Unconscionability in Family Law and Policy
Although the Supreme Court’s decision in AT&T appeared to halt the use of unconscionability in commercial contracts, the same cannot necessarily be said for family law. Unlike in commercial contract enforcement, it has traditionally been left up to the states to define family law relationships. With certain rare exceptions, such as the recent decision in Obergefell, states may determine the status of marriage, divorce, and child custody and support. This is in large part because it is rare for multiple states to have a vested interest in the status of a family. Whereas modern commercial contracts frequently cross state borders and may affect many similar contracts, family law is more naturally limited to the size of a family, and tends to implicate religion and sociological mores to a more visceral and personal extent.
It is also true that, although federal courts are more likely to address issues of commerce under Congress’s commerce clause powers, issues of family law are more often dealt with in local courts and under local laws. The most common form of contract in family law is the prenuptial agreement. A prenuptial agreement is a contract wherein two people create an enforceable agreement covering how they will deal with incidences in their marriage or divorce. These may cover anything from property distribution in the case of divorce to the religion in which their children will be raised. Other common forms of family law contract involve those created at the time of divorce, which may cover alimony and child support as well as custody agreements.
Although states are mostly willing to allow consenting adults to agree on the terms of their marriage and property distribution, there are certain areas of family law that the state retains control over, even where parties have agreed to arbitrate. These include child support, child custody, and, in certain cases, situations where one spouse would otherwise be left to the care of the state.
When approaching an unconscionability analysis in family law, states look to the same signals of unfairness as in commercial law: unequal bargaining power, unfair surprise, and substantive unconscionability. The major difference between commercial and family law arbitration, however, is the subject matter itself. Although, for instance, a court is likely to enforce financial contracts even where they may seem unfair, so long as the contracting process was procedurally fair, the same is not necessarily true for family law. Courts will not, for instance, enforce a contract that forbids divorce entirely, as that is considered a fundamental right of both parties. Neither will courts enforce an agreement that forbids conversion to or from a religion, even where the rest of the contract is legitimate. In these cases, courts are likely to strike the offending clause, but may choose to enforce the remainder of the contract if it can stand alone.
These issues are most likely to come up in the case of religious arbitration agreements in family law. As with commercial arbitration, courts will uphold arbitration agreements in family law contracts so long as the contract is superficially legitimate. The difference occurs not in the enforcement of the arbitration agreement itself but rather in the level of judicial review available to the parties. Courts in commercial agreements are largely unwilling to delve very far into the voluntariness of the contractors when an arbitration agreement has been signed. Rather, they will allow the arbitrator to rule on this so long as the contract is superficially valid. Unless the arbitrator comes to a decision that is grossly incorrect, the courts will generally enforce the decision.
In family law, however, states have a vested interest in the status of children and marriages. For instance, in many states, a parent cannot waive his or her child’s right to child support from the second parent, as it is the child’s and not the parent’s right to receive it. States further have an interest in keeping children and their parents out of the welfare system. They will not generally allow the writing off of responsibilities for either a divorced spouse or a child where the end result will be the state taking over that burden.
The other major difference between commercial and family law arbitration is the implication of fundamental rights. Although arbitration itself has been argued to implicate the right to access a courtroom, the federal courts have chosen not to interpret it in that way. However, fundamental rights to freedom of religion, marriage, and general autonomy are rights the courts do not allow a person to contract away. Therefore, even in cases where arbitration has been agreed upon, a court will not enforce an agreement that purports to destroy these rights.
In the field of religious arbitration, unconscionability as a claim for defeating arbitration is clearly a possibility, but the standard is high, and both substantive and procedural unconscionability must be shown as a general matter. As Helfand notes:
[U]nconscionability is a doctrine well-suited to addressing this problem because it considers both whether parties are pressured into arbitration and whether the applied rules accord with general conceptions of arbitral justice. Although unconscionability is generally a losing argument, it has had a remarkable resurgence in the arbitration context. In fact, a number of recent statistical studies have demonstrated that courts employ the unconscionability doctrine in arbitration cases at a rate significantly higher than in other contract cases. Indeed, given recent developments in arbitration law, the unconscionability doctrine may serve as the preferred ground to vacate awards for judges looking to push back against the perceived inadequacies of arbitral justice.
But, the standards for unconscionability would seem to be religiously neutral and focused on results that strike at the heart of that which a legal system can tolerate; certainly racial discrimination would be such an example.
Merely reaching a result that is different from what secular law would is certainly not unconscionable. Even more important, the religious nature of the arbitration would seem not to be the important datapoint—the nature of the award is mostly what determines unconscionability, and financial awards are almost never deemed unconscionable.
Related to unconscionability, but distinct, is the now widely discredited idea of arbitration awards not being enforced if they violate public policy. As explained in the next chapter in much greater detail, the United States is a system of many different laws, and in any situation in which a choice-of- law provision is permitted, one would be hard pressed to claim that choosing a different legal system—which certainly will generate different legal answers—violates public policy. The public policy application is best manifest in not allowing a choice of law or a choice of forum. Of course, selecting French or Islamic or Japanese or Jewish law will each generate different outcomes in certain cases—but public policy does not preclude doing so.
A classic example of this is the case of Brisman v. Hebrew Academy of the Five Towns & Rockaway [HAFTR], where the Beth Din of America reinstated a Judaic Studies faculty member from his job in a Jewish school, returned him to his status as a tenured faculty member, and ordered that he be provided with back pay for the time he was not working. Justice Balter of the New York Supreme Court (the trial court) ordered the arbitration award to be vacated as it violated the public policy of the state of New York. The court observed that:
[a]n arbitration award may not be vacated by a court ... . unless: it clearly violates a strong public policy; is completely irrational; or if it manifestly exceeds a specifically enumerated limitation on the arbitrator’s power, or unless the rights of a party were prejudiced by the partiality of the arbitrator.
The court then added simply:
[T]he award is violative of public policy. The Beth Din’s ruling sets a precedent that will impact and limit the ability of private schools to make and enforce routine employment decisions, as the award compels Respondent to reinstate an employee it does not wish to employ. It is noted by the Court, that a severance package, which amounted to Chodesh L’Shanah [severance of one month’s salary for each year worked, which is customary under Jewish law] was offered by the Respondent upon termination of the Petitioner, which was rejected. Furthermore, the difficulty set forth by the determination of the salary at an amount exceedingly greater than Petitioner’s co-workers is counterproductive to a harmonious and productive work environment.
The court in essence makes the following claim: the provision here—even though the parties could have agreed to it by contract—violated the court’s understanding of what the rules ought to be, and as such violated public policy.
This case was appealed and was one of the well-litigated public policy cases of the last decade. The Appellate Division unanimously reversed the trial court judge and observed simply that HAFTR “failed to demonstrate the applicability of any of the statutorily enumerated grounds for vacatur of the award.” In plain English, the appellate court held—quite correctly in this author’s view—that “public policy” is not merely a showing that the court would have reached a different result. The exact reason the parties went to rabbinical court to be adjudicated based on Jewish law is that they wanted a different legal system. Rather, it has to be a much broader assertion of public policy.
Although unconscionability has never been the most popular of contract defenses, its place in the arbitration arena cannot be understated. AT&T v. Concepcion appeared to destroy this last defense against the expansive power of the FAA, but it appears that with the new rules awaiting passage by the CFPB in 2016 restricting arbitration clauses, protective restrictions on arbitration will likely see a resurgence. This is, however, of little importance to religious arbitration, where few if any of the concerns of the CFPB are actually present.
-  George K. Walker, Arbitrating Family Law Cases by Agreement, 18 J. Am. Acad.Matrimonial L. 429, 431 (2003).
-  Obergefell v. Hodges, 135 S. Ct. 2584 (2015).
-  United States v. Lopez, 115 S. Ct. 1624, 1630-31 (1995).
-  Anne C. Dailey, Federalism and Families, 143 U. Pa. L. Rev. 1787 (1995).
-  Samuel Green & John V. Long, Marriage and Family Law Agreements§ 2.07 (1984 & Supp. 1997).
-  Id.
-  Am. Jur. 2D Divorce & Separation § 665 (2016).
-  See Parr v. Parr, 635 N.E.2d 1124 (Ind. Ct. App. 1994) (invalidating a prenuptial agreement due to the husband’s severe non-disclosure, misrepresentation of hisassets, and his attorney’s failure to provide a copy of the agreement to the wife’s counsel in advance).
-  Carey v. Population Servs. Int’l, 431 U.S. 678, 684-85 (1977).
-  U.S. Const. amend. 1.
-  AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).
-  Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 686 (1996).
-  See, e.g., N.Y. C.L.S. Family Ct. Act § 413 (2016).
-  Id.
-  Michael A. Helfand, Religious Arbitration and the New Multiculturalism: NegotiatingConflicting Legal Orders, 86 N.Y.U. L. Rev. 1231, 1294 (2011).
-  25 Misc. 3d 913 (N.Y. Sup. Ct. Kings Cty. 2008). For the sake of full disclosure,I note that I was the appellate judge on this matter as a member of the Beth Din ofAmerica and wrote an opinion on this matter as a rabbinical court judge.