Pokorny v. Quixtar, No. 08-15880 (2010)

Is Quixtar's mandatory arbitration program unconscionable?

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The Court of Appeals upheld the District Court's finding that Quixtar's mandatory arbitration program was unconscionable and against public policy. The program was procedurally unconscionable because it was thrust upon Quixtar distributors without a meaningful opportunity to negotiate the contents of the program. The distributors were not given the opportunity to review the rules of the program before agreeing to them. The rules of the program also allowed for unilateral amendment by Quixtar at any time. The court also found the program to be substantially unconscionable. Only the distributor was required to go through the arbitration program to resolve disputes; Quixtar was free to resolve their disputes with other means if they so choose. Also, by requiring a non-binding informal conciliation process before resorting to mandatory arbitration, Quixtar would get a preview of the distributors claims before the binding part of the arbitration program, giving it a possible advantage. The court concluded that these factors made the arbitration program so one sided in Quixtar's favor to render the whole program unconscionable.

Full case and case summary also available online at: http://www.mlmlegal.com/legal-cases/Pokorny_v_Quixtar.php

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Published In: Civil Procedure Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates

Reference Info:Federal, 9th Circuit, California | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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