Judge Audra Mori, Case 22STCV14733 2022-11-14 Tentative Ruling

Plaintiff Jackson Edward Southorn (“Plaintiff”) filed this action against defendants Uber Technologies, Inc. (“Uber”), Rasier LLC (“Rasier”), Rasier-Ca LLC (“Rasier-Ca”), Brian Barrington Ortiz (“Ortiz”), Elder Donato Escobar (“Escobar”), Antonio T. Tzampop, PV Holding Corp for damages arising from a motor vehicle accident that occurred on March 14, 2021.[1] Plaintiff alleges that on the date of the accident, he was a passenger in Ortiz’s vehicle, who was acting as an employee of Uber, Rasier, and Rasier-Ca, when Ortiz collided with Escobar’s vehicle.

At this time, Defendants Uber, Rasier, and Rasier-Ca (collectively, “Defendants”) move to compel arbitration and dismiss or stay this action. Plaintiff opposes the motion, and Defendants filed a reply.

Defendants contend that Plaintiff is bound by an arbitration agreement to arbitrate his claims in the complaint against Defendants. Defendants assert that Plaintiff agreed to Uber’s December 16, 2021 Terms of Use (the “December 2021 Terms”), which required Plaintiff to resolve any claim he may have against Uber in arbitration. Defendants further contend that the parties agreed the arbitrator has the exclusive authority to determine threshold questions of arbitrability and agreed that the Federal Arbitration Act (“FAA”) would govern the agreement.

In opposition, Plaintiff argues that because the subject agreement was not effective until after the subject accident, the Court should find the agreement is not enforceable. Further, Plaintiff argues that the clause requiring Plaintiff to arbitrate claims that arose before entering into the agreement is unconscionable, and that the motion should be denied under CCP § 1281.2(c) because there is a risk of conflicting rulings.

In reply, Defendants assert that Plaintiff does not dispute that he agreed to the December 2021 Terms, and that case law is clear that arbitration agreements can apply retroactively. In addition, Defendants contend that Plaintiff fails to establish that the agreement is unconscionable, and that unconscionability is a threshold issue to be decided by the arbitrator. Lastly, Defendants argue that the parties agreed the agreement would be governed by the FAA, which preempts CCP § 1281.2, so the matter must be ordered to arbitration.

In deciding a petition to compel arbitration, trial courts must decide first whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue whether the claims are covered within the scope of the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The opposing party has the burden to establish any defense to enforcement. (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 (“The petitioner, T–Mobile here, bears the burden of proving the existence of a valid arbitration agreement and the opposing party, plaintiffs here, bears the burden of proving any fact necessary to its defense.”).)

In California, there is a “strong public policy in favor of arbitration.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) Accordingly, “doubts concerning the scope of arbitrable issues are to be resolved in favor of arbitration.” (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak St. (1983) 35 Cal.3d 312, 323.) Further, “under both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” (Higgins v. Sup. Ct. (2006) 140 Cal.App.4th 1238, 1247.) This policy, however, is tempered by the recognition that arbitration must be based on an enforceable contract, as “[t]here is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.” (Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653; Lopez v. Charles Schwab & Co., Inc. (2004) 118 Cal. App. 4th 1224, 1229.) While there is a “ ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution,’ ” it is essential to the proper operation of that policy that “ ‘[t]he scope of arbitration is ... a matter of agreement between the parties' [citation], and ‘ “[t]he powers of an arbitrator are limited and circumscribed by the agreement or stipulation of submission.” ‘ [Citations.]” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9.)

“Under the Federal Arbitration Act ..., the enforceability of an arbitration agreement is normally determined by the court.” (Cobarruviaz v. Maplebear, Inc. (N.D. Cal. 2015) 143 F.Supp.3d 930, 939.)

Here, Defendants contend Plaintiff expressly agreed to arbitrate the claims he is asserting in this action. Defendants attest Plaintiff agreed to the December 2021 Terms, which required Plaintiff to resolve any claim he may have against Defendants in arbitration, and which gave the arbitrator exclusive authority to determine the threshold question of arbitrability. Defendants argue the December 2021 Terms include a clear and conspicuous arbitration provision, and the parties agreed the FAA would govern the agreement.

(a)(1) Covered Disputes: Except as expressly provided below in Section 2(b) [relating to small claims, sexual assault/harassment claims and intellectual property claims, none of which is applicable here], you and Uber agree that any dispute, claim, or controversy in any way arising out of or relating to (i) these Terms and prior versions of these Terms, or the existence, breach, termination, enforcement, interpretation, scope, waiver, or validity thereof; (ii) your access to or use of the Services at any time; (iii) incidents or accidents resulting in personal injury to you or anyone else that you allege occurred in connection with your use of the Services (including, but not limited to, your use of the Uber Marketplace Platform or the driver version of the Uber App), regardless whether the dispute, claim, or controversy occurred or accrued before or after the date you agreed to the Terms, and regardless whether you allege that the personal injury was experienced by you or anyone else; and (iv) your relationship with Uber, will be settled by binding individual arbitration between you and Uber, and not in a court of law. This Arbitration Agreement survives after your relationship with Uber ends.

Defendants provide that on December 21, 2021, Plaintiff was presented with an in-app blocking pop-up screen in the Rider App, which connects passengers with drivers, and the pop-up screen had a header in large type that stated, “We’ve updated our terms.” (Mot. Buoscio Decl. ¶ 8.) The pop-up further stated, “We encourage you to read our Updated Terms in full,” and under this message the phrases “Terms of Use” and “Privacy Notice” were displayed underlined and in blue text to set it apart from the other text on the screen and indicated a hyperlink. (Ibid.) The in-app pop-up screen stated, “By checking the box, I have reviewed and agreed to the Terms of Use and acknowledge the Privacy Notice.” (Id. at ¶ 9.) Uber contends Plaintiff clicked the checkbox and tapped “Confirm,” and thus, Plaintiff expressly consented to the December 2021 Terms by checking the box. (Ibid.)

Clickwrap agreements are those in which website users are required to click on an “I agree” box after being presented with a list of terms and conditions of use. (Nguyen v. Barnes & Noble Inc. (9th Cir. 2014) 763 F.3d 1171, 1175-76.) “Clickwrap agreements require a user to affirmatively click a box on the website acknowledging awareness of and agreement to the terms of service before he or she is allowed to proceed with further utilization of the website. [Citations omitted] Clickwrap agreements ‘have been routinely upheld by circuit and district courts…” (United States v. Drew (C.D. Cal. 2009) 259 F.R.D. 449, 462 n.22 [internal quotations omitted].)

In agreeing to the December 2021 Terms, Plaintiff had to check a box stating in readily apparent text, “I have reviewed and agree to the Terms of Use and acknowledge the Privacy Notice,” and then tap a button stating “Confirm.” (Mot. Buoscio Decl. Exh. A.) This evidence shows Plaintiff took affirmative actions demonstrating agreement with the terms of use, which contained the arbitration agreement. (See Selden v. Airbnb, Inc., supra, 2016 WL 6476934 at *5; see also Cordas v. Uber Technologies, Inc. (N.D. Cal. 2017) 228 F.Supp.3d 985, 988-990.) Accordingly, Defendants have shown the existence of an arbitration agreement consented to by Plaintiff.

Plaintiff, in opposition, does not dispute that he agreed to the December 2021 Terms on or about December 21, 2021, nor does he dispute clicking on the “Confirm” button and accepting Uber’s user agreement. Rather, Plaintiffs argues that the agreement is not enforceable because it was not effective until months after the subject accident. However, the agreement explicitly states that Plaintiff and Uber agree:

that any dispute, claim, or controversy in any way arising out of or relating to (i) these Terms and prior versions of these Terms, or the existence, breach, termination, enforcement, interpretation, scope, waiver, or validity thereof … regardless whether the dispute, claim, or controversy occurred or accrued before or after the date you agreed to the Terms … will be settled by binding individual arbitration between you and Uber, and not in a court of law.

Consequently, Plaintiff expressly consented to arbitrate claims that arose or accrued before or after Plaintiff accepted the December 2021 Terms. “ ‘[A]n arbitration agreement may be applied retroactively to transactions which occurred prior to execution of the arbitration agreement.’ [Citations.]” (Salgado v. Carrows Restaurants, Inc. (2019) 33 Cal.App.5th 356, 361; see also Franco v. Greystone Ridge Condominium (2019) 39 Cal.App.5th 221, 230-31 [Arbitration agreement was “clear, explicit, and unequivocal” regarding claims subject to it and contained no qualifying language limiting its applicability to claims that had yet to accrue; the agreement covered all claims, “whether they had already accrued, or not, at the time the Agreement was executed.”]; compare with Cobb v. Ironwood Country Club (2015) 233 Cal.App.4th 960, 968 [There is “no authority for enforcing a unilaterally imposed retroactive arbitration agreement on a party who has not expressly consented to that retroactive application…”].) Plaintiff fails to otherwise cite any authority showing that an arbitration agreement, such as the one at issue here, expressly applying to retroactive claims is invalid or unenforceable on its face.

Therefore, Defendants’ evidence shows that the parties entered into a valid arbitration agreement.

While courts often decide issues of “arbitrability,” the “'parties can agree to arbitrate “gateway” questions of “arbitrability,” such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.”' (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 891, quoting Rent–A–Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68-69.) The parties may agree, clearly and unmistakably, that the enforceability issue will be delegated to the arbitrator. (AT&T Technologies, Inc. v. Communications Workers (1986) 475 U.S. 643, 649.) To establish this exception, it must be shown by “clear and unmistakable” evidence that the parties intended to delegate the issue to the arbitrator. (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68, 70, fn.1; Howsam v. Dean Witter Reynolds (2002) 537 U.S. 79, 84; see, also Peleg v. Neiman-Marcus Group, Inc. (2012) 204 Cal. App. 4th 1425, 1439-1445.) In the event a party is making a specific challenge to the delegation clause, the court must determine whether the delegation clause itself may be enforced and can only delegate the general issue of enforceability to the arbitrator if it first determines the delegation clause is enforceable. (Rent-A-Center, West, Inc. supra, 561 U.S. at 70.)

Therefore, “‘[t]here are two prerequisites for a delegation clause to be effective.”’ (Aanderud, supra, 13 Cal.App.5th at 892.) “‘First, the language of the clause must be clear and unmistakable.”’ (Id.) “‘Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.”’ (Id.)

“[W]hile courts may consider enforceability challenges specific to delegation clauses, the arbitrator is to consider challenges to the arbitration agreement as a whole.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 240.) “[A]ny claim of unconscionability must be specific to the delegation clause.” (Id. at 244.)

In this case, the agreement provides that any “controversy in any way arising out of or relating to (i) these Terms and prior versions of these Terms, or the existence, breach, termination, enforcement, interpretation, scope, waiver, or validity thereof” is governed by the arbitration agreement. (Mot. Buoscio Decl. Exh. C.) It further provides, in relevant part:

(a)(4) Only an arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute arising out of or relating to the interpretation, applicability, enforceability, or formation of this Arbitration Agreement, including without limitation any claim that all or any part of this Arbitration Agreement is void or voidable. An arbitrator shall also have exclusive authority to resolve all threshold arbitrability issues, including issues relating to whether the Terms are applicable, unconscionable, or illusory and any defense to arbitration, including without limitation waiver, delay, laches, or estoppel…

The agreement is clear that all issues relating to the scope and enforceability of the arbitration provision are for the arbitrator to decide. The relevant provision appears under subsection 2(a) titled Arbitration Agreement. The language is not buried in the agreement and is readily apparent after reading this section of the terms of use. The Terms expressly state that a dispute about whether this Arbitration Agreement can be enforced or applies to a dispute is for the arbitrator to decide. Plaintiff does not dispute that the delegation clause is clear and unmistakable.

Plaintiff does not address the delegation clause in opposition, nor argue specifically that the delegation clause is unenforceable or unconscionable. (Tiri, 226 Cal.App.4th at 244.) To the extent Plaintiff argues that the arbitration agreement and terms applying to retroactive claims are unconscionable, the agreement requires any challenges to the scope and enforceability of the agreement, including whether the arbitration agreement applies to Plaintiff’s claims, to be decided by the arbitrator.

Accordingly, because the delegation clause is enforceable, the Court must order this case to arbitration for an arbitrator to decide whether the agreement covers Plaintiff’s claims against Defendants in this matter.

Plaintiff avers the motion must be denied under CCP § 1281.2(c) because there is a risk of multiple conflicting rulings in this action involving other defendants not parties to the arbitration agreement. However, Plaintiff does not dispute that the FAA governs the parties agreement to arbitrate. Indeed, the agreement states:

Notwithstanding any choice of law or other provision in these Terms, the parties agree and acknowledge that this Arbitration Agreement evidences a transaction involving interstate commerce and that the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”), will govern its interpretation and enforcement and proceedings pursuant thereto. It is the intent of the parties to be bound by the provisions of the FAA for all purposes, including, but not limited to, interpretation, implementation, enforcement, and administration of this Arbitration Agreement, and that the FAA and the applicable arbitration provider’s rules shall preempt all state laws to the fullest extent permitted by law…

An agreement that the FAA governs the parties’ dispute is binding and enforceable, and thus, the parties’ agreement is to be read and interpreted under the FAA. (See Gloster v. Sonic Automotive, Inc. (2014) 2016 Cal.App.4th 438, 446-47.)

“In accordance with choice-of-law principles, the parties may limit the trial court's authority to stay or deny arbitration under the CAA by adopting the more restrictive procedural provisions of the FAA.” (Valencia v. Smyth, supra, 185 Cal.App.4th at 157, 110 Cal.Rptr.3d 180.) “[T]he FAA's procedural provisions (9 U.S.C. §§ 3, 4, 10, 11) do not apply unless the contract contains a choice-of-law clause expressly incorporating them.” (Id. at 174, 110 Cal.Rptr.3d 180.) … The question, therefore, is whether the parties expressly incorporated the FAA’s procedural provisions into their agreements.” (Id. at 177, 110 Cal.Rptr.3d 180; see also Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 387, 394, 25 Cal.Rptr.3d 540, 107 P.3d 217 [“Our opinion does not preclude parties to an arbitration agreement to expressly designate that any arbitration proceeding should move forward under the FAA's procedural provisions rather than under state procedural law” (italics omitted)].)

Although Plaintiff argues CCP § 1281.2(c) allows the Court to deny a motion to compel arbitration where there is a possibility of conflicting rulings concerning parties not bound by the arbitration agreement, because Plaintiff and Uber agreed the FAA would govern the agreement, the Court cannot look to CCP § 1282.2(c) to deny the motion to arbitrate. (Victrola 89, LLC, 46 Cal.App.5th at 342-43, 345-46.) The Agreement limits the court’s authority to limit or stay the action under CCP § 1281.2. [2]

Defendants establish there is an enforceable agreement to arbitrate with Plaintiff. The motion to compel arbitration is granted as to Uber. Because there is a risk of conflicting rulings, the case is stayed pending arbitration.

Hon. Audra Mori

Judge of the Superior Court

[1] This action has been deemed related to Gagg v. Uber Technologies, Inc., 22STCV10818, which arises out of the same accident. (Min. Order June 24, 2022.)

[2] Even if the Court considered CCP § 1281.2 in ruling on the motion, “[w]hat the trial court chooses to do in this situation is a matter of its discretion, guided largely by the extent to which the possibility of inconsistent rulings may be avoided.” (Metis Development LLC v. Bohacek (2011) 200 Cal.App.4th 679, 692-93.) In this case, the Court would still exercise its discretion to order arbitration between Plaintiff and Uber and stay the action pending the outcome of arbitration to address the risk of inconsistent rulings.