                     FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 ROSITA H. SMITH, individually and                 No. 11-35964
 on behalf of all similarly situated
 Washington State Residents,                         D.C. No.
                     Plaintiff-Appellee,          3:11-cv-05054-
                                                       RJB
                      v.

 JEM GROUP, INC., a Nevada                            OPINION
 corporation,
               Defendant-Appellant.


       Appeal from the United States District Court
          for the Western District of Washington
      Robert J. Bryan, Senior District Judge, Presiding

                   Argued and Submitted
             March 7, 2013—Seattle, Washington

                    Filed December 12, 2013

        Before: David M. Ebel,* William A. Fletcher
         and Johnnie B. Rawlinson, Circuit Judges.

                 Opinion by Judge W. Fletcher


 *
   The Honorable David M. Ebel, Senior Circuit Judge for the U.S. Court
of Appeals for the Tenth Circuit, sitting by designation.
2                  SMITH V. JEM GROUP, INC.

                           SUMMARY**


                             Arbitration

    The panel affirmed the district court’s denial of a motion
to compel arbitration arising from an arbitration clause in an
attorney retainer agreement.

    The panel held that the district court correctly decided
that it, rather than an arbitrator, should decide whether the
arbitration clause in the attorney retainer agreement was
unconscionable. The panel also held that the district court
properly concluded, using non-preempted Washington law,
that the arbitration clause was unenforceable.


                             COUNSEL

Christopher Glenn Emch (argued), Foster Pepper PLLC,
Seattle, Washington for Defendant-Appellant.

Toby J. Marshall, Jennifer Rust Murray, Erika L. Nusser
(argued), Beth Ellen Terrell, Terrell Marshall Daudt & Willie
PLLC, Seattle, Washington; Darrell William Scott, The Scott
Law Group, P.S., Spokane, Washington, for Plaintiff-
Appellee.




  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                SMITH V. JEM GROUP, INC.                    3

                         OPINION

W. FLETCHER, Circuit Judge:

    JEM Group, Inc. (“JEM”) appeals from the district court’s
denial of its motion to compel arbitration. The district court
held that it had authority to decide whether an arbitration
clause contained in an attorney retainer agreement is
unconscionable. On the merits, the court held that the clause
is unconscionable under Washington law.

   We affirm.

                       I. Background

    Rosita Smith is the lead plaintiff in a proposed class
action against JEM, Marshall Banks, LLC (“Marshall
Banks”), and Legal Helpers Debt Resolution, LLC (“Legal
Helpers”). According to the complaint, JEM is a “back-end”
debt-relief company that “implements, manages, and
maintains the debt-relief programs marketed and purportedly
performed by ‘front-end’ affiliate debt-settlement companies”
including Marshall Banks. Marshall Banks, also known as
“Kazlow and Tucker Debt Relief, LLC” (“Kazlow and
Tucker”), is a California “front-end” debt-relief company that
markets debt-relief services to consumers. Kazlow and
Tucker is a fictitious company that is not registered in any
state. Legal Helpers is a Nevada limited liability company
and Illinois law firm also known as Macey, Aleman, Hyslip
& Searns. The Illinois Department of Financial and
Professional Regulation recently issued a cease-and-desist
order prohibiting Legal Helpers from engaging in debt
adjusting practices in Illinois. It wrote, “Despite the name,
‘Legal Helpers,’ the company does not provide legal
4               SMITH V. JEM GROUP, INC.

representation to consumers or otherwise act in an attorney
capacity.” In the Matter of Legal Helpers Debt Resolution
LLC, No. 10CC311, at *3 (Ill. Dep’t of Fin. & Prof’l
Regulation, Div. of Fin. Insts. Aug. 1, 2011).

    Under Washington law, a debt-settlement service provider
may not charge more than twenty-five dollars in an initial
payment, fifteen percent of any single payment, or fifteen
percent of the debtor’s total debt. Wash. Rev. Cod.
§ 18.28.080(1). The statute provides an exception for debt-
adjustment services performed by attorneys when those
services are “solely incidental to the practice of their
professions.” Id. § 18.28.010(1)(a). According to the
complaint, debt-adjustment companies, including JEM and
Marshall Banks, have associated with law firms such as Legal
Helpers that are willing to lend their names to debt-
adjustment companies in an attempt to avoid the limitations
such as those contained in the Washington statute. JEM and
Marshall Banks charge fees to Washington consumers that
exceed the statutory limitations on fees that may be charged
by debt-collection agencies.

    In March 2010, Smith received a solicitation from
defendants offering debt settlement services. At the time, she
was struggling financially as a result of her husband’s recent
death and her own declining health. In early April, Smith
signed a twenty-one page contract sent to her by Kazlow and
Tucker. The contract included a four-page, fine-print
attorney retainer agreement (“ARA”) between Legal Helpers
and Smith. The ARA contained an arbitration clause on the
fourth page. There was no explanation of the arbitration
clause either in the ARA or the rest of the contract. The
instruction on the cover page, sent by Kazlow and Tucker,
was uninformative. It said only: “Please sign at every X.
                SMITH V. JEM GROUP, INC.                  5

Please include your voided check and copy of your billing
statements. And fax to [Kazlow and Tucker’s fax number].”

    Smith filed a class action complaint against JEM,
Marshall Banks, and Legal Helpers in federal district court,
alleging breach of fiduciary duty, unjust enrichment, aiding
and abetting, civil conspiracy, and breach of Washington
consumer protection statutes. Defendants all moved to
compel arbitration. JEM and Marshall Banks, who were not
parties to the ARA, contended that they were third-party
beneficiaries of the ARA, and that they were therefore
entitled to arbitration of any claims against them. Smith
opposed the motions, contending that the arbitration clause
within the ARA was unconscionable. The district court
denied defendants’ motions to compel, and defendants
appealed. Marshall Banks and Legal Helpers have dismissed
their appeals, leaving JEM as the only remaining appellant.

          II. Jurisdiction and Standard of Review

    We have appellate jurisdiction under 9 U.S.C.
§ 16(a)(1)(B) and 28 U.S.C. § 1291. “We review de novo
district court decisions about the arbitrability of claims.”
Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir.
2013).

                      III. Discussion

          A. Determination by the District Court

   JEM argues that an arbitrator, rather than the district
court, should have determined whether the arbitration clause
is unconscionable. JEM argues under Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), and
6                SMITH V. JEM GROUP, INC.

Nagrampa v. MailCoups, Inc., 469 F.3d 1257 (9th Cir. 2006)
(en banc), that because the “crux” of Smith’s complaint is
that the contract as a whole is invalid, and the complaint does
not specifically attack the arbitration clause in the ARA as
unconscionable, an arbitrator rather than the court should
have decided whether the arbitration clause was
unconscionable. We disagree.

    We have held that “the question of arbitrability is for the
court to decide regardless of whether the specific challenge
to the arbitration clause is raised as a distinct claim in the
complaint” so long as “the plaintiff’s challenge to the validity
of an arbitration clause is a distinct question from the validity
of the contract as a whole . . . .” Bridge Fund Capital Corp.
v. Fastbucks Franchise Corp., 622 F.3d 996, 998 (9th Cir.
2010). JEM does not contest that Smith separately
challenged the arbitration clause as unconscionable, but it
argues that her challenge to the clause could not have been
the “crux of the complaint” because the challenge was made
for the first time not in Smith’s complaint but in her
opposition to the motion to compel arbitration. We
specifically rejected such an argument in Bridge Fund
Capital. JEM contends that our decision in Bridge Fund
Capital is fatally inconsistent with Buckeye and Nagrampa.

    Even if Bridge Fund Capital were incorrectly decided, we
would, of course, be bound to follow it. But we have no
doubt about its correctness. In Buckeye, the Supreme Court
considered whether a challenge to the validity of an
arbitration agreement was a challenge “specifically [to] the
validity of the agreement to arbitrate” or a challenge to “the
contract as a whole, either on a ground that directly affects
the entire agreement . . . or on the ground that the illegality of
one of the contract’s provisions renders the whole contract
                 SMITH V. JEM GROUP, INC.                       7

invalid.” 546 U.S. at 444. The Court held that because the
“crux of the complaint” filed by the plaintiffs was a challenge
to the contract as a whole, the district court could not properly
consider the argument; rather, arbitrability should be
considered by the arbitrator in the first instance. Id. at
444–46. In Nagrampa, we construed Buckeye to mean that
“challenges specifically to the arbitration agreement were for
the court to decide,” even if these were not the sole or
predominant challenges in the complaint. 469 F.3d at 1269.

    In Bridge Fund Capital we considered “a third scenario
not described in either Buckeye or Nagrampa; namely, a
specific challenge to the arbitration clause that is not raised as
a separate claim in the complaint.” 622 F.3d at 1001. The
relevant facts in Bridge Fund Capital were the same as in the
case before us. Plaintiffs had entered into a franchise
agreement that contained an arbitration clause. Id. at 999.
Plaintiffs filed suit, alleging breach of the agreement, fraud
and deceit, negligent misrepresentation, and violation of
California law. Id. They alleged that provisions of the
agreement were unconscionable, but they did not specify the
particular provisions. Id. Defendant moved to compel
arbitration. Id. Plaintiffs opposed the motion, specifically
contending for the first time that the arbitration clause was
unconscionable. Id. After carefully analyzing Buckeye and
Nagrampa, we concluded that the district court had the
authority to decide whether the arbitration clause was
unconscionable. Id. at 1000–02. We held that it did not
matter that plaintiffs had not specifically alleged
unconscionability of the clause in their complaint. Id. at
1001. It was sufficient that they raised that issue in their
response to the motion to compel. Id. at 1002.
8                 SMITH V. JEM GROUP, INC.

    Our decision in Bridge Fund Capital rests on a
recognition of the nature of arbitration agreements. Many
contracts, including those at issue in Bridge Fund Capital and
in the case before us, provide for compulsory arbitration at
the choice of one or both of the parties; if neither party asks
for arbitration, any dispute that arises under the contract may
be brought to a court. Under such a contract, a challenge to
the arbitration clause would not be a proper part of a
complaint if the plaintiff prefers a decision from a court. As
we observed in Bridge Fund Capital,

       in cases in which the arbitration clause’s
       invalidity is an entirely distinct issue from the
       contract claims in the case—the clearest cases
       in which arbitrability is to be decided by the
       court—we would not generally expect the
       plaintiff to raise claims against the validity of
       the arbitration clause in the complaint,
       because such claims generally would be
       unrelated to plaintiff’s principal prayer for
       relief.

Id. at 1001–02.

   We therefore hold that the district court properly
considered the validity of the arbitration clause.

      B. Unconscionability of the Arbitration Clause

   Under Washington law, a contractual provision is
unenforceable if it is procedurally unconscionable. Nelson v.
McGoldrick, 896 P.2d 1258, 1264 (Wash. 1995) (en banc).
                 SMITH V. JEM GROUP, INC.                     9

       Procedural unconscionability is determined in
       light of the totality of the circumstances,
       including (1) the manner in which the parties
       entered into the contract, (2) whether the
       parties had a reasonable opportunity to
       understand the terms, and (3) whether the
       terms were hidden in a maze of fine print.

Torgerson v. One Lincoln Tower, LLC, 210 P.3d 318, 322
(Wash. 2009) (en banc) (internal quotation marks omitted).
The district court concluded that all three of the listed
circumstances were present in Smith’s agreement to the
arbitration clause in the ARA. The court therefore held the
clause procedurally unconscionable.

    JEM does not argue on appeal that if Washington law
applies to this case, the district court applied it incorrectly.
However, it argues that Washington law does not apply
because it is preempted by the Federal Arbitration Act
(“FAA”), as interpreted by the Supreme Court in AT&T
Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). We
disagree.

    Under Washington law, an attorney fee agreement, or a
provision thereof, is unenforceable if the attorney has not
complied with the Washington Rules of Professional
Conduct. Valley/50th Ave., L.L.C. v. Stewart, 153 P.3d 186,
189 (Wash. 2007) (en banc). An attorney must provide a
“reasonable and fair disclosure of material elements of the fee
agreement” to the client. Wash. Rules of Prof’l Conduct
R. 1.5(a)(9). Advisory opinions interpreting the professional
rules are persuasive but not binding authority under
Washington law. In re Disciplinary Proceeding Against
DeRuiz, 99 P.3d 881, 888 (Wash. 2004) (en banc). In
10               SMITH V. JEM GROUP, INC.

Opinion 1670, the Washington State Bar Association
(“WSBA”) specified that an arbitration provision may be
included in an attorney fee agreement only if the attorney
provides full disclosure of the provision to the client. The
Opinion states that

       there is no per se prohibition in the Rules of
       Professional Conduct against including an
       arbitration provision in a fee agreement with
       a client, but that it (1) must be consistent with
       a lawyer’s fiduciary obligations and statutory
       law such as RCW Ch. 4.24; and (2) it properly
       must be done only with full disclosure to the
       client.

An ABA Formal Opinion similarly concludes that arbitration
agreements are permissible in ARAs only if the client has
been given “sufficient information to permit her to make an
informed decision about whether to agree to the inclusion of
the arbitration provision in the retainer agreement.” ABA
Comm. on Ethics & Prof’l Responsibility, Formal Op. 02-425
(2002). The district court relied on Professional Conduct
Rule 1.5, as well as the WSBA and ABA opinions, to
conclude that an arbitration clause is a material element of an
ARA, and that such a clause is unenforceable under
Washington law unless the attorney has fully disclosed the
arbitration clause to his or her client.

    For several reasons, Concepcion does not support a
conclusion that Washington procedural unconscionability law
is preempted. First, Washington law does not unduly burden
arbitration. Concepcion held that a California law forbidding
a class-action waiver provision in arbitration agreements was
preempted by the FAA. 131 S. Ct. at 1750–51. The Court
                 SMITH V. JEM GROUP, INC.                   11

provided additional examples of arbitration-specific rules that
would be preempted by the FAA, such as state rules declaring
unconscionable any arbitration clause that does not provide
for judicially monitored discovery, requiring arbitration to
proceed in accordance with the Federal Rules of Evidence, or
requiring final disposition by a jury. Id. at 1747. Such rules,
the Court explained, would “stand as . . . obstacle[s] to the
accomplishment of the FAA’s objective[],” which is to ensure
the enforcement of private arbitration agreements. Id. at
1748. In contrast to those rules, the Washington procedural
unconscionability rule applied in this case does not burden
arbitration. Washington law provides only that an arbitration
clause in an ARA is material, and that an arbitration clause is
unenforceable if the attorney fails to disclose it fully. This
law does not “make[] the process slower, more costly, [or]
more likely to generate [a] procedural morass.” Concepcion,
131 S. Ct. at 1751.

    Second, Washington procedural unconscionability law is
concerned only with the process that results in the formation
of the agreement. The state rule at issue in Concepcion, as
well as the rules provided by the Court as examples, were
preempted because they specified the manner in which the
arbitration could or should be conducted. Unlike those rules,
the Washington law at issue says nothing about the manner in
which an arbitration is to be conducted. As the Eleventh
Circuit has observed, “[t]he Supreme Court has consistently
recognized” that “unconscionability doctrine[s] concerned
with defects in the process of contract formation” are “valid
under 9 U.S.C. § 2, and has repeatedly identified
unconscionability as one of the general principles of contract
law that, if applied impartially, may be applied to arbitration
agreements under § 2.” In re Checking Account Overdraft
Litig. MDL No. 2036, 685 F.3d 1269, 1278 (11th Cir. 2012).
12               SMITH V. JEM GROUP, INC.

    Third, Washington procedural unconscionability law
applicable to ARAs is not specifically aimed at arbitration
clauses. Washington law, including Opinion 1670, does not
single out or place any additional burden on arbitration
provisions. Rather, Opinion 1670 merely clarifies that an
arbitration clause is among the material provisions in an ARA
that an attorney, acting as a fiduciary, must disclose to his or
her client. An attorney must disclose the arbitration
agreement only to the same degree that he or she must
disclose all material terms in an ARA.

                         Conclusion

    We conclude that the district court correctly decided that
it, rather than an arbitrator, should decide whether the
arbitration clause in the ARA was unconscionable. We
further conclude that the district court properly decided, using
non-preempted Washington law, that the arbitration clause
was unenforceable.

     AFFIRMED.
