CALIFORNIA CLASS ACTION LAW

Tag: Unconscionability

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 »

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Third District Finds Class Action Waiver Enforceable

Walnuts - Noci

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In an important case regarding the enforceability of class action waivers, the Court of Appeal upheld the enforceability of such a waiver.  In Walnut Producers of California et al. v. Diamond Foods, Inc., No. C060346, — Cal. Rptr.3d —-, 2010 WL 3213613 (Cal. Ct. App. 3d Dist. Aug. 16, 2010), plaintiff Walnut Producers of California (“Producers”) appealed the trial court’s order striking all class action allegations from their complaint. Plaintiffs claimed that a class action waiver in their arbitration agreements with Defendant Diamond Foods, Inc. (“Diamond Foods”), was unconscionable. The trial court disagreed.  The Court of Appeal, affirmed. Read the rest of this entry »