In granting a lender's motion to compel arbitration, a federal court in California upheld an arbitration agreement in the face of several unconscionability challenges, and also clarified that the Federal Arbitration Act (FAA) requires a writing, but does not require that the writing be signed by the parties.

In Hartung v. J.D. Byrider, Inc., No. 1:08-cv-00960-AWI-GSA, 2008 WL 4615044 (E.D. Cal. Oct. 17, 2008), Hartung bought a used car and obtained financing for the car from J.D. Byrider. After falling behind on payments, Byrider assigned Hartung's debt to John Anderson for collection. Hartung later sued Byrider and Anderson, alleging that Anderson contacted Hartung's phone company and pretended to be Hartung's father, gleaning personal information that Anderson then used to begin unlawful and harassing collection attempts that ultimately caused Hartung to surrender her car.

Byrider moved to compel arbitration pursuant to an arbitration agreement in the retail installment contract that Hartung had signed when she bought the car. Hartung opposed, arguing that the contract was unconscionable for several reasons. Hartung had signed the contract but had not initialed the arbitration agreement; however, Hartung had signed and initialed a companion document that stated she understood the contract contained an arbitration agreement.

Hartung argued that the agreement was procedurally unconscionable because she had no opportunity to negotiate, the agreement was prolix and hidden in the contract, and she did not sign the agreement. The Court rejected Hartung's arguments because she presented no evidence in support of her claims besides her own declaration that Byrider "made it seem" that nobody else would give her a car loan because of her bad credit, and that she "believed" the agreement was not negotiable. The Court further held that the arbitration agreement was not hidden or in prolix form, as it was in bold letters and clear language.

Regarding Hartung's argument that she never signed the agreement, the Court noted that "[a]lthough the FAA requires a writing, it does not require that it be signed by the parties." Moreover, the Court obsereved that in this case, Hartung did sign the agreement – specifically, she signed the contract containing the arbitration agreement.

Hartung argued that the agreement was substantively unconscionable because it lacked mutuality, requiring her to bring claims in arbitration but allowing Byrider to bring claims in court. The Court rejected Hartung's argument, holding that under the agreement, both parties were under the same requirement to arbitrate and had the same access to court for certain self-help and provisional remedies.

The Court did hold that the forum selection provision was unconscionable because it required Hartung to arbitrate in Arizona when she lived in California, thus giving rise to a prohibitive expense. Accordingly, the Court severed the unconscionable forum selection provision but upheld the rest of the arbitration agreement.