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A slim majority of the California Supreme Court says a class action waiver should not be enforced if it is imposed by a business that is later accused of cheating its customers of small change that no individual would sue over. The state high court’s opinion Monday doesn’t end the case for credit-card customer Christopher Boehr, who in 2001 tried to launch class action litigation against Discover Bank, because his case is mostly, if not entirely, based on Delaware law. But the opinion will no doubt benefit consumers in California, said F. Paul Bland, a Washington, D.C., lawyer who argued part of the plaintiff’s case before the high court in April. “The 10 largest credit-card issuers all have arbitration clauses that ban class actions,” as do the majority of car dealers in the state, said Bland, a staff attorney for Trial Lawyers for Public Justice. Boehr claims the institution imposed an unfair $29 late fee on bill payments that came in on the afternoon of the due date. Justice Marvin Baxter, writing a concurring and dissenting opinion for a three-justice block, agreed with the majority on one point — that the Federal Arbitration Act does not require California to enforce class action waivers “simply because they are contained in arbitration agreements.” But the rest of his 16-page opinion assails the majority’s reasoning, berating those four justices for choosing Boehr’s case as a stage to arrive at state policy. Making several points that defense attorneys would presumably cheer, Baxter wrote that the majority should have affirmed the 2nd District Court of Appeal’s decision to compel arbitration and waive class treatment in Boehr’s case. But the majority, led by Justice Carlos Moreno, reversed the decision and remanded the case, leaving the 2nd District to figure out whether California or Delaware law should determine the enforceability of Discover Bank’s contract. That issue shouldn’t even be in question, Baxter wrote in his concurring and dissenting opinion, joined by Justices Ming Chin and Janice Rogers Brown. Since Boehr agreed under the contract that Delaware law would govern the relationship, and he has only asserted causes of action under Delaware law, California should only evaluate the contract under Delaware law, Baxter wrote. Lawyers for Boehr, a California resident who wants a nationwide class action, have argued that the courts here should not apply Delaware law where it violates a fundamental California policy, said Bland. “At least under some circumstances, the law in California is that class action waivers in consumer contracts of adhesion are unenforceable, whether the consumer is being asked to waive the right to class action litigation or the right to classwide arbitration,” Moreno wrote for the majority, joined by Chief Justice Ronald George, as well as Justices Joyce Kennard and Kathryn Mickle Werdegar. Discover Bank, as a matter of policy, does not comment on pending litigation, said Robert Boldt, a Los Angeles partner at Kirkland & Ellis who has worked on the company’s defense since 2001. If the 2nd District decides to compel arbitration for an entire class rather than Boehr alone, both sides agree that Discover Bank may waive the arbitration agreement and opt for litigation, the majority noted in a footnote. Baxter warned that it would be dangerous for the state to establish itself as a particularly favorable venue for fighting class action waivers. “If California courts must, or may, dishonor class action waivers that are perfectly valid under the governing law selected by the parties themselves,” countless plaintiffs lawyers will steer similar cases to California, the justice predicts. “California — which now takes a minority position on this issue — might well become the magnet for countless nationwide consumer class lawsuits,” Baxter wrote. “I cannot accept such a result.”

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