Higgins v. Super. Ct.

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Filed 7/10/06 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION EIGHT B187818 CHARLES HIGGINS II, et al., Petitioner, (Los Angeles County Super. Ct. No. BC338017) v. SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES, ORDER MODIFYING OPINION [CHANGE IN JUDGMENT] Respondent; DISNEY/ABC INTERNATIONAL TELEVISION, INC., et al., Real Parties in Interest. THE COURT:* GOOD CAUSE appearing the opinion filed in the above-entitled matter on June 27, 2006, is modified as follows: On page 19, in the second sentence of the Disposition, replace the date December 1, 2006 with December 1, 2005. [end of modification] There is a change in judgment. ______________________ * COOPER, P. J. ______________________ ____________________ RUBIN, J. BOLAND, J.
Primary Holding

Challenging an arbitration clause on the ground of unconscionability does not mean that the entire agreement containing it is invalid.

Facts

After the death of the parents, the Higginses, five children between the ages of 14 and 21 moved in with the Leomitis. The producers of the television program Extreme Makeover: Home Edition approached the Higginses and Leomitis to appear in an episode of the show about their living arrangement. The program selected them for participation and provided that the Leomitis' home would be renovated. The contract sent by the producers to the family consisted of 24 single-spaced pages and 72 numbered paragraphs, as well as several attachments covering authorizations to release medical information, emergency medical releases, and a document simply entitled Release. At the outset of the agreement, the first page informed them that they should not sign it until they had read it.

One paragraph near the end of the agreement provided that the signor had reviewed the agreement with legal counsel or voluntarily waived the opportunity. The last 12 numbered paragraphs, which did not have headings or titles, included a requirement in paragraph 69 that binding arbitration would be used to resolve all disputes arising from the contract. A similar provision appeared in the Release. The producers did not discuss the agreement with the Higginses, nor did the Leomitis, although they gave the Higginses a set of documents and told them to flip through the pages and sign and initial any signature lines or boxes. They followed those instructions without knowing what they were signing.

A member of the show started to renovate the home, while the episode on the family was aired. Afterward, the Leomitis told the Higginses to leave, and the producers refused their requests for help while airing the episode again. The Higginses sued the television producers and the Leomitis under several theories, including breach of contract. The television defendants pointed to paragraph 69 of the agreement in moving to compel arbitration. The Higginses responded that this provision was void for unconscionability, but the trial court disagreed and compelled arbitration. The Higginses sought a writ of mandate.

Opinions

Majority

  • Laurence D. Rubin (Author)

Contracts that are unconscionable are typically contracts of adhesion, which are standard forms drafted and provided by the party of superior bargaining power. The party of lesser bargaining power typically must take or leave these contracts at face value. Unconscionability is both substantive and procedural. Substantive unconscionability arises from overly harsh results, while procedural unconscionability is based on surprise or unfair hardship. Both must be shown for a contract to be unenforceable.

The contract in this case was a contract of adhesion, since it was a standardized agreement that the Higginses had no chance to negotiate. The Higginses' claim was limited to the arbitration provision rather than the entire contract, and they had provided evidence supporting procedural unconscionability by pointing out that paragraph 69 was not clearly labeled or distinguished in any manner from its surroundings in a section labeled "miscellaneous." They had shown substantive unconscionability because the provision required only the Higginses rather than the defendants to submit to binding arbitration, and only the Higginses rather than the television defendants were barred under the clause from seeking appellate review of the arbitrator's decision or rulings on arbitration costs. Whether the Higginses had the opportunity to read the clause is immaterial because this does not stop a party that signs a contract from later claiming that the contract or part of it is unconscionable. The television company appeared to have taken advantage of people who were young, unsophisticated, and coping with the loss of their parents.


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