Arbitration Agreements Unconscionable Contracts

News & Analysis as of

Justices Take On Another California Rule – When an Arbitration Agreement Is Too Flawed to Enforce

The U.S. Supreme Court has agreed to review whether the Federal Arbitration Act (FAA) preempts a California state court rule on unconscionable provisions that is purportedly applied more stringently to arbitration agreements...more

Arbitration of Nursing Home Suits: Take Two

Quasi Tort Reform in Nursing Home Litigation Is on the Way! Last fall, I posted a blog about the national trend of including arbitration provisions in nursing home admission agreements. This trend peaked following the...more

A Call to Action: AB 465 is a Game Changer for California Arbitration Agreements

AB 465 is pending approval from Governor Jerry Brown. If approved, it will go into effect on January 1, 2016. Notably, AB 465 will prohibit California employers from requiring most individuals to enter into arbitration...more

Anti-Arbitration Bill Approved by California Legislature

On August 27, 2015, the California Assembly approved AB 465. The bill, which was approved by the California Senate on August 24, would prohibit California employers from requiring most individuals to enter into arbitration...more

California Legislature Targets Employment Arbitration Agreements

It is no secret that California is no friend to arbitration agreements. As the United States Supreme Court noted in its 2011 opinion in AT&T Mobility LLC v. Concepcion, “California’s courts have been more likely to hold...more

TN COA: Arbitrators Decide Scope and Unconscionability

The Tennessee Court of Appeals at Jackson recently enforced a NY choice-of-law provision against an arbitration challenge, holding that courts determine contract-formation issues, while arbitrators decide the scope and...more

California Supreme Court Upholds Consumer Contract Arbitration Provision Under California’s Unconscionability Framework

In a dispute over the purchase of a car, the purchaser filed a class action in California against the car dealer, and the dealer moved to compel arbitration. The dealer invoked the arbitration agreement contained in the...more

Man Bites Dog: California Supreme Court unanimously rejects unconscionability challenge to consumer arbitration provision

The California Supreme Court has a reputation for hostility to arbitration, especially in the consumers and employment context. Much of the arbitration docket of the United States Supreme Court over the past 30 years has...more

Surprisingly Good News: California Supreme Court Upholds Arbitration Agreement

Many companies doing business in California have had difficulty persuading California courts to enforce their arbitration agreements. Those courts often have used the doctrine of unconscionability to deny enforcement on the...more

California Supreme Court Issues Ruling in Sanchez v. Valencia Holding Company, LLC

On August 3, 2015, the California Supreme Court issued a long-awaited opinion that provides further clarity on the standard of unconscionability needed to invalidate an arbitration agreement. The court determined that its...more

Should You Cut The Delegation Clause From Your Arbitration Agreement?

A recent report showed that less than half of arbitration agreements in the consumer financial arena include delegation clauses in their arbitration agreements. Two recent decisions from state high courts suggest that is a...more

Hawaii Finds Arbitration Agreement With “Severe Limitations on Discovery” is Unconscionable

Hawaii issued a bold arbitration decision this month. It applied its state contract law to conclude that the parties did not form a clear arbitration agreement, but even if they did, it was unconscionable because it...more

Missouri Supreme Court “Calls an Audible,” Upholds Arbitration Agreement

In recent years, Missouri courts have seemed reluctant to enforce arbitration agreements entered into between employers and employees. But in a recent decision, the Missouri Supreme Court reversed that trend and compelled...more

Enforcing Your Arbitration Agreement Just Became a Great Deal Easier

Courts regularly praise private arbitration as a means of affording flexibility to the parties, reducing costs and time, and lessening the burden on the judicial system. In some cases though, arbitration clauses can present a...more

Tenth Circuit Holds FAA Preempts New Mexico Law On Unenforceability Of Unconscionable Arbitration Provisions

On January 28, the U.S. Court of Appeals for the Tenth Circuit held that the Federal Arbitration Act (FAA) preempts New Mexico common law that a compulsory-arbitration provision in a contract may be unconscionable and...more

Which Arbitration Agreement Clauses Will Texas Courts Find Unconscionable?

In recent years, courts have consistently supported employers’ use of arbitration agreements in employment settings. During the last few terms, the Supreme Court of the United States has issued several decisions, such as...more

How to Draft Enforceable Class Action and Other Employer-Friendly Waivers

Porreca v. The Rose Group was a class action lawsuit brought by Carly Porreca and Charles Walton, alleging that their employer, Applebee’s Neighborhood Grill and Bar, had violated the Fair Labor Standards Act. After Porreca...more

A Decision to Arbitrate in the Mountain State: The West Virginia Supreme Court of Appeals Rejects Retroactive Application of the...

The West Virginia Supreme Court of Appeals recently issued a decision addressing mandatory arbitration in connection with a residential mortgage loan that will impact litigants in the Mountain State and potentially influence...more

Court Holds Arbitration Agreement Requiring Employee to Pay Half of Arbitration Costs is Unconscionable

In Chavarria v. Ralphs Grocery Co., No. 11-56673, 2013 WL 5779332 (9th Cir. Oct. 28, 2013), the plaintiff, a former deli clerk, brought a class action against Ralphs for various alleged wage and hour violations of the...more

The California Supreme Court Curtails Concepcion’s Protection of Arbitration Agreements

In AT&T Mobility v. Concepcion, the United States Supreme Court analyzed whether a court could refuse to enforce an arbitration agreement because the terms are “unconscionable,” meaning that one party did not have meaningful...more

Clean-Up in Aisle 9: Ninth Circuit Finds Ralphs Grocery Company’s Arbitration Policy Unconscionable Under State Law Not Preempted...

As we have reported on several occasions, a string of United States Supreme Court cases over the past few years has strengthened the use and applicability of arbitration provisions in contracts. For example, in AT&T Mobility...more

Halloween Special: Scary Results If Employers Overreach In Arbitration Clauses

No haunted house can scare general counsel as much as an opinion invalidating their company’s arbitration clause and thereby allowing a class action to proceed. So, here is a Halloween tale for all to keep in mind....more

Did You Know…The Continuing Saga Of Arbitration Agreements & Unconscionability

In light of the United States Supreme Court decision in AT&T Mobility LLC v. Concepcion, the California Supreme Court recently reversed its own prior decision where it had held that an arbitration agreement that requires an...more

Through the Lens of Concepcion: California Supreme Court Revisits the Validity of Agreements Requiring Employee Waiver of Wage...

Almost one year after the U.S. Supreme Court summarily vacated the original 2011 Sonic-Calabasas opinion (Sonic I), the California Supreme Court issued its opinion on remand in Sonic-Calabasas A, Inc. v. Moreno (Sonic II)....more

The Ninth Circuit Rules Employer’s Arbitration Agreement Unenforceable Under California Law And Cautions Employers To Ensure...

Today, the Ninth Circuit, in Chavarria v. Ralphs Grocery Company (Case No. 11-56673), issued a decision affirming the denial of Ralphs Grocery Company’s motion to compel arbitration in an action by an employee asserting...more

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