SECOND CIRCUIT: CLASS ARBITRATION WAIVER UNCONSCIONABLE UNDER CALIFORNIA LAW
Defendant-Appellant Affiliated Computer Services appealed an order of the US District Court for the Southern District of New York denying Affiliated’s motion to compel arbitration. The district court held that the arbitration clause of a promissory note was unconscionable under California law because of its class action and class arbitration waiver provision. On appeal, Affiliated argued that the clause was not unconscionable, and in the alternative, that California law on this issue was preempted by the FAA. The Second Circuit affirmed the district court’s order, finding that the class arbitration waiver was unconscionable and unenforceable under California law according to principles applicable to contracts generally, and that California law is therefore not preempted by the FAA. Fensterstock v. Education Fin. Partners, Case No. 09-1562 (2d Cir. July 12, 2010)
This post written by John Black.
