Arbitration clauses, by their very nature, waive a consumer's fundamental constitutional rights to trial by jury, access to the courts, due process of law, and equal protection of the laws. Thus, the waiver of a fundamental constitutional right must be proved to have been made voluntarily, knowingly, and intelligently. For a fundamental right to be effectively waived, a consumer must be informed of the consequences before personally consenting to the waiver; waiver of a fundamental right will not be lightly presumed.
The consumer opened a credit card account. Though she filled-up forms, she never signed any agreement that included the terms and conditions of the account. Subsequently, she received by mail her credit card and the agreement pertaining to it. At the time the agreement did not contain an arbitration clause but contained a provision which authorises the creditor to unilaterally change the agreement as it saw fit. The consumer later brought a suit against the creditor, claiming that it violated the Federal Fair Debt Collection Practices Act and the Montana Unfair Trade Practices and Consumer Protection Act. The creditor moved to dismiss the suit and compel arbitration. The creditor alleged that it mailed out a notice of change of terms along with her monthly statement. The trial court granted the motion.
Is a credit card "bill stuffer" that adds an arbitration clause to the agreement sufficient notice to cause a consumer to knowingly and intelligently waive her fundamental constitutional right to a jury trial?
On appeal, the court held that a credit card "bill stuffer" was not sufficient notice to cause the consumer to knowingly and intelligently waive her constitutional right to a jury trial under Mont. Const. art. II, § 26. The addition of an arbitration clause was not within the consumer's reasonable expectations. There were no negotiations over the arbitration provision. The creditor merely included that provision within a monthly billing statement. The "bill stuffer" was a take-it-or-leave-it part of the creditor's form contract. The "bill stuffer" was ambiguous and misleading because it sought to waive the consumer's constitutional rights with a clause blended into the end of a document when bold type, capital letters, and larger fonts were used to draw attention to other clauses. The arbitration clause was unenforceable under Mont. Code Ann. § 28-2-102(2).