On November 23, 2011, the Court of Appeal issued a new opinion on rehearing in Sanchez v. Valencia Holding Corp., ___ Cal.App.3d ___ (Nov. 23, 2011) (Second Appellate District, Division One). (See this blog post for a discussion of the original Sanchez opinion.) The opinion's holding is unchanged, but its discussion of Concepcion has been expanded somewhat, as this redline comparison shows:
Before applying Armendariz to the present case, we note that Concepcion, supra, 131 S.Ct. 1740, does not preclude the application of the
Armendariz principlesto determine whether an arbitration provision is unconscionable. Concepcion disapproved the “Discover Bank rule,” stating: “In Discover Bank, the California Supreme Court applied [the doctrine of unconscionability] to class-action waivers in arbitration agreements and held as follows: [¶] ‘[W]hen the [class action] waiver is found in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when 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, then . . . the waiver becomes in practice the exemption of the party “from responsibility for [its] own fraud, or willful injury to the person or property of another.” Under these circumstances, such waivers are unconscionable under California law and should not be enforced.’” (Concepcion, at p. 1746, italics added.)
With the exception of the Discover Bank rule, the
Courtacknowledged that the doctrine of unconscionability is stilla basis for invalidating arbitration provisions . (Concepcion, at pp.1746, 1747; seeKanbar v. O’Melveny & Myers (N.D.Cal. 2011) 2011 U.S. Dist. Lexis 79447, pp. *15–*16, *23–*24, 2011 WL 2940690, pp. *6, *9.) Thus, Concepcion is inapplicable where, as here, we are not concerned with a class action waiver or a judicially imposed procedure that conflicts
with the arbitration provision and the purposes of the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1–16). (See Concepcion,
at pp. 1748–1753.)
Slip op. at 12-14. I have not seen the rehearing petition, but it is safe to assume the petition asked the court to alter its analysis of Concepcion.