WASHINGTON, Chief Judge:
Appellant Colin Andrew brought suit in the Superior Court against American Import Center ("AIC") and others, alleging breach of contract, fraud, and violations of the Consumer Protection Procedures Act arising out of his purchase of a car from AIC. The Superior Court stayed appellant's case and ordered the parties to proceed to arbitration pursuant to an arbitration agreement that was signed as part of the purchase transaction. Andrew appealed. The question before this court is whether we have jurisdiction to hear an appeal from an order compelling a consumer to arbitrate with a commercial entity based on an arbitration clause in an adhesion contract. For the following reasons, we hold that such an order is interlocutorily appealable pursuant to D.C.Code § 11-721(a)(2)(A) (2012 Repl.). Further, we find that appellant raised a triable issue of fact as to the unconscionability of the arbitration agreement and we therefore remand the case to the trial court to hold an evidentiary hearing and make factual findings concerning unconscionability.
Appellant Colin Andrew brought suit against AIC, Tehran Ghasri ("Ghasri"),
AIC and Wells Fargo moved to dismiss appellant's complaint and compel arbitration because there was an arbitration clause in the finance contract he had signed. Andrew moved for discovery on the issue of whether the arbitration agreement was unconscionable. The trial court denied AIC's and Wells Fargo's motion to dismiss but granted their motion to compel arbitration, staying the proceedings in Superior Court pending completion of arbitration.
In 1970, Congress enacted the District of Columbia Court Reorganization Act of 1970, Pub.L. No. 91-358, Title I, 84 Stat. 473 (1970), D.C.Code § 11-101 et seq. (2012 Repl.), establishing this court as "[t]he highest court of the District of Columbia" and providing that:
D.C.Code § 11-721(a) (2012 Repl.). Congress also passed the Home Rule Act, D.C.Code § 1-201.01 et seq. (2012 Repl.), with the intent of giving the D.C. Council broad authority to legislate upon "all rightful subjects of legislation within the District," § 1-203.02, but limiting the Council's ability to pass legislation that affects this court's jurisdiction:
Subsequently, in 1977, the D.C. Council enacted the District of Columbia Uniform Arbitration Act ("UAA"), D.C.Code § 16-4301 et seq. Relevant to the instant case was a section of the UAA that outlined whether (and which) arbitration orders could be appealed to this court. Section 16-4317 of the UAA read in relevant part:
D.C.Code 1978 Supp., tit. 16 app., s 18. Then, in American Fed'n of Gov't Emps. v. Koczak, 439 A.2d 478, 480 (D.C.1981), this court examined this section of the UAA and concluded that as opposed to an order denying a motion to compel arbitration, an order granting a motion to compel arbitration was not appealable, for two reasons. First, the language of the UAA included orders denying a motion to compel arbitration on the list of final, appealable orders but did not similarly include orders to compel arbitration on that list. Id. Second, the omission of orders compelling arbitration from that list made sense given that an order to compel arbitration would not be considered a final order like an order denying a motion to compel arbitration because the former "does not dispose of the entire case on the merits. Rather, the parties' rights and obligations are finally determined only after arbitration is had...." Id.
Finally, in 2007, the Council replaced the UAA with the District of Columbia Revised Uniform Arbitration Act ("RUAA"), D.C.Code § 16-4401 et seq. (2012). The RUAA also contains a section that outlines when an appeal may be taken. § 16-4427. That section reads, in relevant part:
§ 16-4427(a)(1). The question currently before the court is whether this section of the RUAA violates § 602(a)(4) of the Home Rule Act by impermissibly expanding this court's jurisdiction to allow parties to appeal from an order granting a motion to compel arbitration, a type of an order we have previously determined not to be appealable.
This court has recognized the Supreme Court's "well-developed and long-standing" definition of a final order, which is "a decision that ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment." Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 86, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (internal quotation marks omitted); Crown Oil & Wax Co. v. Safeco Ins. Co., 429 A.2d 1376, 1379 (D.C.1981) (explaining that as a "general rule ... an order is final for purposes of appeal ... [when] it disposes of the entire case on the merits"). This court has specifically and repeatedly
Similarly, in the instant case the order granting the motion to compel arbitration is not a final order and therefore is not appealable as such. As the Supreme Court explained in Green Tree Financial, while an order to compel arbitration entered in conjunction with a dismissal of the case on the merits results in a final order for purposes of appellate review, 531 U.S. at 87, 121 S.Ct. 513 "[h]ad the District Court entered a stay instead of a dismissal... that order would not be appealable." Id. at 87, n. 2, 121 S.Ct. 513. This court has followed the Supreme Court's lead, holding that it is only "where a trial court dismisse[s] a case with prejudice in addition to compelling arbitration ... [that] such an order is unambiguously final [because]... the trial court has effectively prevented a plaintiff from litigating the issue in the future." Keeton v. Wells Fargo Corp., 987 A.2d 1118, 1121 (D.C.2010) (footnotes omitted). Thus, where, as here, the trial court granted appellees' motion to compel arbitration and stayed the case pending resolution of the arbitration, the order is not a final order and therefore, is not appealable under § 11-721(a)(1).
The District's main argument in this case is that an order compelling a party to arbitrate is injunctive in nature, and therefore, can be appealed interlocutorily. An injunction is "an equitable remedy, consisting of a command by the court,
This court adopted the so-called Carson test in Brandon v. Hines, 439 A.2d 496 (D.C.1981), in which a building contractor brought suit for breach of contract against the defendant whose property he had agreed to renovate. Id. at 497. Because the contract contained an arbitration clause, the trial court stayed the case and ordered the parties to arbitrate. Id. After the arbitrators returned an award in appellant's favor, the trial court denied appellant's motion to confirm the award as a judgment, vacated the award (because the arbitration panel had decided the case out of time), and ordered the parties to proceed to trial. Id. The question in the case (which is only indirectly relevant to the instant case) was whether the trial court's order denying the motion to confirm the award, vacating the award, and directing the parties to trial was an appealable order. Id.
To place its analysis in perspective, the Brandon court looked first to federal case law concerning the appealability of orders relating to arbitration under 28 U.S.C. § 1292, the federal analogue to D.C.Code § 11-721. Id. at 503. The court examined federal case law in this area from the late-1970s to the early 1980s, focusing heavily on the Supreme Court's then-recent decision in Carson. Id. at 503-06. In applying the Carson test to the context of a stay pending arbitration, this court made the following observations, albeit in dicta: First, that both an order denying a stay and an order granting a stay of litigation pending arbitration have the "practical effect" of an injunction by either refusing to halt court proceedings or halting court proceedings pending arbitration, respectively. Id. at 506. And, second, that "denials — but not grants — of stays of litigation pending arbitration are appealable interlocutory orders, since only orders that frustrate (in contrast with facilitate) arbitration impose a sufficiently serious injury to justify an immediate appeal." Id. at 507. Specifically, the court reasoned that an order granting a motion to stay court proceedings pending arbitration was not appealable on an interlocutory basis for three reasons: 1) At least in principle, the party resisting arbitration agreed to arbitration at some previous time; 2) an arbitration award is not self-executing, such that a successful party must still go to court for final judgment to be entered at
Months after Brandon was decided this court decided Koczak, which contained dicta that conflicted with that of Brandon. See Koczak, 439 A.2d at 480 n. 7 (emphasis added) (noting that the UAA prohibited the court from hearing an appeal of an order granting a motion to compel arbitration, but reasoning "in the absence of the [UAA], certain orders affecting arbitration could be viewed as orders respecting injunctions, and thus appealable interlocutorily"). Thus, after Koczak was decided there was dicta from this court suggesting that an order granting a motion to compel arbitration was not injunctive in nature (Brandon) and therefore unappealable, as well as dicta indicating that an order granting a motion to compel arbitration could potentially be considered an order respecting injunctions (Koczak) which therefore could be appealed interlocutorily.
Subsequently, in 1988, the Supreme Court overruled much of the federal case law on which Brandon was based. In Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 287, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988), Gulfstream sued Mayacamas for breach of contract in state court for failing to make payments on an aircraft that it had commissioned Gulfstream to build. Id. at 272-73, 108 S.Ct. 1133. Without seeking to remove the case to federal court, Mayacamas filed its own action for breach of the same contract against Gulfstream in federal court. Id. at 273, 108 S.Ct. 1133. Gulfstream moved for a stay or dismissal of the federal court action pending resolution of its state case, but the court denied its motion. Id. The question before the Supreme Court was whether Gulfstream could appeal from the denial of the motion to stay or dismiss the case pending the outcome of the state case.
The Supreme Court reviewed the applicable law at the time, the so-called Enelow-Ettelson rule,
Id. at 287-88, 108 S.Ct. 1133 (quoting Carson, 450 U.S. at 84, 101 S.Ct. 993) (internal quotation marks omitted). Subsequently, federal courts have applied Gulfstream to orders staying or refusing to stay litigation pending arbitration and have concluded that Gulfstream prohibits an appeal from either type of order.
Despite Gulfstream and its progeny, in 1989, this court extended and formally adopted much of the dicta in Brandon in Hercules.
Id. at 38-39.
Thus, Hercules stands for the proposition that in general, a party cannot appeal from an order compelling arbitration.
However, this court has never considered whether an order compelling arbitration is appealable in the specific context at issue here, that is, where a consumer is compelled to arbitrate with a commercial entity pursuant to an arbitration clause contained in a (purported) contract of adhesion.
We are satisfied that applying the Carson test, an order compelling arbitration in the context of a consumer adhesion contract is injunctive in nature. First, as the court noted in Brandon, granting a stay pending arbitration does have the "practical effect" of enjoining the party opposing arbitration, in that it halts litigation and orders the parties to undergo arbitration. 439 A.2d at 506. We see no reason why the changes to our law since Brandon should affect that conclusion.
With respect to the second prong of the Carson test, today both the D.C. Council and this court recognize that there has been a significant increase in the use of arbitration clauses in consumer contracts of adhesion since Brandon and Hercules and that such clauses are being used to the detriment of consumers. Indeed, the D.C. Council's concern that consumers were being taken advantage of by being forced to submit to arbitration based on the terms of an adhesion contract entered into with a commercial entity was a motivating factor behind the decision to add several consumer-friendly provisions into the RUAA. See COMM. ON PUB. SAFETY & THE JUDICIARY, REP. ON BILL 17-50, at 2 (D.C.2007) (explaining that "many businesses have found that mandatory arbitration is advantageous in consumer contracts where the business controls the choice of arbitrators, and can afford the arbitration process more easily than can the consumer"); id. (including "several consumer friendly amendments" in the RUAA because "as the use of arbitration has increased, the view of many is that the arbitration process has been slanted in the favor of business over consumers"). Thus, though this court could not discern a particular significant injury suffered by a party opposing arbitration at the time Brandon and Hercules were decided, today the Council has developed a record that clearly recognizes that the injury suffered by a consumer who is compelled to arbitrate with a commercial entity pursuant to an arbitration clause in an adhesion contract is significant.
This court has also recognized that the policy that overwhelmingly favors arbitration
Further, like litigation, arbitration can be costly and time-consuming, and does not afford the consumer the same process as the courts. See generally Christopher R. Drahozal, Arbitration Costs and Contingent Fee Contracts, 59 VAND. L.REV. 729 (2006). Finally, judicial review of arbitration agreements — including the substantive fairness of those agreements — is extremely limited, both at the trial court level as well as on appellate review. Lopata v. Coyne, 735 A.2d 931, 940 (D.C.1999) (citations omitted) ("Judicial review of an arbitrator's decision is extremely limited, and a party seeking to set it aside has a heavy burden.").
Finally, though today we choose not to forsake our precedent and follow the federal courts and the Gulfstream line of cases to hold that orders compelling arbitration are not appealable, we point out that our decision today is not incompatible with Gulfstream. Though the Supreme Court took the opportunity in that case to overrule the "unworkable ... arbitrary... and unnecessary" Enelow-Ettelson rule that provided for automatic review of any order staying or denying a stay of "legal" proceedings on an equitable basis, Gulfstream, 485 U.S. at 287, 108 S.Ct. 1133 the Court clearly intended that "[s]ection
Having concluded that we have jurisdiction to hear an interlocutory appeal from an order to compel arbitration and stay proceedings where the arbitration agreement appears in a contract of adhesion entered into by a consumer and a commercial entity, we now consider whether the record in this case is one in which appellate review is appropriate under the test set out above. Appellant contends that this court is required to remand the case for further proceedings as we did under similar facts in Keeton, because the trial court granted appellees' motion to compel arbitration without holding an evidentiary hearing or providing the parties an opportunity to develop the record to determine whether the arbitration agreement was unconscionable. We agree. Although the Keeton case involved a different procedural posture,
In Keeton, the appellant, Ms. Keeton, brought suit against Easterns Auto and Wells Fargo after she defaulted on a vehicle loan that had required her to make loan payments totaling more than twice the fair market value of the car. 987 A.2d at 1120. Appellees filed a motion to dismiss and compel arbitration, which the trial court granted, dismissing the case with prejudice. Id. at 1121. Not only was the contract at issue an adhesion contract, id. at 1119, but the appellant had alleged sufficient facts tending to show that the contract was both procedurally and substantively unconscionable. For example,
As in Keeton, there are sufficient facts on the record from which it can be inferred that the contract in the present case was a contract of adhesion. In finding that the contract in Keeton was an adhesion contract, the court relied on the facts that "Ms. Keeton signed a Buyer's Order, a standardized-form contract with terms prepared in advance by Easterns." Keeton, 987 A.2d at 1121 n.2. The court noted "[t]here is no evidence that any of the terms were open to negotiation or were, in fact, negotiated." Id. Here, similar allegations are made by the appellant and those allegations are supported by evidence in the record before us. Appellant signed AIC's "Buyers Order" which contained set "terms and conditions" prepared in advance by AIC on their standardized forms which were automatically accepted by the purchaser upon signing the purchase contract.
Further, appellant alleges procedural and substantive unconscionability.
Keeton, 987 A.2d at 1122 n. 13. Moreover, we have held that "the use of a standardized form contract ... is a fact substantially bearing on th[e] question" of procedural unconscionability, and "where one is employed [] it is important for the court to consider whether the seller identified and explained the terms of the contract, particularly those which might be viewed as unusual or unfair." Bennett v. Fun & Fitness, Inc., 434 A.2d 476, 481 (D.C.1981) (citing Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 450 (D.C.Cir. 1965)).
As Keeton states, "our well-settled unconscionability standard calls for a strongly fact-dependent inquiry" and requires a court to conduct "an expedited evidentiary hearing when parties dispute the validity of the arbitration clause." Keeton, 987 A.2d at 1119, 1121-22. There is no indication that the trial court here undertook any such assessment despite appellant's allegations in the complaint that Mr. Ghasri, simply brought the completed contract to the appellant for him to sign while he was on his shift at work, rather than in a setting where he could take a moment to review and discuss the agreement.
Appellant's assertion of a triable issue of fact pertaining to the substantive unconscionability of the arbitration agreement is also supported by the record. For example, the trial court failed to consider how certain provisions in this arbitration agreement reserve some litigation avenues to one party while "barring [another] from seeking judicial action." Keeton, 987 A.2d at 1122-23. The arbitration agreement states that the parties "prefer to resolve their disputes through arbitration, except that the Dealer ... may proceed with Court action in the event the Purchaser fails to pay any sums due under the Buyers Order or RISC." This exception is carved out for AIC despite the provision subjecting the parties to "binding arbitration" under "all disputes" arising under "case law, statutory law, and all other laws." Additionally, the trial court erroneously found that the agreement "did not preclude a class action," when in fact the agreement states that "by entering into this Arbitration Agreement the parties are waiving their right to bring or participate in any class action in court or through arbitration (this is referred to below as the `class action waiver')." Appellant had even brought to the court's attention various cases in which other courts found such clauses barring class actions substantively unconscionable.
In sum, we find that this is a contract of adhesion and that appellant raised a triable issue of fact as to the unconscionability of the arbitration agreement given the similarities between Keeton and this case.
Reversed and remanded.