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California Supreme Court Grants Businesses’ the ability to Exploit Consumers

Posted on September 9, 2015 in Firm News

On August 3, 2015, the California Supreme Court in a 6-1 decision in Sanchez v. Valencia Holding Co., LLC further opened the door to consumer exploitation through the use of one-sided contracts for goods and services. Sanchez alleged that the defendant automobile dealer made false representations relating to the condition of a used vehicle that Sanchez purchased from the defendant. The sales contract contained an arbitration agreement and class action waiver. This case dealt with the enforceability of that arbitration agreement and the a class action waiver found in the agreement. The Court, relying on the U.S. Supreme Court decision in AT&T Mobility LLC v. Concepcion and its interpretation of the Federal Arbitration Act, determined such agreements, found in standard consumer contracts for good and services, are enforceable unless the terms of the agreement are heavily one-sided against the consumer, which means a single consumer would be unable to represent the interests of several consumers injured in the same manner in a class action. As a result, businesses utilizing such agreements can take advantage of consumers with little fear of recourse. Often the amount of damages involved in claims covered by these arbitration agreements are not economically feasible for a consumer to pursue on their own even with the assistance of an attorney. Without the ability to bring class actions, consumers will be subjected to unchecked abuse by businesses with which they contract. It seems now that the only counter to this abuse will be to amend or repeal the Federal Arbitration Act. 

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