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In rejecting an unconscionability challenge to an arbitration agreement and ordering arbitration of a hazing claim against a fraternity, a federal court in Pennsylvania found that arbitration is capable of advancing the public policy embodied by Pennsylvania’s antihazing statute.
In Griffen v. Alpha Phi Alpha, Inc., No. 06-1735, 2007 WL 707364 (E.D. Pa. Mar. 2, 2007), Griffen, a student at the University of Pennsylvania, applied for membership in Alpha Phi Alpha (Alpha), a fraternity whose members have included Martin Luther King, Jr. and Thurgood Marshall.
During the application process, Griffen was allegedly subjected to hazing, and he subsequently sued Alpha to recover damages for his alleged injuries. Alpha filed a motion to compel arbitration pursuant to an arbitration agreement contained in the membership application. In opposing the motion, Griffen argued that the arbitration agreement was unconscionable and therefore unenforceable.
Under Pennsylvania law, a party raising an unconscionability challenge to an arbitration agreement must prove both procedural and substantive unconscionability. Accordingly, the Court first examined whether the arbitration agreement was procedurally unconscionable.
The Court cited several factors weighing against a finding of procedural unconscionability. First, there was no evidence that the fraternity refused to negotiate the terms of the contract. Second, the decision to enter a fraternity is not fairly characterized “as similar or equivalent to the dire economic or subsistence constraints accompanying the situations where courts have found a lack of meaningful choice, and thus, an invalid contract of adhesion.” Finally, the form of the arbitration agreement did not warrant a finding of procedural unconscionability because it was prominently displayed and required the applicant’s initials.
Without making a definitive finding on the issue of procedural unconscionability, the Court turned to the issue of substantive unconscionability. In analyzing this issue, the Court cited Ostroff v. Alterra Healthcare Corp., 433 F.Supp.2d 538 (E.D. Pa. 2006) for the proposition that substantive unconscionability requires “an inequitable restriction that is unevenly imposed upon the ‘weaker’ party to the agreement.”
In Ostroff, the court listed several factors that have been cited as indicia of substantive unconscionability, including restrictions on discovery, unfair cost allocation, remedial limitations, a reduced limitations period, an elevated burden of proof, and a unilateral right to seek judicial relief. Here, as the Court noted, none of those factors were present.
Griffen argued that the public policy embodied by the Pennsylvania Antihazing Statute justified a finding of substantive unconscionability. In rejecting this argument, the Court pointed out that there is “no inconsistency between the important social policies protected by Pennsylvania’s [a]ntihazing statute and enforcing agreements to arbitrate claims of hazing, because both arbitration and judicial resolution of claims focus on specific disputes between the parties involved, and both can advance broader social purposes.”
As the Court indicated, arbitration is fully capable of advancing the policies embodied by statutes enacted to protect the public interest. Moreover, judicial enforcement of valid arbitration agreements advances the policies embodied by the Federal Arbitration Act and state arbitration laws. Those policies include increasing the efficiency of dispute resolution, facilitating the prosecution of minor claims for which court might be prohibitively expensive, enabling parties to submit complex disputes to an arbiter with the requisite expertise, and alleviating the burden on our overcrowded courts.
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