CALIFORNIA CLASS ACTION LAW

Category: Injunctive Relief

Ninth Circuit Declines to Vitiate Broughton-Cruz Rule

Flight Academy 03

Flight Academy 03 (Photo credit: bestarns)

Declining to issue a broad ruling vitiating the Broughton-Cruz rule, the Ninth Circuit filed its en banc opinion today in Kilgore v. Keybank, National Association, No. 09-16703, __ F.3d __ (9th Cir. Apr. 11, 2013) (en banc).  While the court reversed and remanded with instructions to compel arbitration, it took a narrow approach.  The appeal involved a putative class action by former students of a failed flight-training school who seek broad injunctive relief against the bank that originated their student loans among others.  The court held that the arbitration agreement was not unconscionable under California law and compelled arbitration.

The court concluded that the injunctive relief claim at issue fell outside Broughton-Cruz’s “narrow exception to the rule that the FAA requires state courts to honor arbitration agreements.”

The central premise of Broughton-Cruz is that “the judicial forum has significant institutional advantages over arbitration in administering a public injunctive remedy, which as a consequence will likely lead to the diminution or frustration of the public benefit if the remedy is entrusted to arbitrators.” Broughton, 988 P.2d at 78. That concern is absent here, where Defendants’ alleged statutory violations have, by Plaintiffs’ own admission, already ceased, where the class affected by the alleged practices is small, and where there is no real prospective benefit to the public at large from the relief sought.

You can read more about today’s ruling here.

By CHARLES H. JUNG

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Northern District Denies Motion to Compel Arbitration Where Plaintiffs Sought Only Injunctive Relief Under Unfair Competition Law

records of financial catastrophe from americredit
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The United States District Court for the Northern District of California denied a motion to compel arbitration where plaintiffs sought only injunctive relief under the California Unfair Competition Law (“UCL”).  Cardenas v. Americredit Financial Services Inc., No. C 09-04978 SBA, 2010 WL 3619851 (N.D. Cal. Sept. 13, 2010).

Plaintiffs allege that Defendant AmeriCredit Financial Services, Inc. (“AmeriCredit”), failed to provide Mr. Cardenas with proper notice of his rights in connection with the financing of his car, ostensibly in violation of California’s Unfair Competition Law (“UCL”), California Business and Professions Code § 17200.  Id. *1.  After plaintiff defaulted on his payments, AmeriCredit repossessed Cardenas’ vehicle. Id. *3. The vehicle was subsequently sold and on thereafter, AmeriCredit informed Cardenas that his car had been sold for $12,000, but that he still owed them a deficiency balance of $12,733.85 (i.e., the amount owed on his loan less the amount recovered from the sale of the car). Id. Mr. Cardenas paid only part of the deficiency balance, and AmeriCredit later reported Cardenas’ deficiency to credit bureaus. Id. Read the rest of this entry »