Arbitration Clause At Issue in Cotton Contract.

A group of farmers contracted to deliver cotton grown during the 2010 and 2011 crop years to the U.S. Cotton Growers Association (USCGA), a marketing pool that the appellant owned.  A dispute arose concerning performance under the contracts ultimately resulting in the farmers suing the appellant and the USCGA.  The farmers alleged breach of contract, fraud, violations of the state (TX) Deceptive Trade Practices Act, conversion, negligent misrepresentation, breach of fiduciary duty, conspiracy and civil fraud.  Each contract contained a provision stating that "any and all disputes arising between" the parties "shall be resolved...exclusively by binding arbitration pursuant to the arbitration rules of the American Cotton Shippers Association."  The appellant and the USCGA sought an order compelling arbitration, but the trial court held that the arbitration clause was unconscionable, unenforceable and void.  On appeal, the court reversed.  The appellate court noted that after the case had been briefed and submitted, the TX Supreme Court had decided Venture Cotton Coop v. Freeman, 435 S.W.3d 222 (Tex. 2014) in which the Court noted that an unconscionable or illegal contract provision could be severed if it does not constitute the essential purpose of the agreement.  The appellate court noted, based on the TX Supreme Court's analysis, that numerous factors had to be considered to determine unconscionablity, including whether the farmers knew of the ramifications of agreeing to arbitrate before signing the contracts.  Other factors to be considered are the commercial atmosphere in which the agreement was made, the available alternatives, and the ability of the farmers to bargain.  Accordingly, the court reversed the trial court's decision and remanded for further proceedings in light of the TX Supreme Court's 2014 opinion.  Ecom USA, Inc., et al. v. Clark, et al., No. 07-14-00240-CV, 2015 Tex. App. LEXIS 1817 (Tex. Ct. App. Feb. 25, 2015).