One-Side Legal Costs and Fees Provision Was Part of the Problem
Most cases we report about involve an award of attorney's fees, or the denial of an award. But we cast our net widely. In the next case, an arbitration provision was held to be procedurally and substantively unconscionable, in part because it had a one-side fees and cost provision. Elena Lhotka v. Geographic Expeditions, Inc., Case No. A123725 (1st Dist., Div. 3 1/29/10) (certified for publication).
Geographic Expeditions, Inc. (GeoEx) appealed from an order denying its motion to compel arbitration of a wrongful death action brought by the survivors of one of its clients who died on Mount Kilimanjaro. In a 3-0 decision authored by Justice Siggins, the Court concluded that the arbitration clause was procedurally and substantively unconscionable, and affirmed the order.
The problem? First, the arbitration provision was a "Take It Or Leave It proposition", satisfying the procedural unconscionability prong. Second, the arbitration clause was designed "not simply as an alternative to litigation, but as an inferior forum," satisfying the substantive unconscionability prong. Examples of lopsidedness included limitation of the plaintiffs' recovery, requirements that plaintiffs pay half of any mediation fees and mediate and arbitrate in San Francisco (hey, we like San Francisco!), and — the reason we report on the case — the agreement required plaintiffs "to indemnify GeoEx for its legal costs and fees if they pursued any claims covered by the release agreement."