Appeal in Connection with Enforcement of Arbitration Provision

When a circuit court found the arbitration provision of a student enrollment form at Daymar College to be unenforceable, the college turned to Dinsmore for the appeal. A group of students alleged that they were deceived into enrolling at Daymar through false and misleading statements regarding the transferability of credits and availability of job opportunities. All of the students had signed an enrollment form, which contained a provision that stated any dispute related to the form or their enrollment would be handled through arbitration. The provision also stated that the cost of arbitration would be split amongst both parties. After their initial complaint, the students also argued that they were unaware of the arbitration provision on the enrollment form, and that they were pressured by Daymar to sign the enrollment form quickly. The trial court ruled that the provision was procedurally unconscionable and denied the client’s motion to compel arbitration, explaining that students had a limited time to read and comprehend the enrollment form, and also that requiring students with limited income to pay for half of an arbitration proceeding was unconscionable. Upon appeal, we argued that state and federal law strongly favor the enforcement of agreements to arbitrate, and that state law does not support the proposition that the cost of arbitration can render an arbitration provision unconscionable. Furthermore, we argued that the trial court could have severed the cost-splitting provision as an independent covenant, following state policy to strike objectionable provisions to maintain the contract as a whole. The Kentucky Court of Appeals reversed the decision of the trial court and remanded the matter for additional proceedings.