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Instead of viewing the fairness of arbitration costs at the time the arbitration agreement was made, as is normally the case, a United States District Court in Ohio focused on Plaintiff’s economic hardship during the actual arbitration proceeding, and upheld the severance of a cost-sharing provision in Haro v. NCR Corp., No. 3-:04-CV-328, 2006 WL 2990386 (S.D. Ohio Oct. 18, 2006).
Traditionally, courts reviewing arbitration agreements for unconscionability due to burdensome costs will look at the parties’ financial positions at the time the parties entered the agreement. See Overstreet v. Contigroup Companies, Inc., No. 05-60953, 2006 WL 2424828 (5th Cir. Aug. 23, 2006); Results Oriented, Inc. v. Crawford, 538 S.E.2d 73,79 (Ga. App. 2000), aff’d 548 S.E.2d 342 (Ga. 2001). One of the reasons courts often cite for so doing is that the parties could not have predicted their future economic situation while signing the agreement. Therefore, arbitration agreements should only be deemed unconscionable when the prohibitive effects of a cost-sharing provision were apparent—an analysis that can only accurately take place at the time the agreement was signed.
The Court in Haro broke from this majority and instead focused on Plaintiff’s economic hardships during the period immediately following his termination from employment. Even though Plaintiff was able to find new work by the time of this case, the Court felt that the arbitration agreement unfairly required Plaintiff to share the costs of arbitration. Accordingly, the Court overruled Defendant’s motion for relief and affirmed the severance of the cost-sharing provision.
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