Monday, March 26, 2012

California Supreme Court To Review Concepcion's Impact On The Armendariz Balancing Test: Sanchez v. Valencia Holding Co. LLC

On March 21, 2012, the California Supreme Court granted review of the Second District’s decision in Sanchez v. Valencia Holding Co., LLC, 201 Cal. App. 4th 74 (2011) – previously discussed here – which upheld a denial of a motion to compel arbitration in a proposed CLRA class action.   Although the trial court had denied the defendant’s motion on the grounds that the class action waiver was unenforceable because it violated statutory rights under the CLRA, the Court of Appeal did not affirm the trial court’s order on these grounds, finding instead that the arbitration agreement as a whole was unconscionable under the Armendariz balancing test (which the Court concluded continues to survive notwithstanding Concepcion).  The California Supreme Court appears to be poised to evaluate this proposition, stating the issue on review is as follows:
Petition for review after the Court of Appeal affirmed an order denying a petition to compel arbitration. This case includes the following issue: Does the Federal Arbitration Act (9 U.S.C. § 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?

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