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Court Holds Arbitration Provision Does Not Violate California’s McGill Rule

The plaintiffs brought a class action suit against Extra Space Storage Inc. for false advertising, unfair competition, and violation of the California Consumers Legal Remedies Act. After the case was removed to the U.S. District Court for the Northern District of California, Extra Space moved to compel arbitration based on the rental agreements signed by the class members. The plaintiffs argued that the arbitration provision, which stated that a signatory “will only pursue arbitration on an individual basis and will not pursue arbitration or any other claim on a class-wide, representative, or consolidated basis,” violated California’s McGill rule. The McGill rule provides that a contractual agreement purporting to waive a party’s right to seek public injunctive relief in any forum is unenforceable. The court granted Extra Space’s motion and explained that arbitration provision did not violate the McGill rule because it does not prevent an arbitrator from awarding injunctive relief at large. The court further explained that an action seeking public injunctive relief is not a “representative action.”

Ionescu v. Extra Space Storage Inc., No. 4:19-cv-02226 (N.D. Cal. Aug. 23, 2019).

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About this Author

Rachel Schwartz Insurance Attorney
Associate

Rachel J. Schwartz represents property and casualty insurance industry clients in litigation and counsels them on varied coverage matters, including coverage disputes arising under Commercial General Liability and Directors & Officer policies.

Rachel drafts pleadings, discovery requests and responses, and motions regarding declaratory judgment actions. She reviews insurance policies and conducts legal research on various insurance coverage topics, including late notice, policy exclusions, duty to defend, allocation, and NY Ins. L. 3420(d). She prepares tenders, carrier position...

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