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Affirming a district court ruling granting a motion to dismiss a declaratory relief claim in a credit card dispute, the Fourth Circuit Court of Appeals declined to hear a challenge alleging an arbitration agreement was unconscionable because doing so amounted to a hypothetical advisory opinion, as no party had invoked or threatened to invoke the arbitration agreement.
In Jones v. Sears Roebuck and Co., No. 07-1584, 2008 WL 4844717 (4th Cir. Nov. 10 2008), Jones filed a class action lawsuit against Sears in West Virginia state court for alleged violations of various consumer protection statutes. Jones also sought a declaratory order stating that the arbitration provision in Sears’ contract was unconscionable. He alleged that the arbitration agreement unlawfully eliminated participation in class actions, prevented access to the courts, and unconstitutionally deprived him of his right to a jury trial.
After removal to federal court, Sears moved to dismiss the complaint, arguing that no justiciable question existed because Jones’ complaint raised no case or controversy as Article III of the Constitution requires. The district court granted the motion and Jones appealed.
Affirming the district court, the Fourth Circuit held that the question of whether Sears’ arbitration agreement was unconscionable was not justiciable because Sears had not invoked the arbitration agreement nor threatened to do so. Additionally, the Court found that Jones lacked standing because his claim did not present "a controversy that qualifies as an actual controversy under Article III of the Constitution."
For a plaintiff to have standing, "(1) the plaintiff must allege that he or she suffered an actual or threatened injury that is not conjectural or hypothetical, (2) the injury must be fairly traceable to the challenged conduct, and (3) a favorable decision must be likely to redress injury." Here, Jones had not suffered any actual or threatened harm because Sears had not invoked or threatened to invoke the arbitration agreement. Additionally, Jones had suffered no injury because the arbitration agreement by itself did not constitute an injury. Consequently, no injury existed that the Court could redress by declaring the arbitration agreement unconscionable. Accordingly, the Court concluded that opining on the case would merely serve as an advisory opinion and contravene the case or controversy requirement imposed by Article III of the Constitution.
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