Despite having gotten a reasonable overview of unconscionability in contracts, I hadn't thought to apply it to a settlement agreement. While aware that contracts in which a starving party promised to pay a million dollars for a meal would probably be invalidated as unconscionable*, I wouldn't have made the same judgment about an agreement in which a starving party foregoes remedies for a wrong committed against it, in exchange for necessities. Yet U.S. District Judge Susan Illston's refusal to dismiss Larry Bowoto, et al. v. Chevron Corp. (N.D. CA) sounded a lot like an invalidation of a settlement agreement based on unconscionability.
In the suit, Nigerian villagers allege that Chevron was behind the government forces that put a violent and fatal end to a protest of the corporation's pollution of the Niger Delta -- a protest that at one point included taking Chevron employees hostage. Government forces killed two protestors in the process of freeing the hostages in May 1998, and shot another four dead and burned down two villages in January 1999 in the course of putting down another protest at an oil rig. Chevron argued that 1) the troops were not under their control; and 2) some of the individual victims as well as representatives of the burnt villages had signed releases of liability in exchange for Nigerian currency, rice, beans and blankets.
The plaintiffs have made literally a dozen claims under state and federal law, and several of these have been dismissed either in phase 1 (plaintiffs' allegations failing to meet the standard for the legal claim) or phase 2 (after discovery, plaintiffs lack sufficient evidence to present to a jury). For example, in a Monday decision (2007 U.S. Dist. LEXIS 59374), Judge Illston dismissed the plaintiff's claim of crimes against humanity. The next day, however, she maintained state claims of secondary liability through aiding and abetting, conspiracy, respondeat superior, as well as of assault and battery, negligence of duty, negligent and intentional infliction of emotional distress and wrongful death claims.
The part of the decision that interests me is Part IX, which discusses Chevron's defense that an individual plaintiff had signed a release of liability. Some of the problems with this defense that Judge Illston identifies seem almost inarguable: the plaintiff does not understand English and no one translated the document for him before he signed it; he was not told that it contained a release; he was told that he had to accept Chevron's money in order to get his dead son's body back; the community leaders who signed on behalf of the two burned villages did not clearly have the authority to bind the villages, much less the individuals residing in them. But at the end, Judge Illston says simply, "Additionally, there is some indication that the Opia and Ikenyan release was signed under duress or undue influence. As the supplies provided along with the money (blankets, pillows, and mattresses) indicate, at the time the document was signed, the communities and their members may have been literally fighting for survival."
This is a more controvertible reason for invalidating the release. Suppose none of the rest had occurred, and the release had been translated and explained to everyone such that there was a meeting of the minds, all individual villagers signed it, no bodies were being held hostage. If the only issue with the release were that it was signed by poor, distressed people who exchanged their signatures for necessities and money, should that alone suffice to void the agreement?
* "Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party." 350 2.2d 445.