Judge: Blaine K. Bowman, Case: 37-2023-00049121-CU-NP-CTL, Date: 2024-04-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 25, 2024

04/26/2024  08:30:00 AM  C-74 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Blaine K. Bowman

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Civil - Unlimited  Non-PI/PD/WD tort - Other Motion Hearing (Civil) 37-2023-00049121-CU-NP-CTL GARCIA VS AIRBNB INC [IMAGED] CAUSAL DOCUMENT/DATE FILED:

The court addresses the evidentiary issues. Plaintiffs' request for judicial notice is GRANTED.

The court then rules as follows. Defendants Airbnb, Inc. and Airbnb Payments, Inc.'s motion to compel arbitration is GRANTED. 9 U.S.C. § 2.

Defendants seek to compel arbitration pursuant to Airbnb, Inc.'s Terms of Service and Airbnb Payment's Terms of Service. The Airbnb TOS reads: 23.4 Agreement to Arbitrate. You and Airbnb mutually agree that any dispute, claim or controversy arising out of or relating to these Terms or the applicability, breach, termination, validity, enforcement or interpretation thereof, or any use of the Airbnb Platform, Host Services, or any Content (collectively, 'Disputes') will be settled by binding individual arbitration (the 'Arbitration Agreement'). If there is a dispute about whether this Arbitration Agreement can be enforced or applies to our Dispute, you and Airbnb agree that the arbitrator will decide that issue.

[Emphasis added.] [Defendants' Exhibit F.] The Airbnb Payments TOS is virtually identical and reads: 15.4 Agreement to Arbitrate. You and Airbnb Payments mutually agree that any dispute, claim or controversy arising out of or relating to these Payments Terms or the applicability, breach, termination, validity, enforcement or interpretation thereof, or any use of the Payment Services (collectively, 'Disputes') will be settled by binding individual arbitration (the 'Arbitration Agreement'). If there is a dispute about whether this Arbitration Agreement can be enforced or applies to our Dispute, you and Airbnb Payments agree that the arbitrator will decide that issue.

[Emphasis added.] [Defendants' Exhibit G.] In opposition Plaintiffs raise arguments specific to the delegation clause (italicized above). Malone v. Superior Court (2014) 226 Cal.App.4th 1551 summarizes the applicable analysis with respect to delegation clauses.

A delegation clause requires issues of interpretation and enforceability of an arbitration agreement to be Calendar No.: Event ID:  TENTATIVE RULINGS

3100555  11 CASE NUMBER: CASE TITLE:  GARCIA VS AIRBNB INC [IMAGED]  37-2023-00049121-CU-NP-CTL resolved by the arbitrator. Delegation clauses have the potential to create problems of circularity. For example, suppose an arbitration agreement delegates the issue of enforceability to the arbitrator. If the arbitrator concludes that the arbitration agreement is, in fact, not enforceable, this would mean that the entire agreement, including the delegation clause, is unenforceable-a finding that would undermine the arbitrator's jurisdiction to make that finding in the first place. For this reason, courts have treated the delegation clause as a separate agreement to arbitrate solely the issues of enforceability. In other words, courts have separately enforced an enforceable delegation clause; thus, it has been held that whether the arbitration agreement as a whole is ultimately held to be unenforceable will have no bearing on the enforcement of the delegation clause itself. (Bruni, supra, 160 Cal.App.4th at p. 1287, 73 Cal.Rptr.3d 395.) For this reason, when a party is claiming that an arbitration agreement is unenforceable, it is important to determine whether the party is making a specific challenge to the enforceability of the delegation clause or is simply arguing that the agreement as a whole is unenforceable. If the party's challenge is directed to the agreement as a whole--even if it applies equally to the delegation clause--the delegation clause is severed out and enforced; thus, the arbitrator, not the court, will determine whether the agreement is enforceable. In contrast, if the 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. v. Jackson (2010) 561 U.S. 63, 70 [177 L.Ed.2d 403, 130 S.Ct. 2772, 2778].) [Emphasis added.] Malone, 226 Cal.App.4th at 1559–1560.

Accordingly, because Plaintiffs make a specific challenge to the delegation clause, this court is required to resolve the issue of whether the delegation clause is enforceable. To start, Malone explains, [b]oth the United States Supreme Court and California courts agree that, in order for a delegation clause to be enforceable, it must be clear and unmistakable. (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944–945, 115 S.Ct. 1920, 131 L.Ed.2d 985; Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th 704, 709 [123 Cal.Rptr.3d 547].) Malone, 226 Cal.App.4th at 1560.

As set forth above, the delegation clause in both the Airbnb TOS and Airbnb Payments' TOS plainly provide that '[i]f there is a dispute about whether this Arbitration Agreement can be enforced or applies to our Dispute, you and Airbnb agree that the arbitrator will decide that issue.' The court finds such language clear and unmistakable.

In addition, both TOS agreements incorporate the AAA Consumer Arbitration Rules [Defendants' Exhibit F § 23.6; Defendants' Exhibit G § 15.6] which give the arbitrator 'the power to rule on . . . any objection with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim' [AAA Consumer Arbitration Rule 14].

Virtually every circuit to have considered the issue has determined that incorporation of the American Arbitration Association's (AAA) arbitration rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability. See Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir.2012); Fallo v. High–Tech Inst., 559 F.3d 874, 878 (8th Cir.2009); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1373 (Fed.Cir.2006); Terminix Int'l Co. v. Palmer Ranch LP, 432 F.3d 1327, 1332 (11th Cir.2005); Contec Corp. v. Remote Solution Co., 398 F.3d 205, 208 (2d Cir.2005).

Oracle America, Inc. v. Myriad Group A.G. (9th Cir. 2013) 724 F.3d 1069, 1074.

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3100555  11 CASE NUMBER: CASE TITLE:  GARCIA VS AIRBNB INC [IMAGED]  37-2023-00049121-CU-NP-CTL The court is also persuaded by the analysis of the exact same delegation clause in Dunbar v. Airbnb, Inc. (D. Hawaii, 2020) 2020 WL 1550236, wherein the court found the same provision clear and unmistakable.

Having found the language of the delegation clause is clear and unmistakable, under the analysis in Malone, the delegation clause is enforceable unless it is unconscionable. Malone, 226 Cal.App.4th at 1560.

Malone provides a summary of the applicable unconscionability analysis.

'Unconscionability consists of both procedural and substantive elements. The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. [Citations.]' (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246, 145 Cal.Rptr.3d 514, 282 P.3d 1217.) ' ' 'Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.' ' [Citation.]' (Id. at p. 247, 145 Cal.Rptr.3d 514, 282 P.3d 1217.) When the contract is a contract of adhesion imposed and drafted by the party with superior bargaining power, the adhesive nature of the contract is 'evidence of some degree of procedural unconscionability.' (Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 403, 168 Cal.Rptr.3d 473.) However, the fact that an agreement is adhesive is not, alone, sufficient to render it unconscionable. (Id. at p. 402, 168 Cal.Rptr.3d 473.) 'Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be 'so one-sided as to 'shock the conscience.' ' [Citation.]' (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, supra, 55 Cal.4th at p. 246, 145 Cal.Rptr.3d 514, 282 P.3d 1217.) 'The party resisting arbitration bears the burden of proving unconscionability. [Citations.] Both procedural unconscionability and substantive unconscionability must be shown, but 'they need not be present in the same degree' and are evaluated on ' 'a sliding scale.' ' [Citation.] '[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.' [Citation.]' (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, supra, 55 Cal.4th at p. 247, 145 Cal.Rptr.3d 514, 282 P.3d 1217.) 'Where there is no other indication of oppression or surprise, the degree of procedural unconscionability of an adhesion agreement is low, and the agreement will be enforceable unless the degree of substantive unconscionability is high.' (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796, 137 Cal.Rptr.3d 773.) 'All of these [unconscionability] formulations point to the central idea that unconscionability doctrine is concerned not with 'a simple old-fashioned bad bargain' [citation], but with terms that are 'unreasonably favorable to the more powerful party' [citation]. These include 'terms that impair the integrity of the bargaining process or otherwise contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law, fine-print terms, or provisions that seek to negate the reasonable expectations of the nondrafting party, or unreasonably and unexpectedly harsh terms having to do with price or other central aspects of the transaction.' [Citation.]'6 (Sonic-Calabasas, supra, 57 Cal.4th at p. 1145, 163 Cal.Rptr.3d 269, 311 P.3d 184.) Malone, 226 Cal.App.4th at 1561–1562.

To establish procedural unconscionability Plaintiffs first argue that the delegation clauses are 'buried' within the pages of 43 and 46 page TOS agreements. Plaintiffs also argue that the bolded text used in the TOS agreements is insufficient to draw attention to the delegation clauses and that there is no reference to the delegation clauses in the Table of Contents of the TOS agreements.

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3100555  11 CASE NUMBER: CASE TITLE:  GARCIA VS AIRBNB INC [IMAGED]  37-2023-00049121-CU-NP-CTL A review of the Airbnb TOS [Defendants' Exhibit F] shows that immediately underneath the title 'Terms of Service for Non-European Users' is the following in bold font: Section 23 of these Terms contains an arbitration agreement and class action waiver that apply to all claims brought against Airbnb in the United States. Please read them carefully.

The Table of Contents identifies: '23. United States Dispute Resolution and Arbitration Agreement.' The title of Section 23 is in bold font and reads: 'United States Dispute Resolution and Arbitration Agreement.' The title of Subsection 23.4 is also in bold font: 'Agreement to Arbitrate.' And, the entire text of Subsection 23.4 (set forth above) including the delegation clause is also in bold font.

A review of the Airbnb Payments TOS [Defendants' Exhibit G] shows this TOS is similar. Immediately underneath the title 'Payments Terms of Service for Non-European Users' is the following in bold font: If you reside in, or the organization you are acting for is established in, the United States, the arbitration agreement and class actions waiver in Section 15 apply to you. Please read them carefully.

The Table of Contents identifies: '15. United States Arbitration Agreement.' The title of Section 15 is in bold font and reads: 'United States Arbitration Agreement.' The title of Subsection 15.4 is also in bold font: 'Agreement to Arbitrate.' And, the entire text of Subsection 15.4 (set forth above) including the delegation clause is also in bold font.

Based on the contents of the TOS agreements, the court finds Plaintiffs fail to meet their burden of demonstrating that the location of the delegation clauses within the TOS agreements, or the typeface used for the arbitration provisions and delegation clauses render the delegation clauses procedurally unconscionable. Plaintiffs raise no other arguments as to procedural unconscionability.

As explained in Armendariz, Plaintiffs must show both procedural and substantive unconscionability to preclude enforcement of the delegation clause. Because Plaintiffs fail to establish any procedural unconscionability, the court finds Plaintiffs fails to meet Plaintiffs' burden of proving unconscionability.

See also, Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247; Bigler v. Harker School (2013) 213 Cal.App.4th 727, 736.

Even if the court were to reach the issue of substantive unconscionability the result would not change.

Plaintiffs raise two arguments to establish substantive unconscionability – 1) there are different pre-arbitration dispute resolution procedures for Airbnb/Airbnb Payments and the user, and 2) the enumerated exceptions to arbitration favor Airbnb/Airbnb Payments. Preliminarily, Plaintiffs fail to articulate how such circumstances render the delegation clause unconscionable. Under the analysis of Rent-A-Center as well as Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, substantive unconscionability arguments must be directed specifically to the delegation clause. Plaintiffs' arguments are based on the arbitration agreement as a whole and do not specifically address the effect of these provisions on the delegation clause. Moreover, the court finds Plaintiffs fail to establish the different pre-arbitration dispute resolution procedures (requiring the user to provide notice by mail to Airbnb/Airbnb Payments' registered agent and permitting Airbnb/Airbnb Payments to email notice to the user) as overly one-sided or unreasonably, or unexpectedly harsh. Rent-A-Center specifically rejects Plaintiffs' argument regarding the enumerated exceptions to arbitration.

First, he argued that the Agreement's coverage was one sided in that it required arbitration of claims an employee was likely to bring-contract, tort, discrimination, and statutory claims-but did not require arbitration of claims Rent–A–Center was likely to bring-intellectual property, unfair competition, and trade secrets claims. Id., at 42–43. This one-sided-coverage argument clearly did not go to the validity of the delegation provision.

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3100555  11 CASE NUMBER: CASE TITLE:  GARCIA VS AIRBNB INC [IMAGED]  37-2023-00049121-CU-NP-CTL Rent-A-Center, 561 U.S. 73.

The same analysis applies in this case. The court also finds Plaintiffs fail to establish the enumerated arbitration exceptions provision as overly one-sided or unreasonably, or unexpectedly harsh.

Absent a finding of substantive unconscionability, there is no basis for a finding that the delegation clause is unconscionable. As such, the delegation clause is enforceable and it is for the arbitrator to decide whether the arbitration provision is enforceable against Plaintiffs.

Plaintiff Colin raises the separate argument that Plaintiff Colin is not bound by the delegation clause or arbitration provision because Plaintiff Colin did not consent to the TOS agreements. The court is persuaded by the agency analysis in Hofer v. Gap, Inc. (D. Mass. 2007) 516 F.Supp.2d 161, that Plaintiff Colin is bound by the TOS agreements, including the delegation clause, based on the consent provided by Plaintiff Garcia acting as Plaintiff Colin's agent during the booking process. The complaint alleges that Plaintiffs Garcia and Colin are the parents of decedent Grezhia Soleil Colin [Cplt. ¶ 2]. The complaint also alleges that 'Mr. Colin and Ms. Garcia turned to Airbnb to locate suitable accommodations that would fit the needs of their children, as well as that of their other family members' [Cplt. ¶ 31]; 'Ms. Garcia inputted into the Airbnb mobile application that the family were seeking accommodations' [Cplt. ¶ 33]; '[a]fter inputting the family's needs into the mobile application's search feature, multiple properties were identified' [emphasis in original] [Cplt. ¶ 34]; '[a]fter evaluating several properties . . . Ms. Garcia and Mr. Colin selected the residence' [Cplt. ¶ 35]; 'through the Airbnb mobile application, Ms. Garcia confirmed the booking' [Cplt. ¶ 36]; 'on the day of check-in, Mr. Colin, Ms. Garcia, their parents, children and extended family arrived' [Cplt ¶ 38]. The court finds such allegations, and the process via which Plaintiff Garcia made the booking as described in the Declaration of Jean Magalhaes, analogous to those in Hofer.

There is no dispute that plaintiff did not use the Expedia.com website, or indeed interact with Expedia in any way. Instead, plaintiff authorized Carrie LaRoche, her friend and travel companion, to book airline tickets and accommodation reservations for their trip. LaRoche used Expedia.com to purchase the tickets and reserve the accommodations, and plaintiff later reimbursed her for the expenses.

It is also undisputed that in order to finalize the reservation, LaRoche had to 'click through' Expedia's Web Site Terms, Conditions, and Notices, which included a liability disclaimer.14 That disclaimer stated, among other things, that '[t]he ... hotels and other suppliers providing ... services for Expedia, Inc., are independent contractors and not agents or employees of Expedia, Inc., ...,' and that 'Expedia, Inc., ...

[is] not liable for the acts, errors, omissions, representations, warranties, breaches, or negligence of any such suppliers or from any personal [injuries] ... resulting therefrom.' Plaintiff first contends that she is not bound by the disclaimer because LaRoche's acceptance of the disclaimer does not bind her. This claim, reduced to its essence, is that LaRoche was not her agent for purposes of booking travel plans. That argument is clearly without merit. Although the details are not clear from the record, plaintiff obviously authorized LaRoche to go online and purchase airline tickets and hotel reservations. Nothing in that arrangement is remarkable in the slightest respect; family members, friends, and work colleagues routinely book travel plans for others, and it would be extraordinarily cumbersome to require that each traveler book his or her own ticket. Each such arrangement is necessarily an agency relationship: the person booking the tickets is acting as an agent on behalf of the other members of the traveling party. Implicit in that agency relationship is the power to bind the principal as to matters within the scope of the relationship, including the acceptance of the terms of a disclaimer. See Transurface Carriers, Inc., v. Ford Motor Co., 738 F.2d 42, 45 (1st Cir.1984) (holding principal bound by agent's agreement to a limitation of warranties and noting that 'the law of principal and agent is clear that conferring authority to conduct a transaction gives authority to undertake acts incidental to the transaction.'); Restatement (Third) of Agency § 2.02 (2006) ('An agent has actual authority to take ... acts necessary or incidental to achieving the principal's objectives ....'). LaRoche accordingly had the authority to purchase tickets and reservations for plaintiff, and to agree to a disclaimer of liability on her behalf to accomplish that end.

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3100555  11 CASE NUMBER: CASE TITLE:  GARCIA VS AIRBNB INC [IMAGED]  37-2023-00049121-CU-NP-CTL Hofer, 516 F.Supp.2d at 174–175.

The court finds the same analysis applies in this case. The court is not persuaded by Plaintiffs' attempts to distinguish Hofer, or by the authorities Plaintiffs rely on. None of Plaintiffs' authorities involve circumstances similar to those presented on this motion and in Hofer. Under the analysis in Hofer, Plaintiff Colin is bound by the terms of the TOS agreements.

The court stays this matter pending completion of arbitration. 9 U.S.C. § 3.

The court sets a Status Conference for October 25, 2024 at 10:30am.

If this tentative ruling is confirmed the Minute Order will be the final order of the court and the parties shall not submit any further order on this motion.

Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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