

 
IN THE SUPREME COURT OF TEXAS
 
══════════════════════════════
Nos. 09-0432, 09-0433, 09-0474, 
09-0703
══════════════════════════════
 
 
In re Olshan Foundation Repair Company, LLC 
and
Olshan Foundation Repair Company of 
Dallas, Ltd., RELATORS
 
 
════════════════════════════════════════════════════
On Petitions for Writs of 
Mandamus
════════════════════════════════════════════════════
 
 
Argued March 23, 
2010
 
 
            
Justice Wainwright 
delivered the opinion of the Court.
 
            
Justice Hecht filed a 
concurring opinion, in which Justice 
Medina joined.
 
            
Olshan Foundation Repair Company filed these 
petitions for writs of mandamus in four different cases in which three separate 
trial courts denied Olshan’s pleas in abatement, 
refusing to compel arbitration of consumer claims against it. Three different 
courts of appeals also declined to order the disputes to arbitration. We 
consolidated these cases for argument and now issue a consolidated opinion. 
Because the Texas General Arbitration Act (TAA), and not the Federal Arbitration 
Act (FAA), governs the arbitration dispute in one of the cases (Waggoner, No. 
09-0474), we deny Olshan mandamus relief in that case. 
We conclude that for the other three cases, the trial courts erred in holding 
that the TAA governs the arbitrations, there is no 
evidence that the arbitration agreements were unconscionable as a matter of law, 
and all other disputed issues are questions for the arbitrator. Because the 
trial court erred by denying Olshan’s pleas in 
abatement in the arbitrations governed by the FAA, we conditionally grant 
mandamus relief in those three actions.
I. Factual and Procedural Background
            
Olshan is a national company that repairs 
residential home foundations. In 1998, Craig and Joy Waggoner contracted with 
Olshan to repair their home’s foundation. The Waggoners subsequently discovered new damage to the 
foundation and hired an engineer, Peter De la Mora, to investigate the problems. 
In a 2007 report, De la Mora concluded that Olshan had 
not properly repaired the home. The Waggoners filed 
suit against Olshan for breach of contract, breach of 
warranty, negligence, violations of the Texas Deceptive Trade Practices Act, and 
violations of the Texas Home Solicitation Act. 
            
In three other cases, similar circumstances unfolded. In 2002, Olshan contracted with Vickie and Kenneth Kilpatrick, who 
filed suit against Olshan in 2007. The Kilpatricks’ case was consolidated at the appellate court 
level with claims brought by Charley and Gladys Tisdale, again with nearly 
identical facts. In June 2007, Robert and Marta Tingdale, who initially contracted with Olshan in 2004, filed another similar case. All plaintiffs 
are represented by the same counsel, and each case includes a report from De la 
Mora opining that Olshan had not properly repaired 
each home.
            
The four repair contracts were in writing, and each contained arbitration 
clauses. The arbitration clauses in Kilpatrick (No. 09-0432), Tisdale (No. 
09-0433), and Tingdale (No. 09-0703) provide:
Notwithstanding, any provision in this agreement to the 
contrary, any dispute, controversy, or lawsuit between any of the parties to 
this agreement about any matter arising out of this agreement, shall be resolved 
by mandatory and binding arbitration administered by the American Arbitration 
Association (“AAA”) pursuant to the arbitration laws in your state and in 
accordance with this arbitration agreement and the commercial arbitration rules 
of the AAA . . . .
(emphasis added). The arbitration clause in the Waggoner (No. 
09-0474) agreement is identical except for the language in bold, which states 
“pursuant to the Texas General Arbitration Act.” (emphasis added). None of the agreements addressed in this 
opinion was signed by the consumers’ attorney or exceeded $50,000 in 
consideration.
            
Olshan filed a plea in abatement in each case 
and sought to compel arbitration under the Federal Arbitration Act (FAA). The 
homeowners responded to the pleas, arguing that: (1) the TAA applies to the 
agreements to the exclusion of the FAA, rendering the arbitration agreements 
unenforceable because the agreements were not signed by the homeowners’ 
attorney; and (2) arbitration with the AAA is substantively unconscionable 
because of the expense required and because the contract itself was undisputably unenforceable under the Texas Home Solicitation 
Act. The trial court denied Olshan’s plea in the Waggoners’ action. It held that the TAA applies to the 
agreement, and thus the arbitration agreement was unenforceable pursuant to 
Chapter 171 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code § 
171.002(a)(2) (requiring arbitration agreements in 
service contracts for less than $50,000 be signed by all parties and their 
attorneys). The trial court alternatively held that the prohibitive cost of 
arbitration rendered the agreement to arbitrate unconscionable. Olshan petitioned for mandamus relief with the court of 
appeals, which was denied. The court of appeals held the TAA was not preempted 
by the FAA, and section 171.002(a)(2) of the TAA 
rendered the agreement unenforceable. It denied Olshan’s writ of mandamus without reaching the other issues. 
In the remaining three actions, the trial courts denied Olshan’s pleas in abatement and the courts of appeals denied 
Olshan’s petitions for writs of mandamus.1 
II. Standard for Mandamus
            
At the time these petitions were filed, there was no method under Texas 
procedure for parties to file interlocutory appeals of a trial court’s refusal 
to compel arbitration under the FAA.2 Olshan sought 
relief through petitions for writs of mandamus. See Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 
272 (Tex. 1992). Mandamus will not issue unless: (1) the trial judge has 
committed a clear abuse of discretion; and (2) there is no adequate remedy on 
appeal. In re Odyssey Healthcare, Inc., 310 S.W.3d 419, 422 (Tex. 2010) 
(per curiam) (citing In re Prudential Ins. Co. of 
Am., 148 S.W.3d 124, 135–36 (Tex. 2004)). A trial court abuses its 
discretion if it reaches a decision so arbitrary and unreasonable it amounts to 
a clear and prejudicial error of law or it clearly fails to correctly analyze or 
apply the law. Walker v. Packer, 827 S.W.2d 833, 840 
(Tex. 1992) (citations omitted). The second requirement for mandamus 
relief, that the relator has no adequate remedy by 
appeal, “has no comprehensive definition.” See In re Ford Motor Co., 165 
S.W.3d 315, 317 (Tex. 2005) (citing Prudential, 148 S.W.3d at 136). 
However, we have determined that relators have no 
adequate remedy by appeal when a trial judge erroneously refuses to compel 
arbitration under the FAA. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 
2001).
            
This Court must decide whether the trial courts abused their discretion 
by not compelling arbitration pursuant to the FAA, as requested in Olshan’s pleas in abatement. The trial courts abuse their 
discretion by refusing to compel arbitration if the FAA preempts the TAA and the 
arbitration agreements are not unconscionable. However, the trial courts did not 
err by denying Olshan’s pleas in abatement if the TAA 
applies to the agreements or the agreements are unconscionable.
III. Federal Preemption
A. The FAA and Choice of Law
            
The TAA renders arbitration agreements unenforceable if the agreements 
containing the arbitration clauses are agreements for services “in which the 
total consideration to be furnished by the individual is not more than $50,000” 
and the agreements are not in writing, signed by each party, and each party’s 
attorney. Tex. Civ. Prac. & Rem. 
Code § 171.002(a)(2). The homeowners contend 
that the arbitration agreements are governed by the TAA and are unenforceable 
for failure to meet the two identified TAA requirements. Olshan argues that the FAA applies to the agreements and 
preempts the TAA’s exemption from coverage under section 171.002(a)(2), making the arbitration clauses enforceable. See In 
re Nexion Health at Humble, Inc., 173 S.W.3d 67, 
69 (Tex. 2005) (per curiam) (addressing a similar 
exemption under the TAA for personal injury cases).
            
Section 2 of the FAA preempts state law that would otherwise render 
arbitration agreements unenforceable in a contract involving interstate 
commerce. 9 U.S.C. § 2; Southland Corp. v. Keating, 465 
U.S. 1, 10–11 (1984). “The Act was designed to overrule the judiciary’s 
longstanding refusal to enforce agreements to arbitrate, and place such 
agreements upon the same footing as other contracts.” Volt 
Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford 
Junior Univ., 489 U.S. 468, 474 (1989) 
(internal quotations omitted). We have recognized that the FAA 
preempts parts of the TAA, including section 171.002(a)(2) of the Civil Practice and Remedies Code. See Jack B. 
Anglin Co., 842 S.W.2d at 271 (discussing FAA’s 
preemption of non-waiver provision of DTPA); Nexion, 173 S.W.3d at 69 (Tex. 2005) (discussing 
FAA’s preemption of TAA section 171.002(a)(3)). 

            
But the FAA does not “confer a right to compel arbitration of any dispute 
at any time.” Volt, 489 U.S. at 474. The FAA 
policy is simply to “ensur[e] that private agreements 
to arbitrate are enforced according to their terms.” Id. at 479. In Volt, the Court upheld the 
application of a California statute that allowed a stay of arbitration 
proceedings pending resolution of related litigation because the contract also 
contained a choice-of-law clause providing that “[t]he Contract shall be 
governed by the law of the place where the Project is located.” Id. at 470. The Court reiterated that “the FAA 
pre-empts state laws which ‘require a judicial forum for the resolution of 
claims which the contracting parties agreed to resolve by arbitration.’” Id. at 478 (quoting Southland Corp., 465 U.S. 
at 10). But the FAA does not prevent 
the enforcement of agreements to arbitrate under different 
rules than those set forth in the Act itself. . . . Arbitration 
under the Act is a matter of consent, not coercion, and parties are generally 
free to structure their arbitration agreements as they see fit. Just as they may 
limit by contract the issues which they will arbitrate, so too may they specify 
by contract the rules under which that arbitration will be conducted. . . . By 
permitting the courts to “rigorously enforce” such agreements according to their 
terms, we give effect to the contractual rights and expectations of the parties, 
without doing violence to the policies behind by the FAA. 
 
Id. at 479 (citations omitted). 
            
Subsequently, in Mastrobuono v. 
Shearson Lehman Hutton, Inc., the Court held that the FAA preempted New 
York’s prohibition against arbitral awards of punitive damages despite a choice 
of law provision in an arbitration agreement that stated the agreement “shall be 
governed by the laws of the State of New York.” 514 U.S. 52, 
63–64 (1995). The Court first stressed that the agreement would be 
enforced as written, stating that “the case before us comes down to what the 
contract has to say about the arbitrability of 
petitioners’ claim for punitive damages.” Id. at 
58. Where the Court in Volt read the choice-of-law provision as 
definitively choosing state law over federal law, the Court in Mastrobuono read the provision differently: 

The 
choice-of-law provision, when viewed in isolation, may reasonably be read as 
merely a substitute for the conflict-of-laws analysis that otherwise would 
determine what law to apply to disputes arising out of the contractual 
relationship. 
 
            
. . . 
 
At most, 
[it] introduces an ambiguity into an arbitration agreement that would otherwise 
allow punitive damages awards.
 
Id. at 59, 62. Then, using FAA mandated rules of 
contract construction, the Court concluded that the provision should be read “to 
encompass substantive principles that New York courts would apply, but not to 
include special rules limiting the authority of arbitrators.” Id. at 
62–64.
            
Thus, courts treat arbitration agreements as other contracts in applying 
the legal rules to interpret them. The goal is to discern the true intentions of 
the parties, as the FAA’s primary purpose is to ensure private agreements to 
arbitrate are enforced according to their terms, no more, no less. Volt, 
489 U.S. at 479; see also Baravati v. Josephthal, Lyon & Ross, Inc., 28 F.3d 704, 709 (7th 
Cir. 1994) (Posner, C.J.) (“[S]hort of authorizing 
trial by battle or ordeal or, more doubtfully, by a panel of three monkeys, 
. . . parties are as free to specify idiosyncratic terms of 
arbitration as they are to specify any other terms in their contract.”). 
B. This Court’s Treatment of Choice-of-Law Provisions 
Relating to Arbitration Agreements
            
This Court analyzed contractual language in the context of the 
relationship between an arbitration clause and a general choice-of-law provision 
in In re L & L Kempwood Associates, L.P., 9 S.W.3d 125, 127–28 (Tex. 
1999) (per curiam). We held that an agreement 
containing a general choice-of-law provision stating that the entire contract 
will be governed by “the law of the place where the Project is located,” does not preclude application of the FAA. 
Id. The Court observed that the Project was located in Houston, thus the 
FAA was part of “the law of the place where the Project is located.” Id.; 
see also Capital Income Props. v. Blackmon, 843 S.W.2d 22, 23 (Tex. 1992) 
(per curiam) (stating that “[t]he Federal 
[Arbitration] Act is part of the substantive law of Texas”). When the language 
of the provision included federal law, further language specifically excluding 
application of the FAA is necessary for a court to apply the TAA to the 
FAA’s exclusion. “The choice-of-law provision did not specifically exclude the 
application of federal law, and absent such an 
exclusion we decline to read the choice-of-law clause as having such an 
effect.” L & L Kempwood, 9 S.W.3d at 127–28. Rather, a general choice-of-law provision 
“may reasonably be read as merely a substitute for the conflict-of-laws analysis 
that otherwise would determine what law to apply to disputes.” Id. at 127 n.16 (citing Mastrobuono, 
514 U.S. at 59–60). Courts apply the FAA unless language in the 
arbitration agreement indicates its exclusion.
C. The Law the Parties Chose
            
Three of the arbitration agreements state that disputes arising out of 
the contract “shall be resolved by mandatory and binding arbitration 
administered . . . pursuant to the arbitration laws in your state . . . .” Courts rarely read such general 
choice-of-law provisions to choose state law to the exclusion of federal law. 
See Mastrobuono, 514 U.S. at 59; L & L 
Kempwood, 9 S.W.3d at 127 
n.16. Further, just as the FAA is part of the substantive law of Texas, 
the FAA would be part of the arbitration laws in Texas. See L & L Kempwood, 9 S.W.3d at 127 n.15 
(quoting Capital Income Props., 843 S.W.2d at 23). The language of 
the arbitration clause designating arbitration pursuant to “the arbitrations 
laws in your state” includes the FAA. See id. at 
127–28. Thus, the FAA applies to the three agreements that include the 
“arbitration laws in your state” language, and the FAA preempts the provisions 
of section 171.002(a)(2) of the TAA that would 
otherwise render the agreements unenforceable. The trial courts abused 
their discretion in denying Olshan’s requests to 
compel arbitration based on the unenforceability of the arbitration under 
section 171.002(a)(2) in the Kilpatrick, Tisdale and 
Tingdale cases. 
 
            
In contrast, the Waggoner agreement states that disputes arising out of 
the contract “shall be resolved by mandatory and binding arbitration . . . pursuant to the Texas 
General Arbitration Act . . . .” This provision 
distinguishes the Waggoner agreement from the other agreements and the 
agreements in L & L Kempwood and Mastrobuono. This is not the same general 
choice-of-law provision. This provision chooses a state’s substantive law, 
specifically the TAA, to govern disputes under the agreement. A valid 
choice-of-law provision makes a conflicts-of-law analysis unnecessary; this 
provision expresses a preference between federal and state law. Id. The 
FAA is part of the arbitration laws of Texas and can be applied to arbitration 
administered pursuant to the laws of Texas. However, the FAA is not part of the 
TAA, at least to the extent the two are 
inconsistent.
            
The Fifth Circuit has likewise interpreted an arbitration clause 
specifically invoking the TAA as designating the TAA to govern all aspects of 
arbitration under the agreement, to the exclusion of the FAA. Ford v. Nylcare Health Plans of the Gulf Coast, Inc., 141 
F.3d 243, 246 (5th Cir. 1998) (applying Texas law). The court stated the parties 
may “specify the law governing interpretation of the scope of the arbitration 
clause.” Id. at 248. The focus of the 
determination is on the parties’ choice. Thus, the court held that the parties 
intended the TAA to govern the scope of the arbitration clause. Id. at 249.
            
The language of the Waggoner agreement also indicates the parties’ 
intention that the TAA govern the scope of their arbitration agreement. The 
plain language clearly indicates that the parties intend their arbitration to be 
governed by the TAA rather than merely “the law of the state” or “Texas law.” 
The parties’ intention that arbitration be administered pursuant to the TAA 
would be thwarted if the FAA preempted the TAA’s specific provisions. Thus, an 
agreement specifying that arbitration occur “pursuant to the Texas General 
Arbitration Act” excludes the FAA’s preemption of section 171.002(a)(2) of the TAA.3 
            
Because the TAA would render the Waggoners’ 
arbitration agreement unenforceable, and because the FAA was not chosen by the 
parties, the trial court correctly denied Olshan’s 
plea in abatement, seeking to compel arbitration of Waggoner’s action against 
Olshan. However, because the parties in the 
Kilpatrick, Tisdale, and Tingdale contracts chose to 
arbitrate pursuant to the laws of Texas, which include the FAA, the FAA preempts 
section 171.002(a)(2) of the TAA and precludes those 
requirements from barring arbitration.
IV. Unconscionability
Even though the FAA governs the arbitration agreements in the 
Kilpatrick, Tisdale, and Tingdale contracts, if those agreements are 
unconscionable, they are unenforceable. The homeowners contend that the 
arbitration agreements are unconscionable because “mandatory binding arbitration 
administered by the American Arbitration Association . . . in accordance with 
this arbitration agreement and the commercial arbitration rules of the AAA” is 
prohibitively expensive, preventing their ability to vindicate their claims. 
Further, they contend the contracts are clearly void because Olshan violated the Home Solicitation Act, exacerbating the 
unconscionability of the agreement. 
A. Unconscionability of Arbitration 
Agreements
            
Section 2 of the FAA states arbitration agreements “shall be valid, 
irrevocable, and enforceable, save upon such grounds as exist at law or in 
equity for the revocation of any contract.” 9 U.S.C. § 
2. A central purpose of the FAA is “to reverse the longstanding judicial 
hostility to arbitration agreements . . . and to place arbitration 
agreements upon the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 
(1991) (citations omitted). Such agreements are enforceable only if they 
meet “the requirements of the general contract law of the applicable state.” 
In re Poly-America, L.P., 262 S.W.3d 337, 347 (Tex. 
2008) (citation omitted). When determining whether an agreement to 
arbitrate is valid, “state law, whether of legislative or judicial origin, is 
applicable if that law arose to govern issues concerning the validity, 
revocability, and enforceability of contracts generally.” Perry v. 
Thomas, 482 U.S. 483, 493 n.9 (1987). 
            
Texas law renders unconscionable contracts unenforceable. 
Poly-America, 262 S.W.3d at 348. Texas 
further recognizes both substantive and procedural unconscionability. “Substantive unconscionability refers to the fairness of the arbitration 
provision itself, whereas procedural unconscionability 
refers to the circumstances surrounding adoption of the arbitration provision.” 
In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 677 
(Tex. 2006). Because the homeowners complain of the prohibitive cost of 
arbitration, their claim is grounded in substantive unconscionability. Generally, a contract is unconscionable 
if, “given the parties’ general commercial background and the commercial needs 
of the particular trade or case, the clause involved is so one-sided that it is 
unconscionable under the circumstances existing when the parties made the 
contract.” FirstMerit Bank, 52 S.W.3d at 
757 (citing Tex. Bus. & Com. Code § 2.302 cmt. 1). “The principle is one of the 
prevention of oppression and unfair surprise and not of disturbance of 
allocation of risks because of superior bargaining power.” Tex. Bus. & Com. Code 
§ 2.302 cmt. 1 (internal 
citation omitted). 
            
The U.S. Supreme Court has held that statutory claims may be arbitrated 
“so long as the prospective litigant effectively may vindicate [his or her] 
statutory cause of action in the arbitral forum.” Green Tree Fin. Corp.-Ala. 
v. Randolph, 531 U.S. 79, 90 (2000) (citing Gilmer, 500 U.S. at 28). 
Conversely, an arbitration agreement may render a contract unconscionable if 
“the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating 
[his or her] federal statutory rights in the arbitral forum.” Id.; see 
also Poly-America, 262 S.W.3d at 355–57; FirstMerit Bank, 52 S.W.3d at 756 (citing 
Green Tree, 531 U.S. at 91).
            
We should be wary of setting the bar for holding arbitration clauses 
unconscionable too low. First, arbitration is favored in both federal and Texas 
law, and to conclude that an arbitration agreement is unconscionable based 
merely on the “‘risk’ that [the claimant] will be saddled with prohibitive 
costs” would undermine the “‘liberal federal policy favoring arbitration 
agreements.’” Green Tree, 531 U.S. at 91 (quoting 
Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 
U.S. 1, 24 (1983)); FirstMerit Bank, 52 S.W.3d at 756. Second, the 
theory behind unconscionability in contract law is 
that courts should not enforce a transaction so one-sided, with so gross a 
disparity in the values exchanged, that no rational contracting party would have 
entered the contract. Restatement (Second) of Contracts § 208 cmt. b (1981). 
But as we have recognized previously,
there is nothing per se unconscionable about 
arbitration agreements. In fact, historically, Texas law favors settling 
disputes by arbitration. Arbitration agreements, like the one here, offer a 
permissible choice to traditional litigation that does not favor either party. 
Moreover, assuming unequal bargaining power between [the parties] exists does 
not establish grounds for defeating an agreement to arbitrate under the FAA.
EZ Pawn Corp. v. Mancias, 934 
S.W.2d 87, 90–91 (Tex. 1996) (per curiam) (citations 
omitted). Furthermore, arbitration clauses in consumer contracts reduce 
merchants’ operating costs and produce savings passed on to the consumer in the 
form of lower prices. Thus, a fairly administered arbitration should not create 
a gross disparity in the values exchanged. Stephen J. Ware, Paying the Price 
of Process: Judicial Regulation of Consumer Arbitration Agreements, 2001 
J. Disp. Resol. 89, 89 (2001); 
see generally Steven Shavell, Alternative 
Dispute Resolution: An Economic Analysis, 24 J. Legal Stud. 1
(1995). However, we also recognize that arbitration is intended as a 
lower cost, efficient alternative to litigation. See Poly-America, 262 
S.W.3d at 347 (“[A]rbitration is intended to provide a 
lower-cost, expedited means to resolve disputes 
. . . .”). Where these justifications are vanquished by 
excessive arbitration costs that deter individuals from bringing valid claims, 
the unconscionability doctrine may protect unfairly 
disadvantaged consumers. We agree, as in Green Tree, that excessive costs 
imposed by an arbitration agreement render a contract unconscionable if the 
costs prevent a litigant from effectively vindicating his or her rights in the 
arbitral forum. See Green Tree, 531 U.S. at 90.
B. Application of the Standard
            
The party opposing arbitration bears the burden to show that the costs of 
arbitration render it unconscionable. When “a party seeks to 
invalidate an arbitration agreement on the ground that arbitration would be 
prohibitively expensive, that party bears the burden of showing the likelihood 
of incurring such costs.” Green Tree, 531 U.S. at 92. This Court 
likewise requires “some evidence that a complaining party will likely 
incur arbitration costs in such an amount as to deter enforcement of statutory 
rights in the arbitral forum.” Poly-America, 262 S.W.3d at 356; 
accord In re U.S. Home Corp., 236 S.W.3d 761, 764 (Tex. 2007); 
FirstMerit Bank, 52 S.W.3d at 
756–57.
            
The Court in Green Tree did not explain how detailed the showing 
of prohibitive expense need be to invalidate an arbitration agreement. Green 
Tree, 531 U.S. at 92 (“How detailed the showing of prohibitive expense must 
be before the party seeking arbitration must come forward with contrary evidence 
is a matter we need not discuss . . . .”). However, a number of federal courts 
of appeals, relying on Green Tree, have applied a case-by-case analysis 
of the effect the arbitration clause has on the particular plaintiff’s ability 
to effectively vindicate his rights.4 The Fourth Circuit’s approach in 
Bradford v. Rockwell Semiconductor Systems, Inc. is particularly 
instructive. 238 F.3d 549 (4th Cir. 2001). The court 
noted the proper analysis “evaluates whether the arbitral forum in a particular 
case is an adequate and accessible substitute to litigation.” Id. 
According to the court, that inquiry requires “a case-by-case analysis that 
focuses, among other things, upon the claimant’s ability to pay the arbitration 
fees and costs, the expected cost differential between arbitration and 
litigation in court, and whether that cost differential is so substantial as to 
deter the bringing of claims.” Id. (quotations omitted). The key factor 
is not where the cost to pursue the claim goes, but what the total 
cost to the claimant to pursue the claim is. The court “fail[ed] to see how a claimant could be deterred from pursuing 
his statutory rights in arbitration simply by the fact that his fees would be 
paid to the arbitrator where the overall cost of arbitration is otherwise equal 
to or less than the cost of litigation in court.” Id. 
            
Likewise, in Honrubia Properties, 
Ltd. v. Gilliland, the Corpus Christi–Edinburg Court of Appeals essentially 
accepted Bradford’s conceptual framework. Nos. 
13-07-210-CV, 13-07-249-CV, 2007 WL 2949567 at *6 (Tex. App.—Corpus 
Christi-Edinburg Oct. 11 2007, no pet.) (mem. op.). It considered the party’s ability to pay 
the arbitration fee, the actual amount of the fee in relation to the amount of 
the underlying claim, and the cost differential between arbitration and 
litigation in court. Id. (citations omitted). Applying the standard, the 
court held the arbitration agreement was not substantively unconscionable where 
evidence showed the arbitration would cost approximately $15,000 to $20,283, 
plus expenses and other possible fees; the claimant was seeking more than 
$4,000,000 in compensatory and punitive damages; and arbitration costs would 
range from 11 percent to 15 percent of the claimant’s gross income. Id. at *7. The claimant failed to submit any evidence 
pertaining to the expected cost differential between arbitration and litigation. 
Id. 
            
In applying the unconscionability standard, the 
crucial inquiry is whether the arbitral forum in a particular case is an 
adequate and accessible substitute to litigation, a forum where the litigant can 
effectively vindicate his or her rights. With this in mind, we agree that the 
approach taken by the Fourth Circuit in Bradford effectively pursues this 
inquiry. We note all of the analyses previously discussed correctly assume that 
litigation allows claimants to effectively vindicate their rights, despite the 
expense. The desire to avoid steep litigation expense—including the costs of 
longer proceedings, more complicated appeals on the merits, discovery, 
investigations, fees, and expert witnesses—is the purpose of arbitration in the 
first place. See Jack B. Anglin Co., 842 S.W.2d 
at 272–73 (“[T]he purpose of [arbitration is] providing a rapid, inexpensive 
alternative to traditional litigation . . . .”). In the absence of unusual 
animus between the parties or external motives, plaintiffs continue to pursue 
claims when the expected benefits of the lawsuit outweigh the total cost of 
bringing it. If the total cost of arbitration is comparable to the total cost of 
litigation, the arbitral forum is equally accessible.5 Thus, a comparison of the total costs of 
the two forums is the most important factor in determining whether the arbitral 
forum is an adequate and accessible substitute to litigation. Other factors 
include the actual cost of arbitration compared to the total amount of damages 
the claimant is seeking and the claimant’s overall ability to pay the 
arbitration fees and costs. These factors may also show arbitration to be an 
inadequate and inaccessible forum for the particular claimants to vindicate 
their rights. However, these considerations are less relevant if litigation 
costs more than arbitration. 
C. Sufficiency of the Evidence
            
Green Tree creates a burden-shifting test in which the “party 
seek[ing] to invalidate an arbitration agreement on 
the ground that arbitration would be prohibitively expensive 
. . . bears the burden of showing the likelihood of incurring 
such costs.” Green Tree, 531 U.S. at 92. Once met, the burden shifts to 
“the party seeking arbitration [who] must come forward with contrary evidence.” 
Id.; see also Poly-America, 262 S.W.3d at 348 (“The burden 
of proving such a ground—such as fraud, unconscionability or voidness 
under public policy—falls on the party opposing the contract.”); FirstMerit Bank, 52 S.W.3d at 756 (“Again, since the law 
favors arbitration, the burden of proving a defense to arbitration is on the 
party opposing arbitration.”).
            
Evidence of the “risk” of possible costs of arbitration is insufficient 
evidence of the prohibitive cost of the arbitration forum. Green Tree, 
531 U.S. at 91 (“The ‘risk’ that [the plaintiff] will be saddled with 
prohibitive costs is too speculative to justify the invalidation of an 
arbitration agreement.”). Rather, “both the United States Supreme Court and this 
Court require specific evidence that a party will actually be charged excessive 
arbitration fees.” U.S. Home Corp., 236 S.W.3d at 764; see also FirstMerit Bank, 52 S.W.3d at 757 (“Because the 
record contains no specific evidence that the [plaintiffs] will actually be 
charged excessive arbitration fees, we conclude that there is legally 
insufficient evidence that the plaintiffs would be denied access to arbitration 
based on excessive costs.”). The party opposing arbitration must show the 
likelihood of incurring such costs in her particular case. 
            
Thus, for evidence to be sufficient, it must show that the plaintiffs are 
likely to be charged excessive arbitration fees. While we do not mandate that 
claimants actually incur the cost of arbitration before they can show its 
excessiveness, parties must at least provide evidence of the likely cost of 
their particular arbitration, through invoices, expert testimony, reliable cost 
estimates, or other comparable evidence. See Poly-America, 262 S.W.3d at 
354–55 (concluding that the plaintiff’s “own affidavit and that of an expert 
witness providing detailed estimates of the likely cost of arbitration in [the 
plaintiff’s] case” constituted sufficient evidence); Olshan Found. Repair Co. v. Ayala, 180 S.W.3d 
212, 215–16 (Tex. App.—San Antonio 2005, pet. denied) (holding invoice for 
party’s share of arbitration expenses sufficient). Evidence that merely 
speculates about the risk of possible cost is insufficient.
D. Application to the Facts
            
In applying this analysis to the facts at hand, we begin with the 
agreement itself, which states, “any matter arising out 
of this agreement shall be resolved by mandatory and binding arbitration 
administered by the American Arbitration Association . . . in accordance with 
this arbitration agreement and the commercial arbitration rules of the AAA.” 
According to the commercial arbitration rules, the AAA: 
applies 
the Supplementary Procedures for Consumer-Related Disputes to arbitration 
clauses in agreements between individual consumers and businesses where the 
business has a standardized, systematic application of arbitration clauses with 
customers and where the terms and conditions of the purchase of standardized, 
consumable goods or services are nonnegotiable or primarily non-negotiable in 
most or all of its terms, conditions, features, or choices.
AAA Commercial Arbitration Rule R-1 (2007, 2009). The 
Supplementary Procedures for Consumer-Related Disputes have a separate 
fee schedule for consumer arbitration:
Administrative Fees
 
Administrative fees are based on the size of the claim and 
counterclaim in a dispute. They are based only on the actual damages and not on 
any additional damages, such as attorneys’ fees or punitive damages. Portions of 
these fees are refundable pursuant to the Commercial Fee Schedule. 
 
Arbitrator Fees
 
For cases 
in which no claim exceeds $75,000, arbitrators are paid based on the type of 
proceeding that is used. The parties make deposits as set forth below. Any 
unused deposits are returned at the end of the case.
 
Desk 
Arbitration or Telephone Hearing $250 for service on the case
In Person 
Hearing $750 per day of hearing
 
For cases 
in which a claim or counterclaim exceeds $75,000, arbitrators are compensated at 
the rates set forth on their panel biographies. 
 
Fees 
and Deposits to be Paid by the Consumer:
 
If the 
consumer’s claim or counterclaim does not exceed $10,000, then the consumer is 
responsible for one-half the arbitrator’s fees up to a maximum of $125. This 
deposit is used to pay the arbitrator. It is refunded if not used.
 
If the 
consumer’s claim or counterclaim is greater than $10,000, but does not exceed 
$75,000, then the consumer is responsible for one-half the arbitrator’s fees up 
to a maximum of $375. This deposit is used to pay the arbitrator. It is refunded 
if not used.
 
If the 
consumer’s claim or counterclaim exceeds $75,000, or if the consumer’s claim or 
counterclaim is non-monetary, then the consumer must pay an Administrative Fee 
in accordance with the Commercial Fee Schedule.6 A portion of this fee is refundable 
pursuant to the Commercial Fee Schedule. The consumer must also deposit one-half 
of the arbitrator's compensation. This deposit is used to pay the arbitrator. 
This deposit is refunded if not used. The arbitrator's compensation rate is set 
forth on the panel biography provided to the parties when the arbitrator is 
appointed. 
 
AAA 
Supplementary Procedures for Consumer-Related Disputes, Administrative 
Fees, Arbitrator Fees, Fees and Deposits to be Paid by the Consumer (2005, 
2010). Thus, for a consumer claim up to $75,000, the most a consumer will have 
to pay under these rules is $375 for the arbitrator. Id.; see also 
Green Tree, 531 U.S. at 95 (Ginsburg, J., dissenting) (describing the AAA’s 
Consumer Arbitration Rules as a model “for fair cost and fee allocation”).
            
The homeowners bear the burden to show the likelihood of incurring 
excessive costs, yet no homeowners provided any concrete idea of the amount of 
their claims. It is impossible to know how much they will be charged under the 
AAA rules, even if the fees charged by AAA were excessive. Instead, the 
homeowners provided two invoices from the AAA for arbitration in, as the 
homeowners allege, “similar cases” to show the 
likelihood of excessive litigation costs. The first was a copy of the invoice 
from the AAA to the Ayalas who were plaintiffs in a 
different lawsuit against Olshan. It shows that the 
Ayalas’ claim against Olshan 
was for $200,000, and that the Ayalas’ were charged 
$35,900 to arbitrate that claim. The second was an invoice from the AAA to an 
anonymous claimant for the arbitration of a construction dispute, a similar type 
of case using only one arbitrator.7 The amount of this claim is not stated on 
this invoice, but based on the administrative fee and case service fee charged 
by the AAA, we can deduce that it was between $75,000 
and $150,000. The anonymous claimants were charged $11,406 to arbitrate.
            
Merely showing that other claimants have incurred arbitration costs of 
some amount falls well short of specific evidence that these particular parties 
will be charged excessive fees. There is no evidence that the homeowners’ claims 
are similar in amount or difficulty as the claims of the Ayalas or the anonymous claimant. In fact, the Ayalas’ invoice shows that their claim was for $200,000, 
while none of the homeowners’ claims in this case exceeded $20,000. Moreover, 
there is no evidence that the homeowners have made any effort to reduce the 
likely charges through requests for fee waivers, pro bono arbitrators, or even 
simply requesting a one arbitrator panel. As the court in In re MHI Partnership, Ltd. aptly noted, 
“Substantive unconscionability threatens to become the 
exception that swallows the rule if all that must be done to avoid arbitration 
is to assume the most expensive possible scenario.” No. 
14-07-00851-CV, 2008 WL 2262157 at *7 (Tex. App.—Houston [14th Dist.]
May 29, 2008, no pet.) (mem. op.).
            
Even if we took these invoices as evidence of the likely arbitration 
charges to the homeowners, they have provided no comparison of these charges to 
the expected cost of litigation, the amount of their claim, or their ability to 
pay these costs. See Green Tree, 531 U.S. at 90 n.6 (concluding that a 
party’s unsupported statement that she did not have the resources to pay the 
high costs of arbitration was insufficient); Bradford, 238 F.3d at 556 
n.5 (“The cost of arbitration, as far as its deterrent effect, cannot be 
measured in a vacuum or premised upon a claimant’s abstract contention that 
arbitration costs are ‘too high.’”). The record contains no specific evidence 
that the homeowners will actually be charged excessive arbitration fees, and 
thus there is no legally sufficient evidence that such fees prevent the 
homeowners from effectively pursuing their claim in the arbitral forum.
E. Unconscionability in Light of 
the Texas Home Solicitation Act 
            
Finally, the homeowners argue that the arbitration is unconscionable 
because the parties will expend time, energy, and money needlessly going to 
arbitration when the arbitrator will find the contract—including the arbitration 
clause—void, sending the case back to court.8 They assert that their contract with 
Olshan violated the Texas Home Solicitation Act 
(THSA), which would render the agreements, including the arbitration clauses, 
void. The alleged basis for violation of the THSA is Olshan’s failure to include in the agreements certain 
language regarding cancellation in at least 10-point boldfaced type, where the 
transactions occurred by personal solicitation outside Olshan’s place of business. Tex. Bus. & Com. Code 
§§ 601.002(a), .052, .053, 
.201. Further, the homeowners contend that there is no 
dispute over whether the contract violates the THSA, and the arbitrator will 
thus certainly find the contract void.9
            
It is tempting to avoid the unnecessary costs that would accompany an 
allegedly unnecessary arbitration. But to do so requires the trial court to make 
a determination of issues relating to the contract generally, even if it seems 
clear that one party or the other will prevail. As the U.S. Supreme Court stated 
in Prima Paint Corp. v. Flood & Conklin Manufacturing Co., when the 
parties have contracted for arbitration of their disputes, a trial court “may 
consider only issues relating to the making and performance of the agreement to 
arbitrate.” 388 U.S. 395, 404 (1967); see also Rent-A-Ctr., W., Inc. v. 
Jackson, 130 S. Ct. 2772, 2778 (2010); Buckeye Check Cashing, Inc. v. 
Cardegna, 546 U.S. 440, 445–46 (2006) (“[U]nless the challenge is to the arbitration clause itself, the 
issue of the contract’s validity is considered by the arbitrator in the first 
instance.”). There is no way to fashion a standard to determine whether 
arbitration is unnecessary without giving the trial court some discretion over 
issues relating to the making and performance of the contract generally—exactly 
what Prima Paint, and later Buckeye and Rent-A-Center, 
sought to avoid. Allowing courts to make this determination under an unconscionability analysis would provide an end run around 
the rule. While in some cases this “rule permits a court to enforce an 
arbitration agreement in a contract that the arbitrator later finds to be void[,] . . . it is equally true that [the opposite] approach 
permits a court to deny effect to an arbitration provision in a contract that 
the court later finds to be perfectly enforceable.” Buckeye, 546 U.S. at 448–49. This conundrum is solved 
with a rule that allocates such decisions to arbitration, which is consistent 
with the liberal policy favoring arbitration in the FAA, U.S. Supreme Court 
decisions, and decisions of this Court. The homeowners failed to provide legally 
sufficient evidence of the prohibitive cost of arbitration to prove unconscionability, and this failure cannot be remedied by 
allowing the trial court to determine if it believes the contract itself is 
void.
V. Conclusion
            
This Court endeavors to interpret agreements, including those to 
arbitrate, as they are written. When an agreement specifically states that it is 
to be governed by the Texas General Arbitration Act, we hold that it will be 
governed by the Act, which may mean that disputes arising from its terms will be 
excluded from arbitration. Thus, the TAA applies to the arbitration agreement 
between the Waggoners (No. 09-0474) and Olshan and renders it unenforceable. See Tex. Civ. Prac. & Rem. Code § 
171.002(a)(2). The trial court did not err by denying 
Olshan’s plea in abatement, and the court of appeals 
denied relief. We also deny mandamus relief in the Waggoner case. 
            
However, where an arbitration agreement states that it 
is to be governed by the law of this state, that law includes the Federal 
Arbitration Act. Because it is proper to apply the FAA to the Kilpatrick 
(No. 09-0432), Tisdale (No. 09-0433), and Tingdale 
(No. 09-0703) agreements that use such language, the FAA preempts the provisions 
of section 171.002(a)(2) that would otherwise render those agreements 
unenforceable. And the parties opposing arbitration in those three cases did not 
submit legally sufficient evidence that arbitration of their claims would be 
unconscionable. Therefore, the trial court erred by denying Olshan’s pleas in abatement, and we conditionally grant 
mandamus relief in the Kilpatrick, Tisdale, and Tingdale cases and remand those cases to the trial court for 
further proceedings consistent with this opinion. We are confident that the 
trial courts will comply, and the writs will issue only if they fail to do 
so.
 
                                                                                    
 ______________________________
                                                                                    
 Dale Wainwright
                                                                                    
 Justice
 
 
 
OPINION DELIVERED: December 3, 
2010
 









1
The Tingdale, Kilpatrick 
and Tisdale trial courts issued memorandum opinions, which are addressed by the 
courts of appeals, respectively, in No. 10-09-00119-CV, 2009 WL 1886648 (Tex. 
App.—Waco July 1, 2009, orig. proceeding); Nos. 2-08-336-CV, 2-08-342-CV, 2008 
WL 4661815 (Tex. App.—Fort Worth Oct. 2, 2008, orig. 
proceeding).

2
The Legislature recently amended the Texas Civil 
Practice and Remedies Code to allow an interlocutory appeal “to the court of 
appeals from the judgment or interlocutory order of a district 
court . . . under the same circumstance that an appeal from a 
federal district court’s order or decision would be permitted by 9 U.S.C. 
Section 16.” Tex. Civ. Prac. & Rem Code § 
51.016. However, this act is not applicable to appeals of 
an interlocutory order in an action pending as of September 1, 2009. Act of June 
19, 2009, 81st Leg., R.S., ch. 820, § 2, 2009 Tex. 
Gen. Laws 2061. Because all four actions in this consolidated opinion were 
pending as of September 1, 2009, section 51.016 does not allow an interlocutory 
appeal of these causes.

3
We do not believe the choice-of-law provision to 
be ambiguous.

4
See Musnick v. King 
Motor Co. of Fort Lauderdale, 325 F.3d 
1255, 1259 (11th Cir. 2003) (“Since Green Tree, all but one of the 
other Circuits that have reconsidered this issue have applied a similar 
case-by-case approach.”); see also Blair v. Scott Specialty Gases, 283 
F.3d 595, 609–10 (3d Cir. 2002); Bradford v. Rockwell Semiconductor 
Sys., Inc., 238 F.3d 549, 556 (4th Cir. 2001); LaPrade v. Kidder, Peabody & Co., Inc., 
246 F.3d 702, 708 (D.C. Cir. 2001). But see Circuit City Stores, Inc. v. 
Adams, 279 F.3d 889, 895 (9th Cir. 2002) (holding that plaintiff employees 
should not “have to pay either unreasonable costs or any arbitrators’ fees or 
expenses as a condition of access to the arbitration forum”).

5
“Total cost” refers to the total cost of pursuing 
a claim in either forum, notwithstanding who will be financing the claim. Some 
courts have noted the argument that attorneys will be unwilling to represent 
plaintiffs on a contingency fee basis in the arbitral forum and that contingent 
fee arrangements make litigation less expensive for plaintiffs than arbitration. 
See Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 664 (6th Cir. 
2003); Poly-America, 262 S.W.3d at 355. But other commentators 
argue that there is no reason why plaintiffs cannot secure the same financing 
when arbitration is mandated if both the value of their claim and the cost to 
pursue it remain constant. See Christopher R. Drahozal, Arbitration Costs and Contingent Fee 
Contracts, 59 Vand. L. Rev. 
729, 768 (2006) (“On the face of it, there is no reason to expect contingent fee 
contracts to treat arbitration costs differently than they treat other 
litigation expenses.” ). We recognize arbitration is 
not always a lower-cost, efficient litigation alternative. Forcing consumer 
plaintiffs into an arbitral forum may affect their ability to pursue remedies 
when small claims are at issue. However, this does not excuse parties opposing 
arbitration from providing sufficient evidence to demonstrate that excessive 
costs make arbitration unconscionable in their particular case.

6
“The filing fee shall be advanced by the party or 
parties making a claim or counterclaim, subject to final apportionment by the 
arbitrator in the award. The AAA may, in the event of extreme hardship on the 
part of any party, defer or reduce the administrative fees.” AAA Commercial Arbitration Rule R-49 (2007, 2009). In 2008, 
when Olshan sought to compel arbitration, the total 
initial filing fee and case service fee ranges from $2,550 for claims between 
$75,000–$150,000 to $8,500 for claims above $500,000. AAA Commercial 
Arbitration Administrative Fees, Fees (2007).
 

7
It is unclear whether this means that the Ayalas requested three arbitrators. That the cost of the 
arbitrator to the Ayalas per day of hearing was $3,350, compared to $1,250 per day in the anonymous case, 
leads us to believe they did. 

8
The homeowners concede that the arbitrator and not 
a court decides a contractual defense to the contract as a whole as opposed to a 
contractual defense to just the arbitration provision. See Buckeye Check 
Cashing, Inc. v. Cardegna, 546 U.S. 440, 445–46 
(2006); In re Labatt Food Serv., L.P., 279 S.W.3d 640, 647–49 (Tex. 
2009).

9
Olshan states in its brief and stated at argument to the 
contrary that it will present certain defenses to this claim. It is neither our 
province nor the province of the trial court to determine the merits of these 
defenses when the parties have contracted to arbitrate such 
disputes.