Higgins v. Superior Court

140 Cal. App. 4th 1238, 45 Cal. Rptr. 3d 293 (2006)

 

RULE:

Unconscionability has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results. Procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. But they need not be present in the same degree. Essentially, a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. The more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable and vice versa. 

FACTS:

The siblings claimed that an arbitration clause contained in a written agreement they executed before a program was broadcast was unconscionable. The court agreed, holding that the arbitration clause was procedurally unconscionable. The siblings were young and unsophisticated, and had recently lost both parents. The arbitration provision appeared in one paragraph near the end of a lengthy, single-spaced document. No words were printed in bold letters or larger font, nor were they capitalized. Although the siblings were required to place their initials in boxes adjacent to six other paragraphs, no box appeared next to the arbitration provision. The arbitration provision was also substantively unconscionable. It required only the siblings to submit their claims to arbitration.

ISSUE:

Was the arbitration clause avoidable due to unconscionability?

ANSWER:

Yes.

CONCLUSION:

Arbitration clauses are subject to the same grounds at law for revocation like any other contract, including unconscionability.  The court found that the arbitration clause was  unenforceable. The petition for writ of mandate was granted. The lower court was directed to vacate that part of its order granting the petition of the television defendants to compel arbitration and to enter a new and different order denying the petition to compel arbitration.

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