The following is our summary of the Supreme Court’s actions on petitions for review in civil cases from the Court’s conference on Wednesday, September 24, 2014. The summary includes those civil cases in which (1) review has been granted, (2) review has been denied but one or more justices has voted for review, or (3) the Court has ordered depublished an opinion of the Court of Appeal.
Review Granted
Sabia v. Orange County Metro Realty, S220237 – Review Granted and Held – September 24, 2014
The California Supreme Court granted review and ordered briefing deferred pending decision in Sanchez v. Valencia Holding Co. LLC, S199119, which presents 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. 321, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?
In Sabia, plaintiff and eight other individuals contracted with defendants, a mortgage foreclosure consulting firm. Among the named plaintiffs were four non-native English speakers, each of whom signed the contract after defendants explained the terms in Spanish. After defendants allegedly breached the agreement, plaintiffs filed a class action alleging fraud and breach of contract. The defendants moved to compel arbitration based on the contract’s arbitration clause. Plaintiffs responded by arguing the arbitration provision was procedurally and substantively unconscionable. The trial court ordered arbitration, and plaintiffs appealed.
The Court of Appeal, Second Appellate District, Division Eight, reversed in a published decision, Sabia v. Orange County Metro Realty, Inc. (2014) 227 Cal.App.4th 11, holding: (1) the arbitration provision was procedurally unconscionable because defendants failed to properly disclose the terms of the contract, particularly the arbitration provision; and (2) the arbitration agreement was substantively unconscionable because, by its terms, only plaintiffs were required to arbitrate their claims. The Court of Appeal reasoned the arbitration agreement was procedurally unconscionable because Plaintiffs “were presented a stack of English language documents and effectively told not to read them because they reflected what [defendants] had” misrepresented to them in Spanish. With regard to substantive unconscionability, defendants argued that refusing arbitration for lack of mutuality would contravene AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 321, 131 because “a lack of perfect mutuality of obligation is not generally grounds to invalidate a contract under California law,” and such a requirement would disfavor arbitration. But the Court of Appeal observed that “the ordinary principles of unconscionability may manifest themselves in forms peculiar to the arbitration context. One such form is an agreement requiring arbitration only for the claims of the weaker party but a choice of forums for the claims of the stronger party. The application of this principle to arbitration does not disfavor arbitration.” (Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, 119.)
In a dissenting opinion, Justice Grimes noted that she “would have preferred to stay this case to obtain the benefit of the opinions in cases now pending decision in [the] Supreme Court.”
Review Denied (with dissenting justices)
None.
Depublished
None.
