Justice Aronson Dissents, Believing Majority Misapplied Legal "Sliding Scale" Test To Contract of Adhesion
Plaintiff Nibler sued Monex, a precious metals trading company in which he invested, and lost, his inheritance. The trial court denied Monex's motion to compel arbitration, finding the arbitration provisions unconscionable. In fact Monex had been involved in another case, Paradise v. Superior Court, 176 Cal.App.4th 1554 (2009) in which the arbitration clause was found unconscionable. Monex appealed the denial of its motion.
The Court of Appeal reversed, finding a lack of procedural unconscionability. Nibler v. Monex Deposit Company, G046511 (4th Dist. Div. 3 May 13, 2013) (Moore, Acting P.J., author 2:1, with Justice Fybel concurring) (unpublished). The key to the reversal was that changes had been made to the arbitration provisions, including the ability to opt out completely, precluding a finding of procedural unconscionability. Because both procedural and substantive unconscionability must be present to make an arbitration provision unconscionable, the Court of Appeal didn't even need to address substantive unconscionability. So it didn't.
Nevertheless, the Court of Appeal did agree that the contract was adhesive – basically a take it or leave it contract that the customer could not change.
Justice Aronson, dissenting, believed that once the Majority agreed that the contract was adhesive, it had acknowledged that there was at least some procedural unconscionability, requiring it to apply the sliding scale test, and to consider whether the procedural and substantive unconscionability, considered together, were sufficient to make the arbitration provision unconscionable.
Interesting issue; too bad the case is unpublished.