Third Time’s a Charm: Court of Appeal (Cal.) Orders NOI Class Action to Arbitration; Rejects Sanchez’ “Ability to Pay Arbitration Costs” Loophole Where Cheaper Vehicles are Involved

In Trabert v. Consumer Portfolio Services, Inc., 2015 WL 9271437, at *6-8 (Cal.App. 4 Dist. 2015) (unpublished), the Court of Appeal addressed for the third time whether an arbitration clause in a standard form RISC was unconscionable.  The Court of Appeal addressed the consumer’s argument that Sanchez was distinguishable where cheaper cars purchased by poorer consumers was involved.  The Court of Appeal rejected the argument, and ordered the case to arbitration .

But Trabert argues this case is factually distinguishable because the arbitration costs as applied in his case render the arbitration agreement substantially unfair. . . .Trabert argues this case is distinguishable from Sanchez because he did not purchase the type of a luxury vehicle at issue in Sanchez (a “ ‘preowned’ “ Mercedes Benz for approximately $54,000), and instead he bought a used 2007 Chevrolet Malibu for approximately $14,782 at a high interest rate and his vehicle was later repossessed. However, the make and price of the vehicle are insufficient to reasonably infer the consumer’s financial condition at the time of the purchase. The consumer has the burden to show unaffordability and it is speculative to conclude an individual’s ability to pay based solely on the nature of the purchased consumer product. . . . Trabert also contends this case is different from Sanchez because he presented evidence that common hourly rates of private arbitrators are between $400 and $600. . . The court stated a provision imposing arbitration costs “cannot be held unconscionable absent a showing that appellate fees and costs in fact would be unaffordable or would have a substantial deterrent effect in [the] case.” (Ibid., italics added.) Here there was no evidence the fees and costs would in fact be unaffordable or would have a substantial deterrent effect in this case . . .There is no evidence on the record before us that at the time Trabert signed the purchase contract, the arbitration would be unaffordable to him.  . . .Under Sanchez, the arbitration provision in Trabert’s purchase agreement was not unconscionable and therefore must be enforced.