Arbitration, Enforceability, Fees: Froggy Arbitration Clause Buried Among the Lily Pads Is Too Inconspicuous To Require Arbitration

Inconspicuous As A Frog In A Thicket Of Water Lilies . . . 

 

"Too lazy to feed himself, Washington, D.C., Aug. 15. Just plumb too lazy to catch his food on the fly like regular frogs do, Popeye, giant frog from Louisiana in the U.S. Department of Commerce aquarium, has to be fed his meals from acting [sic] as nursemaid for the critter." Library of Congress. 1937.

        The inimitable Justice Arthur Gilbert writes: "An arbitration clause in a contract is invalid because the clause is as inconspicuous as a frog in a thicket of water lilies. The prevailing party is entitled to attorney fees per Civil Code section 1717. Speaking of frogs, Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515 (Frog Creek) does not prohibit the award of attorney fees." Domestic Linen Supply Co., Inc., v. L J T Flowers, Inc., B292863, B294788 (2/6  12/4/20).

        Justice Gilbert, agreeing with the trial judge, explains why the arbitration clause was inconspicuous. Among other  things, the arbitration clause was not above the purchaser's signature, but on the back of the agreement. The backside was filled with small type. The arbitration clause, lacking heading, boldface, italics or  capitalization, was "simply hidden in a thicket of fine print." The sales representative presenting the agreement was not trained to bring attention to the arbitration clause. And the sales rep was advised to have the purchaser read the personal guarantee while filling out the contract, thus diverting from  the backside of the contract.

        Comment: A reader might at first have thought that leading with a discussion of the inconspicuousness of the arbitration clause would take us to the  issue of unconscionability. No need to go there. Evidently the arbitration clause was so inconspicuous that Justice Gilbert concluded: "There was simply no agreement to arbitrate."

        Regarding the issue of fees, the opinion distinguishes between (1) Frog Creek, in which a case was pending, plaintiff's first petition to compel arbitration was defeated, a second petition succeeded, and defendant ultimately prevailed on the merits; and (2) the instant case, in which a petition to compel arbitration was filed, and the petition was defeated. In the first situation, the petition is defeated, and the lawsuit continues. However, in the instant case, the defeat of the petition terminated the action, leaving the defendant as the prevailing party. And where there is a contractual basis to recover attorney's fees and a prevailing party, the prevailing party can recover attorney's fees.

        Further Comment: If a Jim Murray prize for turning a phrase and color commetary in legal opinions could be awarded to California Appellate Justices, I would nominate Justice Gilbert and Justice William Bedsworth.

Lily pond. Jean E. Norwood, photographer. 1979. Library of Congress.