However, "[u]nder California law, unconscionability of a contract or a contract clause is determined based on the law and facts at the time of the agreement." Yerkovich v. MCA, Inc., 11 F. Supp. 2d 1167, 1173 (C.D. Cal. 1997) (citations omitted), aff'd, 211 F.3d 1276 (9th Cir. 2000); see also Cal. Civ. Code § 1670.5. The Court will therefore analyze the Rules in their prior iteration.
In assessing unconscionability, the Court must examine the validity of a contractual provision as of the time of the contract is made – it is a prospective analysis which does not require proof that a particular plaintiff has already been adversely affected. See, e.g.,Brobeck, Phleger & Harrison v. Telex Corp. , 602 F.2d 866, 875 (9th Cir. 1979) ("[W]hether a contract is fair or works an unconscionable hardship is determined with reference to the time when the contract was made and cannot be resolved by hindsight."); Yerkovich v. MCA, Inc. , 11 F. Supp. 2d 1167, 1173 (C.D. Cal. 1997), aff'd , 211 F.3d 1276 (9th Cir. 2000) ("An unconscionability claim accrues at the moment when the allegedly unconscionable contract is formed ... [the] unconscionability of a contract or a contract clause is determined based on the law and facts at the time of the agreement.").
Courts have declined to find a duty to warn where, as here, a contract disclaimed such a relationship. See Yerkovich v. MCA, Inc., 211 F.3d 1276 (9th Cir.2000) (citing the existence of a contract expressly ... disclaiming the existence of a fiduciary relationship as evidence that no such relationship existed), cert. denied, 531 U.S. 871, 121 S.Ct. 171, 148 L.Ed.2d 117 (2000) ; Petersen v. Sec. Settlement, 226 Cal.App.3d, 1445, 1454–55, 277 Cal.Rptr. 468 (Cal.Ct.App.1991) (same). The Customer Agreement signed by Wang made plain that Bear Stearns would not be acting as an investment advisor or fiduciary.
th Cir. 2001) ("A `business purpose' does not mean a reason for a transaction that is free of tax considerations. Rather, a transaction has a `business purpose' . . . as long as it figures in a bona fide, profit-seeking business."); IES Industries v. United States, 253 F.3d 350, 355 (8th Cir. 2001) ("A taxpayer's subjective intent to avoid taxes . . . will not by itself determine whether there was a business purpose to a transaction."); Northern Indiana Pub. Serv. Co. v. Commissioner, 115 F.3d 506, 512 (7th Cir. 1997) (Gregory and its progeny "do not allow the Commissioner to disregard economic transactions . . . which result in actual, non-tax-related changes in economic position" regardless of "tax-avoidance motive"); see also Estate of Strangi v. Commissioner, 115 T.C. 478, 2000 WL 1755274 (2000); Knight v. Commissioner, 115 T.C. 506, 2000 WL 1755284 (2000); Pasternak v. Commissioner, 990 F.2d 893, 900 (6th Cir. 1993); Vanderschraaf v. Commissioner, 74 T.C.M. (CCH) 7 (1997), affd, 2000 WL 237963, 211 F.3d 1276 (9th Cir. 2000). In each case, the issue is whether there was a legitimate business purpose for what the parties did, not whether they may also have had a tax motive for doing it.
Hildebrand v. Commissioner, 28 F.3d 1024 (10th Cir.1994). See also Vulcan Oil Tech. Partners v. Commissioner, supra; Acierno v. Commissioner, T.C. Memo.1997–441, affd. without published opinion 185 F.3d 861 (3d Cir.1999); Karlsson v. Commissioner, T.C. Memo.1997–432; Vanderschraaf v. Commissioner, T.C. Memo.1997–306, affd. without published opinion 211 F.3d 1276 (9th Cir.2000), affd. without published opinion sub nom. Estate of Lawrenz v. Commissioner, 238 F.3d 429 (9th Cir.2000).