In Beard v. Santander Consumer USA, Inc.,  2012 WL 1292576 (E.D.Cal. 2012), Judge McAuliffe enforced an arbitration clause against a servicemember who filed a class action against an automobile finance company arising from its predecessor’s repossession of the servicemember’s vehicle.

In the underlying action, Beard brings a putative class action against Defendants alleging violations of the Servicemembers Civil Relief Act, 50 U.S.C.App. §§ 501 et seq. Beard, a sergeant in the United States Army National Guard, entered into an agreement to finance the purchase of a 2007 Kia Sportage (the “Fi-nance Agreement”), on or around September 25, 2007. Beard Aff’d. at 2, (Doc. 27–1). The Finance Agreement obligated Beard to make seventy-one installment payments over a period of six years. Ap-proximately one year after signing the Finance Agreement, Beard was called into active military service. Beard was scheduled to report for duty in San Bernadino, California on August 16, 2008. Eight days before his departure, Beard notified Triad that he was subject to deployment and late on his car payments. As such, Beard requested a forbearance of his August 2008 and September 2008 car payments. Triad approved the two-month forbearance request and required Beard to sign a Modifications and Ex-tension Agreement (“Modification Agreement”). The Modification Agreement contained an arbitration clause that required Beard to arbitrate all disputes “arising out of and in connection with, or relating to” the Finance Agreement. ¶Ultimately, Beard failed to keep up with his installment payments and while he was serving in Iraq, Triad repossessed his vehicle without a court order and sold it at auction. Beard now attempts to pursue a putative class action against Defendants Triad and Santander alleging that Defendants violated the Servicemembers Civil Relief Act of 2003 (“SCRA”) by failing to obtain a Court order prior to repossessing his car and by charging more than a 6% interest rate on his loan.¶Rather than answer Beard’s complaint, Defendants moved to stay the proceedings in this Court and to compel Beard to arbitrate his claims under the Federal Arbitration Act, (“FAA”), 9 U.S.C. §§ 3, 4, as set forth in the arbitration clause of the parties’ Modification Agreement. Beard raises two primary challenges to the arbitration provision in the Modification Agreement. First, Beard argues that because the arbitration clause waives the right to a court trial as guaranteed under the SCRA, the Modification Agreement must comply with the 12–point font requirements of 50 App. U.S.C § 517(c). Moreover, the arbitration clause in the Modification Agreement is not in 12–point font and it is therefore invalid. Second, the arbitration clause is unconscionable and therefore should not be enforced by the Court. Beard Opp’n at 16, (Doc 27).

The Court found the SSCRA no impediment to enforcing the Arbitration clause.

Beard alleges that his assent to the Modification Agreement was invalid because the arbitration clause was not executed in accordance with the waiver provisions of the SCRA section 517. Beard’s argument is multi-layered-asserting that (1) the SCRA grants service members a right to a court trial for violations of the SCRA, and (2) any waiver of that right must comport with the particular requirements governing waivers as articulated in Section 517. Opp’n at 8. Beard contends that the arbitration clause contained in the Modification Agreement is therefore invalid under the SCRA because it was i) not a separate instrument and ii) it was not in 12–point font. . . ¶. . . Beard cannot and does not point to any section or subsection within the SCRA which precludes an arbitration agreement and case law establishes otherwise. Absent specific statutory language, coupled with the liberal federal policy favoring arbitration, the Court does not find that the SCRA nullifies a contractual agreement mutually adopted by private parties. See Compucredit Corp., 132 S.Ct. at 673 (when a federal statute is silent as to whether claims can proceed in an arbitrable forum, the FAA requires the arbitration agreement to be enforced according to its terms). The arbitration provision is not a waiver under the SCRA, and therefore, the font and format requirements governing waivers under Section 517 of the SCRA do not apply to the Modification Agreement at issue here.

Nor did the Court find the Arbitration clause unconscionable.The Court explained as to substantive unconscionability:

The arbitration provision here provides a low cost, fair, and consumer friendly forum which allows consumers to effectively vindicate their rights. All proceedings would occur near Beard’s home and Defendants will advance any associated arbitration fees. (Doc. 18–2). The arbitration provision not only benefits Beard by providing him with a fair and low cost forum, but also benefits all consumers by enabling Defendants to maintain low costs. Accordingly, the Court finds that there is a reasonable justification for the unilateral arbitration provision. See McCabe v. Dell, Inc., 2007 U.S. Dist. LEXIS 40137 (C.D.Cal. Apr. 12, 2007) (consumer based contract not substantively unconscionable where arbitration provision provided a low cost, fair, and consumer friendly forum).

As to procedural unconscionability, the Court explained:

In light of the Supreme Court’s decision in Concepion, however, the Court does not find that the adhesive nature of the agreement weighs strongly in favor of procedural unconscionability. Concepcion, 131 S.Ct. at 1750 (holding that “the times in which consumer contracts were anything other than adhesive are long past”). The conduct of the parties also decreases the adhesive nature of the Modification Agreement. The Modification Agreement was a result of a negotiation between Beard and Defendants. Beard approached Triad about modifications to an existing loan. At the time of his request, Beard was already behind on his car payments for reasons unrelated to his active duty status. Beard requested a forbearance from Triad, which it had no legal obligation to provide. The Modification Agreement presented to Beard explicitly stated that as additional consideration for Triad’s agreement to forbear loan payments, Beard agrees to arbitrate his claims if requested by either party. Defendants offered Beard an opportunity to extend the due dates for his car payments, and Defendants reasonably required something in return—Beard’s agreement to arbitrate his claims. Beard’s status as an active duty service member presents some evidence of economic compulsion exerted upon Beard, but he was able to walk away from Defendants’ offer to defer his payments. Beard had no obligation to pursue his claims through arbitration in his original contract. Thus, his agreement for binding arbitration was part of a bargained-for exchange. Beard, as the party who reaped the benefits of an agreement must also accept the agreement’s accompanying burdens.