                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


DALE MORTENSEN ; MELISSA                  No. 11-35823
BECKER, individually and on behalf
of themselves and all others                 D.C. No.
similarly situated,                       1:10-cv-00013-
                  Plaintiffs-Appellees,        RFC

                  v.
                                            OPINION
BRESNAN COMMUNICATIONS, LLC, a
Delaware corporation,
              Defendant-Appellant.


      Appeal from the United States District Court
               for the District of Montana
    Richard F. Cebull, Chief District Judge, Presiding

         Argued and Submitted August 31, 2012
         Submission Withdrawn October 9, 2012
              Resubmitted April 19, 2013
                  Seattle, Washington

                    Filed July 15, 2013
2       MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

 Before: Mary M. Schroeder and Ronald M. Gould, Circuit
     Judges, and Jed S. Rakoff, Senior District Judge.*

                     Opinion by Judge Gould


                           SUMMARY**


                             Arbitration

   The panel vacated the district court’s order declining to
enforce an arbitration clause and a choice-of-law clause in a
broadband Internet service subscriber agreement, and
remanded to the district court with instructions to apply New
York law to the arbitration agreement.

    The panel held that AT&T Mobility LLC v. Concepcion,
131 S. Ct. 1740 (2011), further limited the Federal Arbitration
Act’s savings clause, 9 U.S.C. § 2. The panel held that the
Federal Arbitration Act preempted Montana’s public policy
invalidating adhesive agreements running contrary to the
reasonable expectations of a party. The panel also held that
the district court erred in not applying New York law because
a state’s preempted public policy was an impermissible basis
on which to reject the parties’ choice-of-law selection.



    *
    The Honorable Jed S. Rakoff, Senior District Judge for the United
States District Court for the Southern District of New York, sitting by
designation.

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
      MORTENSEN V . BRESNAN COMMUNICATIONS, LLC                           3

                              COUNSEL

John D. Seiver (argued), Adam S. Caldwell, and Ronald G.
London, Davis Wright Tremaine LLP, Washington, D.C.;
William Scott Mitchell and Michael P. Manning, Holland &
Hart, LLP, Billings, Montana, for Defendant-Appellant.

Scott A. Kamber (argued) and David A. Stampley,
KamberLaw, LLC, New York, New York; Deborah Kravitz,
KamberLaw, LLC, Healdsburg, California; Gregory P.
Johnson, Johnson Law Office, Billings, Montana, for
Plaintiffs-Appellees.


                               OPINION

GOULD, Circuit Judge:

    This case involves a binding arbitration clause in a
contract of adhesion between a commercial provider of high-
speed, broadband Internet services and its customers. We
consider the relationship of state and federal law and the
concept of preemption in this context.1 Dale Mortensen and
Melissa Becker (“Plaintiffs”) brought this putative class
action against Bresnan Communications alleging violations
of the Electronic Communications Privacy Act, 18 U.S.C.
§§ 2520–21, the Computer Fraud and Abuse Act, 18 U.S.C.


  1
    W e originally vacated submission of the present case pending an en
banc decision of this court. The en banc court did not reach the issue in
the present case. See Kilgore v. KeyBank, Nat’l Ass’n, __ F.3d __, Nos.
09-16703, 10-15934, 2013 W L 1458876, at *5 (9th Cir. Apr. 11, 2013) (en
banc) (reversing on state grounds the district court’s denial of a motion to
compel arbitration).
4       MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

§ 1030, and Montana state law for invasion of privacy and
trespass to chattels in connection with targeted advertising
that they received while using Bresnan’s Internet service.
The service subscriber agreement provided to all Bresnan
customers contained a choice-of-law clause, specifying that
New York law should apply, and an arbitration clause, both
of which the district court declined to enforce.

     We consider, in light of the Supreme Court’s decision in
AT&T Mobility LLC v. Concepcion, __ U.S. __, 131 S. Ct.
1740 (2011), whether the Federal Arbitration Act (“FAA”),
Pub. L. No. 68-401, 43 Stat. 883 (1925) (codified as amended
at 9 U.S.C. §§ 1–2 et seq.), preempts Montana public policy
invalidating adhesive agreements running contrary to the
reasonable expectations of a party.2 We then address the
choice-of-law consequences flowing from that holding. We
have jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(A)–(B). See
Muriithi v. Shuttle Express, Inc., 712 F.3d 173, 178 (4th Cir.
2013); Noohi v. Toll Bros., Inc., 708 F.3d 599, 604 (4th Cir.
2013).

    Our decision turns on an interpretation of Concepcion’s
meaning and breadth. After analyzing both Concepcion and
subsequent cases, we conclude that Concepcion further
limited the FAA’s savings clause, 9 U.S.C. § 2, and therefore
hold (1) that the FAA preempts Montana’s reasonable
expectations/fundamental rights rule and (2) that the district
court erred in not applying New York law because a state’s
preempted public policy is an impermissible basis on which
to reject the parties’ choice-of-law selection. Consequently,


    2
    This Montana rule was judicially established in Iwen v. U.S. West
Direct, 977 P.2d 989, 995 (Mont. 1999) and Kortum-M anaghan v.
Herbergers NBGL, 204 P.3d 693, 698–99 (Mont. 2009).
      MORTENSEN V . BRESNAN COMMUNICATIONS, LLC                         5

we vacate the district court’s denial of Bresnan’s motion to
compel arbitration and remand to the district court with
instructions to apply New York law to the arbitration
agreement.3

                                    I

    We start with the facts giving rise to the dispute. Then we
turn to the district court proceedings and present appeal.

      A. The Facts Underlying Class Plaintiffs’ Claims

    Plaintiffs, who reside in or near Billings, Montana,
formerly subscribed to Internet services from Bresnan
Communications, a franchised cable-television provider
incorporated in Delaware, headquartered in New York, and
operating in Montana, Colorado, Wyoming, and Utah. Class
representative Dale Mortensen started services with Bresnan
in October 2007. Bresnan has no record of a customer named
Melissa Becker, although the company does not foreclose the
possibility that she or another member of her household
contracted for Internet service.

    After customers subscribe to Bresnan’s services,
technicians deliver a “Welcome Kit” to their homes and
install the equipment necessary to activate the service. The
“Welcome Kit” contains the Bresnan OnLine Internet Service

  3
   Although Plaintiffs’ initial opposition brief in response to Bresnan’s
motion to compel arbitration seems to concede that an application of New
York law would require arbitration, Plaintiffs now state that they merely
noted that New York courts are less sensitive to consumer contract rights.
Either way, given that New York law generally favors arbitration, which
law applies may be outcome determinative. W e leave that issue to be
decided in the first instance by the district court on remand.
6   MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

Subscriber Agreement and Acceptable Use Policy (“service
agreement”), which is also available on Bresnan’s website.
On Page 21 of the 31-page service agreement, in bold, large
font, is the heading “9. Arbitration.” Paragraph 9(a.) states:

       Binding Arbitration. ANY AND ALL
       D IS P U T E S A R IS IN G B E T W E E N
       CUSTOMER AND BRESNAN
       COMMUNICATIONS (WHETHER BASED
       IN CONTRACT, STATUTE,
       REGULATION, ORDINANCE, TORT—
       INCLUDING, BUT NOT LIMITED TO,
       FRAUD, ANY OTHER INTENTIONAL
       TORT OR NEGLIGENCE,—COMMON
       LAW, CONSTITUTIONAL PROVISION,
       RESPONDEAT SUPERIOR, AGENCY OR
       ANY OTHER LEGAL OR EQUITABLE
       THEORY), WHETHER ARISING BEFORE
       OR AFTER THE EFFECTIVE DATE OF
       T H IS A G R E E M E N T , M US T BE
       RESOLVED BY FINAL AND BINDING
       ARBITRATION. THIS INCLUDES ANY
       AND ALL DISPUTES BASED ON ANY
       PRODUCT, SERVICE OR ADVERTISING
       CONNECTED TO THE PROVISION OR
       USE OF THE SERVICE. The Federal
       Arbitration Act (“FAA”), not state law, shall
       govern the arbitrability of all disputes
       between Bresnan Communications and
       Customer regarding this Agreement and the
       Service. Bresnan Communications and
       Customer agree, however, that New York or
       federal law shall apply to and govern, as
       appropriate, any and all claims or causes of
      MORTENSEN V . BRESNAN COMMUNICATIONS, LLC                            7

         action, remedies, and damages arising
         b e t w e en C u s t o m e r a n d B r e s n a n
         Communications regarding this Agreement
         and the Service, whether arising or stated in
         contract, statute, common law, or any other
         legal theory, without regard to New York’s
         choice of law principles.4

The substance of this paragraph has remained unchanged
since 2003.5 The beginning of the service agreement directs
customers to, “Please read this Agreement very carefully,
because by accepting the Service, you agree to all of these
terms.”

    In 2008, Bresnan entered into a temporary arrangement
with advertising company NebuAd, Inc.             Under the
arrangement, in exchange for a share of NebuAd’s
advertising revenue, Bresnan allowed NebuAd to place an
appliance in its Billings, Montana, network. The appliance
allowed NebuAd to gather information and create profiles of
subscribers in order to target them with preference-sensitive
advertising. Bresnan contends that it provided specific notice
to consumers about the NebuAd trial and allowed individuals




 4
  The service agreement further states that “[a]ll parties to the arbitration
must be individually named” and that “[t]here shall be no right or
authority for any claims to be arbitrated on a class action or consolidated
basis.” But that provision is not challenged on appeal.

    5
       The only amendment to this provision involved updating the
notification address for Bresnan’s Legal Department.
8         MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

to opt out. Under a heading labeled “About Advanced
Advertising,” the company website provided detailed
information about the trial.6 It also gave a list of thirteen


    6
        The text under that heading reads:

             Bresnan Communications is testing a new and exciting
             feature that will improve the relevance of advertising on
             the Internet.        Using anonymous web surfing
             technology, banner ads will be customized to our
             customers’ specific interests—reducing the “clutter”
             normally associated with Internet advertising. W e’re
             confident that this feature will provide a more enjoyable
             browsing experience for our customers.

             W e are committed to our customers’ privacy and we
             have placed great importance on two fundamental
             philosophies in relation to advanced advertising. First,
             participation in advanced advertising is completely
             voluntary.     Second, neither Bresnan nor our
             participating web sites or ad networks will ever collect
             any personally identifiable information— such as names
             or email addresses–In [sic] our efforts to provide this
             valuable feature to our subscribers.

             Following is a list of frequently asked questions
             regarding our advanced advertising service, complete
             with an option to opt-out of this service if desired.

             [FAQs omitted]

             Your Participation is Optional

             Thank you for taking the time to learn about Bresnan’s
             advanced advertising initiative. If you would like to
             opt-out of this service, simply click this link. Note that
             your opt-out will only apply to this browser on this
             computer. If you use more than one browser (such as
             Firefox and M icrosoft Internet Explorer), or more than
     MORTENSEN V . BRESNAN COMMUNICATIONS, LLC                      9

frequently asked questions with corresponding answers that
assured customers that no personally identifying information,
such as first and last name, physical street address, email
address, telephone numbers, or social security numbers would
be collected. Plaintiffs contend that this notice was
misleading and that consent was never obtained.

        B. The Facts Underlying Plaintiffs’ Appeal

    After NebuAd’s temporary arrangement with Bresnan to
gather information from the subscribers ended, a class of
plaintiffs, including those involved in the present action,
brought suit in the United States District Court for the
Northern District of California against NebuAd and several
Internet service providers who hosted NebuAd appliances,
including Bresnan. Bresnan and the other providers moved
to dismiss the action for lack of personal jurisdiction and
failure to state a claim. The district court granted this motion
finding personal jurisdiction lacking. Valentine v. NebuAd,
Inc., No. C08-05113 TEH, 2009 WL 8186130, at *3–10
(N.D. Cal. Oct. 6, 2009). NebuAd became the sole defendant
in that action and eventually reached a court-approved
settlement with the plaintiffs.

    But before reaching that settlement in the initial lawsuit,
groups of plaintiffs filed new class actions in their respective
states. Plaintiffs brought suit against Bresnan in the United
States District Court for the District of Montana re-alleging


         one computer (such as a desktop computer and a
         laptop), you will need to re-visit this page and opt-out
         for each.

A total of eighteen subscribers purportedly opted out.
10 MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

violations of the Electronic Communications Privacy Act,
18 U.S.C. §§ 2520–21, and the Computer Fraud and Abuse
Act, 18 U.S.C. § 1030, while also asserting state-law claims
for invasion of privacy and trespass to chattels.

    Bresnan responded by filing a motion to compel
arbitration under the subscriber agreement and a motion to
dismiss for failure to state a claim. In an opinion that did not
address choice of law, the district court denied Bresnan’s
motion to compel arbitration. Mortensen v. Bresnan
Commc’n, LLC, No. CV 10-13-BLG-RFC, 2010 WL
4716744, at *3–4 (D. Mont. Nov. 15, 2010). The decision
applied Montana public policy requiring arbitration
agreements in contracts of adhesion to be within a party’s
“reasonable expectations” and concluded that the arbitration
agreement did not qualify because it amounted to unknowing
waiver of the fundamental constitutional rights to trial by jury
and access to courts. Id.

    Almost a month later, the court granted in part Bresnan’s
motion to dismiss and discharged the Electronic
Communications Privacy Act and Montana invasion-of-
privacy claims. Mortensen v. Bresnan Commc’n, LLC, No.
CV 10-13-BLG-RFC, 2010 WL 5140454, at *9 (D. Mont.
Dec. 13, 2010).

    Before discovery on the remaining Computer Fraud and
Abuse Act claim and the state-law trespass-to-chattels claim,
the Supreme Court decided Concepcion. Thereafter, Bresnan
moved for and was granted leave to seek reconsideration of
the denial of its motion to compel arbitration.

   But in an order dated September 16, 2011, the district
court concluded that although the Supreme Court’s
     MORTENSEN V . BRESNAN COMMUNICATIONS, LLC 11

characterization of the FAA in Concepcion “may impend
doom for the Montana rules relied upon, it did not in itself
kill them.” Interpreting Concepcion’s holding as further
limiting the savings clause only with respect to
unconscionability and class-waiver provisions, the court
compared the arbitration agreement in the present case with
the one invalidated under Concepcion and found that they
differed in that the current provision (1) was not
unconscionable and (2) was not void because it contained a
class-action waiver. In sum, the court found that the Montana
reasonable expectations/fundamental rights rule survived
Concepcion, served as the fundamental public policy
supporting the application of Montana law (as opposed to
New York law) under Montana choice-of-law rules, and
required the court to deny arbitration.

    Bresnan filed a timely appeal of that denial. It contends
that the district court erred in finding that the Montana rule is
not preempted by the FAA and, if preempted, New York
choice of law should have applied, resulting in arbitration.
Alternatively, Bresnan contends that after Concepcion an
application of the Montana choice-of-law analysis does not
justify rejection of New York law.

                               II

    We review de novo a district court’s decision denying a
motion to compel arbitration, including the interpretation of
the validity and scope of the clause. Bushley v. Credit Suisse
First Bos., 360 F.3d 1149, 1152 (9th Cir. 2004); see also
Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126,
1130 (9th Cir. 2000). As arbitration is favored, those parties
challenging the enforceability of an arbitration agreement
bear the burden of proving that the provision is
12 MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

unenforceable. Green Tree Fin. Corp.-Ala. v. Randolph,
531 U.S. 79, 91 (2000). We also review de novo the district
court’s decision concerning the appropriate choice of law.
Aceves v. Allstate Ins. Co., 68 F.3d 1160, 1167 (9th Cir.
1995).

                             III

    We first address whether the FAA preempts Montana’s
reasonable expectations/fundamental rights rule and then
address the choice-of-law consequences flowing from that
conclusion.

           A. Preemption of the Reasonable
         Expectations/Fundamental Rights Rule

    The Supremacy Clause provides that “the Laws of the
United States . . . shall be the supreme Law of the Land.”
U.S. Const. art. VI, cl. 2. And a state law that “stands as an
obstacle to the accomplishment and execution of the full
purposes and objectives of Congress” is preempted by the
Supremacy Clause. Hines v. Davidowitz, 312 U.S. 52, 67
(1941). We start with an explanation of the FAA, the
Supreme Court’s Concepcion decision, and the Montana
reasonable expectations/fundamental rights rule at issue in
this case. We then apply Concepcion to the Montana rule to
decide whether it is preempted.

                        1. The FAA

    The FAA, enacted in 1925, facilitates private dispute
resolution by making arbitration agreements in maritime
transactions and in contracts involving interstate commerce
presumptively “valid, irrevocable, and enforceable.” See also
     MORTENSEN V . BRESNAN COMMUNICATIONS, LLC 13

Kilgore, 2013 WL 1458876, at *2 (quoting 9 U.S.C. § 2).
The law was created to counter prevalent judicial refusal to
enforce arbitration agreements,7 Concepcion, 131 S. Ct. at
1745, and has been interpreted to embody “a liberal federal
policy favoring arbitration,” Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983). The FAA
“mandates that district courts shall direct the parties to
proceed to arbitration on issues as to which an arbitration
agreement has been signed.” Kilgore, 2013 WL 1458876, at
*2 (quoting Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213,
218 (1985)). Thus the FAA gives a strong boost to
arbitration. See Kramer v. Toyota Motor Corp., 705 F.3d
1122, 1126 (9th Cir. 2013).

     As federal substantive law, the FAA preempts contrary
state law. See Prima Paint Corp. v. Flood & Conklin Mfg.
Co., 388 U.S. 395, 400 (1967); see also Concepcion, 131
S. Ct. at 1746. The FAA’s preemption power has an
exception: It does not require the enforcement of arbitration
agreements on “such grounds as exist at law or in equity for
the revocation of any contract.” 9 U.S.C. § 2 (also known as
the “savings clause”). This savings clause preserves
generally applicable contract defenses, such as fraud, duress,
or unconscionability, and ensures that they are not preempted.
See Kilgore, 2013 WL 1458876, at *3; see also Concepcion,
131 S. Ct. at 1746.




 7
   W hen arbitration was first emerging in the United States, the common
law and early state statutes did not recognize the validity of predispute
arbitration agreements and instead allowed either party to opt out and
compel litigation. Thomas V. Burch, Regulating Mandatory Arbitration,
2011 Utah L. Rev. 1309, 1313 (2011).
14 MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

    Parties have often cited the savings clause in an attempt
to defeat a motion to compel arbitration.8 The United States
Supreme Court has been moved to step in and stop some
efforts to avoid FAA preemption, most notably in its
Concepcion decision.

         2. The Concepcion Decision and Its Progeny

    Concepcion addressed whether the FAA’s savings clause
preempted a California state rule, known as the Discover
Bank rule,9 that invalidated the majority of class-action
waivers in contracts of adhesion as unconscionable.

   The facts involved a class of plaintiffs who purchased
AT&T mobile service advertised as including a free phone.
Concepcion, 131 S. Ct. at 1744. Litigation resulted after

     8
     Beginning in the mid-1990s, litigants employed general contract
defenses, namely unconscionability, to avoid the FAA’s pro-arbitration
policy. See, e.g., Aaron-Andrew P. Bruhl, The Unconscionability Game:
Strategic Judging and the Evolution of Federal Arbitration Law,
83 N.Y.U. L. Rev. 1420, 1440–45 (2008). There is some evidence that
this tactic worked. See Susan Randall, Judicial Attitudes Toward
Arbitration and the Resurgence of Unconscionability, 52 Buff. L. Rev.
185, 194–96 (2004) (suggesting that about 50% of unconscionability
challenges to arbitration agreements in 2002 and 2003 succeeded).

 9
   Discover Bank v. Superior Ct., 113 P.3d 1100 (Cal. 2005), abrogated
by Concepcion, 131 S. Ct. at 1745–47. Specifically, the Discover Bank
rule invalidated class-action waivers in consumer agreements if (1) the
agreement was in a contract of adhesion, (2) the disputes predictably
involved small damages, and (3) the party with the inferior bargaining
power alleged that the stronger party “carried out a scheme to
deliberately” defraud. 113 P.3d at 1110. But the rule was not limited to
arbitration agreements and could be applied to all dispute-resolution
contracts. Concepcion, 131 S. Ct. at 1746–47. It was therefore arguably
“generally applicable.”
        MORTENSEN V . BRESNAN COMMUNICATIONS, LLC 15

plaintiffs were charged $30.22 in sales tax on the retail value
of the phones. Id. The service contract signed by class
members included a provision requiring all disputes to be
arbitrated individually and not collectively.10 Id.

    In its opinion, the Supreme Court reversed the Ninth
Circuit’s decision in Laster v. AT&T Mobility LLC, 584 F.3d
849, 853–59 (9th Cir. 2009), which held that the FAA did not
preempt the Discover Bank rule because Discover Bank was
generally applicable and thus was within the FAA’s savings
clause. Instead, the Supreme Court reasoned that even
general contract defenses, such as unconscionability, are
preempted if they “stand as an obstacle to the
accomplishment” of “ensur[ing] that private arbitration
agreements are enforced according to their terms.”
Concepcion, 131 S. Ct. at 1748 (quoting source omitted).

    The Supreme Court acknowledged that the “inquiry
becomes more complex when a doctrine normally thought to
be generally applicable . . . is alleged to have been applied in
a fashion that disfavors arbitration.” Id. at 1747. But it
concluded for the first time that even generally applicable
state-law rules are preempted if in practice they have a


   10
      The agreement provided that AT&T would pay all costs for the
arbitration of nonfrivolous claims; that arbitration would occur in the
county where there customer was billed; that, for claims of $10,000 or
less, the customer could choose whether to arbitrate in person, on
submissions, or by phone; that either party could bring a claim in small
claims court in lieu of arbitration; that the arbitrator could award any form
of individual relief; that AT&T could not seek reimbursement of its
attorney’s fees; and that, if a customer won an arbitration award greater
than AT&T’s last written settlement offer, AT&T would pay $7,500 in
minimum recovery plus twice the amount of the claimant’s attorney’s
fees. Concepcion, 131 S. Ct. at 1744.
16 MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

“disproportionate impact” on arbitration or “interfere[] with
fundamental attributes of arbitration and thus create[] a
scheme inconsistent with the FAA.” Id. at 1747–48.

    In Marmet Health Care Center, Inc. v. Brown, the
Supreme Court put an exclamation point on the savings
clause’s new limits that it had established in Concepcion. See
__ U.S. __, 132 S. Ct. 1201, 1203 (2012). In Marmet the
Court held that the FAA preempted a West Virginia law
invalidating arbitration clauses in nursing home admission
agreements adopted before an occurrence of negligence
resulting in a personal injury or wrongful death: “When state
law prohibits . . . the arbitration of a particular type of claim,
the analysis is straightforward: The conflicting rule is
displaced by the FAA.” Id. at 1203.

     We interpret Concepcion’s holding to be broader than a
restriction on the use of unconscionability to end-run FAA
preemption. We take Concepcion to mean what its plain
language says: Any general state-law contract defense, based
in unconscionability or otherwise, that has a disproportionate
effect on arbitration is displaced by the FAA. We find
support for this reading from the illustration in Concepcion
involving a case “finding unconscionable or unenforceable as
against public policy consumer arbitration agreements that
fail to provide for judicially monitored discovery.” 131 S. Ct.
at 1747 (emphasis added). Other courts have read
Concepcion in a similar way.11


 11
   See, e.g., In re Cal. Title Ins. Antitrust Litig., No. 08-01341 JSW , 2011
W L 2566449, at *2 (N.D. Cal. June 27, 2011) (“In the wake of new
Supreme Court precedent” the court was “compelled to enforce the . . .
arbitration provisions[.]”); Wolf v. Nissan Motor Acceptance Corp., No.
10-cv-3338 (NLH)(KMW ), 2011 W L 2490939, at *6–7 (D.N.J. June 22,
     MORTENSEN V . BRESNAN COMMUNICATIONS, LLC 17

     Some might argue that our interpretation of Concepcion
goes too far beyond the initial purpose of the FAA, which
was to eliminate judicial hostility toward arbitration and place
arbitration provisions on “the same footing” as all other
contractual provisions. See Iwen, 977 P.2d at 994; see also
Supak & Sons Mfg. Co. v. Pervel Indus., Inc., 593 F.2d 135,
137 (4th Cir. 1979). But we follow the Supreme Court’s
premise in Concepcion that the FAA’s purpose is to “ensur[e]
that private arbitrations are enforced.” 131 S. Ct. at 1748
(quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford
Junior Univ., 489 U.S. 468, 474 (1989)); see also Am.
Express Co. v. Italian Colors Rest., __ S. Ct. __, No. 12-133,
2013 WL 3064410, at *6 & n.5 (June 20, 2013) (noting that
Concepcion established that “the FAA’s command to enforce
arbitration agreements trumps any interest in ensuring the
prosecution of low-value claims”). The word “ensure” is
defined to mean “to make (one) sure (as by pledging,
guaranteeing, convincing, or declaring)” or “to make sure,
certain, or safe: GUARANTEE.” Webster’s Third New
International Dictionary 756 (1993).               In our view,
Concepcion crystalized the directive, touched on in Volt,
489 U.S. at 474, that the FAA’s purpose is to give preference
(instead of mere equality) to arbitration provisions. 131
S. Ct. at 1748. Concepcion outlaws discrimination in state
policy that is unfavorable to arbitration by further limiting the
savings clause. We are bound by our duty to apply
Concepcion and do so here.



2011) (“[N]otwithstanding [state law], the Court is bound by
[Concepcion].”); see also Muriithi, 712 F.3d at 180 (noting that
“Concepcion sweeps . . . broadly” to preempt generally applicable contract
defenses that “target[] the existence of an agreement to arbitrate as the
basis for invalidating that agreement”).
18 MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

3. The Montana Reasonable Expectations/Fundamental
                   Rights Rule

    We apply Concepcion to the Montana reasonable
expectations/fundamental rights rule to determine whether it
is preempted by the FAA.

    Under Montana state law, courts determining the validity
of a contract begin with assessing whether the contract is one
of adhesion. Ticknor v. Choice Hotels Int’l, Inc., 265 F.3d
931, 939 (9th Cir. 2001); Iwen, 977 P.2d at 995. This inquiry
focuses on the contracting process to determine whether both
parties had the ability to negotiate contract terms. Iwen,
977 P.2d at 995. Finding that the contract was adhesive
opens the door for an unconscionability or public policy
defense. Id.

    Once a court views a contract as adhesive, it must
examine the challenged provision to determine whether it is
unconscionable or in violation of public policy. Id. A
provision that was not in the reasonable expectations of both
parties when contracting is void as against public policy.12 Id.
(referring to Passage v. Prudential-Bache Sec., Inc., 727 P.2d
1298, 1301 (Mont. 1986)). As a matter of law, Montana finds
involuntary waiver of fundamental constitutional rights to be
outside of consumers’ reasonable expectations. Kortum-
Managhan, 204 P.3d at 698–99.



 12
   M ontana courts construe the public policy defense as slightly different
from an unconscionability defense. The unconscionability defense is
analyzed through use of the Kloss factors and does not rely on the
reasonable expectations test. See Kloss v. Edward D. Jones & Co.,
54 P.3d 1, 8–9 (Mont. 2002).
       MORTENSEN V . BRESNAN COMMUNICATIONS, LLC 19

    Because the Montana Supreme Court has held that
arbitration agreements constitute a waiver of a party’s
fundamental constitutional rights to trial by jury and access
to courts, all arbitration agreements where waiver is not
“voluntarily, knowingly, and intelligently” made are void as
a matter of public policy. Id. at 699 (citations omitted).
Montana law defines “voluntarily, knowingly, and
intelligently” made as requiring a consumer to be informed of
the consequences of a provision and to personally consent to
waiver after receiving the proper information. Id. Under this
generally applicable rule, only arbitration agreements
explained to and initialed by consumers are valid and
enforceable. See id.

       4. The Effect of Concepcion on the Reasonable
           Expectations/Fundamental Rights Rule

    Bresnan first contends that the Montana reasonable
expectations/fundamental rights rule is not preserved by the
FAA’s savings clause because it is not generally applicable
given that it depends on the unique nature of arbitration
agreements.13 Bresnan supports this assertion by urging that,
unlike other contract provisions, arbitration agreements
implicate fundamental rights. It contends that, even without


  13
      W hile arguing that the M ontana rule is not generally applicable,
Bresnan contends surprisingly that the “reasonable expectations” test is
one based on unconscionability— a quintessential generally applicable
contract defense. The M ontana reasonable expectations/fundamental
rights rule is related to the unconscionability doctrine. The relationship
is shown by the Montana Supreme Court’s application of the Kloss
unconscionability factors to the fundamental rights analysis in Kortum-
Managhan, 204 P.3d at 699–700. But because prior cases have said that
the defenses are different, we decline to hold otherwise. See, e.g., Iwen,
977 P.2d at 995; Kloss, 53 P.3d at 8.
20 MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

Concepcion, the rule is preempted. We disagree. Bresnan
may be correct that the reasonable expectations/fundamental
rights rule has a disproportionate impact on arbitration
agreements. But the rule does not invalidate only those
agreements. Many other types of agreements may be equally
affected by the Montana rule. And contract provisions
requiring bench trials waive the fundamental right to a jury
trial. We cannot say that the fundamental-rights rule depends
entirely on the nature of arbitration agreements.

     Bresnan next contends that even if the doctrine is one of
general applicability, it disproportionally affects arbitration
agreements and thus is preempted by the FAA following
Concepcion.        We agree.       The Montana reasonable
expectations/fundamental rights rule arose from state court
consideration of adhesive arbitration agreements, see Kortum-
Managhan, 204 P.3d at 698–700, and most of the rule’s
applications have been to those provisions, see, e.g., Ticknor,
265 F.3d at 931; Kloss, 53 P.3d at 7–8. Courts, including this
one, considering Montana’s public policy repeatedly refer to
it in arbitration-specific terms. See, e.g., Ticknor, 265 F.3d at
939 (“In the context of adhesion contracts, the Montana
Supreme Court has determined expressly that it will not
enforce an [unfair] arbitration clause.” (citing Iwen, 977 P.2d
at 996)). Because of this, we conclude that the reasonable
expectations/fundamental rights rule runs contrary to the
FAA as interpreted by Concepcion because it
disproportionally applies to arbitration agreements,
invalidating them at a higher rate than other contract
provisions. We hold that the FAA preempts the Montana
     MORTENSEN V . BRESNAN COMMUNICATIONS, LLC 21

reasonable expectations/fundamental rights rule as that rule
is currently employed.14

      B. The Effect of Preemption on Choice-of-Law
                      Considerations

    Now that we have determined that the Montana
reasonable expectations/fundamental rights rule is preempted
by the FAA, we assess the consequences that flow from that
conclusion. Federal courts sitting in diversity use the choice-
of-law rules of the forum state, in this case Montana, to make
a choice-of-law determination. See Zinser v. Accufix
Research Inst., Inc., 253 F.3d 1180, 1187 (9th Cir. 2001); see
also Sparling v. Hoffman Constr. Co., Inc., 864 F.2d 635, 641
(9th Cir. 1988). Montana uses the Restatement (Second) of
Conflict of Laws § 187(2), which finds a choice-of-law
provision overcome where (1) Montana has a materially
greater interest in the transaction than the state whose law
was selected by the parties and (2) application of the selected
state’s law would be contrary to Montana’s public policy.
Ticknor, 265 F.3d at 937–38.

    In assessing whether Montana has a materially greater
interest in the transaction, Montana law considers the place of
contracting; the place where the contract was negotiated; the


   14
      This holding is consistent with extra-circuit precedent because the
Montana reasonable expectations/fundamental rights rule “bar[s] the
arbitration of entire categories of claims,” essentially all adhesive
consumer arbitration agreements, and “disfavors arbitration.” See Noohi,
708 F.3d at 611–13 (holding that a Maryland law requiring an arbitration
provision to contain a mutually coextensive exchange of promises to
arbitrate was not preempted by the FAA following Concepcion because
all it did was “treat an arbitration provision like a stand-alone contract,
requiring consideration” and did not disfavor arbitration).
22 MORTENSEN V . BRESNAN COMMUNICATIONS, LLC

place of performance; the location of the subject matter of the
contract; and the domicile, residence, nationality, place of
incorporation and place of business of the parties. Id. at 938;
see also Keystone, Inc. v. Triad Sys. Corp., 971 P.2d 1240,
1242 (Mont. 1998) (applying the five factors from the
Restatement (Second) of Conflict of Laws § 188 to determine
if Montana had a materially greater interest in the
transaction). Here, after applying these factors, the district
court correctly concluded that Montana had a materially
greater interest than New York in the dispute. The contract
was received by the consumers in Montana as part of their
Welcome Kit, and the contract governed services provided in
Montana to Montana residents. The subject matter of the
contract and performance of it took place almost entirely in
Montana.

    But the second prong of the choice-of-law analysis,
requiring an application of New York law to be contrary to
the fundamental public policy of Montana, is lacking. The
parties have briefed the differences between New York and
Montana policies with respect to the relative favor (or lack
thereof) that they show to arbitration agreements. In the
district court, the judge noted that this prong was fulfilled
because “application of New York law would contravene the
fundamental public policy of Montana in that fundamental
rights would be waived without notice.” Because Montana’s
reasonable expectations/fundamental rights rule is preempted,
we conclude that it cannot serve as a basis for rejecting the
choice-of-law selection of the parties. We have found no
other policy, not preempted by the FAA, that would justify
the application of Montana law. We hold that the district
court should have applied New York law to the arbitration
agreement.
    MORTENSEN V . BRESNAN COMMUNICATIONS, LLC 23

                              IV

    This is not an easy case as it requires us to interpret
Concepcion and apply that law to an established Montana
rule that governs the validity of contracts generally but has a
disproportionate impact on arbitration agreements. Montana
has an interest in protecting its consumers from unfair
agreements, particularly those that force waiver of
fundamental rights without notice. But the Supreme Court in
Concepcion told us to hold that the FAA preempts all laws
that have a disproportionate impact on arbitration agreements.
Given this directive, we hold that the Montana reasonable
expectations/fundamental rights rule is preempted by the
FAA. Because (1) a state’s preempted public policy is an
impermissible basis on which to reject the parties’ choice of
law and (2) under Montana choice-of-law analysis, courts
cannot ignore the law selection of the parties unless it would
contravene a fundamental state policy, the district court erred
in failing to apply New York law. We vacate the district
court’s denial of Bresnan’s motion to compel arbitration and
remand to the district court with instructions to apply New
York law to the agreement.

   VACATED AND REMANDED.
