December 12, 2012

Quaint Remembrances of Contract Law and Arbitration

By Art Hinshaw

The Arizona Bar’s monthly magazine, Arizona Attorney, is a surprisingly good read and every month there’s an article that deserves your full attention.   This month, that article is entitled Broemmer v. Abortion Services of Phoenix, Ltd.: Arizona’s Curious Contribution to the Law of Contractual Arbitration.  The Broemmer case, at 840 P.2d 1013 (1992), is in numerous law school contract texts because it is one of the cases that is not an insurance contract that invokes the seldom used “reasonable expectation” doctrine of Section 211(3) of the Restatement (Second) of Contracts. 

The basic facts of the case are these.  Broemmer sought an abortion and the paperwork associated with the procedure contained a separate one page arbitration agreement whereby all of the parties claims against each other were funneled to arbitration.  The one page document included bolded language and all capital letters saying that “PLEASE READ THIS CONTRACT CAREFULLY AS IT AFFECTS YOUR LEGAL RIGHTS,” followed by “AGREEMENT TO ARBITRATE.”  The Court looked at the case through the lens of the following question: “whether it was beyond [Broemmer’s] reasonable expectations to expect to arbitrate her medical malpractice claims.”  The court answered this question in the affirmative because she had only a high-school education, was inexperienced in commercial matters, didn’t know what arbitration was, and the service provider failed to bring the arbitration clause explicitly to Broemmer’s attention.  Nowhere in the case is there a mention of the Federal Arbitration Act (FAA).  Arizona’s policy of favoring arbitration is mentioned, but gets the brush-off.  It reads as a “yeah, but not here” opinion.

As I read the article, I couldn’t help but think of the Nitro-Lift case that both Jill and Paul recently commented about (here, here, here, and here) where the US Supreme Court bench-slapped the Oklahoma Supreme Court for applying state contract law to an arbitration clause and failing to apply the Federal Arbitration Act.  No doubt that Nitro-Lift puts the holding in Broemmer into question, and no doubt that if the US Supreme Court got a hold of Broemmer today, the outcome would be different than what the Arizona Supreme Court decided 20 years ago.



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