A California federal district court has found an eBay seller's arbitration agreement unconscionable due to its unclear formatting, designation of non-neutral arbitrators, and extreme limitations imposed upon proceedings.

In Mazur v. eBay Inc., No. C 07-03967 MHP, 2008 WL 618988 (N.D. Cal. Mar. 4, 2008), Mazur purchased certain jewelry from merchant HJA on eBay's website. Mazur later filed suit against HJA, alleging that it had misrepresented its merchandise and engaged in fraudulent bidding practices. HJA moved to compel arbitration of Mazur's claims in accordance with an agreement presented to Mazur electronically at the point of purchase.

The Court found that HJA's arbitration agreement was presented to customers like Mazur in a way that was procedurally unconscionable. According to the Court, the agreement was a contract of adhesion coupled with surprise because the agreement was presented in a manner where only a few lines could be displayed at once, and was written without paragraph, section, or heading breaks. In the Court's opinion, these formatting characteristics in a contract of adhesion were sufficient to render the agreement procedurally unconscionable.

The Court, concerned with the neutrality of the arbitrators and the limitations imposed by the proceedings, also found the agreement substantively unconscionable. It found that the nature of the arbitrator's primary business – an independent contractor of in-house legal services to corporations – suggested a duty of loyalty to corporate clients and a lack of arbitral neutrality.

The express prohibition on witnesses, experts, and attorneys within the arbitration proceedings, as well as ambiguity regarding allowed discovery, were also points of concern with the Court. While the limitations were certainly bilateral, the Court found such restrictions would have an impermissible disparate impact on plaintiffs bearing the burden of proof.