A California Court of Appeal recently affirmed the applicability of the Armendariz v. Foundation Health Psychare Services, Inc. standard for assessing unconscionability challenges to arbitration agreements, notwithstanding the U.S. Supreme Court's ruling in AT&T Mobility v. Concepcion (see above link). In Samaniego v. Empire Today LLC, plaintiffs – carpet installers – sued Empire claiming it misclassified them as contractors. In denying Empire's motion to stay the action and compel arbitration, the trial court found the agreement containing the arbitration provision was "highly unconscionable from a procedural standpoint," demonstrated "strong indicia of substantive unconscionability" and was thus unenforceable under Armendariz. The trial court also denied Empire's motion for reconsideration in light of Concepcion, which issued several weeks after the trial court's decision.
The appellate court affirmed, and further recognized that Concepcion "explicitly reaffirmed that the FAA 'permits agreements to arbitration to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability.'" As such, the court concluded that "arbitration agreements remain subject, post-Concepcion, to the unconscionability analysis employed by the trial court in this case."