|
According to a California appellate court, a credit card consumer may not obtain injunctive relief against an allegedly unconscionable arbitration provision on the basis of California consumer protection law because a credit card agreement is not a sale or lease of goods or services.
InBerry v. American Express Publishing, Inc., No. G036848, 2007 WL 257922 (Cal. Ct. App. Jan. 31, 2007), Berry sought an injunction against American Express Publishing, Inc. (AMEX) to prevent enforcement of an allegedly unconscionable arbitration provision in the cardholder agreement. The source of this remedy is California's Consumer Legal Remedies Act (CLRA), CAL. CIV. CODE §1770(a)(19), which applies to "a transaction intended to result or which results in the sale or lease of goods or services to [a] consumer…."
The Court denied the injunction, finding that a credit card is neither a "good" nor a "service" under the CLRA. Additionally, an extensive search of the CLRA's legislative history revealed no evidence that the Act was meant to apply to credit cards.
Berry also argued that the California Supreme Court acknowledged that the CLRA "covered" credit cards in Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005). However, the Discover Bank decision also expressly stated that the plaintiff in that case had not pled a cause of action under the CLRA. Thus, the Court found no statutory basis for issuing an injunction against the AMEX arbitration clause.
Subscribe to a free weekly update on ADR case law and
legislation
|