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Keywords

contractlawsuitbreach of contractarbitrationtrialcorporationarbitration clausearbitrator
contractlawsuitbreach of contractarbitrationcorporationarbitration clause

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Graham v. Scissor-Tail, Inc., 28 Cal.3d 807, 623 P.2d 165, 171 Cal.Rptr. 604, 106 L.R.R.M. (BNA) 2914, 93 Lab.Cas. P 55,330

Facts

Bill Graham, an experienced concert promoter, entered into contracts with Leon Russell and his corporation, Scissor-Tail, for a series of concerts. Disputes arose over the financial losses from one concert and the profits from another, leading Graham to file a lawsuit for breach of contract. Scissor-Tail sought to compel arbitration based on the contracts, which included a clause requiring disputes to be resolved by the American Federation of Musicians (A.F. of M.). The trial court initially ordered arbitration, but Graham contested the validity of the arbitration clause.

Bill Graham, an experienced concert promoter, entered into contracts with Leon Russell and his corporation, Scissor-Tail, for a series of concerts. Disputes arose over the financial losses from one concert and the profits from another, leading Graham to file a lawsuit for breach of contract.

Issue

Whether the arbitration provision in the contracts between Graham and Scissor-Tail was enforceable or unconscionable.

Whether the arbitration provision in the contracts between Graham and Scissor-Tail was enforceable or unconscionable.

Rule

A contract of adhesion is enforceable unless it is found to be unconscionable or contrary to the reasonable expectations of the weaker party.

A contract of adhesion is enforceable unless it is found to be unconscionable or contrary to the reasonable expectations of the weaker party.

Analysis

The court analyzed the nature of the contract and determined that it was adhesive, as Graham had no real bargaining power and was required to accept the terms set by Scissor-Tail. The arbitration provision was deemed unconscionable because it designated an arbitrator who was presumptively biased in favor of one party, violating fundamental fairness principles. The court concluded that the arbitration clause did not meet the minimum levels of integrity required for enforcement.

The court analyzed the nature of the contract and determined that it was adhesive, as Graham had no real bargaining power and was required to accept the terms set by Scissor-Tail.

Conclusion

The court reversed the order compelling arbitration and remanded the case for further proceedings, stating that the arbitration provision was unconscionable and unenforceable.

The court reversed the order compelling arbitration and remanded the case for further proceedings, stating that the arbitration provision was unconscionable and unenforceable.

Who won?

Bill Graham prevailed in the case because the court found the arbitration clause to be unconscionable and unenforceable.

Bill Graham prevailed in the case because the court found the arbitration clause to be unconscionable and unenforceable.

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