holding forum selection 9 clause was substantively unconscionable because it was “part of a contract of adhesion, it was not 10 entered into freely and voluntarily”; franchisee was “provided inadequate notice in the offering 11 circular because the circular contained misleading language creating the reasonable expectation that 12 it would not be enforced” and “considering the respective circumstances of the parties, the ‘place 13 and manner’ requirements are unduly oppressive and harsh upon [franchisee] who had no bargaining 14 power.”
How later courts described this case
- holding forum selection 9 clause was substantively unconscionable because it was “part of a contract of adhesion, it was not 10 entered into freely and voluntarily”; franchisee was “provided inadequate notice in the offering 11 circular because the circular contained misleading language creating the reasonable expectation that 12 it would not be enforced” and “considering the respective circumstances of the parties, the ‘place 13 and manner’ requirements are unduly oppressive and harsh upon [franchisee] who had no bargaining 14 power.”
- stating that 14 “when the crux of the complaint challenges the validity or enforceability of the agreement 15 containing the arbitration provision, then the question of whether the agreement, as a whole, is 16 unconscionable must be referred to the arbitrator” but that “[w]hen the crux of the complaint is not 17 the invalidity of the contract as a whole, but rather the arbitration clause provision itself, then the 18 federal courts must decide whether the arbitration provision is invalid and unenforceable”
- concluding that plaintiff did not waive her objection to arbitration via participation when her participation therein was limited to two preliminary telephone conferences and steps necessary to preserve her objections to arbitration and rights in proceeding, including filing of counterclaim and discovery requests, when she “never participated in any proceedings which even touched the merits of the contractual claims that were to be the subject of arbitration”
- explaining that in cases like Nghiem “where we have found waiver [of the ability to challenge the arbitrator’s ability to decide substantive arbitrability], the objecting party ha[d] participated far more extensively than [the present objecting party] did before resorting to the courts”
Written by the judges who cited it.
The opinion
CLIFTON, Circuit Judge,
concurring in part and dissenting in part:
I agree with the majority that the district court properly undertook in this case to decide whether the arbitration provision in the MailCoups franchise agreement is valid and enforceable within the meaning of the Federal Arbitration Act. I also agree that Nagrampa did not waive her right to object to the arbitrability of the dispute. I thus concur in sections II-A and II-B of the majority opinion by Judge Wardlaw. .
I part company with the majority as to its conclusion that the arbitration provision was unconscionable under California law. I believe that the district court was correct in concluding that the arbitration provision was valid and enforceable. I concur in the relevant portions of the dissents by Judge O’Scannlain (sections II-D and III) and by Judge Kozinski (section II). Like them, I would affirm the judgment of the district court.