           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                         December 16, 2009

                                     No. 09-60433                      Charles R. Fulbruge III
                                   Summary Calendar                            Clerk



JOE BELL; BILLY RAY BROWN; CLARKE DENTON; TONY DENTON;
CHARLES DUBOSE; ROGER EASTERLING; CHRIS FORTENBERRY;
ANGIE GAINEY; BRENDA GUY; LARRY HARRELL; JAMES MCINTOSH;
RONNIE MILEY; HAROLD NELSON; WESLEY ODOM; CHARLES
RAWSON; EDWARD G. SADOWSKI; MARY SESSUMS; C.H. THAMES;
KEITH WARE; JOE MASSEY; RICKY BRATCHER,

                                           Plaintiffs–Appellants,
v.

KOCH FOODS OF MISSISSIPPI, LLC,

                                           Defendant–Appellee.




                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             USDC No. 3:08-CV-697


Before GARZA, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM:*
       Twenty-two poultry growers (the Growers) filed suit against Koch Foods
of Mississippi, LLC, alleging that Koch breached its contracts with the Growers


       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
                                 No. 09-60433

and violated the Packers & Stockyard Act (PSA), along with various state law
claims. Subsequently, the district court denied the Growers’ motion to allow
arbitration-related discovery, granted Koch’s motion to compel arbitration, and
dismissed the suit. On appeal, the Growers argue that (1) the district court
erred in denying their motion to allow arbitration-related discovery; (2) the
arbitration agreements in the record are not evidence of an agreement to
arbitrate because they were not properly authenticated; (3) the arbitration
agreements are not valid because they were fraudulently procured; (4) the
arbitration agreements are unenforceable because they are procedurally and
substantively unconscionable; and (5) the arbitration clause in the agreements
conflicts with the underlying purpose of the PSA. We affirm.
                                       I
      The Growers, at various times, each entered into Broiler Growing
Agreements or Breeder Hen Agreements with Koch. The Growers allege that
Koch unilaterally and unlawfully ended its relationship and terminated
contracts under which the Growers raised chickens on Koch’s behalf, and that
Koch’s conduct amounted to a violation of the PSA. The Growers also allege
Koch’s conduct exhibited actionable state law claims for fraud, fraudulent
concealment, and fraudulent misrepresentation.
      The Growers filed suit in federal district court. Thereafter, Koch filed a
motion to compel arbitration, pursuant to the arbitration clause that is
contained in each of the agreements. The arbitration clause is identical in each
of the agreements and provides that “ALL DISPUTES OR CONTROVERSIES
ARISING UNDER THIS AGREEMENT, INCLUDING TERMINATION
THEREOF,      SHALL     BE    DETERMINED        BY    A   THREE      MEMBER
ARBITRATION PANEL,” in accordance with the rules and procedures of the
American Arbitration Association. The findings of the panel are binding on the
parties. The agreements provide that each party shall pay the costs associated

                                       2
                                        No. 09-60433

with one of the three arbitrators and that the parties shall share equally the
costs associated with the third arbitrator.             Also, “[i]n the event of a final
adjudication by the panel, all fees, costs, and expenses incurred by the successful
party as a result of the dispute, including attorney’s fees and arbitrator fees,
shall be bourn [sic] by the unsuccessful party.” The clause also stipulates “that
the business of raising, processing, and producing poultry products is extensively
involved in interstate commerce,” “that the Federal Arbitration Act is applicable
to this agreement,” and that the arbitration clause provides a complete defense
to any proceeding before a court or administrative tribunal.
      The district court denied the Growers’ request for arbitration-related
discovery, finding that the Growers had not made a compelling showing that
discovery should be permitted. The district court also denied the Growers’
request for a jury trial or a hearing on the issue of whether the arbitration
agreements are valid. After finding that the parties entered valid arbitration
agreements and that the Growers’ claims are within the scope of the agreements,
the district court also rejected the Growers’ arguments that the arbitration
clauses are unconscionable and violate the PSA. Accordingly, the district court
granted Koch’s motion to compel arbitration and dismissed the Growers’ suit.
The Growers subsequently filed this appeal.
                                               II
      The Growers first argue that the district court erred in denying their
motion to allow arbitration-related discovery. We review the discovery decisions
of the district court for abuse of discretion, and we will affirm unless the
discovery decision is arbitrary or clearly unreasonable.1




      1
          United States ex rel. Taylor-Vick v. Smith, 513 F.3d 228, 232-33 (5th Cir. 2008).

                                               3
                                        No. 09-60433

       The Federal Arbitration Act (FAA) “calls for a summary and speedy
disposition of motions or petitions to enforce arbitration clauses.” 2                  It was
“Congress’s clear intent, in the [FAA], to move the parties to an arbitrable
dispute out of court and into arbitration as quickly and easily as possible.” 3
       On appeal, the Growers argue that “if the decision to deny arbitration-
related discovery . . . resulted in the Growers suffering prejudice, the District
Court has abused its discretion regardless of the FAA’s preference for
expeditious proceedings.” The Growers contend that because they have the
burden to prove that the agreements will require them to pay prohibitive
arbitration costs and that the agreements were procured by fraud,4 “it seems
axiomatic” that they “must be given an opportunity to pursue discovery related
to the issue that [they have] the burden to prove.” The Growers maintain that
this court should “adopt a rule that anytime a party bears the burden of proof,
and is either trying to compel or defeat arbitration, then there is a compelling
reason for discovery.”
       Such a broad rule would defeat the FAA’s requirement of summary and
speedy disposition of motions and petitions to enforce arbitration clauses.
Furthermore, the Growers’ argument ignores the reasons the district court
denied their discovery requests. The district court correctly found that the
requested information was either irrelevant, already within the personal
knowledge of the Growers, or did not support a recognizable claim under
Mississippi law. Therefore, arbitration-related discovery would not have helped
the Growers to satisfy their burden of proof. Thus, the district court did not


       2
           Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 29 (1983).
       3
           Id. at 22.
       4
         See Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000) (“[T]he party
resisting arbitration bears the burden of proving that the claims at issue are unsuitable for
arbitration.”).

                                               4
                                         No. 09-60433

abuse its discretion in denying the Growers’ request for arbitration-related
discovery.
                                               III
       The Growers also argue that the district court erred in granting Koch’s
motion to compel arbitration. We review de novo the district court’s ruling on
Koch’s motion to compel arbitration.5
       In deciding whether a party may be compelled to arbitrate, a court must
consider (1) whether there is a “valid agreement to arbitrate the claims and (2)
does the dispute in question fall within the scope of that arbitration agreement.” 6
On appeal, the Growers argue that they did not enter into valid agreements to
arbitrate their claims, the arbitration agreements are unenforceable because of
procedural and substantive unconscionability, and the arbitration agreements
violate the PSA.
                                                A
       The Growers first argue that the arbitration agreements in the record
were not properly authenticated and therefore are not evidence of a valid
agreement to arbitrate between the parties. However, the Growers did not
object to the authenticity of the agreements in district court; thus, they have
waived this argument.7 Furthermore, the Growers have not alleged any harm
from Koch’s alleged failure to properly authenticate the agreements, and they
do not argue on appeal that they did not sign the arbitration agreements that
are in the record.




       5
           See Terrebonne v. K-Sea Transp. Corp., 477 F.3d 271, 277 (5th Cir. 2007).
       6
           Jones v. Halliburton Co., 583 F.3d 228, 234 (5th Cir. 2009).
       7
        See United States v. Monkey, 725 F.2d 1007, 1011 n.4 (5th Cir. 1984) (“Objections to
authenticity . . . are waived by a failure to raise them in the District Court, where the
[opposing party] could have remedied any technical deficiencies.”).

                                                5
                                          No. 09-60433

                                                 B
         Alternatively, the Growers argue that if the arbitration agreements were
properly authenticated, the agreements are not valid because they were
fraudulently procured. Under Mississippi law, a contract that is procured by
fraud is void.8 The party alleging fraud must prove, by clear and convincing
evidence, the following elements:
                  (1) A representation; (2) its falsity; (3) its materiality;
                  (4) the speaker’s knowledge of its falsity or ignorance of
                  its truth; (5) his intent that it should be acted on by the
                  person and in the matter reasonably contemplated; (6)
                  the hearer’s ignorance of its falsity; (7) his reliance
                  upon its truth; (8) his right to rely thereon; (9) his
                  consequent and proximate injury.9
         The district court denied the Growers’ request for a jury trial on the
validity of the agreements and concluded that the Growers had failed to show
that the arbitration agreements were voidable because the Growers had “not
presented any evidence showing that Koch made false representations at the
time the clauses were entered.” On appeal, the Growers concede that Koch did
not “actively” misrepresent the arbitration agreements. Instead, the Growers
argue that Koch knew that the arbitration agreements would effectively deprive
the Growers of any forum due to the excessive costs to have a dispute heard and
that Koch’s silence on this matter constitutes “passive fraud.” The Growers
contend that their failure to present any evidence to substantiate these
allegations is due to the district court’s refusal of their request to conduct
arbitration-related discovery. However, even if the Growers were able to present
evidence to substantiate their allegations, they still have not established that,
under Mississippi law, they would be relieved of their contractual obligation to

         8
             Great S. Nat’l Bank v. McCullough Envtl. Servs., Inc., 595 So. 2d 1282, 1288 (Miss.
1992).
         9
             Id. at 1288-89.

                                                 6
                                            No. 09-60433

arbitrate if their allegations were true. The Mississippi Supreme Court “has
never held that one party to an arm’s-length contract has an inherent duty to
explain its terms to the other. Duties to disclose or to act affirmatively, such as
explaining the terms of a contract, do not arise in arm’s length transactions or
under ordinary standard of care.”10                    Therefore, Koch’s alleged silence is
insufficient to establish that the agreements were fraudulently procured, and we
hold that the arbitration agreements are valid.
                                                   C
         Next, the Growers argue that the agreements are unenforceable because
the circumstances surrounding the formation of the agreements and the terms
of the agreements are unconscionable, both procedurally and substantively, as
a matter of law. The Supreme Court has held that generally applicable contract
defenses, such as unconscionability, may be applied to invalidate arbitration
agreements without contravening the FAA.11                           Under Mississippi law,
“unconscionability has been defined as an absence of meaningful choice on the
part of one of the parties, together with contract terms which are unreasonably
favorable to the other party.” 12             There are “two types of unconscionability,
procedural and substantive.”13
         Procedural unconscionability may be proven by demonstrating “a lack of
knowledge, lack of voluntariness, inconspicuous print, the use of complex
legalistic language, disparity in sophistication or bargaining power of the parties
and/or a lack of opportunity to study the contract and inquire about the contract


         10
              MS Credit Ctr., Inc. v. Horton, 2004-CA-01699-SCT (¶ 32), 926 So. 2d 167, 177 (Miss.
2006).
         11
              Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).
         12
        Entergy Miss., Inc. v. Burdette Gin Co., 97-CA-00481-SCT (¶ 11), 726 So. 2d 1202,
1207 (Miss. 1998) (internal quotation marks omitted).
         13
              E. Ford, Inc. v. Taylor, 2000-IA-01527-SCT (¶ 13), 826 So. 2d 709, 714 (Miss. 2002).

                                                   7
                                       No. 09-60433

terms.” 14 In support of their position that the agreements are procedurally
unconscionable, the Growers argue that they are not sophisticated business
persons and have no knowledge of the workings of arbitration; the arbitration
agreement was presented on a take-it-or-leave-it basis; the Growers are the
weaker of the two parties; the Growers must rely on Koch to make a living; and
Koch controls every aspect of the chicken operations. Although the Growers
assert that they did not know how arbitration worked when they signed the
agreements, parties are charged with understanding the terms of contracts that
they sign.15 Furthermore, the arbitration clause is written in plain English and
conspicuous type, with portions of the clause written in all capital letters. The
clause clearly states that all contract disputes between the parties will be
resolved through arbitration.            Moreover, even if Koch did present the
agreements to the Growers on a take-it-or-leave-it basis, this alone would not
render the agreements procedurally unconscionable:
                  The fact that an arbitration agreement is included in a
                  contract of adhesion renders the agreement
                  procedurally unconscionable only where the stronger
                  party’s terms are unnegotiable and the weaker party is
                  prevented by market facts, timing or other pressures
                  from being able to contract with another party on more
                  favorable terms or to refrain from contracting at all.16
As the district court correctly concluded, the Growers have not shown that they
were prevented from being able to contract with another party on more favorable




       14
            Id.
       15
         See Cleveland v. Mann, 2005-CA-00924-SCT (¶ 23), 942 So. 2d 108, 115-16 (Miss.
2006) (“Plaintiffs may not escape the agreement by simply stating [they] did not read the
agreement or have it read to [them] or understand its terms.”).
       16
         E. Ford, Inc., 2000-IA-01527-SCT (¶ 20), 826 So. 2d at 716; see also Dillard v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1154 (5th Cir. 1992) (“Adhesion contracts
are not automatically void.”).

                                               8
                                         No. 09-60433

terms or to refrain from contracting at all.              Accordingly, we hold that the
arbitration agreements are not procedurally unconscionable.
       “Substantive unconscionability may be proven by showing the terms of the
arbitration agreement to be oppressive.”17 An agreement may be substantively
unconscionable when it is
                one-sided and one party is deprived of all the benefits of
                the agreement or left without a remedy for the other
                party’s nonperformance or breach, a large disparity
                between cost and price or a price far in excess of that
                prevailing in the market price exists, or the terms bear
                no reasonable relationship to business risks assumed by
                the parties.18
       The arbitration agreement in this case “contains no limitation of damages,
no limitation on bringing claims, and no waiver of liability.” 19 However, the
Growers argue that the arbitration agreements are substantively unconscionable
because “a Grower would have to pay up front fees in the amount of $27,000.00
to $29,000.00 to bring a claim under the terms of the agreement,” and “there is
uncontradicted proof that at least fourteen of the Growers cannot now afford to
arbitrate and could not afford to arbitrate a dispute under the terms of the
agreement at the time it was entered.”
       The Supreme Court has recognized “that the existence of large arbitration
costs could preclude a litigant . . . from effectively vindicating her . . . rights in
the arbitral forum,” but “[t]he ‘risk’ that [a litigant] will be saddled with
prohibitive costs is too speculative to justify the invalidation of an arbitration



       17
            E. Ford, Inc., 2000-IA-01527-SCT (¶ 14), 826 So. 2d at 714.
       18
         MS Credit Ctr., Inc. v. Horton, 2004-CA-0199-SCT (¶ 29), 926 So. 2d 167, 177 (Miss.
2006) (internal quotation marks omitted).
       19
         See id. at (¶ 38), 926 So. 2d at 179 (holding that the arbitration agreement was not
substantively unconscionable because “[t]he agreement merely submits the question of liability
to a forum other than the courts”).

                                                9
                                        No. 09-60433

agreement.”20        This court has previously noted that the party opposing
arbitration has a burden of “providing some individualized evidence that they
likely will face prohibitive costs in the arbitration at issue and that they are
financially incapable of meeting those costs.” 21 The district court concluded that
the Growers had failed to provide any individualized evidence to support their
assertion that they would be unable to meet the costs to arbitrate under the
agreements. The Growers argue that “it is quite puzzling that the District Court
demands detailed proof” in light of the court’s denial of their request for
arbitration-related discovery. However, while the Growers have provided their
estimated costs of arbitration, the Growers have not provided any individualized
information about their ability to pay those costs, and each Grower’s individual
ability to pay is within his or her personal knowledge and does not require
discovery. Additionally, the provision requiring the losing party to bear the costs
of arbitration “is not a basis to hold the Agreements unenforceable” as “the
question of which party to the arbitration will ultimately prevail at arbitration
is subject to speculation only.” 22 Accordingly, we hold that the Growers have not
shown that the costs associated with arbitration render the agreements
substantively unconscionable.
                                               D
      Finally, the Growers argue that the arbitration clause conflicts with the
underlying purpose of the PSA.             Section 192 of the PSA prohibits “unfair,
unjustly discriminatory, or deceptive practice[s] or device[s].” 23 The Growers’
argument consists of two sentences: they argue that “Koch’s purported


      20
           Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90-91 (2000).
      21
           Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 300 (5th Cir. 2004).
      22
           See Am. Heritage Life Ins. Co. v. Orr, 294 F.3d 702, 712 (5th Cir. 2002).
      23
           7 U.S.C. § 192(a).

                                               10
                                    No. 09-60433

arbitration agreement was procured in a deceptive manner, and its oppressive
costs sharing provisions are patently unfair,” and thus the arbitration clause
conflicts with the “underlying purpose of the PSA.” The district court found that
the Growers had not shown that the arbitration clauses should be deemed unfair
or deceptive under the PSA. On appeal, the Growers have not identified any
evidence nor cited to any authority supporting their arguments that the
arbitration agreements were procured in a deceptive manner or that the cost-
sharing provisions are unfair. Accordingly, we hold that the Growers have not
established that the arbitration clause conflicts with the PSA.
                                *        *         *
      Therefore, for the reasons discussed above, we AFFIRM the district court’s
judgment.




                                        11
