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Wednesday, January 30, 2013

Flores v. West Covina Auto Group: Court of Appeal Upholds Order Compelling Individual Arbitration in Putative Class Action Arising Out Of Used Car Purchase

This case reminds me of Caron v. Mercedes-Benz Financial Services USA LLC (7/30/12) 208 Cal.App.4th 26, review granted 10/24/12 (discussed here). In Caron, the Court of Appeal held that the FAA preempts the CLRA's prohibition of class action waivers. The Supreme Court granted review and held briefing pending its decision in Iskanian v. CLS Transportation L.A., LLC (6/4/12) 206 Cal.App.4th 949, review granted 9/19/12 (discussed here). 

In Flores v. West Covina Auto Group (1/11/13) --- Cal.App.4th ---, the Court of Appeal affirmed an order granting individual arbitration in an action alleging individual claims and putative class claims under the Consumer Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), the Automobile Sales Finance Act (ASFA) (Civ. Code, § 2981 et seq.), and the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.). The Court of Appeal held: 

  1. The order was appealable under the death knell doctrine. Slip op. at 7-8. 
  2. The contract's class action waiver was valid because the FAA preempts the CLRA's prohibition on class action waivers . Slip op. at 8-15. 
  3. The defendant did not waive its right to demand arbitration by litigating in court for several months because it could not enforce its right to arbitrate until after Concepcion. Slip op. at 15-23. 
  4. Although the arbitration clause was somewhat procedurally unconscionable, it was not substantively unconscionable. Slip op. at 23-33. 
  5. The arbitration clause was not an unexpected term in a contract of adhesion. Slip op. at 33-34. 
  6. The arbitration clause was not unenforceable for lack of mutual consent. Slip op. at 34-35. 
I assume that the California Supreme Court will grant review and hold pending either Iskanian or Sanchez v. Valencia Holding Co., LLC (11/23/11) 201 Cal.App.4th 74, review granted 3/21/12 (discussed here), in which the Court of Appeal found that a similar arbitration clause was unenforceable as unconscionable.

The Flores opinion is available here.  

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