Extreme Makeover: Unconscionability Edition

In a relatively recent case, a California appellate court refused to enforce an arbitration clause on unconscionability grounds. 

Five orphaned siblings (“petitioners”) who appeared in anepisode of the television program “Extreme Makeover: Home Edition”challenged an order compelling them to arbitrate most oftheir claims against various entities involved with the production andbroadcast of the program (“television defendants”).  The California court held that the parties’ agreement was adhesive and that the arbitration clause was procedurally unconscionable because:

[it] appears in one paragraph near the end of alengthy, single-spaced document. The entire agreement was drafted by thetelevision defendants, who transmitted copies of it to the petitioners. Thetelevision defendants knew petitioners were young and unsophisticated, and hadrecently lost both parents. Indeed, it was petitioners’ vulnerability that madethem so attractive to the television defendants. The latter made no effort tohighlight the presence of the arbitration provision in the Agreement. It wasone of 12 numbered paragraphs in a section entitled “miscellaneous.”In contrast to several other paragraphs, no text in the arbitration provisionis highlighted. No words are printed in bold letters or larger font; nor arethey capitalized.Although petitioners were required to place their initials in boxes adjacent tosix other paragraphs, no box appeared next to the arbitration provision. It is true that the top of the first page advisespetitioners to read the entire agreement before signing it and thesecond-to-last paragraph states that the person signing acknowledges doing so.This language, although relevant to our inquiry, does notdefeat the otherwise strong showing of procedural unconscionability.

The court held that the provision was also substantively unconscionable because of its “harsh, one-sided nature” — the television defendants (though not the petitioners)could compel arbitration without fearing that doing sowould preclude the television defendants’ right to injunctive or other equitable relief in court.  Additionally, only the petitioners (and not the television defendants) waived the right to appellate review of an arbitration.

Higgins v. Superior Court, 140Cal.App.4th 1238 (Cal.  App. 2d Dist 2006).

[Meredith R. Miller]