Court of Appeal Invalidates Class Action Waiver in Consumer Legal Remedies Action

In Fisher v. DCH Temecula Imports LLC (August 13, 2010) --- Cal.Rptr.3d ----, 2010 WL 3192912, the Court of Appeal held that the Federal Arbitration Act (FAA) does not preempt California law barring waivers of class action rights in arbitration agreements governing consumer disputes.

Defendant DCH Temecula Imports LLC (DCH) appeals the denial of its petition to compel arbitration. The trial court found that an arbitration clause in a retail installment sales contract (RISC) for the sale of a car to plaintiff Amberlee Fisher, which included a waiver of the right to bring a class action lawsuit or request classwide arbitration, was unenforceable.

Fisher presented several theories to the trial court in opposition to the enforcement of the arbitration clause, including that the arbitration clause required her to waive an unwaivable statutory right to bring a class action lawsuit under the California Legal Remedies Act (the CLRA) and that the arbitration agreement was both procedurally and substantively unconscionable.

We uphold the trial court's denial of the petition to compel arbitration.

Slip op. at 1.

The arbitration clause at issue here required Fisher to waive an unwaivable statutory right under the CLRA to bring a classwide arbitration or class action lawsuit, which violates the public policy underlying these rights. This qualifies as a private agreement in contravention of public rights. DCH has never argued that the CLRA does not further a strong public policy of California; regardless, such argument would not be successful.

Slip op. at 10.