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Granting a motion to compel arbitration and rejecting claims that an arbitration clause’s class action waiver provision was unconscionable, a California federal court upheld the class action waiver, as there was no evidence showing the party with the superior bargaining power used the waiver to cheat large sums of customers of small sums of money.
In Torres v. Chrysler Financial Co., No. C 07-00915 JW, 2007 WL 3165665 (N.D. Cal. Oct. 25, 2007), Torres purchased a car and an extended automobile warranty from Chrysler. A dispute arose when Torres canceled the extended automobile warranty. Chrysler credited the refund towards the interest owed while Torres sought a cash refund or credit against his monthly payments. Torres responded by bringing a putative class action claim against Chrysler for conspiracy and violation of the California Legal Remedies Act. Chrysler moved to compel arbitration pursuant to an arbitration agreement in the parties’ sales contract.
The Court granted Chrysler’s motion to compel arbitration finding there was a valid arbitration agreement between the parties. The Court did acknowledge that a class action waiver might be unconscionable “when the dispute between the contracting parties involves small amounts of damages, and when it is alleged the party with the superior bargaining power has carried out a scheme to harm large numbers of consumers by inflicting damages of individually small sums of money.” However, Torres failed to offer any evidence showing Chrysler “deliberately cheated large numbers of consumers out of individually small sums of money.”
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