By: Beth A. Kahn and Hubert T. Lee
Arbitration agreements are popular among California employers, but in many instances the employer has to go to court in order enforce the agreement. Recently, the California Supreme Court upheld an arbitration provision in a sales agreement, even though quite a few of the terms were arguable—but also reaffirmed its stance on “unconscionability.”
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Some of the Facts
In 2008, Gil Sanchez purchased a preowned 2006 Mercedes-Benz S500V for approximately $53,500 from Valencia Holding Company, LLC. Dissatisfied with his purchase, in March 2010, Sanchez filed a class action against Valencia, claiming that it made false representations about the condition of his Mercedes in violation of the California Consumer Legal Remedies Act.
He also claimed that Valencia broke a number of other California laws related to various unauthorized fees and charges associated with his purchase. Significantly, Sanchez filed his claim as a class action suit, believing that a large number of other consumers had suffered similar violations arising out of their automobile purchases from Valencia.
In response, Valencia asked the trial court to force the lawsuit to be arbitrated instead of proceeding in court. It argued that it had the right to seek arbitration based on the arbitration clause located on the lower back side of the preprinted one-page sales contract Sanchez signed when he purchased his Mercedes. Keep reading at the link below for all details of how the case turned out.