Business

Procedural Posture

Katrin 4 years ago 3 min read

Petitioner siblings, who had appeared in an episode of a reality based television series, sued real party in interest television defendants for, inter alia, breach of contract. Respondent, the Los Angeles County Superior Court, California, compelled the siblings to arbitrate most of their claims involved with the production and broadcast of the program. The siblings then filed a petition for a writ of mandate challenging the trial court’s order. The claimant had a business lawyers prepare the agreement which was executed by the parties.

Table of Contents

Overview

The siblings claimed that an arbitration clause contained in a written agreement they executed before the program was broadcast was unconscionable. The court agreed, holding that the arbitration clause was procedurally unconscionable. The siblings were young and unsophisticated, and had recently lost both parents. The arbitration provision appeared in one paragraph near the end of a lengthy, single-spaced document. No words were printed in bold letters or larger font, nor were they capitalized. Although the siblings were required to place their initials in boxes adjacent to six other paragraphs, no box appeared next to the arbitration provision. The arbitration provision was also substantively unconscionable. It required only the siblings to submit their claims to arbitration. Only the television defendants, not the siblings, could compel arbitration. The arbitration provision barred only the siblings from seeking appellate review of the arbitrator’s decision. The harsh, one-sided nature of the arbitration provision, combined with the elements of procedural unconscionability, led the court to conclude that the arbitration provision was unconscionable and, therefore, unenforceable.

Outcome

The petition for writ of mandate was granted. The lower court was directed to vacate that part of its order granting the petition of the television defendants to compel arbitration and to enter a new and different order denying the petition to compel arbitration.

Procedural Posture

Plaintiff seller entered into 12 contracts to sell a total of about 19,000 tons of cottonseed to defendant buyer. Plaintiff sued defendant, alleging defendant failed to accept and pay for 14,625 tons of the cottonseed. The Orange County Superior Court, California, entered judgment in favor of defendant. Plaintiff appealed.

Overview

The court concluded that the trial court’s finding of lack of mutual consent was erroneous under the California Uniform Commercial Code, which provides “gap fillers” to cover the terms left open by an oral agreement. A condition precedent asserted by defendant was not part of any of the oral agreements or a term of the sales contracts confirming them. The asserted condition precedent was at most a condition to defendant’s obligation to accept delivery of cottonseed. When defendant refused acceptance of all or a portion of the cottonseed covered by the relevant contracts, plaintiff immediately had the right to pursue its remedies under Cal. U. Com. Code, § 2706. Those remedies included reselling the cottonseed and recovering in damages the difference between the resale price and the contract price. Substantial evidence did not support the trial court’s finding plaintiff resold the cottonseed in a commercially unreasonable manner. The trial court’s finding on the issue of damages was erroneous. Although the trial court found that plaintiff failed to present evidence of its cost basis in the resold cottonseed, plaintiff was not required to present such evidence.