Teaching Assistants: Sabine Tsuruda’s “Basic Interests” Approach to Unconscionability Doctrine

August 21, 2025

Martha Ertman (right) provides an excellent review on JOTWELL of Sabine Tsuruda’s recently published article, Race, Unconscionability, and Contractual Equality, I won’t try to summarize Professor Ertman’s summary. I just want to make two supplemental comments, one on Professor Tsuruda’s take on statutory protections against race-based discrimination in contracts, and one on her views on the doctrine of unconscionability as applied to arbitration agreements.

As Professor Ertman notes, Professor Tsuruda’s “basic interests” approach “makes a contract term substantively unconscionable if it runs contrary to a party’s ‘basic interests and inalienable rights’ such as privacy, having a home, accessing justice, and being free from race and gender discrimination.” My initial response upon reading this was to wonder whether unconscionability is the right legal doctrine to address the wrongs that most interest Professor Tsuruda. After all, we have 42 U.S.C. §§ 1981 and 1982 to address not just racial discrimination with respect to basic interests but with respect to all contracts.

With respect to the statutory remedy for discrimination in contractual relations, Professor Tsuruda (below, left) points out that “antidiscrimination law’s narrow focus on classifications and comparators is underinclusive.” Section III of the article fleshes out those two concepts, but her work also suggests that it may not matter what doctrine applies if juries are resistant to legal doctrines that address racial injustice. In a case that allowed defendants to exploit residential racial discrimination to sell homes to Black buyers on materially worse terms than those at which comparable properties were sold to Whites, one juror allegedly said that “he had hoped that finding for the defendants would help to reverse ‘the mess Earl Warren made with Brown v. Board of Education and all that nonsense.’”

But the jury verdict for defendants was upheld on appeal, in part because it can be so hard to establish that the houses sold to Whites really were comparable to the houses offered to Blacks. In addition, the court did not think discrimination was proven when defendants had not behaved any worse than their competitors.

I would like to read more from Professor Tsuruda about what she regards as the problem with classifications. It seems that the dual challenges of finding truly separate classes engaged in comparable transactions makes discrimination claims difficult to establish. I’m not sure how we have discrimination law without classifications. A culture of reaction prefers the reification of current socio-economic divisions over laws regarded as effecting racial preferences. In addition, there is an increased willingness to treat widespread and systematic racism as disproving a claim of racism in a particular instance. Those are societal problems or problems of the Zeitgeist that it is hard for any legal regime to overcome.

Professor Tsuruda’s account indicates that the problems with the statutory regime replicate a problem with unconscionability doctrine. Unconsconscionability treats terms as substantively unconscionable “according to the mores and business practices of the time and place.” Courts now seem to think that standard applies to statutory discrimination claims. Courts have imported a familiar standard to a context in which it does not belong. Professor Tsuruda has usefully identified a problem, but the problem lies with courts; not with the statutory regime.

As I am now writing about arbitration (and fear that I might never be able to stop doing so), I was intrigued by Professor Tsuruda’s use of arbitration to illustrate the promise of her alternative approach to unconscionability. Professor Tsuruda is interested in arbitration because it seems like fertile soil in which her version of unconscionability can take root and grow. There have been a few cases in which courts have found arbitration provisions unconscionable even in the absence of procedural unconscionability, because they effect a subordination and compromise one party’s basic interests for the sake of the counterparty’s commercial gain. Echoing Nancy Kim’s insights on “consentability,” Professor Tsuruda argues that certain agreements should be treated as unconscionable because they involve the waiver of endowments that the general public might view as inalienable, such as the right to vindicate statutory rights, the right to a remedy, which might be made impossible through class-action waivers, or the right to a civil jury.

But Professor Tsuruda recognizes two doctrinal hurdles that her basic interests approach would need to overcome. First, as currently formulated, unconscionability must arise through defective formation. I see this as less of an obstacle than Professor Tsuruda does. The thinnest patina of procedural unconscionability can provide a toehold for the finding of substantive unconscionability, where the latter if manifest, and arbitration agreements almost invariably supply more than a thin layer of procedural unfairness. Arbitration agreements come in contracts of adhesion, which are often long, and the arbitration provisions are not always prominent or placed in a location where they are likely to be seen. These days, arbitration agreements might be extraordinarily complex, as vendors seek to fend off both class actions and mass arbitration. A lay person could not possible penetrate such complexity.

The other problem that the basic interests approach must overcome is more fundamental. Our current jurisprudence does not recognize freedom from racial subordination as a basic interest. Sadly, the trend is in the other direction. SCOTUS treats efforts to remedy past racial injustices that lead to structural inequalities and map onto socio-economic racial inequalities as discrimination against Whites or Asians.

My focus in writing about arbitration is far less sophisticated. For its first half century, the Federal Arbitration Act (FAA) did not apply to asymmetrical contracts such as consumer or employment agreements. It did not apply to statutory claims; it did not apply to state court proceedings. Arguably, post Erie, the FAA, a procedural statute, should have had very limited scope, as it expressly does not give rise to federal question jurisdiction and it thus should give way in diversity cases to the states’ substantive law of contracts, as well as state statutory law. The courts have gone in a different direction, expanding the scope of the FAA in ways, as Margaret Moses and many others have argued, would have rendered it unrecognizable to its drafters and adopters. Undoing the horrible precedents going back to Moses and Southland would be an alterantive approach to achieving Professor Tsuruda’s aims in the realm of arbitration. That said, her reconceptualization of unconscionability doctrine could have many useful applications in fields other than arbitration.

For newcomers to the blog interested in this topic, from 2020-22, we had a number of contributions on critical theory, critical race theory, and feminism. Links follow.

Posted in:

Commentary, Contract Profs and Recent Cases