Judge Audra Mori, Case 22STCV19249 2022-10-04 Tentative Ruling

On June 13, 2022, Plaintiffs Carolina Heras (“Heras”) and Jorge Gonzalez (“Gonzalez”) (collectively, “Plaintiffs”) filed this action against Sam Estakhri (“Estakhri”), Uber Technologies, Inc. (“Uber”), Raiser, Inc. (“Raiser”), and Raiser-CA, LLC (“Raiser-CA”) for damages arising out of a motor vehicle accident. Plaintiffs allege that on August 22, 2020, Plaintiffs “obtained an Uber ride from Uber Driver, Sam Estakhri.” (Compl. at p. 5.) Plaintiffs allege that Estakhri negligently caused an accident while Plaintiffs were his passengers, and while Estakhri was acting in the course and scope of his employment, agency, or joint venture with Uber Technologies, Inc., and Raiser, Inc., Raiser-CA, LLC.

Defendants Uber, Rasier, and Rasier-Ca (collectively, “Defendants”) now move to compel arbitration of Plaintiffs’ claims and to dismiss or stay this action. Plaintiffs oppose the motion.

Defendants contend that Plaintiffs both expressly agreed to arbitrate any claims against Uber, and that this action must be stayed or dismissed to allow Uber and Plaintiffs to arbitrate their claims. Defendants assert that Heras entered into Uber’s April 2021 Terms and Gonzalez entered into Uber’s April 2022 Terms, and both terms require Plaintiffs to resolve any claims against Uber in arbitration. Defendants further assert the parties gave the arbitrator the exclusive authority to determine threshold questions of arbitrability, and that the Federal Arbitration Act (“FAA”) governs the agreements.

In opposition, Plaintiffs argue that that they were already represented by counsel on the alleged days that Uber reached out to Heras and Gonzalez by way of an in-app pop up screen, so Uber wrongfully engaged in direct communications with Plaintiffs regarding their substantive rights. Plaintiffs contend that it is unconscionable that Plaintiffs would agree to the subject terms without consulting with their retained counsel. Plaintiffs contend that Uber fails to show that a valid arbitration agreement exists compelling Plaintiffs to arbitrate their claims from the August 22, 2020 accident, and that the delegation clause in the April 2021 and April 2022 Terms is procedurally and substantively unconscionable.

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 argue Plaintiffs each expressly agreed to arbitrate the claims they are asserting in this action. Defendants attest that Heras agreed to Uber’s April 2021 Terms and Gonzalez agreed to Uber’s April 2022 Terms, with each of the terms requiring Plaintiffs to resolve any claims they have against Uber in arbitration and giving the arbitrator exclusive authority to determine the threshold question of arbitrability.

Except as expressly provided below in Section 2(b) [relating to small claims, sexual assault/harassment claims and intellectual property claims], 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.

(Mot. Buoscio Re: Heras Decl. Exh. C; Mot. Buoscio Re: Gonzalez Decl. Exh. C.)[1]

Defendants assert that on May 1, 2021, Heras was presented with an in-app blocking pop-up screen in Uber’s Rider App, which connects passengers with drivers, notifying Heras that Uber had updated its terms of use. (Mot. Buoscio Re: Heras Decl. ¶ 8.) Similarly, on June 11, 2022, Gonzalez was presented with an in-app blocking pop-up screen in Uber’s Rider App that notified Gonzalez that Uber had updated its terms of use. (Mot. Buoscio Re: Gonzalez Decl. ¶ 8.) The pop-up screens presented to Heras and Gonzalez were identical and had a header in large type stating, “We’ve updated our terms.” (Mot. Buoscio Re: Heras Decl. Exh. A; Mot. Buoscio Re: Gonzalez Decl. Exh. A.) The pop-ups 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.” (Ibid.) Uber provides that each Heras and Gonzalez clicked the checkbox and tapped “Confirm,” and thus, Heras and Gonzalez expressly consented to the April 2021 and April 2022 Terms, respectively, by checking the box. (Mot. Buoscio Re: Heras Decl. ¶ 9; Mot. Buoscio Re: Gonzalez Decl. ¶ 9.)

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 April 2021 and April 2022 Terms, Plaintiffs each 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 Re: Heras Decl. Exh. A; Mot. Buoscio Re: Gonzalez Decl. Exh. A.) This evidence shows that Plaintiffs both took affirmative actions demonstrating agreement with the subject terms of use containing the arbitration agreements. (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 Plaintiffs.

In opposition, Plaintiffs do not dispute taking the actions described above by Uber regarding the April 2021 and April 2022 Terms. Neither Heras nor Gonzalez dispute clicking on the “Confirm” button and accepting Uber’s user agreement. Rather, Plaintiffs aver that there was no valid arbitration agreement between Plaintiffs and Uber when the collision at issue in this lawsuit occurred. However, the April 2021 and April 2022 Terms explicitly state that Plaintiffs and Uber agree:

any dispute, claim, or controversy in any way arising out of or relating to … 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, … will be settled by binding individual arbitration between you and Uber, and not in a court of law

(Mot. Buoscio Re: Heras Decl. Exh. C; Mot. Buoscio Re: Gonzalez Decl. Exh. C [emphasis added].) Thus, Plaintiffs expressly consented to arbitrate claims that arose or accrued before or after Plaintiffs accepted the April 2021 and April 2022 Terms. (See 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…”].) Plaintiffs do not cite any authority showing that an arbitration agreement applying to retroactive claims is invalid on its face.

Therefore, Defendants’ evidence shows the parties entered into a valid arbitration agreement. Plaintiffs next argue that the delegation clause in the April 2021 and April 2022 Terms is unconscionable and unenforceable.

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.)

The parties agree that the arbitrator ("Arbitrator"), and not any federal, state, or local court or agency, shall have exclusive authority to resolve any disputes relating to the interpretation, applicability, enforceability or formation of this Arbitration Agreement, including any claim that all or any part of this Arbitration Agreement is void or voidable. The Arbitrator shall also be responsible for determining all threshold arbitrability issues, including issues relating to whether the Terms are applicable, unconscionable or illusory and any defense to arbitration, including waiver, delay, laches, or estoppel. If there is a dispute about whether this Arbitration Agreement can be enforced or applies to a dispute, you and Uber agree that the arbitrator will decide that issue.

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 April 2021 and April 2022 Terms are each clear that all issues relating to the scope and enforceability of the arbitration provisions are for the arbitrator to decide. The delegation clause in the April 2021 Terms appears in the arbitration agreement under the subsection 2(c) Rules and Governing Law, which contains four paragraphs. (Mot. Buoscio Re: Heras Decl. Exh. C.) The delegation clause in the April 2022 Terms appears under subsection 2(a)(4) titled Delegation Clause. (Mot. Buoscio Re: Gonzalez Decl. Exh. C.) The relevant provisions in the Terms are not buried in the agreement and are readily apparent after reading the Arbitration Agreement section of the April 2021 and April 2022 Terms. The Terms’ delegation clauses are clear and unmistakable that a dispute about whether this Arbitration Agreement can be enforced or applies to a dispute is for the arbitrator to decide.

Plaintiff, in opposition, does not argue that the delegation clause is not clear and unmistakable. Plaintiff instead contends the delegation clause is unconscionable.

Civil Code § 1670.5 states, “If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.”

In general, the doctrine of unconscionability refers to “ ‘ “an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” ’ ” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133.) In other words, the doctrine consists of procedural and substantive components, “ ‘the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.’ ” (Id.)

If unconscionable, the arbitration agreement is not a valid contract and therefore is unenforceable. (Armendariz, 24 Cal.4th at 114.) Although both components of unconscionability must be present to invalidate an arbitration agreement, they need not be present in the same degree. (Id.) “ ‘Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. [Citations.] In other words, the more substantively unconscionable the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ ” (Id.)

Ultimately, determining whether an agreement is unconscionable requires evaluating “the totality of the agreement’s substantive terms as well as the circumstances of its formation to determine whether the overall bargain was unreasonably one-sided.” (Sonic, 57 Cal.4th at 1146.) Procedural unconscionability concerns the manner in which the contract was negotiated and the parties' circumstances at that time; it focuses on the factors of oppression or surprise. (Kinney v. United Healthcare Services. Inc. (1999) 70 Cal.App.4th 1322, 1329.)

Here, Plaintiffs contend the delegation clauses are procedurally unconscionable because the relevant agreements were presented to each Heras and Gonzalez when they were represented by counsel. Specifically, Plaintiffs assert they already retained counsel when they were presented with the Agreements on May 1, 2021, and June 11, 2022. Plaintiffs contend that when they were presented with the agreements, they did not have an opportunity to consult with their counsel.

Plaintiffs merely provide that Heras retained counsel for the accident on October 27, 2020, and that Gonzalez retained counsel on December 1, 2020. However, Plaintiffs provide no evidence showing that Defendants, or their legal department, knew that Plaintiffs were represented by counsel when Plaintiffs accepted the April 2021 and April 2022 Terms. “[A]ctual knowledge is required before an attorney can be held to have violated rule [4.2 formerly cited as 2-100].” (Snider v. Superior Court (2003) 113 Cal.App.4th 1187, 1215.) Moreover, there is no evidence that Defendants were aware of Plaintiffs’ claims concerning the accident at the time the respective terms were presented to them. Plaintiffs filed this action on June 13, 2022, and there is nothing to suggest that Defendants had actual knowledge of this action prior to being served with the summons and complaint. There is thus no showing that Defendants intentionally sent the April 2021 and April 2022 Terms to Heras and Gonzalez as an attempt to improperly communicate with Plaintiffs outside the presence of their counsel. While Plaintiffs contend they were presented with the agreements without opportunity to consult with their counsel, Plaintiffs do not articulate what circumstances actually prevented them from contacting or consulting with their counsel prior to agreeing to the Terms. In other words, there is no evidence that Defendants did not give Plaintiffs sufficient time to read the agreements or obtain advice.

Outside of the argument that the agreements were presented to Plaintiffs after they had retained counsel, Plaintiffs do not challenge the delegation clauses are procedurally unconscionable on any other ground. Plaintiffs do not establish procedural unconscionability in the delegation clauses; Plaintiffs must therefore make a high showing of substantive unconscionability. (Malone v. Sup. Ct. (2014) 226 Cal.App.4th 1551, 1570.)

In arguing the agreements are substantively unconscionable, Plaintiffs assert the arbitration agreements’ provisions lopsidedly favor Uber, and again contend they were forced to agree to them without counsel. Plaintiffs further assert that the delegation clauses are substantively unconscionable because they were not permitted an opportunity to read them in their native language, Spanish.

To the extent Plaintiffs contend the arbitration agreement is one-sided, Plaintiffs fail to articulate how the agreements, and especially the delegation clauses, lopsidedly favor Uber. The delegation clauses apply to both Plaintiffs and Uber, and the language in the delegation clause does not indicate that the delegation of matters to an arbitrator by both parties is unconscionable. Plaintiffs also argue that the arbitration agreement included specific terms chosen by Uber, such as the which arbitration association would be used and concerning choice of law, but proposing specific terms such as these does not make an agreement unconscionable. Further, as analyzed above, the relevant delegation clauses in the April 2021 and April 2022 Terms were not hidden in the arbitration agreements and are conspicuously found therein.

What is more, as to Plaintiffs’ arguments that the delegation clauses were not presented to them in their native language, “[i]t is well established that in the absence of fraud, overreaching, or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.” (Randas v. YMCA of Metropolitan of Los Angeles (1993) 17 Cal.App.4th 158, 163.) Generally, “one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it. If he cannot read, he should have it read or explained to him.” (Id.; see also Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 687 [“If [plaintiff] did not speak or understand English sufficiently to comprehend the English contract, he should have had it read or explained to him.”].) As an aside, Plaintiffs do not argue or submit evidence stating that they are monolingual or that they had difficulty reading or understanding the delegation clauses.

Based on the foregoing, the delegation provisions are not inherently unfair, and Plaintiffs do not establish that they are “overly harsh or so one sided as to shock the conscience.” (Malone, 226 Cal.App.4th at 1571.)

Defendants established there is a valid arbitration agreement between Uber and each of Heras and Gonzalez. The delegation clause is clear and unmistakable, and it is not revocable for unconscionability. Since the delegation clause is valid, the scope and enforceability of the agreement must be decided by the arbitrator.

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] Defendants filed two separate declarations from Ryan Buoscio in support of their motion to compel arbitration- one declaration concerns the arbitration agreement regarding Heras, which is 22 pages, and the other concerns the arbitration agreement involving Gonzalez, which is 34 pages. For identification purposes, the Court will refer as to the declaration regarding Heras as “Buoscio Re: Heras Decl.” and the declaration regarding Gonzalez as “Buoscio Re: Gonzalez Decl.”