On August 3, 2015, the California Supreme Court issued a long-awaited opinion that provides further clarity on the standard of unconscionability needed to invalidate an arbitration agreement. The court determined that its prior formulations of unconscionability, characterized by the terms “overly harsh,” “unreasonably favorable” or “shock the conscious,” were essentially similar. And the court concluded that while the standard of “shock the conscious” is not the only test for unconscionability, an arbitration agreement must be substantially more than a “simple old-fashioned bad bargain” to be deemed unconscionable.
Plaintiff Sanchez filed a putative class action against defendant car dealer Valencia asserting, among other claims, violation of the California Consumer Legal Remedies Act (CLRA), based on allegations that Valencia made false representations to Sanchez regarding the condition of a used Mercedes Sanchez bought from Valencia. The sales contract signed by Sanchez contained a class action waiver and an arbitration clause. The California Supreme Court found both provisions enforceable.
Read more at our client alert at reedsmith.com.