## Facts

- James E. Taylor, Jr. bought a 1998 Ford F-150 from East Ford, Inc., relying on a salesman’s statement that the truck was “new” and had never been titled.
- Taylor signed multiple sale documents, including a preprinted “Offer to Purchase or Lease Vehicle” containing an arbitration clause.
- The arbitration clause was contained in small, non-emphasized print within a larger form; key deal terms appeared in larger, boldface type.
- The clause required arbitration of “any controversy, claim, action or inaction” related to the transaction and resulting agreements under AAA Commercial Arbitration Rules in Jackson, Mississippi.
- The clause limited relief by providing that the arbitrator had no authority to award punitive damages.
- The clause effectively permitted East Ford to pursue certain claims in court while broadly channeling Taylor’s claims to arbitration.
- Taylor stated he was not advised of the arbitration clause and did not read it because it was not brought to his attention; the salesman testified he never discussed arbitration and did not know the form contained such a clause.
- Taylor later learned the truck had previously been owned and titled and sued East Ford for misrepresentation and related claims.
- East Ford moved to compel arbitration; the circuit court denied the motion as unconscionable, and East Ford pursued an interlocutory appeal.

## Issues

1. Whether the arbitration clause in the vehicle purchase offer was unconscionable under Mississippi contract law and therefore unenforceable under the Federal Arbitration Act’s savings clause.
2. Whether the circuit court properly denied the motion to compel arbitration based on procedural and substantive unconscionability.

## Decision

- The Mississippi Supreme Court affirmed the denial of East Ford’s motion to compel arbitration.
- The court held the arbitration clause was unconscionable under Mississippi law and thus unenforceable.
- The case was remanded for a trial on the merits of Taylor’s claims.
- The court reiterated that arbitration agreements are not inherently unconscionable and that state courts may still apply neutral contract defenses consistent with the FAA.

## Legal Principles

- Under the FAA, arbitration agreements are enforceable except on grounds that exist “at law or in equity for the revocation of any contract,” including unconscionability.
- Mississippi unconscionability analysis considers both:
  - Procedural unconscionability (lack of meaningful choice, surprise, oppression in formation), and
  - Substantive unconscionability (overly harsh, one-sided, or remedy-stripping terms).
- Procedural unconscionability may be shown where an arbitration clause is effectively hidden in fine print, not explained, and presented in a non-negotiable consumer form setting.
- Substantive unconscionability may be shown where an arbitration clause:
  - Provides materially one-sided access to courts favoring the drafter, and/or
  - Eliminates punitive damages in a dispute where such remedies may be available for fraud or misrepresentation.

## Conclusion

The court refused to compel arbitration because the clause was imposed in a procedurally unfair manner and contained substantively one-sided and remedy-limiting terms, rendering it unconscionable and unenforceable; the dispute proceeded in court on remand.


East Ford, Inc. v. Taylor, 826 So. 2d 709 (Miss. 2002)