Judge: Armen Tamzarian, Case: 24STCV14965, Date: 2024-12-11 Tentative Ruling

Case Number: 24STCV14965    Hearing Date: December 11, 2024    Dept: 52

Defendant Hyundai Motor America’s Motion to Compel Binding Arbitration

Defendant Hyundai Motor America moves to compel arbitration of this action by plaintiff Ashley Davenport.

Evidentiary Objections

            Plaintiff makes two objections to the declaration of Ali Ameripour in support of defendant’s motion.  Both objections are overruled.

Discussion

Defendant relies on two arbitration provisions: one in the “owner’s handbook & warranty information” (Ameripour Decl., Ex. 3), and a second in the “Bluelink connected services agreement” (Rao Decl., Ex. 2).  As discussed below, the court finds defendant is entitled to compel arbitration under owner’s handbook.  The court therefore need not and does not address the parties’ arguments about the Bluelink agreement. 

As to the owner’s handbook, plaintiff opposes the motion on five grounds.

1. Admissibility of Owner’s Handbook

            Plaintiff contends defendant does not meet its burden of authenticating the owner’s handbook.  The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties.  (Code Civ. Proc., § 1281.2.)  A motion to compel arbitration is “a summary proceeding.”  (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1057 (Espejo).)  The moving party can meet the “initial burden to show an agreement to arbitrate by attaching a copy of the arbitration agreement.”  (Id. at p. 1060.)  For this initial burden, “ ‘it is not necessary to follow the normal procedures of document authentication.’ ”  (Id. at p. 1058 [discussing authentication of electronic signatures].)  Only after the opposing party challenges the evidence, the moving party must present must the moving party “establish by a preponderance of the evidence that the signature [or agreement] was authentic.”  (Ibid.) 

Challenging the authenticity of the moving party’s evidence generally requires a declaration by the plaintiff stating it is not authentic, such as by stating he or she did not sign the agreement or does not recall signing it.  (Espejo, supra, 246 Cal.App.4th at p. 1054; Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846 [when plaintiff did not “recall signing the 2011 agreement, (defendant) had the burden of proving by a preponderance of the evidence that the electronic signature was authentic”].) 

Plaintiff’s declaration does not adequately challenge the authenticity of the owner’s handbook.  She states she “was never given notice … that a subsequent enforceable Arbitration Provision existed inside an Owner’s manual that was presumably delivered to me around the time the Subject Vehicle was delivered to me.”  (Davenport Decl., ¶ 5.)  “I was completely oblivious to the post-sale ‘Arbitration Agreement’ that is buried within the Owner’s Manual’s approximately 50 plus pages.”  (Ibid.)  She does not state she never received a copy of the manual and instead acknowledges she “presumably” got a copy.  Moreover, the complaint alleges plaintiff “received express written warranties” when she bought the vehicle.  (Comp., ¶ 11.)  The “owner’s handbook and warranty information” contains that express warranty. 

2. Magnuson-Moss Warranty Act

            Plaintiff contends that Song-Beverly Act adopts the Magnuson-Moss Warranty Act (MMWA), which purportedly prohibits binding arbitration of warranty disputes.  Plaintiff does not allege a cause of action under the MMWA.  Assuming that law (and regulations interpreting it) applies, the court rejects the argument that the MMWA prohibits arbitration.  Persuasive authority has held, “[W]ritten warranty claims arising under the Magnuson–Moss Warranty Act may be subject to valid binding arbitration agreements.”  (Davis v. Southern Energy Homes, Inc. (11th Cir. 2002) 305 F.3d 1268, 1280; accord Walton v. Rose Mobile Homes LLC (5th Cir. 2002) 298 F.3d 470, 479 [“We hold that the MMWA does not preclude binding arbitration of claims pursuant to a valid binding arbitration agreement”];  In re Apple iPhone 3G Products Liability Litigation (N.D. Cal. 2012) 859 F.Supp.2d 1084, 1091 [“because Plaintiffs may be compelled to arbitrate their state law warranty claims, it follows that Plaintiffs may also be compelled to arbitrate their MMWA claim”].)

            Plaintiff’s reliance on 16 C.R.R. § 703.5(j) is unpersuasive.  That regulation does not state that a MMWA claim cannot be subject to arbitration.

            The court concludes the Magnuson-Moss Warranty Act does not prohibit defendant from compelling arbitration of this action.

3. Civil Code § 1790.1

            Plaintiff argues the Song-Beverly Act’s anti-waiver provision prohibits any agreement that would waive the right to bring an action under Civil Code section 1794.  Section 1790.1 provides, “Any waiver by the buyer of consumer goods of the provisions of this chapter, except as expressly provided in this chapter, shall be deemed contrary to public policy and shall be unenforceable and void.”  This provision prohibits waiving “substantive rights under the Act.”  (Rheinhart v. Nissan North America, Inc. (2023) 92 Cal.App.5th 1016, 1021 (Rheinhart).)  “The Act’s antiwaiver provision is extremely broad; it is not limited to warranties or any particular time frame during the purchase process, but encompasses all mandated remedies afforded to buyers.”  (Id. at p. 1034, italics added.)  Plaintiff provides no authority that this statute prohibits waiving procedural rights, such as an agreement to resolve disputes via arbitration instead of in court.

            Even if the Song-Beverly Act’s anti-waiver provision otherwise applied to arbitration agreements, the Federal Arbitration Act would preempt it.  Plaintiff contends the agreement does not “in fact” involve interstate commerce.  “The FAA applies even ‘ “in individual cases without showing any specific effect upon interstate commerce” if in the aggregate the economic activity in question would represent “a general practice ... subject to federal control.” ’ ”  (Evenskaas v. California Transit, Inc. (2022) 81 Cal.App.5th 285, 294.)  In Evenskass, the court noted, “Even when providing only local transportation services, California Transit drivers are almost certain to use highways, one of the ‘instrumentalities of interstate commerce.’ ”  (Id. at p. 295.) 

The owner’s handbook concerns an automobile.  Selling cars and providing warranties for them is a general practice subject to extensive federal control.  Plaintiff herself seeks to invoke federal law as discussed above.  The FAA therefore applies and preempts any provision in the Song-Beverly Act that would prohibit arbitration.  (See Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 924 [holding FAA preempted Consumer Legal Remedies Act’s anti-waiver provision].)

4. Acceptance of Agreement in Owner’s Handbook

            Plaintiff contends the owner’s handbook and warranty information does not bind plaintiff because she did not agree to it.  “In California, ‘[g]eneral principles of contract law determine whether the parties have entered a binding agreement to arbitrate.’ ”  (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)  Generally, “silence or inaction does not constitute acceptance of an offer”, but “[a]cceptance of an offer may be inferred from … retention of the benefit offered.”  (Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1385–1386.)  Similarly, “a nonsignatory ‘is estopped from avoiding arbitration if it knowingly seeks the benefits of the contract containing the arbitration clause.’ ”  (Crowley Maritime Corp. v. Boston Old Colony Ins. Co. (2008) 158 Cal.App.4th 1061, 1070.) 

            The owner’s handbook and warranty information provides: “If you purchased or leased your vehicle in California, your warranty is made subject to the terms of this binding arbitration provision.  By using the vehicle, or requesting or accepting benefits under this warranty, including having any repairs performed under warranty, you agree to be bound by these terms.  If you do not agree with these terms, please contact us at opt-out@hmausa.com within thirty (30) days of your purchase or lease to opt-out of this arbitration provision.”  (Ameripour Decl., Ex. 3, p. 14.)  Plaintiff’s action seeks the benefits of the express written warranty which contains that provision.

            Plaintiff’s reliance on Norcia v. Samsung Telecommunications America, LLC (9th Cir. 2017) 845 F.3d 1279 (Norcia) is misplaced.  The court reasoned that an arbitration provision in a warranty information brochure did not require binding arbitration of non-warranty claims.  The plaintiff alleged Samsung made fraudulent misrepresentations about a product that “constituted common law fraud and violated California’s Consumers Legal Remedies Act [citation], California’s Unfair Competition Law [citation], and California’s False Advertising Law.”  (Id. at p. 1283.)  Samsung moved to compel arbitration based on “the arbitration provision in the Product Safety & Warranty Information brochure,” which was included in the product’s box.  (Ibid.)

            The court stated the rule discussed above that “[a]n offeree’s silence may also be treated as consent to a contract when the party retains the benefit offered.”  (Norcia, supra, 845 F.3d at p. 1285.)  The court held that rule did not apply in part because “[a] warranty generally does not impose any independent obligation on the buyer outside of the context of enforcing the seller’s promises.”  (Id. at p. 1288.)  That is the context here.  Plaintiff’s suit seeks to enforce the promises in defendant’s warranty via the Song-Beverly Consumer Warranty Act.  Norcia also stated, “Nor would a reasonable person understand that receiving the seller’s warranty and failing to opt out of an arbitration provision contained within the warranty constituted assent to a provision requiring arbitration of all claims against the seller, including claims not involving the warranty.”  (Id. at p. 1290, italics added.)  Here, plaintiff’s complaint expressly seeks to enforce obligations arising from defendant’s warranty. 

            Norcia is distinguishable from this case.  (See Guaschino v. Hyundai Motor America (2023 C.D. Cal.) 2023 WL 8126846, * 4; Ford v. Hyundai Motor America (C.D. Cal. 2021) 2021 WL 7448507, * 7.)

5. Unconscionability

            Finally, plaintiff argues the agreement is unconscionable.  “Both procedural and substantive unconscionability must be shown for the defense to be established, but ‘they need not be present in the same degree.’ ”  (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 (OTO).)  “The burden of proving unconscionability rests upon the party asserting it.”  (Id. at p. 126.)  Plaintiff shows moderate procedural unconscionability but no substantive unconscionability.  She contends the agreement is substantively unconscionable for two reasons.

First, plaintiff argues the agreement unfairly limits discovery.  “[P]arties to an arbitration clause can agree ‘to something less than the full panoply of discovery provided’ in the Code of Civil Procedure.”  (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 504 (Ramirez).)  “[T]he absence of” provisions for discovery do “not automatically render” a claim inarbitrable.  (Ibid.)  “ ‘[W]hen parties agree to arbitrate statutory claims, they also implicitly agree, absent express language to the contrary, to such procedures as are necessary to vindicate that claim.’ ”  (Ibid.) 

“The assessment of whether a discovery clause is unconscionable should focus on general factors that can be examined without relying on subsequent developments,” including: “the types of claims covered by the agreement, the amount of discovery allowed, the degree to which that amount may differ from the amount available in conventional litigation, any asymmetries between the parties with regard to discovery, and the arbitrator’s authority to order additional discovery.”  (Ramirez, supra, 16 Cal.5th at p. 506.)  “Allowing the arbitrator to deviate from agreed-upon default discovery limits ensures that neither party will be unfairly hampered in pursuing a statutory claim based on circumstances that arise post-formation.”  (Ibid.) 

Plaintiff does not show that the arbitration agreement unfairly limits discovery.  The owner’s handbook provides that “binding arbitration shall be administered by and through JAMS Mediation, Arbitration and ADR Services (JAMS) under its Streamlined Arbitration Rules & Procedures, or the American Arbitration Association (AAA) under its Consumer Arbitration Rules.”  (Ameripour Decl., Ex. 3, p. 12.) 

The record does not include a full copy of either set of rules.  Plaintiff submitted only the introduction to AAA’s Consumer Arbitration Rules (Grigoryan Decl., Ex. 1) and Rule 17 of JAMS’s Streamlined Arbitration Rules (id., Ex. 2).  Neither exhibit includes any provision limiting discovery.  Plaintiff’s counsel states, “Arbitrators have personally advised me that depositions can sometimes be disallowed.”  (Grigoryan Decl., ¶ 6.)  Assuming that statement is admissible, that arbitrators “sometimes” prohibit depositions also means they sometimes allow depositions.  JAMS Rule 17(e) indicates that parties may take depositions: “The Arbitrator shall receive and consider relevant deposition testimony recorded by transcript or videotape.”  (Grigoryan Decl., Ex. 2.)

Courts “assume that the arbitrator will operate in a reasonable manner in conformity with the law.”  (Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 984.)  Plaintiff gives no reason to conclude the applicable rules or the arbitrator would not allow adequate discovery.    

Second, plaintiff relies on the “repeat player” effect.  California courts have recognized the repeat player effect as a legitimate concern but held it is not itself “enough to render an arbitration agreement unconscionable.”  (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 179; accord Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 985-986.)  Plaintiff relies on the Consumer Financial Protection Bureau’s analysis of the American Arbitration Association.  (Opp., p. 16.)  But there is no evidence defendant has repeatedly appeared before AAA or any one arbitrator.  There is a “strong public policy in favor of arbitration.”  (Bigler v. Harker School (2013) 213 Cal.App.4th 727, 735.)  Plaintiff’s concerns about unfairness do not suffice to make the agreement substantively unconscionable.

Disposition

            Defendant Hyundai Motor America’s motion to compel arbitration is granted.  Plaintiff Ashley Davenport is ordered to arbitrate this action against defendant Hyundai Motor America.  The court hereby stays the entire action pending resolution of the arbitration proceeding.