Blog #30 (California Courts Depart From Decade-Long Prohibition of Arbitration Agreements in Consumer Law Context; Brooks Robinson)
I would like to thank my colleague Natalie Ikhlassi for this week's legal portion.
California courts have recently signaled an important change in California law concerning the enforceability of arbitration agreements between businesses and consumers. Arbitration is generally a faster, less expensive, and less complicated way to resolve disputes than a lawsuit filed in court. Despite all these benefits, for the last decade, California courts routinely have found that consumers could not be forced to arbitrate their grievances relating to a company's business practices even if they signed an agreement to do so. Specifically, arbitration of Consumers Legal Remedies Act claims for injunctive relief have been prohibited since 1999, and arbitration of claims for public injunctive relief under California's Unfair Competition Law have been prohibited since 2003. The basic reasoning has been that the California legislature did not intend for the arbitration of injunctive relief claims under these consumer statutes. Therefore, businesses could not seek to limit their exposure by requiring consumers to arbitrate their claims.