In Fensterstock v. Education Finance Partners, ___ F.3d ___ (2d Cir. Jul. 12, 2010), the Second Circuit, applying California law (including Discover Bank), struck down a no-class-action arbitration clause as unconscionable.
The court invalidated the entire arbitration clause, holding that under the U.S. Supreme Court's recent decision in Stolt-Neilsen, the court had "no authority to order class-based arbitration" unless the contract authorized it. Slip op. at 31. Because the contract did not authorize class arbitration (on the contrary, the contract was silent on that topic once the unconscionable class action ban was excised), the class action could not proceed in arbitration and would have to proceed in the district court instead. Id. at 31-32.
[HT: Blawgletter] UPDATE: There was an error in the link to the opinion, which has been fixed.