Nibler v. Monex Deposite Co., No. G046511 (Cal.App. 4 Dist. May 13, 2013). (Click here for a copy of the decision.) This case involves an investor who lost his inheritance money after opening up an account with Monex, a precious metals trading company. The investor sued Monex in state court for various claims, including fraud, breach of fiduciary duty, and unfair business practices, and Monex responded to the lawsuit by asking the court to enforce arbitration provisions in agreements the investor had signed to open up the account. The trial court denied Monex’s motion to compel, finding the arbitration provisions to be unconscionable.
In a prior case, Parada v. Superior Court, a California appellate court had found that Monex’s arbitration clause was unconscionable, and the investor in this recent Nibler case argued that the prior Parada case was controlling since a similar arbitration clause was at issue. However, the appellate court in Nibler found that the newer arbitration clause had significant differences from the clause found unconscionable in Parada. The older, unenforceable clause provided for a more costly arbitration proceeding involving three arbitrators, while the clause at issue only required one arbitrator. Also, the appellate court found it significant that the new arbitration clause had a 30-day opt-out provision, which alleviated concerns regarding procedural unconscionability. The appellate court ultimately reversed the lower court’s denial of Monex’s motion to compel arbitration.