Arbitration/Unconscionability: Fourth District, Division 3, Finds That Contract of Adhesion Is Not Procedurally Unconscionable

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.4^th 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 (4^th 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 Div. 3 May 13, 2013) (Moore, Acting P.J., author 2:1, with Justice Fybel concurring) (unpublished).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      Interesting issue; too bad the case is unpublished.

Comments

[Daniel]

At the time when I signed this I had no idea what i was signing. I did not even know what arbitration was. When I signed the Atlas Account I was led to believe that these people were trained professionals and were on my side, a win/win situation. Not a they win/you loose situation, but look how hard they fight now that the tables have turned! I had no prior investment experience, no legal experience and no attorney advising me unlike Monex who has a team of in-house attorneys working against you. (Am I a little but gullible? Maybe. Well, Im not a liar or a thief so I dont expect to be treated that way either.) I was never given any advice as to the risks with regards to my overall financial strategy, only that it was a "sure thing" and that I was "congratulated" as they proceeded lie to me scam me out of my future. I am now homeless, broke and living a lifestyle that anyone at Monex could not endure for even a few days. Did the operators of Monex loose their house, business and their entire futures at the same time I did? No, they had their money invested in a safe way, unlike me. They pressured me down a path of utter destruction while they made even more money that the millions they already had.