Sanchez v. Valencia Holding Co., LLC

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In this dispute over the sale of a car, Plaintiff filed a class action lawsuit against Defendant, alleging, inter alia, that Defendant violated the Consumer Legal Remedies Act by making false representations about the condition of the automobile. Defendant filed a motion to compel arbitration pursuant to an arbitration clause in the sale contract that had a class action waiver. The trial court denied the motion, concluding that the class waiver was unenforceable, and therefore, the entire arbitration agreement was unenforceable. After the trial court’s decision was filed, the United States Supreme Court in AT&T Mobility LLC v. Concepcion held that the Federal Arbitration Act (FAA) preempts California’s unconscionability rule prohibiting class waivers in consumer arbitration agreements. On appeal, the Court of Appeal declined to address whether the class waiver at issue was enforceable and instead held that the arbitration appeal provision and the arbitration agreement as a whole were unconscionably one-sided in favor of Defendant. The Supreme Court reversed, holding that the Court of Appeal erred as a matter of state law in finding the agreement unconscionable, as, in light of Concepcion, the FAA preempts the trial court’s invalidation of the class waiver on unconscionability grounds. View "Sanchez v. Valencia Holding Co., LLC" on Justia Law