                                No. 2--07--0322       Filed: 1-11-08
______________________________________________________________________________

                                              IN THE

                               APPELLATE COURT OF ILLINOIS

                              SECOND DISTRICT
______________________________________________________________________________

NICOLE TORTORIELLO,                    ) Appeal from the Circuit Court
                                       ) of Kane County.
       Plaintiff-Appellee,             )
                                       )
v.                                     ) No. 06--L--304
                                       )
GERALD NISSAN OF NORTH AURORA,         )
INC., and J.P. MORGAN CHASE BANK,      ) Honorable
                                       ) Judith M. Brawka,
       Defendants-Appellants.          ) Judge, Presiding.
______________________________________________________________________________

       JUSTICE O'MALLEY delivered the opinion of the court:

       Defendants, Gerald Nissan of North Aurora (Gerald Nissan) and J.P. Morgan Chase Bank

(J.P. Morgan), appeal the judgment of the trial court denying their motions to stay court proceedings

and compel arbitration pursuant to an arbitration clause in an automobile purchase agreement signed

by Gerald Nissan and plaintiff, Nicole Tortoriello. The trial court denied defendants' motions because

it found the arbitration clause unconscionable. We view the clause differently and so reverse and

remand for further proceedings.

       In June 2006, plaintiff sued defendants, seeking to rescind her purchase of a preowned Nissan

automobile from Gerald Nissan, a transaction financed by J.P. Morgan. Plaintiff alleged common-law

fraud and violations of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud

Act) (815 ILCS 505/1 et seq. (West 2004)). Plaintiff attached to her complaint two documents, each

entitled "Used Car Retail Buyers Order" and signed by plaintiff and Gerald Nissan. Both documents
No. 2--07--0322


consist of the same two-sided preprinted form but contain different figures in the spaces provided for

the contract terms. One document is dated October 22, 2005 (First Buyers Order), and the other

October 28, 2005 (Second Buyers Order). Plaintiff alleged that, several days after she signed the

First Buyers Order, Gerald Nissan informed her that her financing for the purchase was not approved.

According to plaintiff, Gerald Nissan "falsely misrepresented that [she] had no option" but to sign a

second contract, the Second Buyers Order, whose terms were less favorable to her than the First

Buyers Order.

        Both defendants filed motions to stay court proceedings and compel arbitration. They relied

on an arbitration clause that appears on the reverse side of the Second Buyers Order. At the top of

the reverse side is the heading "Terms and Conditions," followed by a series of single-spaced

paragraphs written in very fine print. The density of text is relieved somewhat by a single blank line

that separates each paragraph. The paragraphs are numbered and each is prefaced with an underlined

subject description. The final paragraph, number 17, contains the arbitration provision. We

reproduce it here in actual size and in context, to give an impression of the overall appearance of the

page:
                                                                                "TERMS AND CONDITIONS

        1. Changes in Price Manufacturer has reserved the right to change the price to Dealer of new motor vehicles without notice, in the event the price to Dealer of new vehicles of the series
        and body type ordered in this contract is changed by the Manufacturer prior to delivery of the new motor vehicle ordered under this contract. Dealer reserves the right to change the
        cash delivered price of such motor vehicle to Buyer accordingly. If such cash delivered price is increased by Dealer, Buyer may, if dissatisfied with the change in price, cancel this order,
        in which event the used motor vehicle, if any, that has been traded in as part of the consideration of such new motor vehicle, shall be returned to Buyer upon payment of a reasonable
        charge for storage and repairs (if any) or, if such used motor vehicle has previously been sold by Dealer, the amount received therefrom, less a selling commission of 15% and any expense
        incurred in storing, insuring, conditioning, or advertising said used motor vehicle for sale shall be returned to Buyer.

        2. Changes in Design Manufacturer has reserved the right to change the design of any new motor vehicle, chassis, accessories or parts thereof at any time without notice and without
        obligation to make the same or any similar change upon any motor vehicle chassis, accessory or parts previously purchased by or shipped to Dealer, or being manufactured or sold in
        accordance with Dealer's orders. In the event of any such change by Manufacturer, Dealer shall have no obligation to Buyer to make the same or similar changes in any motor vehicle,
        chassis, accessories or parts thereof covered by this contract either before or subsequent to delivery of the new moto r vehicle to Buyer.

                                                                                              ***

        15. Severability If any term, covenant or condition of this contract or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder
        of this contract or the application of such term, covenant or provision, to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected
        thereby and each term, covenant or provision of this contract shall be valid and be enforced to the fullest extent permitted by law.

        16. Limitation of Dealer's Liability Dealer's entire liability to Buyer, if any, for any claim, demands or causes of action, whether in tort, contract, consumer fraud, fraud or
        otherwise, is limited solely to the amount set forth as the purchase price of this contract. Notwithstanding the foregoing limitation, if a disp ute, claim or cause of action arises as a result
        of the purchase of the vehicle or any breach or alleged breach of this contract, wh ether in tort, contract, consumer fraud, fraud or otherwise, Dealer, at its sole option, may elect to
        repurchase the vehicle sold hereunder and refund the purchase price of the vehicle to Buyer, less any reasonable costs to Dealer associated with the repurchase. At Dealer's sole discretion,
        such repurchase would be the sole remedy available to Buyer in the event of a breach of this contract by Dealer. The limitation set forth herein does not affect any disclaimer or other
        provision of this contract and creates no sub stantive rights of action against Dealer.

        17. Arbitration Any controversy, claim, cause of action, or other dispute arising out of or relating to this contract, or the breach, termination or invalidity thereof, whether in tort, contract,
        consumer fraud or otherwise, except a cause of action or claim by Dealer to recover full payment of the purchase price, or claim involving the breach of any retail installment contract



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No. 2--07--0322

       as set forth below, shall be resolved by binding arbitration before a sole arbitrator in DuPage County, Illinois in accordance with the Commercial Rules of the American Arbitration
       Association, and judgment upon any award rendered by the arbitrato r may be entered in any court of competent jurisdiction. The arbitrator shall determine the rights and obligations
       of the parties according to the substantive laws of the State of Illinois and the express terms of this contract. The official lan guage of the arbitration shall be English. The arbitrator shall
       not be empowered to grant exemplary, punitive, or consequential damages or any damages in excess of those damages permitted under the express terms of this contract. The party
       prevailing on substantially all of its claims shall be entitled to recover its costs, including attorney's fees, for the arbitration proceedings, as well as any ancillary proceeding, including
       a proceeding to compel or enjoin arbitration, to request interim measures or to confirm or set aside an award. Claims, causes of action and other disputes against Buyer arising out of
       or related to the breach by Buyer of any retail installment contract executed in connection with this contract are not subject to arbitration under this paragraph."



Enlarged for better readability, the arbitration provision states:

       "17. Arbitration Any controversy, claim, cause of action, or other dispute arising out of or

       relating to this contract, or the breach, termination or invalidity thereof, whether in tort,

       contract, consumer fraud or otherwise, except a cause of action or claim by Dealer to recover

       full payment of the purchase price, or claim involving the breach of any retail installment

       contract as set forth below, shall be resolved by binding arbitration before a sole arbitrator in

       DuPage County, Illinois in accordance with the Commercial Rules of the American

       Arbitration Association, and judgment upon any award rendered by the arbitrator may be

       entered in any court of competent jurisdiction. The arbitrator shall determine the rights and

       obligations of the parties according to the substantive laws of the State of Illinois and the

       express terms of this contract. The official language of the arbitration shall be English. The

       arbitrator shall not be empowered to grant exemplary, punitive, or consequential damages or

       any damages in excess of those damages permitted under the express terms of this contract.

       The party prevailing on substantially all of its claims shall be entitled to recover its costs,

       including attorney's fees, for the arbitration proceedings, as well as any ancillary proceeding,

       including a proceeding to compel or enjoin arbitration, to request interim measures or to

       confirm or set aside an award. Claims, causes of action and other disputes against Buyer

       arising out of or related to the breach by Buyer of any retail installment contract executed in

       connection with this contract are not subject to arbitration under this paragraph."

Paragraph 16, which is also implicated in this appeal, reads in relevant part:


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       "16. Limitation of Dealer's Liability Dealer's entire liability to Buyer, if any, for any claim,

       demands or causes of action, whether in tort, contract, consumer fraud, fraud or otherwise,

       is limited solely to the amount set forth as the purchase price of this contract."

       The top two-thirds of the front side of the Second Buyers Order contains a series of blanks

for such terms as the make, model, and year of the purchased car, as well as the selling price, sales

tax, and fees. This section of the front side also contains several paragraphs of preprinted terms,

including a paragraph entitled "Warranty Disclaimer," which reads in relevant part (not in actual size):

       "Dealer expressly disclaims any liability to buyer for any consequential damages, damages for

       loss of use, loss of profits or income, loss of time or inconvenience, or any other incidental

       or consequential damages arising out of this contract or the operation of the vehicle

       purchased hereunder."

The bottom third of the page is set off by a solid line, immediately below which is a heading that is

bolded and centered on the page. The heading reads in actual size:

       "SUBJECT TO TERMS & CONDITIONS ON REVERSE SIDE AND THIRD PARTY FINANCE

       APPROVAL"

The font for the immediately surrounding lines is considerably smaller and not bolded. The font for

the heading is, in fact, the largest on the page but for the main page title, which reads: "USED CAR

RETAIL BUYERS ORDER." At the very bottom of the front side of the Second Buyers Order are

spaces for the buyer's personal information and signature.

       In her response to the motions to compel arbitration, plaintiff argued that the arbitration

clause was both procedurally and substantively unconscionable. Plaintiff asserted that she "never saw

the [arbitration clause], [she] was not told to read the [clause]," and "no one never [sic] referred to




                                                  -4-
No. 2--07--0322


the [clause]." Plaintiff also argued that the clause was "one-sided, without consideration[,] and

inconspicious."

         The trial court held a hearing on defendants' motions. Plaintiff testified on her own behalf.

She stated that, on October 22, 2005, she purchased a preowned Nissan at Gerald Nissan and traded

in her Chevrolet Monte Carlo. The terms of the agreement were contained in the First Buyers Order,

which plaintiff signed in the presence of a financing employee whom she did not name. Plaintiff

testified that she had no objection to the terms of the First Buyers Order as she understood them.

Plaintiff acknowledged that the reverse side of the First Buyers Order contains an arbitration clause

identical to the provision in the Second Buyers Order. Plaintiff testified that when she signed it she

was unaware of the arbitration clause in the First Buyers Order. Plaintiff explained that no one at

Gerald Nissan advised her to read the back of the document or informed her that there were any

terms on the back. Plaintiff did not read the back of the First Buyers Order on her own initiative

before she signed the contract, because she "didn't get an opportunity." Plaintiff testified that Gerald

Nissan gave her copies of the First Buyers Order and the related paperwork she signed on October

22. When asked if she read the back of the First Buyers Order between October 22 and October 28,

the day she returned to Gerald Nissan, plaintiff said: "Everything was a done deal at that point, so

I didn't feel that I had to sit down and analyze the contracts that were already provided to me the first

time."

         Plaintiff testified that, on October 26, 2005, she received a phone call from Tamer Shams,

Gerald Nissan's finance manager. In that conversation, Shams asked plaintiff to return to Gerald

Nissan to discuss "two options" with him. Shams also stated that plaintiff needed to re-sign her

paperwork. When plaintiff told Shams that she did not wish to sign any more paperwork, Shams



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replied that she was required "by law" to do so and that her credit could be negatively affected if she

refused.

        Plaintiff testified that she went to Gerald Nissan on October 28 and met with Shams, who

presented plaintiff with the Second Buyers Order. Plaintiff testified that Shams said nothing about

her financing for the sale reflected in the First Buyers Order and that he did not allude to any problem

with the transaction. Plaintiff noticed that the Second Buyers Order reflected the purchase of the

same preowned Nissan shown in the First Buyers Order but indicated an increase of $1,700 for her

service contract. Plaintiff told Shams that she did not want to sign the Second Buyers Order and

asked that Gerald Nissan return her trade-in. Shams refused and said that Gerald Nissan would sue

plaintiff if she did not sign the document. Plaintiff, believing that she had "no option to walk away,"

signed the Second Buyers Order and the related paperwork. Plaintiff testified that neither Shams nor

anyone else at Gerald Nissan informed her that day of an arbitration clause in the Second Buyers

Order. Plaintiff did not read the back of Second Buyers Order on her own initiative before she signed

it, because she was "rushed" through the process. Plaintiff admitted, however, that she never

requested time to read the contract in full before she signed it. She also did not read the back of the

Second Buyers Order before leaving Gerald Nissan that day, because the document was "taken away

as soon as she signed [it]." Plaintiff testified that she was given a copy of the signed Second Buyers

Order when she left Gerald Nissan that day. When asked if she had "read anything on the reverse side

since then," plaintiff replied in the negative.

        Plaintiff testified that she signed the Second Buyers Order involuntarily and under "duress."

She testified that no one at Gerald Nissan physically threatened her but that she signed the Second

Buyers Order to preserve her credit, which Shams claimed would be damaged if she did not sign the



                                                  -6-
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agreement. Plaintiff admitted that she never asked to speak to anyone other than Shams at Gerald

Nissan on October 28.

        Shams was defendants' sole witness. He testified that the transaction reflected in the First

Buyers Order failed because plaintiff's financing was rejected. Shams explained that "there is a certain

advance you would need from the bank to get the deal approved" and that plaintiff's advance "was

coming up short" because she owed more on her trade-in, the Monte Carlo, than the car was worth.

Shams testified that he later secured financing for plaintiff from J.P. Morgan. Shams acknowledged

that the "deal had changed" but he did not elaborate. Shams testified that, once he obtained financing,

he phoned plaintiff and said: "[T]here is some paperwork that I need to go over with you and ***

I need you to come in and re-sign some paperwork." Plaintiff met with Shams at Gerald Nissan and

told him she desired a car with a sunroof, which was lacking in the Nissan she had originally agreed

to purchase. After Shams showed her a model with a sunroof, plaintiff decided to purchase the

Nissan she had earlier selected. Plaintiff then signed the Second Buyers Order and the related

paperwork. Shams testified that plaintiff did not "ask [for] more time to read the documents." Shams

testified that plaintiff "could have decided not to purchase any cars from [Gerald Nissan]" but that

she never expressed such a desire to Shams.

        The trial court issued a written order denying defendants' motions to stay proceedings and

compel arbitration. The trial court found the arbitration clause both procedurally and substantively

unconscionable based on the following factors, no single one of which, the trial court cautioned, was

dispositive:

                "a. the arbitration provision in Section 17 is not conspicuous when the document is

        viewed as a whole, nor on the back page;



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               b. the arbitration provision in Section 17 is indistinguishable in the fine print but for

      the title;

               c. the arbitration provision in Section 17 is not specifically referenced or referred to

      on the front page;

               d. the arbitration provision in Section 17 is not the result of a prior course of

      meaningful dealings or trade usage between the parties;

               e. the arbitration provision in Section 17 was not bargained for between the parties

      but rather is one provision in a contract of adhesion where there existed a disparity of

      bargaining power between the drafter of the contract and the party claiming unconscionability;

               f. the arbitration provision in Section 17 was not brought specifically to the plaintiff

      purchaser's attention;

               g. the arbitration provision in Section 17 is at the bottom of a full page of fine print

      filled from margin to margin with text;

               h. the arbitration provision in Section 17 is written in 'legalese' without clear notice

      to the purchaser that dispute resolution is significantly limited (e.g. the first sentence of the

      section is as long or longer than eight of the other sixteen paragraphs, and is so complicated,

      it is nearly unintelligible);

               i. the one-sided nature of the issues to be arbitrated in Section 17 excludes all matters

      dealing with the purchaser's financial obligations irrespective of other findings regarding the

      dealer by the arbitrator;

               j. the inclusion of a provision within Section 17 in violation of the Illinois Consumer

      Fraud Act excluding any consideration of punitive damages."



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Immediately following these findings, the trial court noted in parentheses: "contrast: the arbitration

section at issue in [Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1 (2006)]." The trial court concluded

that plaintiff "cannot be fairly said to have been aware of what she was agreeing to in Section 17

which is inordinately one-sided in the drafter's favor." Defendants filed this timely appeal under

Supreme Court Rule 307(a)(1). 188 Ill. 2d R. 307(a)(1).

                               I. PLAINTIFF'S MOTION TO STRIKE

         Before we consider the merits of this appeal, we address plaintiff's motion to strike portions

of defendants' opening brief. Plaintiff takes issue with three aspects of defendants' statement of facts.

First, plaintiff asserts that defendants' citations that appear in the form, "RP Plaintiff's [or Defendant's]

Ex. __," are improper because the source "simply can not [sic] be located." The point of this

objection eludes us.      "RP," as defendants explain, quite obviously designates the report of

proceedings for the hearing on defendants' motions to compel arbitration, the only proceeding

transcribed in the record. It is equally apparent that the designation "Ex." refers to an exhibit

admitted at that hearing. These citations are entirely appropriate. Second, plaintiff argues that

defendants' quotation of the arbitration provision, bolded in part unlike the original, "make[s] it

appear as if the arbitration provisions were conspicuous and easily found." Defendants bolded the

essential parts of the arbitration provision for emphasis. We do not reproach them for this. We can

properly assess the conspicuousness of the arbitration clause from the copy of the Second Buyers

Order that is included in the record.

         Plaintiff's third complaint with defendants' statement of facts is that defendants have

misrepresented the record. Plaintiff singles out the following statements from page 10 of defendants'

brief:



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       "Plaintiff claims that she never read [the arbitration] clause before signing either Agreement.

       (RP 000066, RP 000119-20). She did not, in fact, choose to read anything on the reverse

       side of the Agreements. (Id.)"

The relevant testimony on the pages defendants cite is:

               "Q. Did you, at the time you were at the dealership on the 28th [of October 2005],

       read anything on the reverse side of that document [the Second Buyers Order]?

               A. No. At the time.

               Q. Now, if you'll flip to the second page, obviously, this is a photo copy, but--well,

       first of all, have you read anything on the reverse side since then?

               A. No.

                                                ***

               Q. You read the front of every document that you were handed on October 22nd and

       October 28th?

               A. On the 28th, I did not. On the 22nd, the documents that were provided in front

       of me, I read the front. They took them after I signed, so the 22nd was a car I actually

       wanted. I mean, I wanted that deal. I signed for it, so I read the front of it, didn't get an

       opportunity to read the back part."

Plaintiff claims that defendants' statement that she "did not, in fact, choose to read anything on the

reverse side of the Agreements" (emphasis added) misrepresents the actual meaning of the testimony.

While plaintiff's testimony implies that she freely chose not to read the back side of either Buyers

Order after she signed it, she expressly testified that she "didn't get an opportunity to read the back

part" of the First Buyers Order before she signed it on October 22 and that she was "rushed" through



                                                 -10-
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the process on October 28 and so she also did not read the reverse side of the Second Buyers Order

before signing it. If the above-quoted statements from defendants suggest that plaintiff freely chose

not to read the reverse side of either Buyers Order before signing it, then their claims do not

accurately reflect the record. In our view, however, defendants' assertion that plaintiff "did not, in

fact, choose to read anything on the reverse side of the Agreements" is ambiguous and may refer to

plaintiff's conduct before or after she signed each Buyers Order. While we believe that defendants

should have clarified their statements, the record does not clearly confute them, and we refuse to

strike them.

        Plaintiff also takes issue with the argument section of defendants' opening brief. She asks that

we strike all citations to federal district court decisions as well as the arguments based on those

citations. Plaintiff cites admonitions from the Seventh Circuit Court of Appeals as to the precedential

value of federal district court cases. Plaintiff claims that these cases hold that the decisions of the

lower federal courts "are not to be cited for any purpose." (Emphasis added.) This is an indefensible

overstatement. For instance, Anderson v. Romero, 72 F.3d 518, 525 (7th Cir.1995), states that

"[d]istrict court decisions have no weight as precedents" and "no authority" but may be cited as

"evidence of the state of the law." Plaintiff's argument has a more fundamental affliction, however.

On the question of what is proper practice in state courts, she cites prescriptions by federal appellate

courts for practice in federal courts. She claims that these federal prescriptions also bind state court

practice by virtue of the federal supremacy clause (U.S. Const., art. VI), but the sole case she cites,

Weiss v. Village of Downers Grove, 225 Ill. App. 3d 466 (1992), speaks to the entirely distinct

question of what substantive law--state or federal--governs federal claims brought in state courts.

See Weiss, 225 Ill. App. 3d at 469 ("Where, as here, a State court considers a Federal claim under



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the supremacy clause of the United States Constitution (U.S. Const., art. VI), the State court must

apply Federal law to the claim"). The more relevant guidepost is our recent statement in Lamar

Whiteco Outdoor Corp. v. City of West Chicago, 355 Ill. App. 3d 352, 360 (2005), that "[a]lthough

this court is not bound to follow federal district court decisions [citation], such decisions can provide

guidance and serve as persuasive authority [citation]." Defendants' citation to federal district courts

is not improper per se. We will give these authorities no greater deference than they are due.

        For the reasons stated above, we deny plaintiff's motion to strike portions of defendants' brief.

                                    II. UNCONSCIONABILITY

        We now turn to the substance of this appeal. Defendants attack the trial court's finding that

the arbitration clause in the Second Buyers Order is both procedurally and substantively

unconscionable.

        The threshold question is what law applies. There are two contenders: section 1 of the

Uniform Arbitration Act (Arbitration Act) (710 ILCS 5/1 (West 2004) ("[a] written agreement to

submit any existing controversy to arbitration or a provision in a written contract to submit to

arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable

save upon such grounds as exist for the revocation of any contract")) and section 2 of the Federal

Arbitration Act (FAA) (9 U.S.C. §2 (2000) ("[a] written provision in *** a contract evidencing a

transaction involving commerce to settle by arbitration a controversy thereafter arising out of such

contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in

writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or

refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in

equity for the revocation of any contract")). Defendants argue that the FAA applies because the



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underlying transaction in this case affects interstate commerce. Normally, "[w]here a contract

involving interstate commerce contains an arbitration clause, federal law preempts state statutes even

in state courts." Bishop v. We Care Hair Development Corp., 316 Ill. App. 3d 1182, 1190 (2000).

However, "in circumstances where parties to a contract have agreed to arbitrate in accordance with

state law, the FAA does not apply, even where interstate commerce is involved." Glazer's

Distributors of Illinois, Inc. v. NWS-Illinois, LLC, 376 Ill. App. 3d 411, 421 (2007); see also Volt

Information Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior University, 489 U.S.

468, 479, 103 L. Ed. 2d 488, 500, 109 S. Ct. 1248, 1256 (1989) ("Just as [the parties] may limit by

contract the issues which they will arbitrate [citation], so too may they specify by contract the rules

under which that arbitration will be conducted. Where *** the parties have agreed to abide by state

rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent

with the goals of the FAA ***"). The Second Buyers Order provides that it "shall be governed by

the internal laws of the State of Illinois," and the arbitration provision states that "[t]he arbitrator shall

determine the rights and obligations according to the substantive laws of the State of Illinois."

Pursuant to Glazer's and Volt, we apply the Arbitration Act to the arbitration provision.

        In fact, we would apply Illinois law even absent the choice-of-law provision. Neither party

presented the trial court with the question of what law should apply. The trial court's order denying

defendants' motions does not refer at all to the FAA and cites the Arbitration Act alone. It is not our

province to decide for the first time in this litigation whether the FAA applies, for whether a

transaction impacts interstate commerce is a question of fact. See Merritt-Chapman & Scott Corp.

v. Pennsylvania Turnpike Comm'n, 387 F.2d 768, 772 (3d Cir. 1967) ("it is impossible for us to

determine on appeal whether the [FAA] applies. For to do so would require us to make an initial



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factual determination whether the contract evidenced 'a transaction involving commerce' within the

meaning of §2 of the Act"); see also Else v. Inflight Cinema International, Inc., 465 F. Supp. 1239,

1244 (D.C. Pa. 1979) ("[w]hether interstate commerce is involved is a question of fact for the district

court").

        No matter which statute we apply, however, Illinois law will govern our analysis. "Whether

under federal rules or state law, there is no arbitration without a valid contract to arbitrate." Aste v.

Metropolitan Life Insurance Co., 312 Ill. App. 3d 972, 975 (2000). " 'In determining whether a valid

arbitration agreement arose between the parties, [the court] should look to the state law that

ordinarily governs the formation of contracts.' " Aste, 312 Ill. App. 3d at 976, quoting Gibson v.

Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997). In applying the FAA,

"courts may not *** invalidate arbitration agreements under state laws applicable only to arbitration

provisions" (emphasis in original) (Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 134

L. Ed. 2d 902, 909, 116 S. Ct. 1652, 1656 (1996)), but "general contract defenses such as fraud,

duress, or unconscionability, grounded in state contract law, may operate to invalidate arbitration

agreements" (Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 2002)). Even if the

FAA applied, Illinois law would provide the ultimate criteria for judging plaintiff's claims of

unconscionability.

        Having determined that Illinois law applies, we turn to the question of who--the trial court

or the arbitrator--should decide the validity of the arbitration clause. Defendants argue that the trial

court should have referred to the arbitrator the question of whether the arbitration clause's disclaimer

of punitive damages conforms with the Consumer Fraud Act. As noted, the trial court invalidated

the arbitration clause for, inter alia, its nonconformity with the Consumer Fraud Act. (Defendants



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do not dispute that the trial court was the appropriate arbiter for the remaining issues touched on by

the court in its disposition.) Defendants advance two contentions why the arbitrator, not the trial

court, should have decided whether the disclaimer of punitive damages is consistent with the

Consumer Fraud Act. First, defendants assert that the trial court's consideration of that particular

challenge to the arbitration clause violated the principle that the court "is not to consider the merits

of the arbitrable issue but must summarily determine whether an arbitration agreement exists"

(Contract Development Corp. v. Beck, 210 Ill. App. 3d 677, 679 (1991)). Defendants fail to

recognize that, though plaintiff's complaint alleges violations of the Consumer Fraud Act, the

disclaimer of punitive damages is not one of the grounds alleged. Thus, the legitimacy of the damages

limitation is not an "arbitrable issue" but a basis on which plaintiff attacks the arbitration clause itself.

"The issue of whether a contract to arbitrate exists must be determined by the court, not an

arbitrator." Bahuriak v. Bill Kay Chrysler Plymouth, Inc., 337 Ill. App. 3d 714, 719 (2003); see also

710 ILCS 5/2(b) (West 2004) ("[o]n application, the court may stay an arbitration proceeding

commenced or threatened on a showing that there is no agreement to arbitrate" (emphasis added)).

Second, defendants cite Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 163 L. Ed. 2d

1038, 126 S. Ct. 1204 (2006), which, in their words,"held specifically that the question of whether

a [sic] terms of a contract with an arbitration [clause] rendered the contract void for illegality was to

be determined by an arbitrator, not the court." Defendants overlook an important qualification in

Buckeye's holding. The court held that "unless the challenge is to the arbitration clause itself, the

issue of the contract's validity is considered by the arbitrator in the first instance." (Emphasis added.)

Buckeye, 546 U.S. at 445-46, 163 L. Ed. 2d at 1044, 126 S. Ct. at 1209. In any event, Buckeye was

interpreting the FAA, which divides responsibilities between the arbitrator and the trial court



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differently than does the Arbitration Act, which is the applicable statute here. Under the Arbitration

Act, "[t]he issue of whether a contract to arbitrate exists must be determined by the court, not an

arbitrator" (Bahuriak, 337 Ill. App. 3d at 719), regardless of whether the challenge to the arbitration

clause is in effect a challenge to the entire contract (which, incidentally, could be the case here

because the contract contains a general disclaimer of punitive damages). The trial court was correct

in taking upon itself the issue of whether the disclaimer of punitive damages in the arbitration clause

comports with the Consumer Fraud Act. In what follows, we review the trial court's findings on that

issue and on the other facets of plaintiff's claim that the arbitration clause is invalid as unconscionable.

        Before examining the arbitration clause, we set forth our standard of review. While deferring

to the trial court's findings of fact supporting its determination of unconscionability (Caliguiri v. First

Colony Life Insurance Co., 318 Ill. App. 3d 793, 800-01 (2000)), we review de novo both its

construction of the arbitration clause (Peach v. CIM Insurance Corp., 352 Ill. App. 3d 691, 694

(2004)) and its ultimate determination of unconscionability (Kinkel, 223 Ill. 2d at 22). There is a

"strong public policy in favor of enforcing arbitration agreements." Kinkel, 223 Ill. 2d at 47.

        "Unconscionability can be either 'procedural' or 'substantive' or a combination of both." Razor

v. Hyundai Motor America, 222 Ill. 2d 75, 99 (2006). The trial court determined that the arbitration

provision was unconscionable in both senses.

                                   A. Procedural Unconscionability

        We attend first to the finding of procedural unconscionability. Recently, in Kinkel, the

supreme court adopted a lengthy exposition of procedural unconscionability from the First District

Appellate Court in Frank's Maintenance & Engineering, Inc. v. C.A. Roberts Co., 86 Ill. App. 3d 980,

989-90 (1980). The issue in Frank's Maintenance was the procedural and substantive fairness of a



                                                   -16-
No. 2--07--0322


limitation on liability, but the supreme court in Kinkel held that the following remarks were applicable

as well to an attack on an arbitration provision:

        " 'Procedural unconscionability consists of some impropriety during the process of forming

        the contract depriving a party of meaningful choice. [Citations.] Factors to be considered

        are all the circumstances surrounding the transaction including the manner in which the

        contract was entered into, whether each party had a reasonable opportunity to understand the

        terms of the contract, and whether important terms were hidden in a maze of fine print; both

        the conspicuousness of the clause and the negotiations relating to it are important, albeit not

        conclusive factors in determining the issue of unconscionability. [Citation.] To be a part of

        the bargain, a provision limiting the defendant's liability must, unless incorporated into the

        contract through prior course of dealings or trade usage, have been bargained for, brought

        to the purchaser's attention or be conspicuous.' " Kinkel, 223 Ill. 2d at 23, quoting Frank's

        Maintenance, 86 Ill. App. 3d at 989-90.

Most of the trial court's findings relate to procedural unconscionability. The trial court found that

the arbitration provision is "indistinguishable in the fine print but for the title" and so is not

conspicuous, was "not specifically referenced or referred to on the front page," was "not brought

specifically to the plaintiff purchaser's attention," was "not the result of a prior course of meaningful

dealings or trade usage between the parties," was "not bargained for" but rather was part of a contract

of adhesion, and was written in "legalese" and so was "nearly unintelligible." Plaintiff also claims that

she was "coerced" into signing the Second Buyers Order. This is a reference, we presume, to alleged

remarks by Shams that negative consequences, such as damage to plaintiff's credit or even a lawsuit

by Gerald Nissan, would flow from her refusal to sign the document. The trial court, however, made



                                                  -17-
No. 2--07--0322


no finding that plaintiff was subject to coercion or duress beyond what was inherent in the Second

Buyers Order, which, as we explain below, is a contract of adhesion. See, e.g., Kinkel, 223 Ill. 2d

at 26 (noting that the typical contract of adhesion contains "terms *** [that] are nonnegotiable and

presented in fine print in language that the average consumer might not fully understand"). Therefore,

we do not consider whether plaintiff was coerced by threats into signing the Second Buyers Order.

        The trial court's findings on procedural unconscionability relate to either of two questions:

(1) whether plaintiff could or did notice the clause, i.e., whether the clause was "part of the bargain,"

in the words of Frank's Maintenance; and (2) whether plaintiff could or did understand the clause.

        Our discussion of the first question is framed by the final line in the above-quoted language

from Frank's Maintenance: "To be a part of the bargain, [an arbitration provision] must, unless

incorporated into the contract through a prior course of dealing or trade usage, have been bargained

for, brought to the purchaser's attention or be conspicuous."            (Emphasis added.)       Frank's

Maintenance, 86 Ill. App. 3d at 990. The trial court found, and defendants do not dispute, that the

arbitration provision was neither bargained for nor incorporated into the Second Buyer's Order

through a prior course of dealing or trade usage. The clause quoted from Frank's Maintenance is,

however, in the disjunctive, conveying that an arbitration provision may be considered "part of the

bargain" if it has at least one of the characteristics the court listed. Defendants argue that the

arbitration provision has the saving virtue of being conspicuous. We find that, though the arbitration

clause itself was not conspicuous, it was adequately brought to plaintiff's attention by another

provision in the contract and, therefore, was part of the bargain.

        To explain our holding, we focus on two discrete findings by the trial court. The first is the

finding that the arbitration clause is not conspicuous because it is "indistinguishable in fine print but



                                                  -18-
No. 2--07--0322


for the title" and is "at the bottom of a full page of fine print filled margin to margin with text." The

second is the court's finding that the clause "was not brought specifically to the plaintiff purchaser's

attention" and "is not specifically referenced or referred to on the front page." We review both

findings de novo because they are based on the trial court's interpretation of the Second Buyers

Order. See Peach, 352 Ill. App. 3d at 694. The court remarked, without elaboration, that the

arbitration clause compared unfavorably with the provision in Kinkel, which the supreme court held

was procedurally unconscionable to a "degree" but not enough to invalidate it independently of any

substantive flaws (Kinkel, 223 Ill. 2d at 27). As Kinkel was central to the trial court's decision, and

plaintiff cites it in defending the trial court's reasoning, we examine the case in detail. As we explain

below, Kinkel demonstrates that an arbitration clause that is not itself conspicuous may be deemed

part of the bargain under Frank's Maintenance if it was brought to the consumer's attention by other

provisions in the contract of which the clause is a part.

        At issue in Kinkel was the validity of an arbitration clause in the plaintiff's contract with

Cingular for cellular telephone service. The arbitration clause appeared on the reverse side of the

contract in a densely printed series of paragraphs with the general heading " 'TERMS AND

CONDITIONS.' " Kinkel v. Cingular Wireless, LLC, 357 Ill. App. 3d 556, 558 (2005). The

following provision was nestled in the middle of a paragraph near the bottom of that page:

        " 'INDEPENDENT ARBITRATION[.] Please read this paragraph carefully. It affects

        rights that you may otherwise have. (a) CINGULAR and you shall use our best efforts to

        settle any dispute or claim arising from or relating to this Agreement. *** If CINGULAR

        and you do not reach agreement within 30 days, instead of suing in court, CINGULAR and

        you agree to arbitrate any and all disputes and claims (including but not limited to claims



                                                  -19-
No. 2--07--0322


       based on or arising from an alleged tort) arising out of or relating to this Agreement, or to any

       prior Agreement for products or service between you and CINGULAR ***. *** Except

       where prohibited by law, CINGULAR and you agree that no arbitrator has the authority to[]

       (1) award relief in excess of what this agreement provides[,] (2) award punitive damages or

       any other damages not measured by the prevailing party's actual damages[,] or (3) order

       consolidation or class arbitration. The Arbitrator(s) must give effect to the limitations on

       CINGULAR's liability as set forth in this agreement, any applicable tariff, law, or regulation.

       *** Notwithstanding the foregoing, either party may bring an action in small claims court.' "

       (Emphasis added.) Kinkel, 357 Ill. App. 3d at 558.

Near the top of the page was this statement:

       " 'IMPORTANT NOTICE: THIS AGREEMENT                            CONTAINS MANDATORY

       ARBITRATION AND OTHER IMPORTANT PROVISIONS LIMITING THE REMEDIES

       AVAILABLE TO YOU IN THE EVENT OF A DISPUTE. PLEASE REFER TO THE

       SECTION ENTITLED 'ARBITRATION' FOR DETAILS.' " Kinkel, 357 Ill. App. 3d at

       563-64.

The appellate court in Kinkel included a copy of the "Terms and Conditions" page in its appendix,

but neither the copy nor the court's quotations from the original document are in actual size. The

appellate court endeavored to describe the text:

       "[The arbitration clause] appears in the middle of a long paragraph at the bottom of the terms-

       and-conditions page on the back of the service agreement. The arbitration clause is one of

       five clauses appearing in the same paragraph. The terms and conditions are printed on an 8-

       by 14-inch page containing 123 lines of tiny single-spaced text. By way of comparison, an



                                                 -20-
No. 2--07--0322


        8- by 14-inch page contains 61 lines of 12-point single-spaced type." Kinkel, 357 Ill. App.

        3d at 563.

        The plaintiff in Kinkel challenged the arbitration clause as a whole, and the class action waiver

in particular, arguing unconscionability. Presumably because it was undisputed that the arbitration

clause was neither specifically bargained for nor incorporated into the service agreement through a

prior course of dealing or trade usage, the appellate court's discussion of procedural unconscionability

focused solely on whether the challenged provisions were brought to the plaintiff's attention or were

conspicuous. The court held: (1) the arbitration clause as a whole was not conspicuous but was

brought to the plaintiff's attention, and (2) the class action waiver was neither. Kinkel, 357 Ill. App.

3d at 563-64.

        As for the arbitration clause as a whole, the court found that it "could not be less

conspicuous," because "[t]he print is so small that it seems highly unlikely that any consumer would

read the entire terms-and-conditions page."         Kinkel, 357 Ill. App. 3d at 563.         The court

acknowledged the bolded and all-capitalized signal, "Independent Arbitration," but found that it

provided "far less visual emphasis than might be the case with larger print." Kinkel, 357 Ill. App. 3d

at 563. The court also took note of the all-capitalized proviso that warned of "Mandatory

Arbitration," but it determined that "due to the minuscule typeface, the capital letters provide far less

emphasis than they otherwise might." Kinkel, 357 Ill. App. 3d at 563-64. The court found the

warning of "Mandatory Arbitration" "sufficient to warrant a conclusion that the arbitration provision

as a whole was conspicuous or brought to the plaintiff's attention." (Emphasis added.) Kinkel, 357

Ill. App. 3d at 563-64. However, the warning "[did] nothing to bring the provision barring class

arbitration to [the plaintiff's] attention." Kinkel, 357 Ill. App. 3d at 564. The court concluded:



                                                  -21-
No. 2--07--0322


        "The [class action waiver] was offered to the plaintiff on a take-it-or-leave-it basis hidden in

        a maze of fine print where it was unlikely to be noticed, much less read. This is sufficient for

        a finding of procedural unconscionability." Kinkel, 357 Ill. App. 3d at 564.

        Cingular appealed to the supreme court the finding on the class action waiver. The plaintiff

did not appeal the appellate court's rejection of her challenge to the arbitration clause as a whole. In

analyzing the issue of procedural unconscionability, the supreme court mentioned an aspect of the

service contract that the appellate court, curiously, did not acknowledge. On the front of the

contract, the plaintiff had initialed a preprinted acknowledgment that she had read the terms and

conditions on the back. Kinkel, 223 Ill. 2d at 26.

        The supreme court did not dispute the appellate court's assessment that the class action waiver

was "hidden in a maze of fine print where it was unlikely to be noticed, much less read" (Kinkel, 357

Ill. App. 3d at 564). The court found the inconspicuousness of the clause itself offset by two points:

(1) the plaintiff's signed acknowledgment on the front of the contract that she had read the terms and

conditions on the back; and (2) the undisputed fact that "the terms and conditions were in [the

plaintiff's] possession and she either read them or could have read them if she had chosen to do so."

Kinkel, 223 Ill. 2d at 26.

        The court recognized that the service contract was a contract of adhesion, typified by terms

that are "nonnegotiable and presented in fine print in language that the average consumer might not

fully understand." Kinkel, 223 Ill. 2d at 26. The arbitration clause could not be invalid on these

grounds alone, stressed the court, because "[s]uch contracts *** are a fact of modern life." Kinkel,

223 Ill. 2d at 26. The court explained:




                                                 -22-
No. 2--07--0322


        "Consumers routinely sign such agreements to obtain credit cards, rental cars, land and

        cellular telephone service, home furnishings and appliances, loans, and other products and

        services.    It cannot reasonably be said that all such contracts are so procedurally

        unconscionable as to be unenforceable." Kinkel, 223 Ill. 2d at 26.

        The court discussed two cases cited by the plaintiff: Razor and Frank's Maintenance. The

plaintiffs in Razor and Frank's Maintenance challenged waivers of consequential damages, not

arbitration clauses, but the Kinkel court found their analyses relevant nonetheless. The court

concluded that the cases were "largely distinguishable." Kinkel, 223 Ill. 2d at 26. The court noted

that the disputed provision in Frank's Maintenance, like that in Kinkel, appeared on the reverse side

of a sales document. The difference was that, in Frank's Maintenance, "[the] clause directing the

plaintiff's attention to the conditions printed on the reverse was stamped over, suggesting that the

obscured language was irrelevant and could be ignored." Kinkel, 223 Ill. 2d at 25. The front-page

advisory in Kinkel was unobstructed.

        The court did find a similarity between the arbitration clause and the waiver of consequential

damages in Razor. The clause stated that arbitration costs were to be set by the Wireless Industry

Arbitration Rules, which were available from Cingular or the American Arbitration Association

" 'upon request.' " Kinkel, 223 Ill. 2d at 8. This statement "was in fine print near the bottom of an

8- by 14-inch page that was filled, from margin to margin, with text," and it was not emphasized in

any way. Kinkel, 223 Ill. 2d at 26-27. The Kinkel court found parallels between this "lack of

information" and the facts of Razor, where the plaintiff first encountered the waiver of consequential

damages in the owner's manual delivered with the car, and thus there was " '[no] basis for concluding

that plaintiff could have seen the clause[] before entering into the sales contract.' " Kinkel, 223 Ill. 2d



                                                   -23-
No. 2--07--0322


at 25, quoting Razor, 222 Ill. 2d at 102. Even though the plaintiff in Kinkel did not challenge the

cost provision of the arbitration clause, the court held that that issue could not be answered "without

viewing the waiver provision in the context of the service agreement as a whole." Kinkel, 223 Ill. 2d

at 22. The court concluded that, though there was "a degree of procedural unconscionability" in "the

contract of which the class action waiver [was] a part," the taint was not sufficient by itself to

invalidate the contract, and the court proceeded to address the plaintiff's claims of substantive

unconscionability. Kinkel, 223 Ill. 2d at 27.

        The supreme court's opinion in Kinkel teaches three lessons pertinent to the case at hand.

First, contracts of adhesion, typified by terms that are "nonnegotiable and presented in fine print in

language that the average consumer might not fully understand" (Kinkel, 223 Ill. 2d at 26), are not

per se unconscionable from a procedural standpoint. Some added coercion or overreaching is

necessary.

        Second, Kinkel teaches that even an arbitration clause "hidden in a maze of fine print where

it [is] unlikely to be noticed, much less read" (Kinkel, 357 Ill. App. 3d at 564) may be considered

"part of the bargain" if it was brought to the consumer's attention elsewhere in the contract. This

norm follows from the disjunctive proposition of Frank's Maintenance, adopted by Kinkel, that " '[t]o

be part of the bargain, [an arbitration clause] must, unless incorporated into the contract through prior

course of dealings or trade usage, have been bargained for, brought to the purchaser's attention or

be conspicuous.' " (Emphasis added.) Kinkel, 223 Ill. 2d at 23, quoting Frank's Maintenance, 86 Ill.

App. 3d at 990.

        Third, the procedural soundness of any particular provision within an arbitration clause is

assessed by considering "the [contract] as a whole." Kinkel, 223 Ill. 2d at 22. When Kinkel reached



                                                  -24-
No. 2--07--0322


the supreme court, the plaintiff challenged only the class action waiver in the arbitration clause, but

the court also took note of infirmities in the cost provision of the clause. Kinkel, 223 Ill. 2d at 26-27.

Here, plaintiff challenges the arbitration clause as a whole, and our attention has not been directed

to an alleged procedural flaw in any other provision in the Second Buyers Order.

        In light of Kinkel, the arbitration clause is not invalid as procedurally unconscionable. First,

the clause was "part of the bargain." Like the class action waiver in Kinkel, the arbitration clause,

ensconced in one of several paragraphs in a page of densely packed, minute print, was not

conspicuous by any reasonable measure. Yet, also like the class action waiver in Kinkel, the

arbitration clause was brought to the reader's attention by a notice elsewhere in the contract. The

signaling provision was the bolded, all-capitalized statement, "SUBJECT TO TERMS &

CONDITIONS ON REVERSE SIDE AND THIRD PARTY FINANCE APPROVAL," printed

above the signature lines on the front side of the Second Buyers Order. Of course, unlike in Kinkel,

plaintiff did not sign or initial a separate acknowledgment that she had read the conditions on the

reverse side of the contract, nor was there a prominent and specific notice of mandatory arbitration

on the reverse side of the contract. This lack was offset, we believe, by a fact that was absent in

Kinkel. Although plaintiff did not have an opportunity to read the back side of the Second Buyers

Order at Gerald Nissan on October 28, 2005, its preprinted terms had been in her possession for

several days, because the forms for the First and Second Buyers Orders were identical. Plaintiff

signed the First Buyers Order on October 22, 2005. She testified that she was content with the terms

of that agreement as she understood them. Plaintiff had several days to review the First Buyers Order

before returning to Gerald Nissan on October 28 and signing a contract that contained identical terms

preprinted in an identical format. The supreme court in Kinkel found it significant that "the terms and



                                                  -25-
No. 2--07--0322


conditions were in [the plaintiff's] possession and she either read them or could have read them if she

had chosen to do so." Kinkel, 223 Ill. 2d at 26. Plaintiff had even more opportunity to read the

arbitration provision than did the plaintiff in Kinkel, who by all appearances agreed to the terms the

same day she was presented them. Plaintiff, we hold, cannot reasonably claim that she had insufficient

notice of the arbitration clause in the Second Buyers Order. See Bunge Corp. v. Williams, 45 Ill.

App. 3d 359, 364 (1977) (the defendants' claim that they had no opportunity to read the arbitration

provisions in their contracts to sell grain to the plaintiff was "to no avail" because "each defendant

had been a party to a contract to sell grain to [the plaintiff] on at least one prior occasion, and ***

those contracts had been made on identical forms containing identical arbitration provisions").

       Relatedly, we note that the "disparity of bargaining power" identified by the trial court is not

fatal to the arbitration clause. Such disparity, the supreme court noted in Kinkel, is typical of

contracts of adhesion, which are not per se unconscionable.

       Second, on the separate question of whether plaintiff could or did understand the arbitration

clause, we find that the arbitration clause is not abstruse to the point of invalidity. Like the trial

court's finding of a disparity of bargaining power, its finding that the arbitration clause was "nearly

unintelligible" because of its "legalese" does not distinguish the document from the general run of

contracts of adhesion. Such contracts are known for having "language that the average consumer

might not fully understand" (Kinkel, 223 Ill. 2d at 26). The trial court placed particular emphasis on

the abstruseness of the clause, but its lack of clarity is not unusual for legal contracts, which are

seldom extolled for limpid prose.

       Besides Kinkel, plaintiff cites Frank's Maintenance, Razor, Bahuriak, and Anderson v. Farmers

Hybrid Cos., 87 Ill. App. 3d 493 (1980). These four cases are readily distinguishable. Frank's



                                                 -26-
No. 2--07--0322


Maintenance is distinguishable here for the same reason it was in Kinkel, namely, the front-page

advisory in Frank's Maintenance was effaced and thus appeared "irrelevant" (Frank's Maintenance,

86 Ill. App. 3d at 992). In Razor, the plaintiff first encountered the waiver of consequential damages

in the owner's manual of the car she had already purchased. The court said:

        "Surely, whatever other context there might be in which a contractual provision would be

        found to be procedurally unconscionable, that label must apply to a situation such as the case

        at bar where plaintiff has testified that she never saw the clause; nor is there any basis for

        concluding that plaintiff could have seen the clause, before entering into the sales contract."

        (Emphasis in original.) Razor, 222 Ill. 2d at 101-02.

There is no question here that plaintiff was presented with the arbitration clause before she signed the

Second Buyers Order. Razor, therefore, has no weight in the circumstances of this case.

        In Anderson, 87 Ill. App. 3d at 501, the appellate court held that a damages limitation

appearing on the reverse side of an order-confirmation slip was not conspicuous and thus did not

comply with section 2--316(2) of the Uniform Commercial Code (Code) (Ill. Rev. Stat. 1971, ch. 26,

par. 2--316(2) (now 810 ILCS 5/2--316(2) (West 2004))). The code provides: "A term or clause is

conspicuous when it is so written that a reasonable person against whom it is to operate ought to

have noticed it." Ill. Rev. Stat. 1971, ch. 26, par. 1--201(10) (now 810 ILCS 5/1--201(10) (West

2004)). The court reasoned that, though the clause was in capital letters, there was little on the front

side of the slip to suggest that there were any conditions on the back:

        "In small print, in the middle of the slip, was the following sentence: 'This order subject to

        conditions on reverse side hereof and subject to acceptance by the company.' This language

        was not conspicuous in any manner and, in fact, was in smaller print than other on the front



                                                 -27-
No. 2--07--0322


        side of the order slip. *** We find little on the front side, under the circumstances, to bring

        to a reasonable person's attention and notice the existence of express disclaimers on the

        reverse side of the slip. *** In short, while the type used for disclaiming the warranties was

        conspicuous, in the sense of being larger than other type in the paragraph, the presence of that

        paragraph on the reverse side of the order slip was not at all conspicuous, either from the

        general appearance of the slip or from any conspicuous language on the front side of the slip."

        Anderson, 87 Ill. App. 3d at 502.

Anderson's guidance is severely limited because the reader cannot appreciate the size of the relevant

writing in the case. The court's characterization of the front-page proviso as written in "small print"

is not particularly illuminating, and the court did not append a copy of the slip to its opinion or

attempt to reproduce the text in actual size. We think that, by any reasonable scale, the proviso on

the front side of the Second Buyers Order is not in "small print." Anderson, we conclude, is no help

to plaintiff.

        Plaintiff's citation to Bahuriak is a curiosity, as no claim of unconscionability was raised in that

case. In fact, the appellate court held that the trial court's findings as to the existence of a valid

arbitration agreement were insufficient for review and remanded for further findings. Bahuriak, 337

Ill. App. 3d at 720.

        We conclude that, even if the arbitration clause is procedurally unconscionable "to a degree,"

like the class action waiver in Kinkel, that flaw is insufficient by itself to invalidate the clause.

                                   B. Substantive Unconscionability




                                                   -28-
No. 2--07--0322


          Substantive unconscionability " 'relates to situations where a clause or term in a contract is

allegedly one-sided or overly harsh.' " Zobrist v. Verizon Wireless, 354 Ill. App. 3d 1139, 1147

(2004), quoting Bishop, 316 Ill. App. 3d at 1196.

          The trial court found the arbitration clause substantively unconscionable because (1) the

clause is "one-sided" in its obligations; and (2) the clause's exclusion of punitive damages violates the

Consumer Fraud Act. Neither is a ground for invalidating the arbitration clause.

          There is, we recognize, an imbalance of duties in the arbitration clause. The clause provides

that "[a]ny controversy, claim, cause of action or other dispute arising out of or relating to [the]

contract" is subject to arbitration except (1) "a cause of action or claim by Dealer to recover full

payment of the purchase price" and (2) "[c]laims, causes of action and other disputes against Buyer

arising out of or related to the breach by Buyer of any retail installment contract executed in

connection with [the] contract." Thus, claims by the buyer arising out of or relating to the Second

Buyers Order are unqualifiedly subject to arbitration, but significant exceptions exist for claims by the

dealer.

          What the trial court found lacking is, in the vernacular, mutuality of obligation; but contractual

promises need not have such precise proportions. "The parties to a contract need not have identical

rights and obligations." Hofmeyer v. Willow Shores Condominium Ass'n, 309 Ill. App. 3d 380, 385

(1999). "The mutuality requirement is satisfied if each party has given sufficient consideration for

the other's promise." Hofmeyer, 309 Ill. App. 3d at 385; see also Vassilkovska v. Woodfield Nissan,

Inc., 358 Ill. App. 3d 20, 28 (2005) ("[m]utuality of obligation is required only to the extent that both

parties to an agreement are bound or neither is bound; that is, if the requirement of consideration has

been met, mutuality of obligation is not essential").



                                                    -29-
No. 2--07--0322


        How these principles apply with respect to promises to arbitrate is best grasped by comparing

Bishop with Vassilkovska. In Bishop, the plaintiffs operated hair salons as franchisees of the

defendant and subleased property from the defendant for the salons. The sublease agreements

contained "cross-default" clauses authorizing the defendant to evict a franchisee for any breach of its

franchise agreement. The franchise agreements contained clauses subjecting to arbitration all claims

arising out of or relating to the agreements, except eviction proceedings brought pursuant to the

"cross-default" clauses. The plaintiffs challenged the arbitration clauses for lack of mutuality, arguing

that "an arbitration agreement is not mutually binding where one party reserves the option to raise

and resolve the majority of disputes in a court rather than through arbitration." Bishop, 316 Ill. App.

3d at 1198. The court disagreed, explaining that it would not invalidate "an arbitration clause that

compels one party to submit all disputes to arbitration but allows the other party the choice of

pursuing arbitration or litigation so long as the contract is otherwise supported by consideration on

both sides." Bishop, 316 Ill. App. 3d at 1198. The court held that, because the franchise agreements

were undisputedly supported by consideration, the arbitration clauses did not need "identical

obligations." Bishop, 316 Ill. App. 3d at 1198.

        In Vassilkovska, the plaintiff signed a purchase contract and a separate arbitration agreement

in purchasing a vehicle from the defendant. The plaintiff claimed that the arbitration agreement

lacked consideration because it broadly required the plaintiff to arbitrate her claims under the

purchase contract but effectively exempted the defendant from arbitrating any claim it had concerning

the plaintiff's performance under the purchase contract. The appellate court noted that, unlike the

court in Bishop, it was "not confronted with an arbitration clause in a contract supported by

consideration on both sides." Vassilkovska, 358 Ill. App. 3d at 27. The arbitration agreement, rather,



                                                  -30-
No. 2--07--0322


was "separate and apart from the purchase contract," and therefore the arbitration agreement had to

be supported by its own consideration. Vassilkovska, 358 Ill. App. 3d at 25. The court found such

consideration lacking because the defendant's promise to arbitrate was "empty" in that it "completely

exempted issues that could arise from its sale of the automobile to the plaintiff." Vassilkovska, 358

Ill. App. 3d at 29.

        The case at hand is like Bishop, not Vassilkovska, because the promise to arbitrate is part of

a clause within a larger contract, the Second Buyers Order. As plaintiff has never questioned that the

Second Buyers Order is supported by consideration, the arbitration clause does not suffer for lack

of mutuality of obligation.

        The trial court also found the arbitration clause invalid for its exclusion of punitive damages.

The clause provides that the arbitrator "shall not be empowered to grant exemplary, punitive or

consequential damages in excess of those permitted under the express terms of this contract."

Paragraph 16 on the reverse side of the Second Buyers Order expressly limits the dealer's liability to

the purchase price of the vehicle. Also, the front side contains an express disclaimer of punitive

damages. Section 10a(a) of the Consumer Fraud Act (815 ILCS 505/10a(a) (West 2004)) provides

that the trial court "in its discretion may award actual economic damages or any other relief which

the court deems proper." Such relief may include punitive damages. See Smith v. Prime Cable of

Chicago, 276 Ill. App. 3d 843, 858 (1995). Section 10c of the Consumer Fraud Act (815 ILCS

505/10c (West 2004)) provides: "Any waiver or modification of the rights, provisions, or remedies

of this Act shall be void and unenforceable." As an attempt to categorically exclude a form of relief

authorized by the Consumer Fraud Act, the punitive damages disclaimer in the arbitration clause is

void and unenforceable.



                                                 -31-
No. 2--07--0322


       The arbitration clause is not, however, void in its entirety, for the punitive damages disclaimer

is severable from the remainder of the clause. "In determining whether it is appropriate to sever an

unconscionable provision from an agreement and enforce the remainder of the agreement, Illinois

courts are to consider whether the provisions operate independently of each other or whether the

valid provisions are 'so closely connected with unenforceable provisions that to do so would be

tantamount to rewriting the Agreement.' " Kinkel, 357 Ill. App. 3d at 569, quoting Abbott-Interfast

Corp. v. Harkabus, 250 Ill. App. 3d 13, 21 (1993). If the disclaimer of punitive damages is stricken,

the intent of the arbitration clause remains essentially fulfilled, for there still exists the broad

requirement of arbitration. Also significant is the presence of a severability clause in the Second

Buyers Order. The clause reads:

       "If any term, covenant or condition of this contract or the application thereof to any person

       or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this

       contract or the application of such term, covenant or provision, to persons or circumstances

       other than those to which it is held invalid or unenforceable shall not be affected thereby and

       each term, covenant or provision of this contract shall be valid and be enforced to the fullest

       extent permitted by law."

"The existence of a severability clause in a contract certainly strengthens the case for the severance

of unenforceable provisions because it indicates that the parties intended for the lawful portions of

the contract to be enforced in the absence of the unlawful portions." Harkabus, 250 Ill. App. 3d at

21. Sealing the issue in favor of severance is "the strong policy in favor of enforcing arbitration

agreements, which is best served by allowing the valid portions of the arbitration agreement to




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remain in force while severing the unconscionable provision." Kinkel, 357 Ill. App. 3d at 569.

Therefore, we do not find the arbitration clause substantively unconscionable.

        We hold that the trial court erred in declaring the arbitration clause unconscionable and

unenforceable in its entirety. The clause is enforceable but for its disclaimer of punitive damages.

        We appreciate the trial court's sensitivity to the equities in this case, but we must conclude

that its decision cannot be reconciled with Kinkel's pronouncements on unconscionability. Mindful

as we are of the express policy in favor of arbitration, we note that, after Kinkel, there is little chance

that consumers will "obtain credit cards, rental cars, land and cellular telephone service, home

furnishings and appliances, loans, and other products and services" (Kinkel, 223 Ill. 2d at 26) without

forgoing any assurance that their claims relating to these types of contracts will have the full

protections of the courts.

        As a final matter, defendants urge us to clarify that J.P. Morgan, though not a signatory to

the Second Buyers Order, is a third-party beneficiary of the contract and so plaintiff is required to

arbitrate her claims against both defendants. J.P. Morgan asserted this position below and plaintiff

did not contest it. The trial court did not expressly address the issue but proceeded on the assumption

that J.P. Morgan is bound by the arbitration clause to the same extent as Gerald Nissan. Plaintiff

continues not to dispute the issue. We agree with defendants that J.P. Morgan is a third-party

beneficiary of the Second Buyers Order. "A third-party beneficiary is bound by the terms of the

contract in the same manner as the parties are bound." Streams Club, Ltd. v. Thompson, 180 Ill.

App. 3d 830, 840 (1989). "The third-party beneficiary doctrine applies to arbitration agreements."

Dannewitz v. Equicredit Corp. of America, 333 Ill. App. 3d 370, 373 (2002). "Where it is shown

that the signatories to the agreement intended that nonsignatories were to derive benefits from the



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agreement and where the [agreement] itself is susceptible to this interpretation, then arbitration is

proper." Dannewitz, 333 Ill. App. 3d at 373. The Second Buyers Order is expressly conditioned on

"third party finance approval," and J.P. Morgan had the benefit of providing financing. Additionally,

the arbitration clause does not distinguish between claims brought by the dealer and those brought

by a third-party financier, but applies to "[a]ny" claim arising out of or relating to the contract. See

Johnson v. Noble, 240 Ill. App. 3d 731, 733 (1992) (employees of corporation that signed contract

with plaintiff were third-party beneficiaries of arbitration clause that covered "[a]ny claim or

controversy arising out of or relating to [the] agreement"). Plaintiff's claims against J.P. Morgan are

equally subject to arbitration as her claims against Gerald Nissan.

        For the foregoing reasons, we reverse the judgment of the circuit court of Kane County

denying defendants' motions to stay proceedings and compel arbitration, and we remand this cause

for further proceedings consistent with this disposition.

        Reversed and remanded.

        BOWMAN and HUTCHINSON, JJ., concur.




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