Brower v. Gateway 2000, Inc.


Court: Supreme Court of New York, Appellate Division

Facts: Plaintiffs bought computers, and have problems with the terms of the warranty, which include an arbitration clause incorporating by reference some rules that are not readily available.

Posture: Finding for the defendants at trial.

Issue: Is the arbitration clause valid?

Holding: No. Remanded to the court to designate an appropriate arbitrator.

Rule: The FAA means that arbitration clauses are enforceable, but this one goes too far by basically preventing substantive arbitration: costs vastly exceed the price of the disagreement (i.e., the cost of a computer), and the rules are hidden.

Reasoning: NY law requires both procedural and substantive unconscionability. We have those both here.

Dicta: The purpose here is not to redress inequality between the parties, but rather to ensure that one party can't surprise the other with overly oppressive terms.