J. 757, 795 (1969)
Flemming, Anne. The Rise and Fall of Unconscionability as the “Law of the Poor, The Georgetown Law Journal, Vol. 102 (2014) pp. 1392-1493. Geertz, Clifford (1973). The Interpretation of Cultures. Basic Books. Gómez, Laura. Understanding Law and Race as Mutually Constitutive, Journal of Scholarly Perspectives, Vol. 81, No. 1 (2012) Jahn, B. (2005). Barbarian Thoughts: Imperialism in the Philosophy of John Stuart Mill. Review of International Studies, 31(3), 599-618. Kastely, Amy. Out of the Whiteness: On Raced Codes and White Race Consciousness in Some Tort, Criminal, and Contract Law, University of Cincinnati Law Review Vol. 63 (1994) Leff, Arthur. Unconscionability and the Code: The Emperor’s New Clause, University of Pennsylvania Law Review, Vol. 115 (1967) --------------. Unconscionability and the Crowd-Consumers and the Common Law Tradition, Faculty Scholarship Series (1970) McCullough, Colleen. Unconscionability as a Coherent Legal Concept, University of Pennsylvania Law Review Vol. 164 (2016) Median, Jose. Color Blindness, Meta-Ignorance, and the Racial Imagination, Critical Philosophy of Race, Vol 1 (2013) Mills, Charles. The Racial Contract, Cornell University Press, 1997. Posner, Eric. Contract law in the welfare state: A defense of the unconscionability doctrine, usury laws, and related limitations on the freedom to contract, The Journal of Legal Studies, Vol 24 (1995). Rolewick, David. Unconscionability Under the Uniform Commercial Code - Two Trends in Cases Decided on Unconscionability Grounds, Loyola University Chicago Law Journal, Vol. 1 (1970) Shapiro, Ian. Politics against Domination, Cambridge, Massachusetts, Belknap Press of Harvard University Press, 2016. Shiffrin, Seana. Paternalism, Unconscionability Doctrine, and Accommodation, Philosophy & Public Affairs, Vol. 29, No. 3 (Summer, 2000), pp. 205-250. Stone, A. (1985). The Place of Law in the Marxian Structure-Superstructure Archetype. Law & Society Review, 19(1), 39-67. Svensson, Ola. The Unconscionability Doctrine in U.S. Contract Law, Master Thesis Lund University (2010) Zalesne, Deborah. Racial Inequality in Contracting: Teaching Race as a Core Value, Columbia Journal of Race and Law, Vol. 3, No. 1, 2013.