Discover Bank v. Superior Court

This case concerns the validity of a provision in an arbitration agreement between Discover Bank and a credit cardholder forbidding classwide arbitration. The credit cardholder, a California resident, alleges that Discover Bank had a practice of representing to cardholders that late payment fees would not be assessed if payment was received by a certain date, whereas in actuality they were assessed if payment was received after 1:00 p.m. on that date, thereby leading to damages that were small as to individual consumers but large in the aggregate. Plaintiff filed a complaint claiming damages for this alleged deceptive practice, and Discover Bank successfully moved to compel arbitration pursuant to its arbitration agreement with plaintiff.

Plaintiff now seeks to pursue a classwide arbitration, which is well accepted under California law. (See Keating v. Superior Court (1982) 31 Cal.3d 584, 613-614 [ 183 Cal.Rptr. 360 , 645 P.2d 1192 ] (Keating), overruled on other grounds in Southland Corp. v. Keating (1984) 465 U.S. 1 [ 79 L.Ed.2d 1 , 104 S.Ct. 852 ] (Southland).) But plaintiff’s arbitration agreement with Discover Bank has a clause forbidding classwide arbitration.…

I concur in part and dissent in part. I agree with the majority that federal law does not compel enforcement of contractual class action waivers simply because they are contained in *175 arbitration agreements. But I lament the majority’s determination to use this case as a vehicle to resolve the issue of California’s policy on class action waivers. For two reasons, we need not, and should not, confront that question here.

First, because the Court of Appeal upheld the instant waiver solely by finding federal preemption of any California antiwaiver policy, that court did not decide whether such a policy exists. Ordinarily, we do not address, on review, issues that were not decided by the Court of Appeal.

Second, the majority’s questionable decision to deem the class action waiver in this contract unconscionable by California standards—a determination at odds with the vast weight of authority elsewhere (see discussion, post)—is simply moot under the particular circumstances. The parties reasonably agreed that Delaware law would govern all aspects of their contractual relationship, and plaintiff has asserted only Delaware causes of action. Thus, regardless of California’s position…

Trial Lawyers for Public Justice, F. Paul Bland, Jr., Michael J. Quirk, Arthur H. Bryant, Leslie A. Bailey, Kate Gordon; Strange & Carpenter, Brian R. Strange, Gretchen Carpenter, Los Angeles; Law Offices of Barry Kramer and Barry L. Kramer for Real Party in Interest.

Bramson, Plutzik, Mahler & Birkhaeuser and Robert M. Bramson, Walnut Creek, for National Association of Consumer Advocates as Amicus Curiae on behalf of Real Party in Interest.

Deborah M. Zuckerman, Michael R. Schuster; Kemnitzer, Anderson, Barron & Ogilvie and Mark F. Anderson, San Francisco, for AARP as Amicus Curiae on behalf of Real Party in Interest.

The Sturdevant Law Firm, James C. Sturdevant, San Francisco; Ian Herzog, Santa Monica; Michael Adler; Sharon J. Arkin, Newport Beach; Stuart B. Esner, Los Angeles,; Brian S. Kabateck, Los Angeles; David A. Rosen, Los Angeles; Daniel U. Smith, Kentfield; Christine D. Spagnoli; Lea-Ann Tratten; Steven B. Stevens, Los Angeles, and Scott H.Z. Sumner, Walnut Creek, for Consumer Attorneys of California as Amicus Curiae on behalf of Real Party in Interest.

Ghalchi & Associates, Kamran Ghalchi, Los Angeles; Adhoot & Wolfson, Tina Wolfson, Los Angeles, and Robert Adhoot…