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Under Colorado law, an arbitration agreement that excludes collection disputes is not necessarily unconscionable for lack of mutuality, an Oregon state court held.
In DEX Media, Inc. v. National Management Services, Inc., No. 0402-01435; A128010, 2007 WL 10448 (Or. App. Jan. 3, 2007), DEX, a publisher of telephone directories, entered into an agreement with NMS, which solicits and sells advertising.
The parties' agreement contained an arbitration clause, which covered "any claim, controversy or dispute" between the parties, with the exception of actions brought by DEX for collection of amounts due under the agreement.
NMS argued that the agreement was unconscionable because, although the agreement appeared to be mutual, DEX did not have to arbitrate every dispute. For example, NMS argued, the agreement allowed DEX to unilaterally reject advertisements and did not require DEX to arbitrate collection disputes.
Applying Colorado law, the Court disagreed and compelled arbitration of the dispute. The agreement was not unconscionable, the Court reasoned, because DEX had commercially reasonable reasons to exempt certain disputes from the arbitration agreement.
For example, by extending credit to NMS, DEX was bearing a risk that NMS would not pay, which justified excluding collection actions from arbitration. Additionally, the Court accepted DEX's argument that it would be impossible to carry on business if it had to submit all advertising decisions to pre-publication arbitration.
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