COURT APPLIES CONCEPCION AND REJECTS UNCONSCIONABILITY ARGUMENT
On remand from the Supreme Court and the Second Circuit in light of AT&T Mobility v. Concepcion, a district court granted defendant’s motion to compel arbitration over plaintiff’s arguments that: 1) defendant could not compel arbitration because it was not a party to the contract containing the arbitration clause; and 2) the arbitration clause is unconscionable. Applying California law, the court held that the plaintiff was estopped from avoiding arbitration against the defendant because the defendant was the agent of a signatory to the contract and the plaintiff’s claims were intertwined with the contract that included the arbitration clause. Regarding the unconscionability issue, the court reasoned that even though Concepcion overruled the Discover Bank rule, it did not entirely do away with the unconscionability defense to arbitration agreements. Applying a California rule governing the unconscionability of all contracts, not just arbitration agreements, the court analyzed whether the arbitration clause was procedurally and substantively unconscionable and found that it was not. Fensterstock v. Education Finance Partners, Case No. 08-03622 (USDC S.D.N.Y. Aug. 30, 2012).
This post written by Abigail Kortz.
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