Filed 12/15/05

CERTIFIED FOR PUBLICATION

 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

 

FIRST APPELLATE DISTRICT

 

DIVISION ONE

 

 

DANA KLUSSMAN et al., Plaintiffs and Respondents, v. CROSS COUNTRY BANK et al., Defendants and Appellants.

A108572   (Alameda County Super. Ct. No. 2001-026688)

 

 

Defendants Cross Country Bank (Bank), its credit card servicing company Applied Card Systems, Inc. (ACS), and Rocco A. Abessinio appeal from an order denying their motion to compel arbitration.^[1] Most of the issues originally raised on appeal have been settled by our Supreme Court's recent decision in Discover Bank v. Superior Court (2005) 36 Cal.4th 148 (Discover Bank). Consequently, the principal issue remaining for decision is the proper application of the choice of law rules outlined in Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459 (Nedlloyd). We conclude that the trial court correctly applied the appropriate choice of law analysis; that under California law the hidden waiver of the right to bring classwide arbitration in this case is unconscionable; and therefore, the arbitration clause is unenforceable.

BACKGROUND

California residents, Dana Klussman and Samantha L. Klussman filed a class action complaint for damages and injunctive relief alleging five causes of action against Bank, ACS and Abessinio. The operative complaint for purposes of this appeal is the fourth amended complaint filed on May 28, 2004.^[2] Bank is a Delaware corporation headquartered in Delaware that issues VISA and MasterCard credit cards and solicits a substantial amount of business in California. ACS is a Delaware corporation headquartered in Florida that services Bank's credit card operations and collects related debts. Abessinio is the owner and Chief Executive Officer of Bank and ACS.

The complaint alleged that Bank's California customers were primarily low credit individuals including elderly and disabled persons who had experienced bankruptcies or had other credit management problems, and who were â€