GMSR obtains reversal of order denying its client’s arbitration petition

Advanced Air Management, Inc. v. Gulfstream Aerospace Corporation, California Court of Appeal, Second District, Division Seven (Sept. 6, 2017, No. B265723, unpublished).  After GMSR’s client, Gulfstream Aerospace Corporation, performed maintenance on a business jet, the jet’s charter operator sued for breach of contract and negligence.   Gulfstream petitioned to compel arbitration, relying on the signed jet maintenance terms and conditions, which included a clause requiring arbitration under American Arbitration Association rules.  The plaintiff opposed, arguing that many of the maintenance terms, including the arbitration clause, were unconscionable.  The trial court agreed with the plaintiff and denied the petition.  The Court of Appeal reversed, holding that the parties’ threshold dispute was limited to the validity of the arbitration clause itself.  Under the AAA arbitral rules, that threshold dispute had to be resolved in arbitration, not in court.  In a concurring and dissenting opinion, one of the justices wrote that he would have declined to address the impact of the AAA rules, but would likewise reverse because the arbitration clause was neither procedurally nor substantively unconscionable.

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