Court Holds Arbitration Provision Does Not Violate California’s McGill Rule

Carlton Fields
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Carlton Fields

The plaintiffs brought a class action suit against Extra Space Storage Inc. for false advertising, unfair competition, and violation of the California Consumers Legal Remedies Act. After the case was removed to the U.S. District Court for the Northern District of California, Extra Space moved to compel arbitration based on the rental agreements signed by the class members. The plaintiffs argued that the arbitration provision, which stated that a signatory “will only pursue arbitration on an individual basis and will not pursue arbitration or any other claim on a class-wide, representative, or consolidated basis,” violated California’s McGill rule. The McGill rule provides that a contractual agreement purporting to waive a party’s right to seek public injunctive relief in any forum is unenforceable. The court granted Extra Space’s motion and explained that arbitration provision did not violate the McGill rule because it does not prevent an arbitrator from awarding injunctive relief at large. The court further explained that an action seeking public injunctive relief is not a “representative action.”

Ionescu v. Extra Space Storage Inc., No. 4:19-cv-02226 (N.D. Cal. Aug. 23, 2019).

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