Doyle Wheeler v. Noteworld LLC

MEMORANDUM

Plaintiffs Doyle and Carri Wheeler brought a consumer debt diversity action against Defendants NoteWorld LLC, Freedom Debt Center (“Freedom”), and others, arising from the Wheelers’ engagement of Freedom to provide them with debt settlement services. Freedom appeals the denial of its motion to compel arbitration. We affirm.

The district court concluded, and the parties do not dispute, that three provisions of the arbitration section of the Debt Settlement Agreement were substantively unconscionable: the 30-day limitation period for claims; the loser-pays-all provision; and the provision requiring the Wheelers to arbitrate their Washington claim in Orange County California.

Under Washington law, severance of unconscionable provisions from a section of an agreement is not possible where the unconscionable provisions permeate that section. McKee v. AT & T Corp., 164 Wash.2d 872 , 191 P.3d 845, 860 (2008). This contract’s arbitration section has only four sentences and three of these contain an unconscionable provision. The section is materially similar to the one in McKee where four provisions of a consumer services contract were held to be substantively unconscionable…