California unconscionability in brief

Paton v. Cingular Wireless, 2006 WL 1413537 (Cal.App. 1 Dist.)

The trial court denied Cingular’s motion to compel arbitration in this case alleging fraudulent overcharges, since arbitration was provided for under Cingular’s contract with plaintiffs. Relying on the California Supreme Court’s decision in Discover Bank, the trial court denied the motion and the court of appeal affirmed. This is a regular result under Discover Bank’s holding that prohibiting classwide arbitration in an adhesion contract, where fraud is alleged, is unconscionable. Briefly noted: Cingular reiterated its Federal Arbitration Act preemption arguments, though conceding they’d already been rejected in Discover Bank, to preserve them for anticipated U.S. Supreme Court review. And the court pointed out that the recent amendments to California’s consumer protection law take away with one hand (eliminating private attorney general actions by imposing a standing requirement) but give with the other (allowing class actions). The only ground of unconscionability the plaintiffs had was the prohibition of class arbitrations; thus, they will have to plead class allegations successfully for the case to survive after remand.