I was right: Bridgeford v. Pacific Health stabs Alvarez v. May Dept. Stores Co. in the heart, stuffs garlic in its mouth

I hate Alvarez v. May Dept. Stores Co., 143 Cal. App. 4th 1223 (2006).  My supplemental briefing in that case was uncannily prescient of parts of Taylor v. Sturgell, 128 S.Ct. 2161 (2008).  But did the Court of Appeal rule in my favor.  Nooooo.  Did the U.S. Supreme Court take my case to correct that gross misinterpretation of collateral estoppel rules in uncertified class actions?  Nooooo.  But along comes Bridgeford v. Pacific Health (January 18, 2012), in which the Court of Appeal (Second Appellate District, Division Three) did what I so wanted to do.  They stabbed Alvarez dead, dead, dead.

Here are the money quotes:

California courts have held or suggested that the denial of class certification can establish collateral estoppel against absent putative class members on issues that were actually decided in connection with the denial. (Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, 1236; Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1202-1203 (Bufil); see also Johnson v. GlaxoSmithKline, Inc. (2008) 166 Cal.App.4th 1497, 1510-1513 & fn. 8 (Johnson) [assuming the point while expressing reservations].) Alvarez stated that the principles of collateral estoppel ensure that the absent putative class members' interests were adequately represented in the prior proceeding. (Alvarez, supra, at p. 1236.) We conclude to the contrary that if no class was certified by the court in the prior proceeding, the interests of absent putative class members were not represented in the prior proceeding and the requirements for collateral estoppel cannot be established, as we shall explain.

Slip op., at 11.  The Court then explained:

The United States Supreme Court, however, in Smith v. Bayer Corporation, supra, 131 S.Ct. 2368, recently resolved the issue. Applying common law principles of issue preclusion, the high court held that unnamed putative class members cannot be bound by issue preclusion if the class was never certified in the prior proceeding. (Id. at pp. 2380-2381.) Smith v. Bayer Corporation stated, “[n]either a proposed class action nor a rejected class action may bind nonparties” (id. at p. 2380), and, “[t]he great weight of scholarly authority . . . agrees that an uncertified class action cannot bind proposed class members.” (Id. at p. 2381, fn. 11.) The high court explained that unnamed putative class members as nonparties can be bound by issue preclusion only if there was a properly certified class because only in those circumstances can the court in the later proceeding conclude that their interests were adequately represented in the prior proceeding. (Id. at pp. 2379-2381 & fn. 11.)

We find the reasoning in Smith v. Bayer Corporation, supra, 131 S.Ct. 2368, persuasive and conclude, under California law, that the denial of class certification cannot establish collateral estoppel against unnamed putative class members on any issue because unnamed putative class members were neither parties to the prior proceeding nor represented by a party to the prior proceeding so as to be considered in privity with such a party for purposes of collateral estoppel.

Slip op., at 12-13.

Back to your crypt for all eternity, foul spawn of darkness.

Alvarez v. Brookstone Company, Inc. holds that Pineda v. Williams-Sonoma Stores, Inc. applies retrospectively

Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524 (2011) (Pineda) held that the collection of ZIP codes as part of a credit card transaction is conduct that violates Civil Code section 1747.08.  In Alvarez v. Brookstone Company, Inc. (pub. ord. January 18, 2012), the Court of Appeal (Fourth Appellate District, Division One) considered whether Pineda applied retrospectively to conduct occurring prior to that decision.  The Court had little difficulty concluding that the holding of Pineda applied retrospectively:

Pineda expressly concluded: "[T]he only reasonable interpretation of section 1747.08 is that personal identification information includes a cardholder's ZIP code." (Pineda, supra, 51 Cal.4th at p. 534, italics added.) Therefore, despite Brookstone's attempts to show the contrary, the California Supreme Court held that its interpretation of section 1747.08 was the only reasonable interpretation of that statute. Pineda further concluded section 1747.08 "provides constitutionally adequate notice of proscribed conduct." (Id. at p. 536.) We reject Brookstone's due process argument that it did not have fair notice or warning of section 1747.08's prohibition against requesting and recording the ZIP codes of customers during credit card transactions.

Slip op., at 7.

Court revives claims of failure to disclose and active concealment of defects from computer purchasers

Reporting on this case pains me greatly.  I should be pleased to report on a CLRA and UCL decision that revives consumer claims.  But all I feel is pain.  Let me explain by quoting from the case.  The very first sentence says, "In this class action alleging a failure to disclose a computer defect involving a microchip that controlled floppy disk data transmission, plaintiffs Tammy Collins and Rudolph Roma appeal from a judgment on the pleadings."  Huh?  Floppy disk data transmission.  Rings a bell.  Nope, can't place it.  Must be some highfalutin, newfangled technology.  I recognize "data."  Anyhow, in Collins v. eMachines, Inc. (pub. ord. December 21, 2011), the Court reviewed a trial court order granting a motion for judgment on the pleadings.

It was alleged that defendant failed to disclose and actively concealed the disk controller defect from potential purchasers. Despite knowing of the defect and knowing that the defect could result in critical data corruption, executives of eMachines directed the company to continue to sell the defective computers after October 31, 1999. eMachines actively concealed the existence of the defect from purchasers by, among other practices specified in the FAC, continuing to issue the warranty knowing the computers had the defect, and engaging in misleading “customer service” practices that concealed the defect in online “customer support” guides, in customer service diagnoses of computer problems, and at call centers.  The case was stayed for four years while cases in other states moved forward.

Turning first to the CLRA, the Court restated the LiMandri circumstances giving rise to actionable deceit.  The Court recognized the FAC as alleging factor (2), when the defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff, and factor (3), when the defendant actively conceals a material fact from the plaintiff.  The Court then agreed that a "reasonable" consumer would certainly find data corruption to be material information in connection with a computer.

Next, the Court distinguished Daugherty, observing that, in Daugherty, the only represetation made was the warranty, and the vehicles performed adequately as warranted.  The Court was similarly dismissive of Bardin, in which it was alleged that exhaust manifolds were likely to fail after the warranty period.  The Court explained that the manifolds in Bardin worked they way they were supposed to under the warranty.  Contrasting the circumstances, the Court said, "Because a floppy disk, at the time of the complaint, was integral to the storage, access, and transport of accurate computer data, the floppy disk was central to the function of a computer as a computer. The exhaust manifolds at issue in Bardin, by contrast, were just blowing smoke."  Slip op., at 12.  That's funny.  You see, the exhaust manifold vents combustion byproducts...

Regarding the UCL, the Court relied on its discussion about Daugherty and Bardin to conclude that a claim under the UCL was easily stated as well.  The Court agreed that consumers certainly had an expectation about data integrity when they purchased the affected computers.

After also concluding that the allegations supported a claim for common law fraud, the Court concluded that legal remedies were adequate, rendering an unjust enrichment claim unnecessary.

I should also tag this one with "Dinosaurs," given the discussion of floppy disk drives.  That reminds me that I should tell you about the time I saved data on a bent floppy disk drive by removing the casing and putting the raw disk in a disk drive.  The year was 1985.  Madonna, Huey Lewis, Duran Duran and Wham! were dominating the charts...

[extended period of blank stares]

...and that's how I saved all that data!

Aleman v. Airtouch Cellular confirms what we already suspected regarding reporting time pay and split shift wages

While this case ostensibly addresses issues of first impression in California, like many such decisions it was only a matter of time.  In Aleman v. Airtouch Cellular (December 21, 2011), the Court of Appeal (Second Appellate District, Division Two) examined claims for reporting time pay and split shift premiums.  The case was brought by former employees of AirTouch. The plaintiffs worked mostly as retail sales representatives or customer service representatives at AirTouch stores and kiosks.  Plaintiffs alleged that AirTouch did not properly pay its nonexempt employees for attending mandatory store meetings.

On the reporting time claim, the Court concluded that the plaintiffs were not entitled to receive "reporting time pay" for attending meetings at work, because all the meetings were scheduled and they worked at least half the scheduled time.  This issue stems from the argument that reporting time pay should be based on a two-hour minimum.  Thus, goes the argument, if you are called into a meeting one day for two hours, you should get two hours of pay, even if the meeting last 90 minutes.  This theory is dead.  If a meeting is scheduled, and the meeting lasts at least half the scheduled time, that is good enough.

On the split shift differential claim, the Court concluded, consistent with at least one treatise to examine the issue, that the split shift differential is intended only to protect the minimum wage law.  Thus, if your pay for the hours worked is enough to satisfy the split shift premium of one extra hour of pay at minimum wage, then no further pay need be supplied.

On the plus side, the Court explicitly held that an award of attorney's fees was improper, since both reporting time pay and split shift pay were governed by Labor Code section 1194, governing payment of minimum wages.  Since the one-way fee shifting statute controls the claims, defendant could not recover fees.  Phew.

What procedures must a Court follow when a plaintiff settles, leaving a "headless" putative class action?

I've faced a species of this issue myself.  But it turns out that the answer to this question involves more potential twists and turns than one might first believe.  Seems there's more than one way to skin this headless cat.  And, in a most interesting twist, the appellate division tackling this question is very same division that decided Parris v. Superior Court, 109 Cal. App. 4th 285 (2003) [pre-certification communications with class members], Belaire-West Landscape, Inc. v. Superior Court, 149 Cal. App. 4th 554 (2007) [discovery of putative class member identity and contact information], and Lee v. Dynamex, Inc., 166 Cal. App. 4th 1325 (2008) [discovery of putative class member identity and contact information], so one might say that this division has a certain expertise regarding this prickly area.

In Pirjada v. Superior Court (December 12, 2011), the Court of Appeal (Second Appellate District, Division Seven) issued an order to show cause but ultimately denied the petition for a writ of mandate brought by the plaintiff following the denial of a discovery motion.  The plaintiff settled his individual claim through direct negotiations with defendant's CEO.  The trial court granted leave to amend the complaint to name a new class representative but denied the motion to compel precertification discovery to identify a suitable class representative.

What will ultimately happen in this case remains unclear.  But this opinion does identify key decisions that might have changed the result, though that is hard to say with certainty.

The Court began its discussion by restating existing standards.  First, class member rights are protected, even pre-certification.  Second, court approval is not needed to communicate with putative class members, but when a court's assistance is solicited, a court can consider the potential for abuse.  Third, class member contact information is "generally discoverable."  Fourth, lead plaintiffs, who are unqualified to serve as a class representative may, "in a proper case," move for discovery to find a new representative.  However, the Court also noted that precertification discovery is not a matter of absolute right.

Next, citing La Sala v. American Savings & Loan Assn., 5 Cal. 3d 864  (1971) and Kagan v. Gibraltar Sav. & Loan Assn., 35 Cal. 3d 582 (1984) (disapproved in part on another ground in Meyer v. Sprint Spectrum L.P., 45 Cal.4th 634 (2009)), the Court emphasized the trial court's obligation, as also stated in Rule 3.770, to consider carefully any request to dismiss a class action and evaluate whether notice is necessary.

Then, after noting that the standard of review is the abuse of discretion standard, the Court explained why the writ must be denied. Petitioner first argued, as a matter of discovery law, that because defendant failed to respond to document requests, it waived any objection. Absent a finding that the failure was the result of mistake, inadvertence or excusable neglect, Petitioner argued that it was an abuse of discretion to deny the motion to compel. Second, as a matter of the procedural law governing class actions, Petitioner argued that the court abused its discretion in declining to authorize notice to potential class members about the need for a substitute representative. The Court found the first contention to be incorrect and the second premature.

Interestingly, though the Court ultimately rejected the challenge to the discovery order, it was highly critical of defendant's behavior:

Outside the context of representative and class actions it may well be, as Pacific National observes, “a matter of common knowledge and common sense” that once a plaintiff settles his or her case any discovery responses not yet due no longer need to be served. Because the lawsuit against Pacific National was filed as a class action, however, and the individual settlement with Pirjada was made without the participation or consent of his lawyer, the experienced employment law attorneys representing Pacific National should have either objected to the still-outstanding discovery as moot, moved for a protective order or taken steps to ensure that the settlement agreement between their client and Pirjada included a provision withdrawing any remaining discovery requests.

Slip op., at 12.  The Court then observed that the trial court could have crafted a number of alternative orders designed to locate a suitable representative.  Here's where things get interesting.  The trial court first considered and denied a motion to give notice to the class.  That order was not challenged, though the Court telegraphed its opinion of the Order:

Although the court's decision to deny Westrup Klick's motion for notice to the class was based largely on a distinction between consumer and employee class actions, a distinction we implicitly rejected in Belaire-West Landscape, Inc. v. Superior Court, supra, 149 Cal.App.4th 554, the propriety of that ruling is not before us. Westrup Klick did not seek writ review of the court's May 26, 2011 order. Instead, it elected to proceed by way of a motion to compel.

Slip op., at 13.  The Court then concluded that the trial court's decision to deny the motion to compel after giving time to find a new representative was not arbitrary or capricious.

As to the second, premature argument, the Court also seemed to be hinting that the trial court should proceed with caution:

Whether or not the superior court's initial decision not to notify potential class members that Pirjada now lacks standing to represent the class was correct, the court will necessarily revisit that question when it hears its order to show cause regarding dismissal. Counsel's declaration in support of the petition for writ of mandate indicates a new class representative cannot be identified by the informal means authorized in Parris, supra, 109 Cal.App.4th 285, and discussed by the superior court during the May 26, 2011 hearing. Assuming that remains the case, Westrup Klick will have an opportunity to demonstrate to the court that some form of notice is required to avoid prejudice to absent class members. It would be inappropriate for us to prejudge the outcome of that hearing or to restrict the superior court's discretion by attempting to outline the factors it should weigh in deciding how to comply with the requirements of La Sala, Kagan and Rule 3.770.

Slip op., at 14-15.  Riiiiiight.  Good thing they didn't give the trial court a look at their cards.

So now you know, at a minimum, that when the representative suddenly hits the eject button, class counsel needs to walk carefully through the dismissal process so as to seek the best possible methods for locating replacement representatives and/or obtaining notice to the putative class.

Common law test for employment governs claim by "licensed agent" challenging independent contractor classification

Test pilots who push the envelope either go on to walk on the moon and serve as legislators or die in fiery crashes.  Either way, they go out in a big way.  Cases that push the envelope don't have such dramatic finishes, but they often clarify the law, and not necessarily in a good way.  In Arnold v. Mutual of Omaha Insurance Company (December 30, 2011), the Court of Appeal (First Appellate District, Division One) reviewed the trial court's decision to grant summary judgment in favor of defendant on the claim that a non-exclusive insurance agent was improperly classified as an independent contractor.  A key aspect of the Court's decision concerned the issue of whether the trial court applied the correct test for employment to claims alleging failure to reimburse expenses and failure to timely pay wages.

On appeal, the plaintiff argued that the trial court erred in applying the common law test for employment that was enunciated in S. G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989).  Instead, the plaintiff contended that Labor Code section 2750 supplied a statutory definition of employee that is broader than the common law test and controls the definition of employee applicable to section 2802.  I note here, parenthetically, that this argument seems somewhat similar to an discussion of this issue I presented some years ago on this blog.  At least now I don't have to wonder how a court would react to this analysis.

In any event, the Court cited approvingly to Estrada for its conclusion that the Labor Code does not define "employee" for purposes of section 2802:

One reviewing court has recently held the Labor Code does not expressly define “employee” for purposes of Labor Code section 2802, and therefore, the common law test of employment applies to that section. (Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 10 (Estrada).) That court went on to cite the “principal” and “additional factors” of the common law test as articulated by the Supreme Court in Borello, supra, 48 Cal.3d 341, and summarized above. (Estrada, supra, at p. 10.)

Slip op., at 6-7.  While the Court noted that Estrada may not have explicitly considered the argument about section 2750, the Court  went on to hold that the common law test must apply, or section 2750 would conflict with the statutes immediately following 2750.

Having settled on the common law test for employment as the correct test, the Court then considered whether the evidence supported the trial court's decision to grant summary judgment.  While it is impossible to know what evidence was submitted, the Court's summary of key evidence suggests that the defendant had the better of it:

The salient evidentiary points established Arnold used her own judgment in determining whom she would solicit for applications for Mutual's products, the time, place, and manner in which she would solicit, and the amount of time she spent soliciting for Mutual's products. Her appointment with Mutual was nonexclusive, and she in fact solicited for other insurance companies during her appointment with Mutual. Her assistant general manager at Mutual's Concord office did not evaluate her performance and did not monitor or supervise her work. Training offered by Mutual was voluntary for agents, except as required for compliance with state law. Agents who chose to use the Concord office were required to pay a fee for their workspace and telephone service. Arnold's minimal performance requirement to avoid automatic termination of her appointment was to submit one application for Mutual's products within each 180-day period. Thus, under the principal test for employment under common law principles, Mutual had no significant right to control the manner and means by which Arnold accomplished the results of the services she performed as one of Mutual's soliciting agents.

Slip op., at 9-10.

It's easy to armchair quarterback, but the factual record described by the Court does not seem like the optimal factual record on which to test this issue.  Then again, when I appealed Alvarez, I'm sure many people said the same thing...  Good thing the Supreme Court bailed me out years after the fact in another case.

"Actual cash value" isn't fair market value, says George v. Automobile Club of Southern California

Here's one from the backlog stack, but it isn't too exciting, so you didn't miss much.  In George v. Automobile Club of Southern California (December 12, 2011), the Court of Appeal (Second Appellate District, Division Eight) reviewed the trial court's decision to sustain a demurrer without leave to amend in a putative class action alleging it was impropre for defendant to declare the "actual cash value" of a vehicle in an insurance policy but then refuse to pay that amount in the event of a total loss, instead paying the fair market value of the car at the time of the loss.   The result didn't seem to be in doubt, based on the policy language noted by the trial court and Court of Apeal:

The declarations page, when read together with the rest of the policy, unambiguously provides that in the event of a total loss, the policy will pay the actual cash value of the car up to $25,000, less the deductible. The ordinary meaning of these words is that if the car is stolen and forever lost, the policy will pay the fair market value, or actual cash value, of the car on the date of the claim, less the deductible, but in any event, not more than $25,000.

Slip op., at 16.  This isn't really a class action case in that the issue was solely one of contractual interpretation, but I include it as a cautionary note for anyone else looking into bringing such a claim. 

Disagreeing with a sister Court of Appeal, Wisdom v. Accentcare, Inc. wisely finds arbitration agreement unconscionable

The fact that equally learned Courts of Appeal reach fundamentally different results from similar circumstances either confirms that minute differences in fact are all that are needed to change the result on tough legal issues (the "aren't we important in the legal field" explanation) or confirms that we're all making this pseudo-science of law up as we go along (the "likely" explanation).  In Wisdom v. Accentcare, Inc. (July 3, 2012), a Court of Appeal (Third Appellate District) examined an arbitration clause included within an application for unemployment.  The trial court concluded that the application was unenforceable, given its substantial procedural and substantive unconscionability.  The Court of Appeal agreed.

Procedural unscionability was obvious to the Court:

In this case, the preemployment arbitration agreement is procedurally unconscionable. “[F]ew employees are in a position to refuse a job because of an arbitration requirement.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 115.)

Slip op., at 2.  The Court found additional evidence of procedural unconscionability in the agreement "because its language implied there was no opportunity to negotiate, because the rules of any arbitration were not spelled out in the agreement or attached thereto, and because plaintiffs did not understand they were waiving their right to a trial, nor was that fact explained to them."

The Court then found substantive unconscionability because of the lack of mutuality:

The lack of mutuality is made apparent by contrast to a different application form, also employed by AccentCare, which provided that “in exchange for my agreement to arbitrate, AccentCare, Inc. also agrees to submit all claims and disputes it may have with me to final and binding arbitration . . . .” “[I]n the context of an arbitration agreement imposed by the employer on the employee, such a one-sided term is unconscionable.” (Armendariz, supra, 24 Cal.4th at p. 118.)

Slip op., at 2-3.

Much of the discussion includes a more detailed discussion of the various deficiencies identified by the trial court.  Of particular note, though, was the Court's mention of an opinion from the Second Appellate District, Division Seven, which reached a different result in similar but not identical circumstances:

We are aware that Division 7 of the Second Appellate District examined a nearly identical arbitration agreement in Roman, supra, 172 Cal.App.4th at page 1470-1471, and held that the procedural unfairness was “limited[.]” Roman reasoned that there was little evidence of surprise since the arbitration provision was “contained on the last page of a seven-page employment application,” and “was set forth in a separate, succinct (four-sentence) paragraph that Roman initialed, affirming she had seen it.” (Id. at p. 1471.)

Here, however, even though plaintiffs undoubtedly saw the arbitration paragraph when they initialed it, their declarations state they did not know what “binding arbitration” meant, no one explained it to them, and they were unaware they were giving up their right to trial. There was no evidence any of the plaintiffs were sophisticated in legal matters. This, combined with the non-negotiable, take-it-or-leave-it circumstances surrounding the application for employment, result in a strong showing of procedural unconscionability.

Slip op., at 10-11.  Then, when discussing substantive unconscionability in the form of one-sidedness, the Court's criticism of Roman is more pointed:

Defendants rely on Roman, supra, which held that an agreement containing nearly identical language was bilateral. (172 Cal.App.4th at p. 1473.) But Roman, supra, did not explain its reasons for concluding that the agreement at issue in that case was bilateral. Instead, the court distinguished Higgins, supra, on the ground that the procedural unconscionability in Higgins had been “far greater[.]” (Id. at pp. 1472-1473.)

To the extent Roman implies that the agreement in Higgins was not substantively unconscionable due to its one-sidedness, it is wrong. Higgins, supra, discussed at some length the fact that the “I agree” language of the contract indicated that only the siblings had agreed to the arbitration clause, and stated only briefly that “[a]dditional elements of substantive unconscionability” were to be found in the provision barring only the siblings from seeking appellant review of some claims and the provision requiring arbitration in accordance with the rules of the American Arbitration Association. (Higgins, supra, 140 Cal.App.4th at p. 1254.)

Slip op., at 14-14.

While I may be biased from my own success before Division Seven, I generally like the analyses in that Division's opinions.  But it is hard to find fault with this Court's critique of Roman. 

In Sanchez v. Valencia Holding Company, LLC, Court slays arbitration agreement, comments on Concepcion and Armendariz

With AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740 (2011) in the bank and earning interest, the new defense playbook includes a renewed, direct assault on Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83 (2000).  But in Sanchez v. Valencia Holding Company, LLC (October 24, 2011), the Court of Appeal (Second Appellate District, Division One) stongly declared the ongoing viability of Armendariz after Concepcion.  In other words, Concepcion is to state law unconscionability analysis as tap water is to vampires - no effect.

 The allegations are easy to summarize.  Plaintiff Sanchez wanted to buy a used Mercedes.   The dealer charged him $3,700 to have the vehicle "certified" as eligible for a lower interest rate.  That was a lie.  The charge was for an undisclosed and optional extended warranty.  The dealer charged him new tire fees when not all of the tires were new.  Plaintiff was also told that the vehicle was a "certified" used Mercedes, having been through a rigorous inspection and maintenance process.  That was also a lie.  Sanchez filed a class action alleging, among other things, violations of the CLRA, ASFA, UCL, Song-Beverly Act, and Public Resources Code section 42885.

Valencia moved to compel arbitration. The trial court denied the motion, stating that the CLRA expressly provides for class actions and declares the right to a class action to be unwaivable.   (See Civ. Code, §§ 1781, 1751.) As a consequence, the class action waiver in the arbitration provision was unenforceable. Further, because the agreement included a poison pill clause, the unenforceability of the class action waiver made the entire arbitration provision unenforceable.   The trial court therefore denied the motion. Valencia appealed.

The Court of Appeal began its discussion by summarizing its conclusion:

We do not address whether the class action waiver is unenforceable. Rather, we conclude the arbitration provision as a whole is unconscionable: The provision is procedurally unconscionable because it is adhesive and satisfies the elements of oppression and surprise; it is substantively unconscionable because it contains terms that are one-sided in favor of the car dealer to the detriment of the buyer. Because the provision contains multiple invalid terms, it is permeated with unconscionability and unenforceable. Severance of the offending terms is not appropriate. It follows that the case should be heard in a court of law.

Slip op., at 10.  Next, focusing on Concepcion and Armendariz, the Court said:

Before applying Armendariz to the present case, we note that Concepcion, supra, 131 S.Ct. 1740, does not preclude the application of the Armendariz principles to determine whether an arbitration provision is unconscionable. Concepcion disapproved the "Discover Bank rule," stating:  "In Discover Bank, the California Supreme Court applied [the doctrine of unconscionability] to class-action waivers in arbitration agreements and held as follows: [¶]  '[W]hen the [class action] waiver is found in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money, then . . . the waiver becomes in practice the exemption of the party "from responsibility for [its] own fraud, or willful injury to the person or property of another." Under these circumstances, such waivers are unconscionable under California law and should not be enforced.'" (Concepcion, at p. 1746, italics added.) With the exception of the Discover Bank rule, the Court acknowledged that the doctrine of unconscionability is still a basis for invalidating arbitration provisions. (Concepcion, at pp. 1746, 1747; see Kanbar v. O’Melveny & Myers (N.D.Cal. 2011) 2011 U.S. Dist. Lexis 79447, pp. *15–*16, *23–*24, 2011 WL 2940690, pp. *6, *9.) Thus, Concepcion is inapplicable where, as here, we are not concerned with a class action waiver or a judicially imposed procedure that conflicts with the arbitration provision and the purposes of the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1–16). (See Concepcion, at pp. 1748–1753.)

Slip op., at 11-12.  In the balance of the opinion, the Court found procedural unconscionability (one-sided and surprise) and substantive unconscionability (several terms favoring dealer).  The Court then concluded that some of the substantive defects could not be cured by striking provisions.

The Court explicity declined to address the issue of whether the CLRA rendered the class action waiver provision unenforceable.

Justice Rothschild concurred in the judgment.

A little antitrust nugget in the movie theater business...

This one entertains me becaues it faintly evokes the studio system of the 1930's and the decades of antitrust action by the FTC, with United States v. Paramount Pictures, 334 U.S. 131 (1948) stealing a good deal of the spotlight.  It's not quite as big as Paramount, but it's what we have.  In Flagship Theaters of Palm Desert LLC v. Century Theaters, Inc. (August 31, 2011), the Court of Appeal (Second Appellate District, Division One) considered an appeal of a summary judgment ruling that ended Flagship's antitrust action.  The allegations were summarized by the Court:

Flagship filed this antitrust action against Century and two film distributors, alleging that Century has used the power deriving from both the size of its theater circuit and its many theaters in noncompetitive markets to undermine the competitive process through which theaters bid for and obtain licenses to exhibit first-run films. According to Flagship, under previous ownership the River and the Palme obtained roughly equal numbers of first-run films, but under Century the River now obtains licenses for far more first-run films than the Palme, the few that are left to the Palme are commercially inferior, and the imbalance is not based on the relative merits of the Palme's and the River's bids. On the contrary, according to Flagship, superior bids by the Palme are often rejected in favor of inferior bids by the River as a result of Century's abuse of the power of its circuit

Slip op., at 2.  I'm not going to cover the Court's interesting attempt to assess the current state of unlawful circuit dealing under the Sherman Act and the Cartwright Act.  But if you practice or dabble in antitrust law, this is like a brief history lesson centered around the movie distribution world.  I will note, however, that the Court wasn't thrilled with all of the sealed documents the Court received and later concluded were not appropriately classified as confidential.