California Supreme Court

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California Supreme Court upholds balanced arbitration agreement

August 03, 2015

The California Supreme Court rejected the arguments of an automobile purchaser that an arbitration agreement was unconscionable because it included a class waiver, allowed appeals for outlier awards, required the appealing party to pay for appellate costs pending an appeal, and allowed the parties to invoke self-help remedies, such as repossession.

The Court acknowledged that California’s Discover Bank rule, which holds class action waivers to be unconscionable, is preempted by the Federal Arbitration Act. Moreover, the Court concluded that the remaining provisions of the arbitration agreement were not substantively unconscionable because they were not likely to operate in a lopsided manner to benefit the automobile seller.

NCLC filed its amicus brief on 10/01/2012. Petition for review denied 10/24/12. The Supreme Court requested supplemental briefing on which standard the Court should use for determining whether a contract or contract term is substantively unconscionable. U.S. Chamber filed supplemental letter brief 3/19/2014.

Argued 5/5/2015. Decided 8/3/2015.

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