Akilah Louise Wofford v. M.J. Edwards & Sons Funeral Home Inc.
2015 WL 7428743, 490 S.W.3d 800, 2015 Tenn. App. LEXIS 926 (2015)
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Rule of Law:
An arbitration provision in a contract of adhesion is unconscionable and unenforceable when it is one-sided, lacks essential procedural terms, and is presented under circumstances of unequal bargaining power, thereby placing it beyond the reasonable expectations of an ordinary person. Furthermore, a document cannot be incorporated by reference into a contract if the party to be bound was never provided a copy or given an opportunity to review it.
Facts:
- Akilah Wofford's father died on June 10, 2013, and she, a college student, contracted with M.J. Edwards & Sons Funeral Home, Inc. ('Edwards') for funeral services.
- On June 10, Edwards took possession of Mr. Wofford's body.
- By June 11, Edwards had embalmed the body, ordered a casket, and begun other preparations before presenting a final contract.
- On June 12, Ms. Wofford signed a two-page purchase agreement ('Contract') that contained a brief, bolded arbitration clause above the signature line.
- The Contract stated it was subject to 'Part Three for Terms and Conditions,' a separate document which contained detailed arbitration rules.
- Edwards intentionally did not provide Ms. Wofford with a copy of Part 3 of the contract, and she was never given an opportunity to review its terms.
- Edwards completed the funeral services, and Mr. Wofford was interred at Galilee Memorial Gardens cemetery.
- Subsequently, allegations arose that Galilee Memorial Gardens had improperly handled human remains.
Procedural Posture:
- Akilah Wofford and other plaintiffs filed a class action complaint against M.J. Edwards & Sons Funeral Home, Inc. in the Chancery Court of Shelby County (trial court), alleging breach of duty.
- Edwards filed a motion in the trial court to compel arbitration and stay the legal proceedings.
- The trial court denied Edwards's motion, finding there was no meeting of the minds and therefore no valid agreement to arbitrate.
- Edwards, as appellant, filed a timely appeal of the trial court's order to the Tennessee Court of Appeals, with Wofford as appellee.
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Issue:
Is an arbitration provision in a funeral services contract unenforceable when it is part of a contract of adhesion, is completely one-sided, lacks key procedural details, and refers to a separate document containing more information that was never provided to the consumer?
Opinions:
Majority - J. Steven Stafford
Yes. An arbitration provision is unenforceable as unconscionable when it is contained within a contract of adhesion, is one-sided, lacks essential procedural terms, and the consumer was not given a realistic choice or opportunity to understand its full scope. First, the court held that Part 3 of the contract, which contained detailed arbitration rules, was not incorporated by reference because Ms. Wofford was never provided a copy and thus could not have assented to its terms. This distinguishes the case from situations where a sophisticated party merely fails to read an available document. Second, the court determined the contract was one of adhesion because it was a standardized form offered on a 'take it or leave it' basis by a party with superior knowledge (Edwards) to a vulnerable consumer (Wofford) under emotionally trying circumstances, leaving her with no realistic choice. Third, the remaining arbitration clause in the signed contract was deemed unconscionable. It was substantively unconscionable because it was completely one-sided, binding only Ms. Wofford to arbitration. It was procedurally unconscionable due to the unequal bargaining power, the expediency of the transaction, the lack of clarity on the arbitration process, and the fact that by the time it was presented, Edwards had already commenced services, making refusal impractical. Given the totality of the circumstances, the provision was beyond the reasonable expectations of an ordinary person and is therefore unenforceable.
Analysis:
This decision reinforces judicial scrutiny of arbitration clauses in consumer contracts of adhesion, particularly in contexts involving vulnerable parties and unequal bargaining power. It clarifies the limits of the 'incorporation by reference' doctrine, establishing that a party cannot be bound by a document they were never given an opportunity to review. The court's holistic 'totality of the circumstances' approach to unconscionability, weighing factors like emotional state, one-sidedness, and lack of procedural clarity, provides a significant precedent for challenging the enforceability of sparse or unfair arbitration provisions in consumer service agreements.
