The Court of Appeal has recently handed down two new decisions addressing arbitration clauses with class action bans.
In the first, Fisher v. DCH Temecula Imports LLC, ___ Cal.App.4th ___ (Aug. 13, 2010), the Court of Appeal (Fourth Appellate District, Division Two) held that the CLRA's no-waiver provision (Civ. Code section 1751) and its class action provision (Civ. Code section 1781) trumped a class action ban in an arbitration clause:
[T]he clear language of the CLRA does not allow a consumer to waive the provisions of the CLRA in advance, including the right to bring a class action. Since the plain language of the statute provides that a consumer “may” bring a class action if there is damage to other consumers similarly situated, he or she cannot be asked to waive this class action right in advance.
Slip op. at 24. This is an interesting argument that no appellate court had expressly adopted before. The Court held the entire arbitration clause unenforceable. Id. at 24-25.
In the second case, Walnut Producers of California v. Diamond Foods, Inc., ___ Cal.App.4th ___ (Aug. 16, 2010), the Court of Appeal (Third Appellate District) held that an arbitration clause with a class action ban in a commercial contract was not unconscionable. Slip op. at 12-25. The Court also held that an order striking class allegations from a complaint is appealable and reviewed de novo. Id. at 5-8.
The Complex Litigator also has a short post on these two decisions.