[*P56] The second fundamental
right at issue in the case at bar is the right of access to the courts.
[*P57] Article II, Section 16 of Montana's Constitution guarantees that "courts
of justice shall be open to every person, and speedy remedy afforded for
every injury of person, property, or character." In my view, this
right is as much a fundamental right as is any other Article II right.
This is so not only because the right of access to the courts is included
within the Constitution's Declaration of Rights, but also, and just as
importantly, without the right of access to the courts, other Article
II rights would have little protection from infringement and, thus, little
meaning. See, Butte Community Union, 219 Mont. at 430, 712
P.2d at 1311-13; Wadsworth, 275 Mont. at 299, 911 P.2d at 1172.
[*P58] Constitutional rights that cannot be enforced are illusory. It is as
[**141] if those rights cease to exist as legal rights. Montanans' fundamental
rights to a jury trial, to due process and to equal protection, among
others, are rendered meaningless absent the courts being able to enforce
these rights. Purely and simply, access to the courts guarantees that
other Article II rights are something more than mere dreams and aspirations.
Access to the courts gives real existence to other fundamental rights.
And, that makes access to the courts a fundamental right also, for without
this right other rights have no meaning.
[*P59] In this conclusion, I acknowledge that we have explicitly and implicitly
held to the contrary. See, Meech v. Hillhaven West Inc. (1989),
238 Mont 21, 776 P.2d 488; Peterson v. Great Falls School District
(1989), 237 Mont. 376, 773 P.2d 316; Miller v. Fallon County (1989),
240 Mont. 241, 783 P.2d 419; Bieber v. Broadwater County (1988),
232 Mont. 487, 759 P.2d 145; Linder v. Smith (1981), 193 Mont.
20, 629 P.2d 1187; Merchants Ass'n v. Conger (1979), 185 Mont.
552, 606 P.2d 125. Notwithstanding, I do not see how these decisions
can be squared with, much less continue to exist beside, this Court's
jurisprudence holding that other Article II rights are fundamental rights.
[*P60] This Court has stated repeatedly that a right is fundamental under
Montana's Constitution if the right is either found in the Declaration
of Rights or is a right without which other constitutionally guaranteed
rights would have little meaning. State v. Bird, 2002 MT 2, 308 MT
2, P25, 308 Mont. 75, P25, 43 P.3d 266, P25 (right to be present for
all court proceedings); In re Mental Health of K.G.F., 2001 MT 140,
P30, 306 Mont. 1, P30, 29 P.3d 485, P30 (right to effective assistance
of counsel for involuntary commitment proceedings); Armstrong v. State,
1999 MT 261, P34, 296 Mont. 361, P34, 989 P.2d 364, P34 (right to
privacy); and MEIC v. Dept. of Environmental Quality, 1999 MT 248,
P56, 296 Mont. 207, P56, 988 P.2d 1236, P56 (right to a clean and
healthful environment); State v. Clark, 1998 MT 221, P22, 290 Mont.
479, P22, 964 P.2d 766, P22 (right to confront and examine accusers);
State v. Weaver, 1998 MT 167, P26, 290 Mont. 58, P26, 964 P.2d 713,
P26 (right to a unanimous verdict); Wadsworth, 275 Mont. at 299,
911 P.2d at 1172 (right to pursue employment); Matter of C.H. (1984),
210 Mont. 184, 201, 683 P.2d 931, 940 (right to physical liberty).
We could never have enforced the fundamental rights litigated in these
and in other cases where fundamental rights were at issue had access to
the courts been denied in the first instance. Indeed, without access to
the courts, these other fundamental rights would have had no real [**142]
existence; they would have been merely aspirations without substance.
[*P61] The instant case and others we have considered-- Chor, 261 Mont.
143, 862 P.2d 26; Casarotto, 268 Mont. 369, 886 P.2d 931; Keystone,
Inc. v. Triad Systems Corporation, 1998 MT 326, 292 Mont 229, 971 P.2d
1240; and Iwen, 1999 MT 63, 293 Mont. 512, 977 P.2d 989--likewise
demonstrate why the right of access to the courts must be protected as
the fundamental constitutional right it [***14] is. These cases point
inescapably to the conclusion that, for their own obvious economic benefit,
large national and multi-national corporations are effectively privatizing
an important segment of the civil justice system in this country by including
fine-print, non-negotiable, take-it-or-leave-it, mandatory, binding arbitration
clauses in their standard-form contracts. n3
n3 A cursory review of the literature will reveal not only the substantial and
growing support for my conclusion but also will provide citations to a
multitude of cases which detail the horror stories of corporate abuse
of ordinary citizens and small business people by way of the inclusion
of mandatory arbitration clauses in contracts of adhesion. See, e.g.,
Jean R. Sternlight, Mandatory Binding Arbitration and the Demise of
the Seventh Amendment Right to a Jury Trial (2001), 16 Ohio St. J.
on Disp. Resol. 669; Margaret M. Harding, The Redefinition of Arbitration
by Those with Superior Bargaining Power (1990), 1999 Utah L.Rev.
857; Katherine Van Wezel Stone, Rustic Justice: Community and Coercion
Under the Federal Arbitration Act, 77 N.C. L.Rev. 931 (1999); Reginald
Alleyne, Statutory Discrimination Claims: Right "Waived"
and Lost in the Arbitration Forum (1996), 13 Hofstra Lab. L.J.
381, to name just a few.
That said, there is also little point railing against the present state of the
law "favoring" arbitration. See, Moses H. Cone Memorial Hosp.
v. Mercury Const. Corp. (1993), 460 U.S.1, 103 S. Ct. 927, 74 L.
Ed. 2d 765. I will note, however, that arbitration, historically,
was designed as a method of alternative dispute resolution between merchants
of equal sophistication and bargaining power (see Jerold S. Auerbach,
Justice Without Law? 101-114 (1983); Ian R. MacNeil, American
Arbitration Law 15-25 (1992)); that during the deliberations leading
up to the passage of the Federal Arbitration Act (FAA), the proponents,
drafters and sponsors--Senator Walsh from Montana, among others--were
extremely concerned that the inclusion of arbitration clauses in adhesion
contracts be voluntary because of the concomitant loss of the right of
jury trial and court access (see, the excelleant discussion of
this point in Allstar Homes, Inc. v. Waters (1997, Ala.), 711 So.
2dj 924 (Cook, J. concurring)); and that, with due all deference to the
Supreme Court of the United States, Justices Thomas's and Scalia's criticism
of Southland and its progeny and their conclusion that these cases
should be overruled to the extent that they apply the FAA in state court
proceedings is dead right. See, Allied-Bruce Terminix Companies v.
Dobson (1995), 513 U.S. 265, 283, 115 S. Ct. 834, 844, 130 L. Ed. 2d 753
(Scalia, J. and Thomas, J., dissenting).
[*P62] These are the adhesion contracts that ordinary citizens and small business
people must accept if they want to acquire what most would consider to
be basic and necessary services and products--household appliances, residential
leases, rental cars, pest extermination, banking services, office and
business equipment, phone service, consumer product warranties, household
and commercial insurance, employment, credit cards, consumer and small
business financing and [**143] medical attention, for example. Likewise,
these are the adhesion contracts that, as in the case sub judice,
ordinary citizens and small business people are compelled to sign if they
want to participate in the national/global economy, the profits of which
fuel the very existence and growth of these same national and multi-national
corporations (and the election and re-election of their benefactors in
government). Bankruptcy Judge James S. Sledge, Jr. recently brought this
point home. He observed:
Ask any reasonable man on the street, i.e.[,] a consumer, if he thinks it is
fair that he is barred from access to the courts when he has a claim based
on a form contract which contains an arbitration clause and he will respond
with a resounding "No!" . . . The reality that the average consumer
frequently loses his/her constitutional rights and right of access to
the court when he/she buys a car, a household appliance, insurance policy,
receives medical attention or gets a job rises as a putrid odor which
is overwhelming the body politic.
In re Knepp, 229 B.R. 821, 827 (Bankr. N.D. Ala. 1999).
[*P63] In short, without access to the courts, there is no way to safeguard
the other fundamental rights guaranteed by Article II of Montana's Constitution.
Indeed, to the extent that those rights cannot be protected by the courts,
Montana's Declaration of Rights is little more than a collection of eloquent,
but unenforceable, words. Access to the courts is a fundamental right,
and our cases that hold to the contrary are wrong.
[*P64] That said, my objective here is not to provide an analysis for challenging
the reasoning of Meech, Linder and their progeny. Rather, my point
is that where [***15] fundamental constitutional rights are involved--here,
the right of a trial by jury and, in my opinion, access to the courts--the
law is eminently clear that the waiver of such rights will not be lightly
presumed. State v. Okland (1997), 283 Mont. 10, 15, 941 P.2d 431,
434 (presuming waiver of counsel from a silent record is impermissible);
State v. Lucero (1968), 151 Mont. 531, 538, 445 P.2d 731, 735 (stating
courts indulge every reasonable presumption against waiver of constitutional
rights). A waiver of a fundamental right must be proved to have been made
voluntarily, knowingly and intelligently--typically by the party seeking
the waiver. Bird, 35-36; Tapson, 25; Lucero, 151 Mont.
at 538, 445 P.2d at 735. For a fundamental right to be effectively
waived, the individual must be informed of the consequences before personally
consenting to the waiver. Dahlin, 22; State v. Allison (1944),
116 Mont 352, 360, 153 [**144] P.2d 141, 145. And, the waiver
will be narrowly construed. State v. Tiedemann (1978), 178 Mont. 394,
402, 584 P.2d, 1284, 1298.
[*P65] In applying these well-settled principles of law in the context of
the issue presented here, a reviewing court must consider a totality of
overlapping and non-exclusive factors including: whether there were any
actual negotiations over the waiver provision; whether the clause was
included on a take-it-or-leave-it basis as part of a standard-form contract;
whether the waiver clause was conspicuous and explained the consequences
of the provision (e.g. waiver of the right to trial by jury and right
of access to the courts); whether there was disparity in the bargaining
power of the contracting parties; whether there was a difference in business
experience and sophistication of the parties; whether the party charged
with the waiver was represented by counsel at the time the agreement was
executed; whether economic, social or practical duress compelled a party
to execute the contract (e.g. where a consumer needs phone service and
the only company or companies providing that service require execution
of an adhesion contract with a binding arbitration clause before service
will be extended); whether the agreement was actually signed or the waiver
provision separately initialed; whether the waiver clause was ambiguous
or misleading; and whether the party with the superior bargaining power
lulled the inferior party into a belief that the waiver would not be enforced.
[*P66] Returning to the record before us, there is no evidence to support
a conclusion that Kloss knowingly and intelligently waived her rights
to trial by jury and access to the courts when she executed Jones's standard-form
contracts containing the arbitration clauses. There is no evidence that
Kloss negotiated for any provision in the contracts much less the arbitration
clauses. There is no indication in the record that Kloss had counsel when
she signed the agreements. And, it can hardly be argued that Kloss was
on the same level of sophistication and expertise as that of Jones's agent,
Husted; nor did she have any degree of equal bargaining power.
[*P67] What the record does demonstrate, however, is that Kloss is an ordinary
citizen of advanced years; that she did not read the agreements; that
she was not given the opportunity to read the agreements (which, however,
did contain an explanation of the consequences of the arbitration clause);
and that Jones's agent, upon whom Kloss had historically relied to explain
the significant parts of agreements presented to her, neither pointed
out the existence of the arbitration clauses nor explained that the clauses
would bar her from exercising her fundamental constitutional rights of
access to Montana's [**145] courts and to a trial by jury. The record
is clear. Kloss did not voluntarily, knowingly and intelligently waive
her fundamental constitutional rights of trial by jury and access to the
courts on the facts presented here.
[*P68] It is to the consequences of this ineffective waiver that I next turn.
[*P69] The United States Supreme Court has held that the Federal Arbitration
Act (FAA) preempts those state laws which invalidate and are "applicable
only to arbitration provisions." Allied-Bruce Terminix
Companies v. Dobson (1995), 513 U.S. 265, 281, 115 S. Ct. 834, 843, 130
L. Ed. 2d 753. [***16] The Court has stated that in adopting Section
2 of the FAA Congress precluded states from singling out arbitration provisions
for suspect status. Rather, according to the Court, such provisions must
be placed "upon the same footing as other contracts." Scherk
v. Alberto-Culver Co. (1974), 417 U.S. 506, 511, 94 S. Ct. 2449, 2453,
41 L. Ed. 2d 270.
[*P70] The Supreme Court has also held, however, that if a state law governs
issues concerning the validity, revocability and enforceability of contracts
in general--see, Perry v. Thomas (1987), 482 U.S. 483, 492,
n. 9, 107 S. Ct. 2520, 2527, n. 9, 96 L. Ed. 2d 426--then generally
applicable contract defenses, such as fraud, duress or unconscionability,
may be applied to invalidate arbitration agreements without contravening
Section 2 of the FAA. Doctor's Associates Inc., v. Casarotto (1996),
517 U.S. 681, 687, 116 S. Ct. 1652, 1657, 134 L. Ed. 2d 902 (citing
Allied Bruce, 513 U.S. at 281, 115 S. Ct. at 843; Rodriguez
de Quijas v. Shearson/American Express, Inc. (1989), 490 U.S. 477, 483-84,
109 S. Ct. 1917, 1921-22, 104 L. Ed. 2d 526; Shearson/American
Express, Inc., v. McMahon (1987), 482 U.S. 220, 226, 107 S. Ct. 2332,
2337, 96 L. Ed. 2d 185).
[*P71] In this regard Montana has long subscribed to the rule that contractual
waivers of constitutional rights must be evaluated in that light and by
the tests applicable to the waiver of constitutional rights. May v.
Figgins (1980), 186 Mont. 383, 394, 607 P.2d 1132, 1138. In May,
we recognized the general rule that parties could contract in advance
to submit to in personam jurisdiction of a given court--there,
Colorado. Nonetheless, we refused to uphold that sort of contract provision
where the Colorado court was unable to exercise in personam jurisdiction
consistent with due process. We reasoned that the contract provision amounted
to a forfeiture of the constitutional right of due process, and that there
was no "clear waiver" because the party charged with the waiver
could not have known that the agreement he signed subjected him to the
jurisdiction of the Colorado courts. In [**146] reaching this conclusion
we pointed out that there was nothing in the agreement that specified
the jurisdiction as to which the charged party waived his constitutional
due process rights. May, 186 Mont. at 394, 607 P.2d at 1138 (citing
Fuentes v. Shevin (1972), 407 U.S . 67, 95, 92 S. Ct. 1983, 2001,
32 L. Ed. 2d 556 (The right of jury trial is fundamental and courts
indulge every reasonable presumption against waiver.)).
[*P72] Quoting Telephonic, Inc. v. Rosenblum (1975), 88 N.M. 532, 543 P.2d
825, 830, we observed that, " 'an agreement to waive this constitutional
right must be deliberately and understandingly made, and the language
relied upon to constitute such a waiver must clearly, unequivocally and
unambiguously express [***17] a waiver of this right.' " May,
186 Mont. at 394, 607 P.2d at 1138-39. We then went on to state that:
To accept the respondent's argument that the defendant here contractually consented
to be sued in Colorado would be to give the respondent carte blanche to
use contracts of adhesion to establish a right to sue defendants wherever
would be most convenient to respondents, and least convenient to defendants.
The contractual provisions purporting to waive in personam jurisdiction
are unreasonable and unenforceable.
May, 186 Mont. at 395, 607 P.2d at 1139.
[*P73] Similarly, but with a contrary result, we upheld a provision whereby
a party contracted away his right to the statutory exoneration of his
suretyship because the waiver of rights did not involve "a constitutional
right, nor a waiver in violation of public policy." Montana Bank
of Circle, N.A., v. Ralph Meyers & Son, Inc. (1989), 236 Mont. 236,
241, 769 P.2d 1208, 1212.
[*P74] As discussed above, Montana law generally applicable to the waiver
of constitutional rights, requires that the waiver will not be lightly
presumed; that it must be proved to have been made voluntarily, knowingly
and intelligently--typically by the party seeking the waiver; and that
it will be narrowly construed. See 64 infra. Importantly, Montana
applies these same principles in cases where there is a purported contractual
waiver of constitutional rights. Such a contractual waiver " 'must
be deliberately and understandingly made, and the language relied upon
to constitute such a waiver must clearly, unequivocally and unambiguously
express a waiver of this right.' " May, 186 Mont. at 394, 607
P.2d at 1138-39.
[*P75] In this case, as already noted, there is no evidence in the record
before us that Kloss voluntarily, knowingly and intelligently waived her
fundamental constitutional rights to a jury trial and to access to [**147]
the courts when she signed Jones's standard-form contracts. Rather, the
record demonstrates the contrary. Thus, Kloss's purported waiver of her
rights to a jury trial and of access to the courts was not an effective
waiver in a constitutional sense.
[*P76] That being the case, and under principles of Montana law generally
applicable to all contracts, Kloss's contract with Jones cannot be enforced,
at least to the extent of the arbitration clause.
[*P77] Accordingly, for the reasons set forth in our Opinion and in this separate
Opinion, I concur.
JAMES C. NELSON
Justices Terry N. Trieweiler, W. William Leaphart and Patricia O. Cotter join
in the foregoing concurrence.
TERRY N. TRIEWEILER
W. WILLIAM LEAPHART
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