Another Arbitration Agreement Bites the Crust

er... Dust, too.

Western Pizza owns some Domino's franchises. Their arbitration agreement had a class action waiver (illegal). It also had an arbitration selection procedure specifying a certain "dispute resolution service" that had only one arbitrator employed. So, that kind of took the surprise out of who would conduct the arbitration. The court struck down the arbitration agreement as unconscionable. Not a surprise given the current state of arbitration case law.

Interestingly, though, the court of appeal held that the company's "small claims" procedure, permitting relaxed discovery, evidence, and hearing procedures for claims worth less than $50,000. The court noted that such things are normal in arbitration anyway. Also, the court did not find unconscionable the agreement's silence on discovery procedures and no requirement of a written award, holding these were "implied" in the agreement under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.

The case is Sanchez v. Western Pizza Enterprises, Inc. and the opinion is here.