Stroock Special Bulletin
"California Supreme Court Issues Important Federal Arbitration Act Preemption Ruling"
On August 3, 2015, the California Supreme Court decided Sanchez v. Valencia Holding Company, LLC, Case No. S199119 (Aug. 3, 2015), holding that the Federal Arbitration Act (“FAA”), as confirmed by the United States Supreme Court in AT&T Mobility v. Concepcion, __ U.S. __, 131 S. Ct. 1740 (2011), preempts the invalidation of a class action waiver contained in an arbitration agreement on unconscionability grounds. While the decision is important with respect to the enforceability of arbitration agreements in form automobile sales contracts, which was the particular contract before the Court, it perhaps is most noteworthy because it reflects a shift from the California Supreme Court’s historic hostility to consumer arbitration and class action waivers.