ORIGINAL PROCEEDINGS in mandate. William F. Highberger, Judge. Petition granted and remanded with directions. (Los Angeles County Super. Ct. No. BC410509).
The opinion of the court was delivered by: Croskey, Acting P. J.
CERTIFIED FOR PUBLICATION
Plaintiffs Arturo Arguelles-Romero and Evangelina Amezcua attempted to pursue a class action against AmeriCredit Financial Services, Inc. (AmeriCredit), the assignee of plaintiffs' automobile financing contract. Relying on an arbitration clause with a class action waiver contained in the contract, AmeriCredit moved to compel individual arbitration. Plaintiffs opposed the motion on the basis that the arbitration clause and class action waiver constituted an unconscionable exculpatory clause. The trial court disagreed and granted the motion to compel individual arbitration. Plaintiffs sought immediate review by means of a petition for writ of mandate and we issued an order to show cause. While we hold the trial court did not err in finding the class action waiver was not unconscionable, we also conclude that it should have also performed a discretionary analysis on whether a class action is a significantly more effective practical means of vindicating the unwaivable statutory rights at issue. We therefore grant the petition and remand with directions.
FACTUAL AND PROCEDURAL BACKGROUND
On February 19, 2006, plaintiffs, a married couple, purchased a new 2006 Chevrolet Tahoe truck from a dealer. The purchase price of the truck was $38,845.46, including taxes and fees. An $8,000 down payment was made, comprised of $2,500 cash and a $5,500 manufacturer's rebate. The remainder of the purchase price was financed at an interest rate of 15.99%, over a term of six years. The contract was eventually assigned to AmeriCredit.
At some point, plaintiffs fell behind in their payments.*fn1 On October 21, 2008, AmeriCredit repossessed their truck. On October 23, 2008, AmeriCredit sent plaintiffs a notice of intent to sell the truck. Civil Code section 2983.2, a part of the Automobile Sales Finance Act (ASFA), sets forth certain requirements for a notice of intent to dispose of a repossessed motor vehicle. For example, the notice must set forth the right to redeem the motor vehicle, and, where applicable, the conditional right to reinstate the contract. (Civ. Code, § 2983.2, subds. (a)(1) & (a)(2).) Case law has interpreted these requirements to mean that the notice must "provide sufficient information to defaulting buyers to enable them to determine precisely what they must do in order to reinstate their contracts, including stating the amounts due, to whom they are due, the addresses and/or contact information for those parties, and any other specific actions the buyer must take." (Juarez v. Arcadia Financial, Ltd. (2007) 152 Cal.App.4th 889, 899.) That case further held, "[t]he creditor must also inform the consumer regarding any additional monthly payments that will come due before the end of the notice period, as well as of any late fees, or other fees, the amount(s) of these additional payments or fees, and when the additional sums will become due." (Id. at p. 905.)
The notice AmeriCredit sent to plaintiffs informed them of both the right to redeem the vehicle and the conditional right to reinstate the contract. The notice set forth both the amount of money which would be required to redeem the vehicle and the amount necessary to reinstate the contract, and itemized both amounts. However, the calculation appeared to have been made as of the date of the notice; underneath each total was written, "Plus any storage charges, additional payments, and late charges which become due after the date of this notice." Plaintiffs would ultimately allege that the notice was insufficient under the ASFA for this reason.*fn2
There is no allegation that plaintiffs attempted to exercise their right to redeem or their right to reinstate. AmeriCredit sold the truck on November 21, 2008, for $8,400. Subtracting this from the unpaid amount financed and adding in other expenses and fees, AmeriCredit calculated a deficiency owing of $16,452.74. AmeriCredit wrote plaintiffs with this calculation, stating, "Please contact us to make arrangements for the payment of this debt. If you do not, AmeriCredit may take any legal action necessary in order to recover the debt." Plaintiffs allege that they have paid a portion of the deficiency, but do not indicate the precise amount.
2. Allegations of the Complaint
Under the ASFA, a defaulting buyer "shall be liable for any deficiency after disposition of the repossessed... motor vehicle only if the notice" of intent to sell complied with all requirements set forth in Civil Code section 2983.2, discussed above. As plaintiffs believe the notice of intent they received from AmeriCredit was inadequate, they brought the instant action against AmeriCredit, asserting that they are not liable for the deficiency balance. They seek a refund of any amounts paid and an order enjoining AmeriCredit from further collection efforts. Additionally, they seek an order requiring AmeriCredit to inform all credit reporting agencies to delete all references to the deficiency balance allegedly owed.*fn3
Plaintiffs allege, on information and belief, that the notice of intent to sell which they received was a standard form sent by AmeriCredit to its California borrowers whose vehicles were repossessed. Plaintiffs therefore seek to maintain a class action, on behalf of all persons who were issued such a notice from AmeriCredit in California, within the four years preceding the date of the complaint, who were subsequently assessed a deficiency balance following the disposition of the vehicle, and from whom AmeriCredit collected or attempted to collect any portion of the deficiency balance. They allege causes of action for violation of the ASFA, the unfair competition law (Bus. & Prof. Code, § 17200, et seq.), and for declaratory relief. They seek restitution and injunctive relief on behalf of the entire class. Additionally, plaintiffs seek attorney's fees under the ASFA (Civ. Code, § 2983.4) and Code of Civil Procedure section 1021.5.
3. Motions to Compel Arbitration and Stay Discovery
AmeriCredit responded to the complaint with a motion to compel individual arbitration, based on an arbitration clause and class action waiver in the purchase and financing contract plaintiffs had signed when they purchased the truck.*fn4 At the same time, AmeriCredit moved for a protective order and to stay discovery pending resolution of its motion to compel arbitration. Plaintiffs opposed the motion, seeking limited discovery directed to the issue of the enforceability of the arbitration clause and class action waiver. Plaintiffs' opposition stated, "The contract is a standard form contract used throughout California and is a 'take it or leave it' contract, with customers having no ability to negotiate the terms of the contract, particularly those set forth on the back of the contract, including the arbitration provision. It is anticipated that Ameri[C]redit will respond to the discovery by acknowledging that it does not accept contracts in which the consumer may have crossed off portions of the terms set forth on the back of the contract [including the arbitration clause and class action waiver]. [¶] In addition, it is anticipated that discovery will reveal that Ameri[C]redit uses the court system almost exclusively against its customers in seeking default judgments. The arbitration provision will only be used if a consumer attempts to file a class action as in this case. It is essentially a 'poison pill' designed to insulate Ameri[C]redit from liability that would otherwise be imposed under California's law."
The trial court permitted plaintiffs certain limited written discovery, and indicated that if plaintiffs had any doubts regarding the veracity of AmeriCredit's responses, they could apply ex parte for follow-up discovery, which might include a deposition. Plaintiffs did not apply for further discovery.*fn5
4. AmeriCredit's Discovery Responses
AmeriCredit's discovery responses were not as plaintiffs had expected. Plaintiffs had "anticipated that Ameri[C]redit will respond to discovery by acknowledging that it does not accept contracts in which the consumer may have crossed off portions of the terms set forth on the back of the contract [including the arbitration clause and class action waiver]." AmeriCredit made no such acknowledgement. Instead, it denied that it refused assignment of contracts where terms on the back had been changed, and specifically denied that it refused assignment of contracts in which the customers had deleted the arbitration provision. In fact, AmeriCredit's Senior Vice President of Dealer Services verified a discovery response stating, "Approximately 40 percent of the California contracts [AmeriCredit] accepted for assignment since March 2005 do not contain either an arbitration provision or a class action waiver."
As to plaintiffs' assertion that "it is anticipated that discovery will reveal that Ameri[C]redit uses the court system almost exclusively against its customers in seeking default judgments," discovery revealed that, while AmeriCredit did not proceed in arbitration to obtain a deficiency against a borrower in the four years prior to the complaint, AmeriCredit also filed no lawsuits seeking deficiencies during the same period, and obtained no default judgments. Thus, plaintiffs' characterization of AmeriCredit as a company which required the consumers with which it dealt to sign an arbitration clause, ...