Monday, March 27, 2006

Those pesky California class actions

Janda v. T-Mobile, USA, Inc., 2006 WL 708936 (N.D .Cal.)

Another California case denying a cell phone company’s argument that a putative class action under the Consumer Legal Remedies Act and Business and Professions Code must be arbitrated rather than litigated. Fairly standard California law at this point. I noted the court’s pointed statement that, while it will not “speculate as to the exact size of the font” of T-Mobile’s customer agreement submitted to the court, the font size is significantly smaller than that employed by the court (and the parties). I'm not sure font size matters; it's not as if anyone would read 50 pages of small print if it were 100 pages of regular print.

The California test for substantive unconscionability requires an allegation of a scheme “to deliberately cheat large numbers of consumers out of individually small sums of money.” Here, the plaintiffs satisfied that requirement by alleging that they were systematically overcharged in a variety of ways in violation of California’s unfair competition, consumer protection, and false advertising laws (as well as in breach of their contracts). But, since California law doesn’t require intent for a violation of consumer protection laws, it seems they can get in court by alleging deliberate acts even if they don’t establish deliberation.

There was a severability issue as to one plaintiff (the other’s contract expressly provided that if a class waiver was unenforceable the arbitration agreement wouldn’t apply). If the class waiver was unconscionable, could the arbitration agreement still be enforced otherwise, allowing class arbitration? The court determined that the arbitration clause was permeated with an unlawful purpose and would not be enforced at all.

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