Sonic III

Sanchez v. Valencia Holding Co., No. S199119 (Cal. Aug. 3, 2015)

This case is kind of a do-over of the second half of Sonic-Calabasas A, Inc. v. Moreno, 51 Cal. 4th 659 (2013) on the law of unconscionability as it applies to arbitration agreements. Justice Liu, joined by most of the court, thinks there are various articulable standards for substantive unconscionability, all of which more or less mean some kind of unilateralism or unfairness that goes well beyond just striking a bad deal. Justice Chin (no longer joined by Justice Baxter, who has since retired) thinks the court should settle on a “shocks the conscience” standard, which he believes to impose a higher burden than other formulations.

This time, however, the court gets to the merits. Everyone agrees that under whatever standards they might apply, the provisions at issue—various limits and exceptions to a contractual right to a de novo appeal to a three-arbitrator panel—aren’t unfair enough to render the agreement substantively unconscionable.

Reversed.

Lies, Damn Lies, and Statistics

Duran v. U.S. Bank Nat’l Assoc., No. S200923 (Cal. May 29, 2014)

In this significant case that the wage-and-hour class action bar has been eagerly awaiting, the California Supreme Court reverses a wage-and-hour class action that actually went to trial. That makes it, as the court explains, “an exceedingly rare beast.” But it isn’t just the fact that this case was tried that is unusual. The way it was tried is also outside of the ordinary. The trial court selected twenty-one plaintiffs out of a total class of 260. It then tried those claims and extrapolated their results class-wide. It refused to admit any evidence outside of the sample plaintiffs. This all resulted in a finding that the entire class was erroneously misclassified as exempt, and a $15 million judgment ($57,000 per class member) against the defendant. While the court does not go so far to say that trial by sample can never be appropriate, what happened in this case can’t withstand scrutiny.