CALIFORNIA CLASS ACTION LAW

Tag: Concepcion

U.S. Supreme Court Issues Another Pro-Arbitration Decision, Upholding a Class Waiver

American Express?

American Express? (Photo credit: the justified sinner)

Today the U.S. Supreme Court issued its opinion in American Express Co. v. Italian Colors Restaurant, No. 12-133, 570 U.S. __ (June 20, 2013).  The Court considered  whether a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act (“FAA”) when the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.  The Court held that it was.

“Respondents argue that requiring them to litigate their claims individually—as they contracted to do—would contravene the policies of the antitrust laws. But the antitrust laws do not guarantee an affordable procedural path to the vindication of every claim.”  Slip Op. at 4.

You can read more here.

By CHARLES JUNG

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Arbitration Clause on Back of Pre-Printed Auto Purchase Contract Is Unconscionable

Mini Maint Page 1

Mini Maint Page 1 (Photo credit: Flyinace2000)

Yesterday, in Vargas v. SAI Monrovia B, Inc., No. B237257, __ Cal. App. 4th __ (2d Dist. June 4, 2013), a putative class action, the Second District revisited its holding in Sanchez v. Valencia Holding Co., LLC, 201 Cal.App.4th 74 (2012), review granted March 21, 2012, S199119.  In Sanchez the court held that a “Retail Installment Sale Contract” used to purchase an automobile is unconscionable and unenforceable.  In Vargas, the court again concluded that the identical sale contract does not require the arbitration of disputes between a purchaser and a car dealer because it is permeated by unconscionability.

The arbitration provision, entitled, “ARBITRATION CLAUSE,” was on the back at the bottom of the page, outlined by a black box; the arbitration provision was the last provision in the Sale Contract concerning the purchase of the vehicle; a provision related to the assignment of the contract appeared below it. The buyers’ final signatures appeared near the bottom of the front side. The only signature line on the back was at the very bottom of the page; it required the seller’s signature to assign the contract to a third party.

Slip Op. at 3.

The court found that the arbitration provision satisfies the two elements of procedural unconscionability: oppression and surprise. Read the rest of this entry »

California Court of Appeal Reverses Denial of Arbitration Petition, Despite Presence of Class Waiver

Used Car Lot

Used Car Lot (Photo credit: Hugo90)

California’s First District yesterday approved of an arbitration agreement, despite the presence  of a class waiver and a requirement to arbitrate public claims.  See Vasquez v. Greene Motors, Inc., et al., Case No. A134829, __ Cal.App.4th __ (1st Dist. Mar. 27, 2013).

The Court described the clause as follows:

The reverse side, also dense with text, contains a number of provisions in separate boxes, many dealing with typical ―boilerplate legal matters, such as warranties, applicable law, and buyer and seller remedies. None of the provisions on the back page requires a buyer‘s signature. Toward the bottom of the page is the arbitration clause. The entire text of the clause is outlined in a black border. In all capital letters and bold type at the top is written, ―ARBITRATION CLAUSE [¶] PLEASE REVIEW— IMPORTANT—AFFECTS YOUR LEGAL RIGHTS. Immediately below, three numbered provisions, also in all capital letters, inform the buyer either party may request arbitration, this would prevent a court or class-wide proceeding, and it might limit discovery. Below these, in smaller type, are the actual terms of the clause. Pursuant to these terms, the arbitration may be conducted under the auspices of the National Arbitration Forum or the American Arbitration Association (AAA), at the election of the buyer, or by any other mutually agreeable organization; the initial arbitration will be conducted by a single arbitrator; it will occur in the federal district of the buyer‘s residence; the seller must advance up to $2,500 of the buyer‘s arbitration costs; the award is binding unless it is $0 or more than $100,000 or includes injunctive relief, in which 4 case either party can request a second arbitration before three arbitrators; and the use of self-help remedies and small claims court is exempted.

The Court validated the presence of a class action waiver and requirement to arbitrate public claims, finding the arguments against each “foreclosed” by Concepcion:

Finally, Vasquez argues the waiver of class action rights and the requirement to arbitrate ―public claims, such as the statutory violations alleged here, are impermissible. (See Discover Bank v. Superior Court (2005) 36 Cal.4th 148 (Discover Bank); Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303.) Both arguments have been foreclosed by the United States Supreme Court‘s decision in AT&T Mobility, LLC v. Concepcion (2011) 131 S.Ct. 1740 (Concepcion), which found preemption by the Federal Arbitration Act (9 U.S.C. § 1 et seq.). (See Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 769; Nelsen v. Legacy Partners Residential, Inc. (2012) 207 26 Cal.App.4th 1115, 1136–1137.) Although Concepcion expressly considered only Discover Bank‘s judicially created ban on class action waivers as unconscionable, the same rationale would require a finding of preemption of the statutory ban on class action waivers in section 1751, which is similarly based on public policy.

You can read more about this opinion here.

Judges & Attorneys

Justice Margulies wrote the opinion for the court, and Justices Dondero and Banke concurred.  The trial court judge was Hon. Robert S. Bowers of Solano County Superior Court

Toschi, Sidran, Collins & Doyle, David R. Sidran and Thomas M. Crowell for Defendants and Appellants.

Rosner, Barry & Babbitt, Hallen D. Rosner, Christopher P. Barry and Angela J. Smith for Plaintiff and Respondent.

By CHARLES H. JUNG

California Court of Appeal Cites Death Knell Doctrine to Assert Jurisdiction Over Appeal of Order Granting Arbitration

Ring His Death Knell - NARA - 534312

Ring His Death Knell – NARA – 534312 (Photo credit: Wikipedia)

Yesterday, in a proposed wage and hour class action, the California Court of Appeal for the Second District reversed the lower court’s order granting a petition to compel arbitration.  Compton v. Superior Court of Los Angeles County, No. B236669, — Cal.Rptr.3d —-, 2013 WL 1120619 (2d Dist. Mar 19, 2013).  Plaintiff was a property manager who was required to sign an arbitration agreement that also barred arbitration of class claims.  The trial court granted defendants’ petition to compel arbitration.

Normally an order compelling arbitration is not appealable.  But the Court of Appeal determined it had jurisdiction, citing the “death knell” doctrine:

An order compelling arbitration is not appealable. (Elijahjuan v. Superior Court (2012) 210 Cal.App.4th 15, 19.) The parties argue over whether this matter is appealable under the “death knell” doctrine, which applies when an order effectively terminates a class action. Rather than parse the case law on that issue, we conclude that we have jurisdiction to treat this nonappealable order as a petition for writ of mandate in this unusual case because: (1) the unconscionability issue is one of law based on undisputed facts and has been fully briefed; (2) the record is sufficient to consider the issue and it appears that the trial court would be only a nominal party; (3) if we were to dismiss the appeal, and the ultimate reversal of the order is inevitable, it would come in a post-arbitration award after the substantial time and expense of arbitrating the dispute; and (4) as a result, dismissing the appeal would require the parties to arbitrate nonarbitrable claims and would be costly and dilatory.

The Court concluded that the arbitration agreement was unconscionably one-sided because (1) it exempted from arbitration claims the employer would more likely bring, such as claims for injunctive or equitable relief from trade secret disclosures; (2) it limited the time to demand arbitration to a period shorter than the relevant statutes of limitation; (3) it retained the statute of limitations period for itself  and (4) it suggested that the arbitrator had the discretion not to award mandatory attorney’s fees under the Labor Code.

The Court determined that it was not violating Concepcion by enforcing Armendariz’s bilaterality rule:

Read the rest of this entry »

California’s First District Invalidates Auto Dealer’s Arbitration Agreement Due to Lack of Mutuality

English: The Earl Warren Building and Courthou...

English: The Earl Warren Building and Courthouse at Civic Center Plaza, San Francisco, California. This building is home to the Supreme Court of California and the Court of Appeal for the First Appellate District. Photographed by user Coolcaesar on August 31, 2006. (Photo credit: Wikipedia)

The California Court of Appeal struck down an arbitration agreement by a car dealer defendant in a putative class action, rejecting an argument that an unconscionability analysis that focuses on the lack of mutuality in an arbitration contract violates Concepcion. Natalini v. Import Motor, Inc., 213 Cal. App. 4th 587 (1st Dist., mod. February 5, 2013).

Relying on the U.S. Supreme Court’s holding in AT & T Mobility LLC v. Concepcion,  563 U.S. –––– , 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), appellant car dealer argued that an “unconscionability analysis that focuses on the lack of mutuality or bilaterality in an arbitration provision is ‘an example of applying a generally applicable contract defense in a manner which disfavors arbitration.'”  The First District declined to read Concepcion so broadly, and noted that:

Recent California and federal district court decisions addressing arbitration provisions very similar to that in the present case and in the identical car purchase context have not read  Concepcion so broadly.  (See  Trompeter v. Ally Financial, Inc. (N.D.Cal., June 1, 2012, No. C–12–00392 CW) 2012 WL 1980894 [p. *8] [nonpub. opn.]  ( Trompeter );   Smith v. Americredit Financial Services, Inc. (S.D.Cal., Mar. 12, 2012, No. 09cv1076 DMS (BLM)) 2012 WL 834784 [pp. *2–*4] ( Smith );   Lau v. Mercedes–Benz USA, LLC (N.D.Cal., Jan. 31, 2012, No. CV 11–1940 MEJ) 2012 WL 370557 [pp. *6–*7] ( Lau );  see also  Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 804, fn. 18, 137 Cal.Rptr.3d 773.)    Read the rest of this entry »