Sonic-Calabasas A, Inc. v. Moreno

In Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, the California Supreme Court summarized the issue this way: "The core concern of the unconscionability doctrine is the '"'absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.'"' The unconscionability doctrine ensures that contracts, particularly contracts of adhesion, do not impose terms that have been variously described as '"'overly harsh'"' , '"unduly oppressive"' , '"so one-sided as to 'shock the conscience'"' , or 'unfairly one-sided'. All of these formulations point to the central idea that the unconscionability doctrine is concerned not with 'a simple old-fashioned bad bargain' , but with terms that are 'unreasonably favorable to the more powerful party' . These include 'terms that impair the integrity of the bargaining process or otherwise contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law, fine-print terms, or provisions that seek to negate the reasonable expectations of the nondrafting party, or unreasonably and unexpectedly harsh terms having to do with price or other central aspects of the transaction.' " (Id. at p. 1145.) The Sonic-Calabasas court explained that one form of substantive unconscionability exists if an adhesive arbitration provision effectively blocks a party from obtaining redress of disputes in any forum. This form of unconscionability was discussed in Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, which held that an arbitration agreement was unconscionable because the plaintiff could not afford the substantial fees the agreement required as a prerequisite to pursuing arbitration. The Sonic-Calabasas court explained Gutierrez's import as follows: "In Gutierrez, the plaintiff entered into an automobile lease agreement with the defendant automobile dealer. He subsequently sued the dealer over alleged fraud in the transaction. The adhesive agreement contained an inconspicuous arbitration clause. The Court of Appeal found that, based on the American Arbitration Association rules in effect at the time the defendant moved to compel arbitration, the plaintiff would have had to pay $8,000 in administrative fees to initiate the arbitration. It was undisputed that such fees exceeded the plaintiff's ability to pay. In holding this aspect of the arbitration agreement unconscionable, Gutierrez said: 'We conclude that where a consumer enters into an adhesive contract that mandates arbitration, it is unconscionable to condition that process on the consumer posting fees he or she cannot pay. It is self-evident that such a provision is unduly harsh and one-sided, defeats the expectations of the non-drafting party, and shocks the conscience. While arbitration may be within the reasonable expectations of consumers, a process that builds prohibitively expensive fees into the arbitration process is not. To state it simply: it is substantively unconscionable to require a consumer to give up the right to utilize the judicial system, while imposing arbitral forum fees that are prohibitively high. Whatever preference for arbitration might exist, it is not served by an adhesive agreement that effectively blocks every forum for the redress of disputes, including arbitration itself.' " (Sonic-Calabasas, supra, 57 Cal.4th at pp. 1144-1145.)