In Shroyer v. New Cingular Wireless, ___ F.3d ___ (9th Cir. Aug. 17, 2007), the Ninth Circuit struck down a class action waiver in an arbitration clause, concluding "that under the test set forth in Discover Bank v. Superior Court of Los Angeles, 36 Cal. 4th 148 (Cal. 2005), the waiver is both procedurally and substantively unconscionable and, therefore, unenforceable." Slip op. at 10002. The opinion provides this interesting distillation of California law on the subject:
The California Courts of Appeal have construed Discover Bank as providing for a three-part inquiry in order to determine whether a class action waiver in a consumer contract is unconscionable. See Cohen v. DirecTV, Inc., 142 Cal. App. 4th 1442, 1451-53 (2006); Klussman v. Cross Country Bank, 134 Cal. App. 4th 1283, 1297 (2005); Aral v. EarthLink, Inc., 134 Cal. App. 4th 544, 556-57 (2005). Under this three-part inquiry, courts are required to determine: (1) whether the agreement is “ ‘a consumer contract of adhesion’ ” drafted by a party that has superior bargaining power; (2) whether the agreement occurs “ ‘in a setting in which disputes between the contracting parties predictably involve small amounts of damages’ ”; and (3) whether “ ‘it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.’ ” Cohen, 142 Cal. App. 4th at 1151-53 (quoting Discover Bank, 36 Cal. 4th at 162-63); see also Klussman, 134 Cal. App. 4th at 1297 (summarizing the three parts identified in Discover Bank). Although there are most certainly circumstances in which a class action waiver is unconscionable under California law despite the fact that all three parts of the Discover Bank test are not satisfied, it is unnecessary to explore those circumstances here because the instant action satisfies them all and cannot be distinguished from Discover Bank. Cohen, 142 Cal. App. 4th at 1455.
Slip op. at 10005-06.