Sixth Circuit Narrows Unconscionability Challenges to Arbitration Clauses After Coinbase – Comment on Jessica Hines v. National Entertainment Group, LLC (6th Cir. 2025)

I. Introduction

In a published decision with broad ramifications for employment, consumer, and commercial arbitration, a Sixth Circuit panel (Gibbons, J., joined by Sutton, C.J. & White, J.) vacated a district court order that had refused to compel arbitration in a wage-and-hour class action brought by an exotic dancer. The Court held that:

Under Ohio law, an arbitration clause plainly headed “MANDATORY ARBITRATION” was not procedurally unconscionable merely because the worker was “nearly naked,” felt hurried, or faced a take-it-or-leave-it contract.
A federal court assessing substantive unconscionability may evaluate only the arbitration clause itself; objections to other contract terms are severable and for the arbitrator, consistent with Buckeye, Rent-A-Center, and—properly understood—Coinbase, Inc. v. Suski.

The ruling emphasizes the severability doctrine, tightens the evidentiary burden for proving procedural unconscionability, and cabins the reach of the Supreme Court’s 2024 decision in Coinbase.

II. Summary of the Judgment

Jessica Hines sued National Entertainment Group (“NEG”) alleging unpaid wages under the FLSA and Ohio statutes. NEG moved to dismiss or stay, citing three identical “Lease Agreement Waivers” containing a sweeping arbitration clause. The district court denied the stay, holding the clause both procedurally and substantively unconscionable.

The Sixth Circuit reversed:

Procedurally, the clause was conspicuous, written in ordinary font, and signed three separate times; bare allegations of haste or unequal bargaining power did not negate a “meaningful choice.”
Substantively, the district court erroneously examined unrelated contract provisions. Under the severability principle, only the clause itself—and not the remainder of the Lease Waiver or a separate Club Activity Waiver—can be scrutinized for substantive fairness at the enforcement stage.

The panel remanded for consideration of the remaining three Stout factors (scope, congressional intent, stay versus dismissal), signalling that arbitration will almost certainly be compelled.

III. Detailed Analysis

A. Precedents Cited and Their Influence

Federal Arbitration Act (FAA), 9 U.S.C. §§ 1–16 – Establishes the baseline enforceability of arbitration agreements.
Stout v. J.D. Byrider, 228 F.3d 709 (6th Cir. 2000) – Provides the four-factor framework for motions to compel arbitration; only the first factor (existence of a valid agreement) was disputed.
AT&T Mobility v. Concepcion, 563 U.S. 333 (2011) – Arbitration clauses may be invalidated only by generally applicable contract defenses.
Buckeye Check Cashing v. Cardegna, 546 U.S. 440 (2006) & Rent-A-Center v. Jackson, 561 U.S. 63 (2010) – The separability doctrine: challenges to the overall contract go to the arbitrator unless directed at the clause itself.
Coinbase, Inc. v. Suski, 602 U.S. 143 (2024) – Clarified that courts decide which of two conflicting contracts governs arbitrability. The panel distinguished Coinbase because no superseding contract was alleged here.
Ohio authorities on unconscionability (Hayes v. Oakridge Home, 908 N.E.2d 408 (Ohio 2009); ABM Farms; Vanyo; etc.) shaped the state-law analysis, stressing dual proof of procedural and substantive unconscionability.

B. Legal Reasoning

1. Procedural Unconscionability

The Court applied Ohio’s balancing test (age, education, circumstances of signing, opportunity to read, who drafted). Key holdings:

Conspicuous heading and standard-sized font defeated claims of hidden terms.
Absent evidence of coercion, refusal to allow questions, or incapacity, the signer is presumed to understand a contract she signed three different times.
Economic pressure (having paid a “house fee” and being “nearly naked”) did not amount to duress; employee could have declined to work.
Cases involving nursing-home residents (Martin, Wascovich) are distinguishable because they involved genuine capacity concerns.

2. Substantive Unconscionability

The panel rebuked the district court for evaluating provisions outside the arbitration clause. Applying severability:

Only the fairness of the clause itself matters; collateral fee-shifting or liability provisions are for the arbitrator.
Mutual promises to arbitrate supply adequate consideration; “lack of mutuality” arguments failed under both Ohio and Sixth Circuit precedent (Fazio).
Possible inconsistent outcomes across individual arbitrations are policy concerns, not grounds for invalidation.

3. Distinguishing Coinbase

Hines argued that Coinbase allows courts to consider whole-contract challenges when they “equally” affect the arbitration clause. The Court clarified:

Coinbase applies only when two contracts send arbitrability to different fora.
Here, no second contract purported to override the Lease Waiver; therefore, classic severability controls.

C. Potential Impact

Practical Barriers to Unconscionability Claims – Plaintiffs in the Sixth Circuit must now supply concrete evidence of coercion, incapacity, or hidden terms; generalized references to hurried signing, nudity, or take-it-or-leave-it employment will rarely suffice.
Post-Coinbase Clarification – District courts cannot invoke Coinbase to roam broadly through contract provisions; unless a second agreement vitiates the first, unconscionability analysis remains tightly focused on the arbitration clause.
Employment & Gig-Economy Agreements – Businesses may rely on conspicuous, plain-language arbitration clauses even in high-pressure hiring environments, provided there is no outright deception or incapacity.
Litigation Strategy – Plaintiffs must tailor challenges directly to the clause (e.g., prohibitive costs, illusory promises) rather than to surrounding documents, or those objections will be referred to the arbitrator.

IV. Complex Concepts Simplified

Federal Arbitration Act (FAA): Federal statute that makes written arbitration agreements enforceable and empowers courts to stay litigation and compel arbitration.
Procedural vs. Substantive Unconscionability: Procedural concerns the formation process—was the weaker party tricked or coerced? Substantive looks at the fairness of the terms themselves.
Severability Doctrine: An arbitration clause is treated as an independent mini-contract. Disputes about the rest of the contract are for the arbitrator, unless the clause itself is specifically challenged.
Delegation Clause: A contract term that authorizes arbitrators, not courts, to decide “gateway” issues such as the validity or scope of the arbitration agreement.
Take-it-or-leave-it (Adhesion) Contract: A standardized form offered by a party with superior bargaining power. Under the FAA, adhesion alone does not void an arbitration clause without additional unfairness.

V. Conclusion

Hines v. National Entertainment Group reinforces the arbitration-friendly stance of the Sixth Circuit and offers a precise roadmap for lower courts confronting unconscionability defenses after Coinbase. The decision:

Reaffirms that conspicuous, mutually binding arbitration clauses survive most procedural attacks.
Limits substantive unconscionability review to the clause itself, preserving the arbitrator’s domain over collateral contract disputes.
Clarifies that Coinbase does not loosen severability where no competing contract displaces the arbitration agreement.

Going forward, parties seeking to avoid arbitration in the Sixth Circuit must marshal particularized evidence of coercion or inequity directed at the clause, while litigants drafting agreements should ensure prominent headings, bilateral obligations, and clear language—steps that virtually immunize the arbitration provision from judicial invalidation.