In Cisneros v. American General Financial Services, Inc. 2012 WL 3025913 (N.D.Cal. 2012), Judge Breyer found an arbitration clause in a contract educational services sold door-to-door was procedurally and substantively unconscionable.

Plaintiff Lucresia Cisneros (“Plaintiff”) contends that Defendants American General Financial Services, Inc., Hispanic Educational, Inc., and Logic’s Consulting, Inc., engaged in a door-to-door scheme selling personal computers and software financed through credit accounts opened with Defendant AGFS. On behalf of herself and similarly situated California consumers, Plaintiff alleges violations of California consumer protection statues and federal truth in lending laws. Defendant AGFS, however, argues that the consumer contract between Plaintiff and Defendant AGFS requires Plaintiff to arbitrate her claims on a non-class, non-consolidated basis. As discussed below, both procedural and substantive unconscionability are present in the arbitration provision. Accordingly, the Court DENIES Defendant AGFS’s Motion to Compel Arbitration.

Judge Breyer found the clause procedurally unconscionable because it was a contract of adhesion, it was entered into at the Plaintiff’s residence, the contact was negotiated in the Spanish language but the arbitration clause was in English, and the contact failed to attach the NAF’s Arbitration Rules to the arbitration clause.  Judge Breyer found the contact substantively unconscionable because

The arbitration provision here lacks bilateriality and creates unduly harsh one-sided effects. In particular, the arbitration provision provides that, “[n]otwithstanding any other terms of the Arbitration Provisions, you cannot elect to arbitrate and Creditor shall not be required to arbitrate Creditor’s self-help or judicial remedies of replevin, garnishment, reposses-sion, or foreclosure with respect to any property that secures this Agreement.” Andretich Decl. Ex. C at 7. Additionally, “Creditor can elect to arbitrate such claims and, if such election is made, you shall be bound by such election.” Id. Defendant has therefore carved out and preserved remedies for judicial forum issues that relate to debt collection and “are the only practical remedies Defendant would ever seek against consumers.” See Opp’n at 9. ¶  Defendant argues that the Arbitration Agreement need not be perfectly mutual to be enforceable. See Reply at 8–9. Defendant further argues that it is not always unconscionable under California law for one party to have certain remedies or claims excluded from arbitration. See Armendariz, 24 Cal.4th at 117, 99 Cal.Rptr.2d 745, 6 P.3d 669 (noting that a party with superior bargaining power properly may obtain “extra protection for which it has a legitimate commercial need without being unconscionable”). Defendant contends that it has a legitimate interest in maintaining its ability to enforce its rights with respect to judicial self-help remedies. Reply at 9. ¶ The Court rejects Defendant AGFS’s argument. Here, the party with stronger bargaining power has restricted the weaker party to the arbitral forum, but reserved for itself the ability to seek redress in either an arbitral or judicial forum as to issues that matter to it the most. “California courts have found a lack of mutuality supporting substantive unconscionability.”   Nagrampa, 469 F.3d at 1285 (citations omitted). Indeed, Armendariz explained that substantive unconscionability may manifest itself in the form of “an agreement requiring arbitration only for the claims of the weaker party but a choice of forums for the claims of the stronger party.” 24 Cal.4th at 119, 99 Cal.Rptr.2d 745, 6 P.3d 669; see also Martinez v. Master Protection Corp., 118 Cal.App.4th 107, 115, 12 Cal.Rptr.3d 663 (2004) (holding that an arbitration agreement requiring employees to arbitrate all claims, but reserving employer’s right to obtain injunctive relief in a judicial forum for certain causes of action, lacks mutuality). ¶  The Court therefore finds that the arbitration provision is substantively unconscionable.