Lhotka v. Geographic Expeditions, Inc.

Brief Fact Summary.

Geographic Expeditions, Inc. appealed a judgment denying their motion to compel arbitration after a consumer died on an expedition purchased from Geographic Expeditions, Inc.

Synopsis of Rule of Law.

A contract is unconscionable if the parties have unequal bargaining power and the weaker party has no choice but to agree to the stronger party’s terms.

Facts.

Lhotka purchased a hiking expedition from Geographic Expeditions, Inc. (GeoEx). GeoEx required all purchasers to sign a liability and release form that limited recovery to the cost of the trip, required arbitration and mediation to be in San Francisco, California, and made the purchaser responsible for GeoEx’s attorney’s fees and half of the mediation costs. Lhotka died during the expedition and Lhotkas mother sued GeoEx. GeoEx filed a motion to compel arbitration and the trial court denied the motion. GeoEx appealed.

Issue.

Whether a contract is unconscionable if the parties have unequal bargaining power and the weaker party has no choice but to agree to the stronger party’s terms?

Held.

Yes. The judgment of the trial court is affirmed. The contract is procedurally unconscionable because Lhotka was not given the ability to negotiate and GeoEx represented that other companies required similar agreements. The contract is also substantially unconscionable because the terms of the agreement were one-sided, requiring the injured to travel for mediation and pay for GeoEx’s attorney’s fees. Striking the entire contract is therefore appropriate because there are several unconscionable provisions.

Discussion.

Procedural unconscionability exists where a party lacks the ability to negotiate the contract or has a choice in the ability the contract. Substantive unconscionability exists where the contract unreasonably allocates risk.