Mission Viejo v. Beta: Concepcion Does Not Eliminate California’s Unconscionability Doctrine

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Following on the Second Appellate District’s extensive and closely-reasoned holding in Brown v. Ralphs Grocery Co., in which the court held that the U.S. Supreme Court’s recent decision concerning arbitration preemption in Concepcion v.  AT&T does not apply to representative actions brought pursuant to PAGA, the Fourth Appellate District has now weighed in, as well.  In Mission Viejo Emergency Med. Assocs. v. Beta Healthcare Grp. (opinion available here), the court briefly addressed Concepcion and unmistakably held that Concepcion does not preempt all California contractual unconscionability law.

Although the underlying motion to compel arbitration was ultimately granted, Mission Viejo is significant in that it extends, beyond PAGA, the applicability of California’s unconscionability doctrine within the realm of arbitration agreements.  While the Mission Viejo defendants suggested in supplemental briefing that “AT&T [v. Concepcion] essentially preempts all California law relating to unconscionability,” the Mission Viejo panel sharply rejected this absolutist interpretation of Concepcion, stating:  “We disagree, as the case [Concepcion] simply does not go that far.”  Mission Viejo Emergency Med. Assocs. v. Beta Healthcare Grp., No. G043815, slip op. at 13 n.4 (Cal. Ct. App. June 29, 2011).  Thus, while the at-issue arbitration agreement in Mission Viejo was not found to be unconscionable, the ruling signifies the continued vitality of California’s unconscionability doctrine against defendants urging that Concepcion effectively eliminates the doctrine altogether.