California’s High Court Tests Mandatory Arbitration

California Supreme Court Building
California Supreme Court

The California Supreme Court may be preparing to follow the lead of the U.S. Supreme Court and limit consumer ‘s ability to sue and expanding the ability of businesses to demand arbitration of disputes.  Last week the state’s high court took up the case of Gil Sanchez  who bought a used Mercedes-Benz in Valencia in 2008 and sued after having trouble with the car and paying fees he says were misrepresented or never disclosed.

The court of appeal previously found the sales contract requiring Sanchez to submit to arbitration to be unconscionable, containing harsh, one-sided terms that favored the car dealer and left Sanchez with little bargaining power.

But last week the California Supreme Court agreed to hear the auto dealer’s appeal.

At issue is whether federal law preempts California’s more consumer friendly law, which invalidated mandatory arbitration provisions in the consumer contract as procedurally and substantively unconscionable.

The court’s action comes on the heels of a U.S. Supreme Court decision allowing AT&T to require arbitration of disputes and bar class actions in its contract terms.


Case: Sanchez v. Valencia Holding Co.,  No. 12-33



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