Almost three and a half years ago, the Supreme Court granted review in Sanchez v. Valencia Holding Co., no. S199119, in order to address whether the Federal Arbitration Act, as construed in Concepcion, preempts generally applicable state-law rules of contractual unconscionability.
The Court of Appeal said no (Sanchez v. Valencia Holding Co., LLC, 201 Cal.App.4th 74 (2011)), and the question was since authoritatively answered in the negative in several opinions, including Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (discussed in this blog post). As a result, Sanchez became a vehicle for the Supreme Court instead to revisit what it means for a contract to be "unconscionable" under California law. The Court ordered supplemental briefing on that issue in February 2014.
In an opinion handed down yesterday, the Supreme Court held, in a fact-specific analysis, that the contract of adhesion between the plaintiff car buyer and his used car dealer was not "unconscionable," contrary to the Court of Appeal's conclusion in 2011. Sanchez v. Valencia Holding Co., __ Cal.4th ___ (Aug. 3, 2015). The Court held that the various formulations of substantive "unconscionability," "used throughout our case law, all mean the same thing." Slip op. at 9.
Probably the most significant part of the opinion, from a consumer class action perspective, is its holding that the FAA, as construed in Concepcion, preempts the CLRA's "no-waiver" provision (Civil Code section 1751) "insofar as [that provision] bars class waivers in arbitration agreements covered by the FAA." Slip op. at 26. This issue had previously been the subject of a split in authority among the Courts of Appeal.