                IN THE SUPREME COURT OF MISSISSIPPI

                        NO. 2018-CA-01133-SCT

RAY VIRGIL, BARBARA LLOYD AND
CASSANDRA JOHNSON

v.

SOUTHWEST MISSISSIPPI ELECTRIC POWER
ASSOCIATION

DATE OF JUDGMENT:               07/31/2018
TRIAL JUDGE:                    HON. GEORGE WARD
TRIAL COURT ATTORNEYS:          WALKER (BILL) JONES, III
                                MICHAEL D. SIMMONS
                                JUSTIN RONALD GLENN
                                HENRY T. HOLIFIELD
                                RICHARD R. GRINDSTAFF
                                W. BRUCE LEWIS
                                BRANNON LEE BERRY
                                ROBERT L. JOHNSON, III
                                LAWRENCE JOSEPH HAMILTON, II
                                CHRISTINA M. SCHWING
COURT FROM WHICH APPEALED:      ADAMS COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANTS:       WALKER (BILL) JONES, III
                                MICHAEL D. SIMMONS
                                BRANNON LEE BERRY
                                ROBERT L. JOHNSON, III
                                DAVID WAYNE BARIA
                                JUSTIN RONALD GLENN
ATTORNEYS FOR APPELLEE:         CHRISTINA M. SCHWING
                                W. BRUCE LEWIS
                                LUTHER T. MUNFORD
                                ROBERT M. GORE
NATURE OF THE CASE:             CIVIL - OTHER
DISPOSITION:                    AFFIRMED - 04/09/2020
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

     EN BANC.
       GRIFFIS, JUSTICE, FOR THE COURT:

¶1.    Southwest Mississippi Electric Power Association (Southwest) is a nonprofit,

member-owned electric cooperative corporation created by statute to provide electricity to

rural Mississippians. Miss. Code Ann. § 77-5-205 (Rev. 2018). Ray Virgil, Barbara Lloyd,

and Cassandra Johnson (Plaintiffs) are members of Southwest. Plaintiffs filed a lawsuit

against Southwest and alleged that Southwest failed to return excess revenues and receipts

to its members. Southwest moved to compel arbitration. The trial court granted Southwest’s

motion to compel arbitration. Plaintiffs appealed. We find no error and affirm.

                       FACTS AND PROCEDURAL HISTORY

¶2.    The purpose of rural electric cooperatives such as Southwest is to “promot[e] and

encourag[e] the fullest possible use of electric energy by making electric energy available at

the lowest cost consistent with sound economy and prudent management of the business of

such corporations.” Miss. Code. Ann. § 77-5-205 (Rev. 2018).

¶3.    To purchase electric energy from Southwest, each member is required to sign a

membership application. The membership application states, “[t]he Applicant will comply

with and be bound by the provisions of the charter and bylaws of the Association and such

rules and regulations as may, from time to time, be adopted by the Association.” Southwest’s

bylaws state that a person may become a member of Southwest by, inter alia, “agreeing to

comply with and be bound by the Certificate of Incorporation of the Association and by these

bylaws and any amendments thereto and such policies, rules and regulations as may from

time to time be adopted by the Board of Directors.”



                                              2
¶4.    In February 2017, the board of directors amended the bylaws to include an arbitration

provision.1 The arbitration provision, section 11.05 of the bylaws, stated the following in

bold and in all capital letters:

               ALTERNATIVE DISPUTE RESOLUTION. Unless otherwise
       prohibited by law, any controversy or claim arising out of or relating to these
       bylaws, or the breach thereof, or any controversy or claim arising out of or
       relating to patronage capital shall be resolved by binding arbitration
       administered by the American Arbitration Association in accordance with its
       arbitration rules after all conditions precedent as set forth in Article VIII,
       Section 8.01, if applicable, have been met. This agreement involves interstate
       commerce such that the Federal Arbitration Act, 9 U.S.C. § 1, et seq., shall
       govern the interpretation and enforcement of this arbitration agreement. The
       arbitration shall be held in the State of Mississippi at a location to be
       designated by the party not making the initial demand for arbitration. A
       judgment on the award rendered by the arbitrator shall be entered in any court
       having jurisdiction thereof. Each party agrees to pay their own attorneys’ fees
       and costs and each party agrees to share equally in the cost of the arbitrator.

               The parties also agree to (i) waive any right to pursue a class action
       arbitration, or (ii) to have an arbitration under this agreement consolidated or
       determined as part of any other arbitration or proceeding. The parties agree
       that any dispute to arbitrate must be brought in an individual capacity, and not
       as a plaintiff or class member in any purported class or representative capacity.
       If any part of this arbitration clause, other than waivers of class action rights,
       is found to be unenforceable for any reason, the remaining provisions shall
       remain enforceable. If a waiver of class action and consolidation rights is
       found unenforceable in any action in which class action remedies have been
       sought, this entire arbitration clause shall be deemed unenforceable. It is the
       intention and agreement of the parties not to arbitrate class actions or to have
       consolidated arbitration proceedings. Should the parties have a dispute that is
       within the jurisdiction of the justice courts of the State of Mississippi, such
       dispute may be resolved at the election of either party in justice court rather
       than through arbitration.

             If the arbitration clause is deemed unenforceable or the parties
       otherwise litigate a dispute in court, the parties agree to waive any right to a

       1
        Plaintiffs became members of Southwest before the addition of the arbitration
provision into the bylaws.

                                               3
       trial by jury in any proceeding brought in court.

¶5.    On December 22, 2017, Plaintiffs filed a complaint against Southwest, alleging that

Southwest unlawfully had failed to return to its members more than $13 million in excess

member equity. By Mississippi law, an electric cooperative may not be organized for

pecuniary profit. Miss. Code Ann. § 77-5-205. Mississippi Code Section 77-5-235(5)

provides,

               A corporation’s rates for energy furnished or offered by the corporation
       shall be sufficient at all times to pay all operating and maintenance expenses
       necessary or desirable for the prudent conduct and operation of its business
       and to pay the principal of and interest on such obligations as the corporation
       may have issued and/or assumed in the performance of the purpose for which
       it was formed. The revenues and receipts of a corporation shall first be devoted
       to such operating and maintenance expenses and to the payment of such
       principal and interest and thereafter to such reserves for improvement, new
       construction, depreciation and contingencies as the board may from time to
       time prescribe. Revenues and receipts not needed for these purposes shall be
       returned to the members by such means as the board may decide, including
       through the reimbursement of membership fees, the implementation of general
       rate reductions, the limitation or avoidance of future rate increases, or such
       other means as the board may determine.

Miss. Code. Ann. § 77-5-235(5) (Rev. 2018). Plaintiffs contended that Southwest had

unduly retained excess revenue as “new member equity,” despite the excess funds not being

necessary “to fund expenses, debt service or reserves . . . .”2

¶6.    Southwest filed a Renewed Motion to Compel Arbitration and Stay Proceedings, in

which it argued that the matter should be decided by an independent arbitrator under its




       2
        Southwest allegedly retained $45 million in excess revenue. Plaintiffs contend that
Southwest had retained $13 million above the 30 percent asset-to-equity ration (safe harbor)
prescribed by the Rural Utilities Service (RUS), a federal lending agency.

                                              4
bylaws.3 Southwest argued that arbitration was the appropriate avenue of resolving the

dispute because a presumption favors arbitration, because the members agreed to be bound

by the bylaws, and because the members directly benefitted from the contract by receiving

electricity and capital credits from the cooperative.

¶7.    Plaintiffs argued that they did not agree to arbitrate the dispute. Upon applying for

electricity, each Plaintiff signed a one-page application for electricity. The application for

electricity was the only document Plaintiffs signed with Southwest, and it made no mention

of an arbitration provision. Additionally, Plaintiffs argued that because the mandatory

arbitration provision contained in the bylaws directly conflicted with the nonmandatory

provision in the same bylaws, the arbitration provisions were ambiguous and unenforceable.

Plaintiffs further argued that Southwest owed a heightened duty to members of the

cooperative to fully explain the terms of the contract Plaintiffs were signing, including the

implication of arbitration. And lastly, Plaintiffs argued that the membership application was

unconscionable.

¶8.    The trial court granted Southwest’s motion to compel arbitration, finding that the

parties had entered into a valid arbitration agreement and that Plaintiffs had failed to meet

their burden of proof as to unconscionability. The trial court found that the allegations in the

complaint arose out of Southwest’s bylaws and patronage capital and fell within the scope

of the arbitration provision. The trial court stated that a strong public policy favors

arbitration. Because Plaintiffs each signed a membership application, the trial court held that

       3
        Southwest previously had filed a motion to compel arbitration in the federal district
court before the case was remanded.

                                               5
Plaintiffs had expressly agreed to be bound by the terms of Southwest’s bylaws as amended

from time to time. The trial court also found that Section 77-5-223 granted the board

authority to amend the bylaws and that Plaintiffs had each reaped the benefits of their

membership status with Southwest since signing the membership application.

¶9.    Plaintiffs appealed and presented three issues for review:

       1.     Whether the trial court erred by finding that the parties entered into a
              valid arbitration agreement.

       2.     Whether the trial court erred by finding that the dispute fell within the
              scope of the arbitration provision.

       3.     Whether the trial court erred by finding that no external factors
              precluded arbitration in this matter.

The parties also submitted supplemental briefing at the direction of this Court.

¶10.   This is the first of several similar cases, which appear to be class-action lawsuits,4 that

have been filed around the state of Mississippi against electric power cooperatives (also

referred to as electric power associations). A similar case is now before this Court for review

—Delta Electric Power Association v. Archie Campbell, No. 2019-CA-00206-SCT. Two

other cases were before this Court—Coast Electric Power Association v. Lakesha Butler,

No. 2018-CA-01728, and Dixie Electric Power Association v. William Willis, No.

2019-CA-0000—but these cases were removed to federal court after the United States Court

of Appeals for the Fifth Circuit held that the electric power cooperatives presented a



       4
         The complaint identifies Plaintiffs to include “the Members 4-25,000 are members
of Southwest Mississippi Electric Power Association who will be joined under Miss. R. Civ.
P 19(a)(2).” Plaintiffs’ response to the motion to compel arbitration opens, “Ray Virgil, et
al., on behalf of himself and other members similarly situated (‘Plaintiffs’).”

                                                6
colorable federal defense. Butler v. Coast Elec. Power Ass’n, 926 F.3d 190 (5th Cir. 2019).

There are also several similar cases at present pending before trial courts that have not yet

been appealed but will be affected by the outcome of this litigation.5

                               STANDARD OF REVIEW

¶11.   “In reviewing an appeal of an order compelling arbitration, we review the trial judge’s

factual findings under an abuse-of-discretion standard, and we conduct a de novo review of

all legal conclusions.” Smith v. Express Check Advance of Miss., LLC, 153 So. 3d 601,

605-06 (Miss. 2014) (footnotes omitted) (citing Ill. Cent. R.R. Co. v. McDaniel, 951 So. 2d

523, 526 (Miss. 2006); Va. Coll., LLC v. Blackmon, 109 So. 3d 1050, 1053 (Miss. 2013)).

¶12.   This Court has held that “[t]he party resisting arbitration must shoulder the burden of

proving a defense to arbitration.” Norwest Fin. Miss., Inc. v. McDonald, 905 So. 2d 1187,

1193 (Miss. 2005) (citing Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 92, 121 S.

Ct. 513, 522, 148 L. Ed. 2d 373 (2000)).

                                        ANALYSIS

¶13.   “In determining the validity of a motion to compel arbitration under the Federal

Arbitration Act, courts generally conduct a two-pronged inquiry.” E. Ford, Inc. v. Taylor,

826 So. 2d 709, 713 (Miss. 2002). “The first prong has two considerations: (1) whether there



       5
        These cases, which were requests for admission pro hac vice, include Twin County
Electric Power Association v. Thomas Simmons, No. 2019-AC-00777 (pending in
Washington County Circuit Court); Kimberly Harper v. Southern Pine Electric
Cooperative, No. 2018-AC-00838 (removed to federal court in Butler, 926 F.3d at 201-02);
Evelyn Swindell v. Twin County Electric Power Association, No. 2018-AC-00463 (pending
in Washington County Chancery Court); and Octavia Lewis v. Pearl River Valley Electric
Power Association, No. 2018-AC-00428 (pending in Pearl River County Chancery Court).

                                              7
is a valid arbitration agreement and (2) whether the parties’ dispute is within the scope of the

arbitration agreement.” Id. “Under the second prong, the United States Supreme Court has

stated [that] the question is ‘whether legal constraints external to the parties’ agreement

foreclosed arbitration of those claims.’” Id. (citing Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S. Ct. 3346, 87 L. Ed. 2d 444 (1985)).

“Under the second prong, applicable contract defenses available under state contract law

such as fraud, duress, and unconscionablity may be asserted to invalidate the arbitration

agreement without offending the [FAA].” Id. (citing Doctor’s Assocs., Inc. v. Casarotto,

517 U.S. 681, 686, 116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996)).

       I.     Whether the trial court erred by finding that the parties entered into a
              valid arbitration agreement.

¶14.   The Southwest Mississippi Electric Power Association was created and is governed

by statute. See Miss. Code Ann. §§ 77-5-201 to -259 (Rev. 2018). Section 77-5-225 governs

the “membership,” and it provides,

               Except as hereinafter provided, the corporate purpose of a corporation
       shall be to render service to its members only. Any person may become and
       remain a member if such person shall use energy supplied by such corporation
       and shall comply with the terms and conditions in respect to membership
       contained in the bylaws of such corporation, which terms and conditions shall
       be nondiscriminatory. Any person who shall agree to use energy supplied by
       the corporation from an existing line or from a line the construction of which
       has been authorized or commenced by the corporation may be admitted to
       membership in the corporation prior to such use upon complying with the
       other terms and conditions with respect to membership contained in the
       certificate of incorporation or in the bylaws. The membership fee of the
       corporation shall be fixed by the board of directors.

Miss. Code Ann. § 77-5-225 (Rev. 2018) (emphasis added). Additionally, Section 77-5-



                                               8
223(a) gives the board of directors the power “[t]o adopt and amend bylaws for the

management and regulation of the affairs of the corporation.” Miss. Code Ann. § 77-5-

223(a) (Rev. 2018).

¶15.   In The Door Shop, Inc. v. Alcorn County Electric Power Association, 261 So. 3d

1099, 1104 (Miss. 2018), this Court found that a member of an electric power association

“specifically and contractually agreed” to be bound by the association’s bylaws by filling out

the membership application. Under the bylaws, the board of directors was empowered “[t]o

adopt and amend by-laws for the management and regulation of the affairs of [the power

association].” Id. at 1105 (internal quotation marks omitted) (quoting Miss. Code Ann. §77-

5-223(a)). Moreover, the board of directors “was at liberty to alter, amend, repeal, or adopt

new bylaws so long as certain voting standards were satisfied.” Id. This Court concluded

that the power association’s board of directors “acted pursuant to lawful authority” in

amending the bylaws and that the member had notice of the board’s power to do so. Id.

¶16.   Here, the membership application was signed by Plaintiffs.          The membership

application advised that members would be bound by the bylaws and that the bylaws could

be amended by the elected board. Members received notice of bylaw amendments at every

annual meeting and through the Today in Mississippi newspaper.

¶17.   According to The Door Shop, here, Plaintiffs’ execution of the membership

application “bound [them] to [Southwest’s] bylaws.” Id. at 1100. As in The Door Shop, the

board “acted pursuant to lawful authority” in amending the bylaws, and Plaintiffs had notice

of the board’s power to do so. Id. at 1105. As a result, Southwest’s bylaw amendment to



                                              9
add the arbitration provision was legal and proper. Therefore, the trial court did not err by

finding that the parties entered into a valid arbitration agreement.

¶18.   Our analysis should end here—finding a legal and valid arbitration provision. But the

dissent concludes that the Court should continue to review this case as a contractual

agreement to determine whether the arbitration provision in the contractual agreement was

unconscionable. Yet the Plaintiffs admit that this is neither a contract case nor a case

involving contract interpretation. Indeed, the Plaintiffs acknowledge that “this case and

controversy does not arise out of any contract” but instead “is based on violation of

Mississippi statute . . . .” Because this is not a contract case or a case involving contract

interpretation, any discussion regarding the contract defense of unconscionability is

unnecessary. Nevertheless, we address the Plaintiffs additional arguments raised on appeal.

       II.    Whether the trial court erred by finding that this dispute fell within the
              scope of the arbitration provision.

¶19.   Plaintiffs argue that the underlying dispute, whether Southwest unduly retained excess

revenues and receipts, does not fall within the scope of the arbitration provision set forth in

the bylaws. Plaintiffs assert that they did not attach the bylaws to their complaint, file a

breach-of-contract action, or utilize the bylaws in any way to support their cause of action.

As a result, Plaintiffs claim that this dispute does not arise out of the bylaws but, instead,

arises from Southwest’s failure to comply with Mississippi Code Section 77-5-235. We

disagree and find that Plaintiffs’ dispute falls within the scope of the arbitration provision.

¶20.   “Courts often characterize arbitration language as either broad or narrow.” MS Credit

Ctr., Inc. v. Horton, 926 So. 2d 167, 175 (Miss. 2006). “Broad arbitration language governs

                                              10
disputes ‘related to’ or ‘connected with’ a contract, and narrow arbitration language requires

arbitration of disputes that directly ‘arise out of’ a contract.” Id. at 176 (quoting Pennzoil

Expl. & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1067 (5th Cir. 1998)). “Because

broad arbitration language is capable of expansive reach, courts have held that ‘it is only

necessary that the dispute “touch” matters covered by [the contract] to be arbitrable.’” Id.

(alteration in original) (quoting Pennzoil, 139 F.3d at 1068).

¶21.   Here, the arbitration provision states, in relevant part, “[a]ny controversy or claim

arising out of or relating to these bylaws, or the breach thereof, or any controversy or claim

arising out of or relating to patronage capital shall be resolved by binding arbitration . . . .”

The arbitration provision uses broad language. As a result, all claims that touch matters

covered by the parties’ agreement must be arbitrated.

¶22.   In their complaint, Plaintiffs claim that at the end of the 2016 fiscal year, Southwest

held patronage capital equal to 42 percent of its assets, exceeding the industry’s

recommended 30 percent. Plaintiffs requested a refund of the excess patronage capital under

Section 77-5-235. Thus, Plaintiffs’ claims regarding excess patronage capital clearly touch

matters covered by the parties’ agreement.

¶23.   Additionally, Section 77-5-235(5) states that “[r]evenues and receipts not needed . .

. shall be returned to the members by such means as the board may decide . . . .” Section

8.03(a) of the bylaws addresses patronage capital in connection with furnishing electric

energy and provides,

       In the furnishing of electric energy the Association’s operations will be so
       conducted that all members will through their patronage furnish capital for the

                                               11
       Association. All members acknowledge the need of the Association for capital
       received from members to operate. In order to induce patronage and to assure
       that the Association is obligated to operate on a nonprofit basis, the
       membership has voted to vest in the Board of Directors, in its discretion and
       business judgment, the ability to allocate patronage capital to the accounts of
       members, rather than paying them in cash, for all amounts received and
       receivable from the furnishing of electric energy in excess of operating costs
       and expenses properly chargeable against the furnishing of electric energy. All
       such amounts in excess of total operating costs and expenses at the moment of
       receipt by the Association are received with the understanding that they are
       furnished by members as capital credits. The association may pay by credits
       for each member to a capital account on the books of the Association all such
       amounts in excess of operating costs and expenses. The books and records of
       the Association shall be set up and kept in such a manner that at the end of the
       fiscal year the amount of capital, if any, so furnished by the member is clearly
       reflected and credited in appropriate records to the capital account of each
       member.

¶24.   Plaintiffs’ dispute involves the board’s allocation of patronage capital and touches on

Southwest’s bylaws. Accordingly, the trial court did not err by finding that Plaintiffs’ dispute

fell within the scope of the arbitration provision.

       III.   Whether the trial court erred by finding that no external factors
              precluded arbitration in this matter.

¶25.   Plaintiffs assert that the arbitration provision is both unconscionable and ambiguous.

We separately address each assertion.

       A.     Unconscionability

¶26.   Plaintiffs argue that the arbitration provision constitutes a contract of adhesion and

is procedurally unconscionable. At the hearing, the chancellor recognized that “[t]he burden

. . . of proving a contract of adhesion or unconscionability, that would certainly fall on the

plaintiffs in this case, and they’ve not chosen to call any witnesses.” The chancellor

determined that Plaintiffs presented no evidence or proof in support of their opposition to

                                              12
arbitration. We agree.

¶27.   A contract of adhesion is one that is “drafted unilaterally by the dominant party and

then presented on a ‘take-it-or-leave-it’ basis as to the weaker party who has no real

opportunity to bargain about the terms.” Horton, 926 So. 2d at 171 (internal quotation marks

omitted) (quoting Taylor, 826 So. 2d at 716). In determining whether an arbitration

provision is procedurally unconscionable, this Court considers: “1) lack of knowledge; 2)

lack of voluntariness; 3) inconspicuous print; 4) complex legalistic language; 5) disparity in

sophistication or bargaining power; 6) lack of opportunity to study the contract and inquire

about the contract terms.” Id. at 177 (citing Taylor, 826 So. 2d at 714). Lack of knowledge

and lack of voluntariness are prominent indicators of procedural unconscionability. Taylor,

826 So. 2d at 716.

¶28.   Plaintiffs assert both a lack of knowledge and a lack of voluntariness regarding the

arbitration provision. Regarding a lack of knowledge, Plaintiffs claim they had no notice of

the arbitration provision. But Plaintiffs’ argument directly contradicts this Court’s decision

in The Door Shop, in which the Court reviewed Section 77-5-223(a) and ruled that the

electric power association’s board of directors was authorized to adopt and amend the

bylaws, that the members had notice of the board’s power to do so, and that the board acted

within its lawful authority. Here, as in The Door Shop, Southwest’s board of directors was

authorized to adopt and amend the bylaws, Plaintiffs had notice of the board’s power to do

so, and the board acted within its authority to amend the bylaws. While the arbitration

provision was not included in the bylaws when Plaintiffs signed the membership application,



                                             13
Plaintiffs knew that the bylaws could be amended. As the trial court properly noted,

“[e]verybody knows bylaws can be changed.” By executing the membership application,

Plaintiffs agreed to be bound by the bylaws. Plaintiffs knew that the bylaws could be

amended and received notice of the bylaw amendments at the annual meetings. Thus,

Plaintiffs’ lack-of-notice argument fails.

¶29.   Plaintiffs further argue a lack of voluntariness in executing the membership

application. Plaintiffs claim that the membership terms were nonnegotiable and that they had

no other alternatives for electricity.

       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
       factors, timing or other pressures from being able to contract with another
       party on more favorable terms or to refrain from contracting at all.”

Taylor, 826 So. 2d at 716 (quoting Entergy Miss., Inc. v. Burdette Gin Co., 726 So. 2d

1202, 1207 (Miss. 1998)).        Here, the terms of membership in Southwest were not

“unnegotiable.”

¶30.   Mississippi’s statutory framework empowers Southwest’s board of directors to “adopt

and amend bylaws for the management and regulation of the affairs of the corporation.”

Miss. Code Ann. § 77-5-223(a). The directors are elected annually to a three-year term by

members entitled to vote. Miss. Code Ann. § 77-5-221 (Rev. 2018). The directors must be

members of the corporation. Id. Only members are allowed to participate in the election of

directors to serve on the board. Id. Each member has one vote no matter how much

electricity he or she uses, according to section 3.05 of Southwest’s bylaws. All members are



                                             14
“entitled to address the board at any regular meeting regarding any suggestions for better

service, grievances or any other matter affecting the corporation.” Miss. Code Ann. § 77-5-

221.

¶31.   Under Mississippi statutes and Southwest’s bylaws, the board is comprised of

Southwest members, the members elect who among them serves on the board, and the

members maintain the power to address individual grievances to the board at regular

meetings. Thus, the statutes and bylaws ensure that the power to enact and amend terms of

membership rests with the members of the cooperative. This ability of the members to alter

the terms of membership through the methods of participation outlined in the statutes and

bylaws makes the terms of membership negotiable. Thus, Plaintiffs lack-of-voluntariness

argument is without merit.

¶32.   Additionally, Plaintiffs unconscionability argument singles out arbitration. In AT&T

Mobility, LLC v. Concepcion, 563 U.S. 333, 342, 131 S. Ct. 1740, 1747, 179 L. Ed. 2d 742

(2011), the United States Supreme Court held that the FAA may preempt a state

unconscionability rule of general application if the rule disproportionately affects arbitration.

The Court concluded, “[a]lthough [the FAA] § 2’s saving clause preserves generally

applicable contract defenses, nothing in it suggests an intent to preserve state-law rules that

stand as an obstacle to the accomplishment of the FAA’s objectives.” Id. at 343.

¶33.   “The [FAA] . . . requires courts to place arbitration agreements ‘on equal footing with

all other contracts.’” Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1424, 197

L. Ed. 2d 806 (2017) (quoting DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463, 465, 193 L. Ed.



                                               15
2d 365 (2015)). General contract defenses such as procedural unconscionability cannot be

applied in such a way that targets or disproportionately impacts arbitration. Id. at 1428 n.2.

In other words, any general state-law contract defense “must in fact apply generally, rather

than single out arbitration.” Id.

¶34.   Plaintiffs’ procedural-unconscionability argument singles out the arbitration provision

for disfavored treatment, in violation of Concepcion and Clark. Plaintiffs do not argue that

all of the bylaws, i.e., the entire membership agreement between the parties, are procedurally

unconscionable. Instead, Plaintiffs single out the arbitration provision and argue that it is

procedurally unconscionable.        But if Mississippi’s contract defense of procedural

unconscionability is applied to target only the parties’ arbitration provision, it will have a

disproportionate effect on arbitration. Thus, while a valid arbitration provision governs this

controversy, Plaintiffs’ attempt to single out that arbitration provision as unconscionable

violates Concepcion and Clark.

¶35.   Moreover, all of Southwest’s bylaws and amendments were adopted in the same way.

Thus, assuming Plaintiffs were to prevail on their procedural-unconscionability argument,

it would require this Court to invalidate all of Southwest’s bylaws, not just the arbitration

provision. Such invalidation of all of the bylaws would certainly not benefit Plaintiffs

because if the entire membership agreement is procedurally unconscionable and

unenforceable, then Plaintiffs would no longer be members of Southwest and would

therefore lose standing to pursue their claims.

¶36.   The trial court stated that it “heard no evidence” to support Plaintiffs’ argument that



                                             16
the arbitration provision was a contract of adhesion or was procedurally unconscionable. We

agree and find no error by the trial court.

       B.     Ambiguity

¶37.   Plaintiffs further argue that the arbitration provision in the bylaws is ambiguous and

does not demonstrate a meeting of the minds. Specifically, Plaintiffs assert that one section

of the bylaws specifies that a member may seek arbitration but that another section states that

claims related to the return of patronage capital shall be resolved by arbitration. Plaintiffs

argue that “[t]he arbitration provisions irreconcilably conflict with one another; thus, creating

an ambiguity.” We disagree.

¶38.   Section 8.03(k) of the bylaws, titled “Patronage Capital in Connection with Furnishing

Electric Energy,” provides,

       To the extent the membership disagrees with the decisions of the Board of
       Directors with respect to the allocation or retirement of capital credits, the
       member may seek arbitration pursuant to Section 11.05 of these Bylaws, but
       only after the member has first provided written notice to the Board of
       Directors at least fifteen (15) calendar days in advance of the next scheduled
       regular monthly Board meeting and provided the Board of Directors with a
       reasonable time to investigate and respond to the matter.

(Emphasis added.) Section 11.05, titled “Alternative Dispute Resolution,” provides, “[a]ny

controversy or claim arising out of or relating to these bylaws, or the breach thereof, or any

controversy or claim arising out of or relating to patronage capital shall be resolved by

binding arbitration . . . .” (Emphasis added.)

¶39.   “When construing a contract, we will read the contract as a whole, so as to give effect

to all of its clauses.” One S., Inc. v. Hollowell, 963 So. 2d 1156, 1162 (Miss. 2007) (quoting



                                               17
Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908 So. 2d 107, 111 (Miss. 2005)). When

read together, as a whole, sections 8.03(k) and 11.05 are not ambiguous. Section 8.03(k)

simply states that before a member can seek arbitration under section 11.05, the member

must first provide written notice to the board. Section 8.03(k) is not a separate, permissive

arbitration provision. Instead, section 8.03(k) specifically refers to section 11.05, the

mandatory arbitration provision. Thus, despite Plaintiffs’ argument, the trial court did not

err by finding that the arbitration provisions do not conflict and are not ambiguous.

                                     CONCLUSION

¶40.   We find that the parties entered into a valid arbitration agreement, that the parties’

dispute falls within the scope of the arbitration agreement, and that no external factors

preclude arbitration in this matter. Accordingly, we affirm the chancery court’s judgment

granting Southwest’s renewed motion to compel arbitration.

¶41.   AFFIRMED.

    COLEMAN, MAXWELL, BEAM, CHAMBERLIN AND ISHEE, JJ., CONCUR.
KING, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION. RANDOLPH, C.J.,
AND KITCHENS, P.J., NOT PARTICIPATING.

       KING, PRESIDING JUSTICE, DISSENTING:

¶42.   I disagree with the majority’s finding that the Plaintiffs presented no evidence in

support of their opposition to arbitration. A court may invalidate an arbitration agreement

based on unconscionability, “but not on legal rules that ‘apply only to arbitration or that

derive their meaning from the fact that an agreement to arbitrate is at issue[.]’” Kindred

Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1426, 197 L. Ed. 2d 806 (2017) (quoting



                                             18
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S. Ct. 1740, 179 L. Ed. 2d 742

(2011)). In finding arbitration provisions procedurally unconscionable, this Court considers

“1) lack of knowledge; 2) lack of voluntariness; 3) inconspicuous print; 4) complex legalistic

language; 5) disparity in sophistication or bargaining power; 6) lack of opportunity to study

the contract and inquire about the contract terms.” MS Credit Ctr., Inc. v. Horton, 926 So.

2d 167, 177 (Miss. 2006) (citing E. Ford, Inc. v. Taylor, 826 So. 2d 709, 714 (Miss. 2002)).

Generally, procedural unconscionability is shown by lack of knowledge and lack of

voluntariness. Taylor, 826 So. 2d at 716.

¶43.   Although the majority concludes that the analysis should end at finding a legal and

proper arbitration provision, this Court, on its own motion, requested that the parties submit

supplemental briefing on whether Southwest had waived delegation of arbitrability by not

asserting it in the trial court and instead arguing the merits of arbitrability. In its supplemental

brief, Southwest admitted that “it did not seek to enforce the delegation clause in the trial

court . . . .” Instead, Southwest submitted to the trial court the merits of arbitrability,

including both the validity and infirmities. Because Southwest chose to submit the merits of

arbitrabilitly to the trial court, we must now determine whether the arbitration provision

should be invalidated based on any infirmities, including unconscionability.

¶44.   I would find that the Plaintiffs demonstrated both a lack of knowledge and a lack of

voluntariness. First, the arbitration provision at issue was not included in the bylaws when

Plaintiffs signed the membership agreement stating they would be bound by the bylaws.

Although the membership agreement stated that the bylaws could be amended from time to



                                                19
time, Plaintiffs were not notified that the bylaws were being amended to include an

arbitration agreement until after the amendment had already occurred. As Kevin Bonds stated

in his affidavit, “[m]embers receive notice of Bylaw amendments at annual meetings of the

members and through the Today in Mississippi newspaper.” (Emphasis added.) Accordingly,

Southwest’s members had no notice that the bylaws were amended to include an arbitration

agreement until after the arbitration agreement had already been entered into the bylaws.

While the bylaws may be amended by Southwest’s board, the board does not have unlimited

authority in making those amendments.

¶45.   Moreover, contracts of adhesion are “drafted unilaterally by the dominant party and

then presented on a ‘take-it-or-leave-it’ basis to the weaker party who has no real opportunity

to bargain about its terms.” Caplin Enters., Inc. v. Arrington, 145 So. 3d 608, 615 (Miss.

2014) (internal quotation marks omitted) (quoting Taylor, 826 So. 2d at 716). 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 factors,
       timing or other pressures from being able to contract with another party on
       more favorable terms or to refrain from contracting at all.”

Taylor, 826 So. 2d at 716 (quoting Entergy Miss., Inc. v. Burdette Gin Co., 726 So. 2d

1202, 1207 (Miss. 1998)). I would find that the arbitration provision contained in the bylaws

created a contract of adhesion. “[P]ublic utilities are monopolies engaged in the business of

furnishing necessary services to the public . . . .” Miss. Pub. Serv. Comm’n v. Miss. Power

Co., 429 So. 2d 883, 886 (Miss. 1983). Electricity is a basic need that could be furnished




                                              20
from no company other than Southwest.6 Thus, Southwest had a monopoly on electricity in

the area, not by happenstance, but by a government-enforced monopoly. Because Southwest

has a monopoly on electricity, a necessary service, and was the sole provider of electricity

in its designated areas, the Plaintiffs had no opportunity to contract with another utility

provider to obtain electricity.7 The Plaintiffs in this case could not simply decline to accept

the arbitration provision by terminating their membership with Southwest.

¶46.   No reasonable alternative existed for Plaintiffs to receive electricity. Southwest argues

that Plaintiffs had other options for receiving energy such as solar panels or generators.

However, as Plaintiffs argue, solar panels and generators are not reasonable alternatives for

the average Mississippian. Southwest cites Fourth Davis Island Land Co. v. Parker, 469 So.

2d 516, 521 (Miss. 1985), a case involving a power-line dispute in which this Court stated

that “[w]e are not holding that electricity is not a necessity, but the means by which it is


       6
         See Miss. ex rel. Hood v. Entergy Miss., Inc., No. 3:08CV780 HTW-LRA, 2012
WL 3704935, at *7 (S.D. Miss. Aug. 25, 2012) (“In this case, the State of Mississippi
unquestionably has an interest in the regulation of the retail, intrastate utility market and in
the protection of its citizens from illegal over-billing for a basic necessity such as
electricity.”).
       7
        As Representative Jim Cooper stated,

       America’s 930 electric co-operatives are the sole source of electricity for
       homes, farms, and businesses for parts of 47 states. . . . [D]istribution co-ops
       (“co-ops”) simply resell and deliver electricity to retail customers across the
       crucial “last mile” between the national electric power grid and the co-op
       members that ultimately use that electricity. Nationwide electrification is
       considered by engineers to be the greatest accomplishment of the twentieth
       century. It is hard to imagine life without it.

Representative Jim Cooper, Electric Co-Operatives: From New Deal to Bad Deal?, 45
Harv. J. on Legis. 335 (2008) (footnote omitted).

                                              21
furnished to the Fourth Davis property is one for which a substitute could be furnished by

reasonable labor and expense.” The Parker case can be distinguished. The property involved

in that dispute was located on a remote island and was used primarily for hunting camps. Id.

at 522. In fact, it was undisputed that no person permanently resided at the Fourth Davis

dwellings. Id. Moreover, the members of Fourth Davis testified that “cooking was achieved

in part by butane and wood-powered sources.” Id. In conclusion, this Court held that “the

power line was not reasonably necessary since an alternative would not involve

disproportionate expense and inconvenience.” Id. at 522.

¶47.   This case presents completely different facts. Plaintiffs here reside in the area in which

Southwest is the sole electricity provider. Additionally, no testimony indicated that Plaintiffs

or anybody else in the district cooked by butane or wood-powered sources. It would be

wholly unreasonable for Plaintiffs to be expected to do so on any long term basis. Thus,

unlike in Parker, electricity is reasonably necessary for Plaintiffs and an alternative would

likely involve disproportionate expense and inconvenience.

¶48.   In addition, Plaintiffs had no opportunity to opt out of the arbitration provision. In

Bank One, N.A. v. Coates, 125 F. Supp. 2d 819, 826 (S.D. Miss. 2001), under its

membership agreement, Bank One sent a notice to each of its cardmembers stating that the

cardmember agreement would be amended to add an arbitration provision. Cardmembers

were given the option to reject the arbitration provision within a certain period of time. Id.

Absent objection, the notice stated the arbitration provision would become effective after that

period of time. Id. The court upheld the arbitration agreement, finding probative that Bank



                                              22
One had sent a notice to each of its cardholders before the amendment took place and had

given the cardholders an opportunity to reject the arbitration provision. Id. at 831. The court

also emphasized that the notice did not address several amendments but rather “addressed

the singular topic of the arbitration clause, and began with the heading ‘IMPORTANT

NOTICE.’” Id. at 833. Similarly, in Beneficial National Bank, U.S.A. v. Payton, 214 F.

Supp. 2d 679, 683 (S.D. Miss. 2001), Beneficial National Bank sent a notice to each of its

cardholders stating that a mandatory arbitration provision was being added to the agreement

unless the cardholder rejected the change. The court upheld the arbitration provision, stating

that the notice had specifically informed the plaintiff of his right to opt out of the arbitration

provision. Id. at 687.

¶49.   Unlike in Coates and Payton, Southwest gave no notice before including the

arbitration provision in the bylaws. Southwest also gave its members no opportunity to opt

out of the arbitration provision. And opting out of receiving electricity also was not an option

because electricity is a basic necessity. In order to receive a basic necessity, the members of

Southwest were simply bound to the amendment without notice or choice. Thus, I would find

that the procedures Southwest used in this case lacked agreement and were unconscionable.

¶50.   The Plaintiffs cite McCreary v. Liberty National Life, and its holding that the parties

to an insurance policy had not agreed to arbitrate their disputes. There, the court found

probative that

       [t]he application was the only document plaintiff ever signed; there is, of
       course, no mention in its contents of the arbitration endorsement. That
       endorsement is part of the insurance contract which plaintiff received upon
       completion of the application process. When plaintiff received the policy, she

                                               23
       was given the option of “return[ing] it for any reason,” in which case, the
       policy was “void from the beginning . . . .” There was no notice, no discussion,
       and no negotiation of the arbitration endorsement, circumstances, which, in
       this court’s view, hardly signify either agreement or waiver.

McCreary v. Liberty Nat. Life, 6 F. Supp. 2d 920, 921 (N.D. Miss. 1998) (second alteration

in original). The court found that the arbitration endorsement was unenforceable and ordered

the matter to proceed in court. Id. This case presents similar facts. Southwest had all the

bargaining power in this case. Before receiving electricity, a basic necessity, Plaintiffs were

required to sign the one-page membership agreement under which Plaintiffs were bound by

the provisions of the bylaws, which could be amended from time to time. Plaintiffs had no

opportunity to negotiate the terms of the arbitration provision and were not provided with a

copy of the bylaws before signing the membership agreement. And while Plaintiffs did sign

the membership agreement agreeing to be bound by the bylaws that may be amended from

time to time, Mississippi Code Section 77-5-223(a) (Rev. 2018) requires those amendments

to be consistent with law.

¶51.   The trial court found probative that the members of Southwest elect the board of

directors. However, the board of directors selects the nomination committee that determines

the candidates who will be voted on to be a director. The nomination committee gathers

suggestions and then determines the members who will be voted onto the board. Should the

members wish to nominate an individual that the nomination committee does not include on

its list, under the bylaws, section 4.04(b), they may do so only by a petition with fifty

members’ signatures, addresses, account numbers, and service locations. Therefore, the

individual members of Southwest are limited in their choices for the board of directors.

                                              24
¶52.   I find no merit in the majority’s contention that the Plaintiffs’ argument directly

contradicts this Court’s decision in The Door Shop, Inc. v. Alcorn County Electric Power

Association, 261 So. 3d 1099, 1104 (Miss. 2018). The Door Shop involved the retroactivity

of an amendment to the bylaws to recover underbilling. Id. The issues of arbitration and

unconscionability were not raised or discussed in that case. Because The Door Shop has no

bearing on the issues raised here, I disagree with the majority’s conclusion that the Plaintiffs’

lack of notice argument failed.

¶53.   Market factors and regulatory constraints created a great disparity in bargaining

power. Because electricity is a basic need, the Plaintiffs in this case could not simply decline

to accept the arbitration provision by terminating their membership with Southwest. The

Plaintiffs had no reasonable alternative to receive electricity; therefore, Southwest retained

all of the bargaining power. The right “to seek redress in a court of competent jurisdiction

. . . . is among our most cherished rights . . . .” Robertson v. J.C. Penney Co., Inc., 484 F.

Supp. 2d 561, 568 (S.D. Miss. 2007). Because Plaintiffs had no opportunity to bargain

regarding arbitration, I would find that the arbitration provision created a contract of

adhesion and was procedurally unconscionable. Therefore, I dissent from the majority’s

finding that the arbitration provision was valid and enforceable.




                                               25
