Calif: Notice, Ethics Rules, Class-Action Bans.

The article reports that a California appeals court has recently ruled in a case that an arbitration clause in a residential construction contract was unenforceable because it did not comply with state notice requirements for arbitration agreements. The court held that the Federal Arbitration Act did not apply because the contractor cited no authority showing that interstate commerce was involved. The court reasoned that allowing state law to apply would lead to confusion. Because California rules are preempted by federal law, the California rule requiring California investors to arbitrate securities disputes out of state or else waive protections under California law will not apply. The California Supreme Court held in Discover Bank v. Superior Court of Los Angeles that class action waivers can be considered to be exculpatory, unconscionable contracts of adhesion under California law when they "have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent."