Court of Appeal (Cal.) Adds Another Arbitration Clause Decision to the Sanchez Column, But Reverses Trial Court’s Denial of Petition to Compel

In Vasquez v. Greene Motors, Inc., — Cal.Rptr.3d —-, 2013 WL 1232343 (Cal.App. 1 Dist., 2013), the Court of Appeal found the arbitration clause in the standard form automobile RISC to be procedurally and substantively unconscionable.

After plaintiff Gustavo E. Vasquez purchased a used car on credit from defendant Greene Motors, Inc. (Greene), the vehicle’s financing was assigned to defendant American Honda Finance Corporation (Honda). When Vasquez later sued Greene and Honda in connection with the terms of the financing, defendants petitioned the superior court to compel arbitration of the matter under a clause in the sales agreement. Vasquez opposed the petition on the ground the arbitration clause, contained on the back of a complex, one-page, preprinted document, was procedurally and substantively unconscionable. The trial court agreed and denied the petition to compel.  Because the arbitration agreement was imposed on Vasquez without the opportunity for negotiation, and was therefore adhesive, we agree the transaction was procedurally unconscionable. In light of the minimal level of procedural unconscionability and the absence of significant substantive unconscionability, however, we reverse the trial court’s denial of the petition to compel.