## Facts

- Beverly Brewer obtained a $2,215 title loan from Missouri Title Loans, Inc. (MTL) secured by her car at a 300% interest rate.
- The loan documents contained a mandatory arbitration provision with a class arbitration waiver requiring individual arbitration.
- The agreement restricted Brewer to individual arbitration while preserving MTL’s ability to pursue legal action and repossess the vehicle upon default.
- The contract was standard-form, nonnegotiable, and difficult for consumers to understand, placing MTL in a superior bargaining position.
- Brewer made two payments totaling more than $1,000, reducing principal by only $0.06.
- Brewer filed a putative class action alleging violations of Missouri consumer-protection statutes (including the Missouri Merchandising Practices Act).
- Evidence showed no consumer had ever filed an individual arbitration claim against MTL, and consumer attorneys testified they were unlikely to take individual cases due to cost, complexity, and limited recoverable damages.
- MTL moved to compel individual arbitration under the agreement.

## Issues

1. Whether, after *AT&T Mobility LLC v. Concepcion*, a state-law rule treating class arbitration waivers as unconscionable is preempted by the Federal Arbitration Act (FAA).
2. Whether the arbitration provision was unconscionable under generally applicable Missouri contract law, independent of any rule targeting class waivers.
3. If the arbitration provision was unconscionable, what remedy applied (severance, reformation, or revocation of the arbitration clause).

## Decision

- The court held that, in light of *Concepcion*, the presence and enforcement of a class arbitration waiver does not by itself render an arbitration clause unconscionable.
- The court nevertheless held the arbitration provision unenforceable because its formation was unconscionable under traditional Missouri contract law.
- The court revoked the arbitration clause, allowing the claims to proceed in court.
- The judgment was affirmed in part and reversed in part, and the case was remanded for further proceedings consistent with the ruling.

## Legal Principles

- The FAA preempts state-law doctrines applied in a way that disfavors arbitration by conditioning enforceability on the availability of classwide procedures.
- Courts may apply generally applicable contract defenses, including unconscionability, to arbitration agreements so long as the doctrine is not applied as a special rule against arbitration.
- Procedural unconscionability focuses on contract formation, including oppression, surprise, and unequal bargaining power in nonnegotiable consumer contracts.
- Substantive unconscionability may be shown by materially one-sided remedial terms, including arrangements that channel consumers into arbitration while preserving a lender’s judicial and self-help remedies.
- Where unconscionability infects the arbitration agreement’s formation, the proper remedy may be revocation of the arbitration clause rather than compelled arbitration.

## Conclusion

The Missouri Supreme Court ruled that federal law prevents invalidating an arbitration clause solely because it bars class arbitration, but it refused to enforce MTL’s arbitration provision because it was formed under unconscionable conditions shown by adhesion contracting, one-sided remedies, and the practical unavailability of individual relief.


Brewer v. Missouri Title Loans, Inc., 364 S.W.3d 486 (Mo. 2012)