Brewer v. Missouri Title Loans

Beverly Brewer (plaintiff) borrowed $2,215 secured by her car from Missouri Title Loans (MTL) (defendant) at a 300 percent interest rate. The loan agreement limited Brewer’s remedies against MTL to individual arbitration with each side paying its own costs, but MTL could still pursue legal action and repossess the car if Brewer defaulted. The entire agreement was one-sided, nonnegotiable, and difficult for consumers to understand, and it placed MTL in a superior bargaining position. Practically speaking, a consumer could not recover from the title company, as no consumer had ever filed a claim for individual arbitration against MTL. Brewer made two payments over $1,000, but they reduced her loan principal by only six cents, and she brought a consumer class action against MTL. MTL moved to dismiss and compel individual arbitration. Brewer countered that the agreement was unconscionable, and three consumer lawyers testified that attorneys were unlikely to handle individual claims because of the complexity, expense, and small amount of recoverable damages. The trial judge severed the class-arbitration waiver as unenforceable and ordered an arbitrator to determine whether class arbitration was appropriate. On appeal, the Missouri Supreme Court found the class-arbitration waiver unconscionable and the entire arbitration agreement unenforceable. The United States Supreme Court vacated that ruling following its decision in AT&T Mobility, LLC v. Concepcion, 563 U.S. 333 (2011), requiring the Missouri Supreme Court to revisit the issue.