Judge: Daniel M. Crowley, Case: 21STCV46383, Date: 2022-08-26 Tentative Ruling

Case Number: 21STCV46383    Hearing Date: August 26, 2022    Dept: 28

Defendants Massage Envy Franchising, LLC and Massage Envy Limited, LLC’s Motion to Compel Arbitration; Defendants Massage Envy Franchising, LLC and Massage Envy Limited, LLC’s Motion to Admit Nicole Stewart Pro Hac Vice

Having considered the moving, opposing and reply papers, the Court rules as follows. 

BACKGROUND

On December 20, 2021, Plaintiff Jane Doe (“Doe”) filed this action against Defendants Massage Envy Limited, LLC (“MEL”), Massage Envy Franchising, LLC (“MEF”), CSG Holdings CA, LLC (“CSG”) and Jill Lillaney (“Lillaney”) for sexual battery, battery, gender violence, intentional infliction of emotional distress, sexual harassment, negligence, negligent hiring/supervision/retention, negligent failure to train or educate and negligence – premises liability.

On March 18, 2022, CSG filed an answer.

On April 18, 2022, MEL and MEF filed a Motion to Compel Arbitration to be heard on July 8, 2022. The Court continued the hearing on the motion to August 26, 2022. On June 24, 2022, Plaintiff filed an opposition. Moving Defendants filed a reply on June 30, 2022.

On May 31, 2022, May 31, 2022, MEL and MEF (“Moving Defendants”) filed an application for Pro Hac Vice Admission of Nicole Stewart, to be heard on August 26, 2022.

Trial is currently set for June 19, 2023.

PARTY’S REQUESTS

Moving Defendants request that the Court order Plaintiff to arbitrate claims asserted against Moving Defendants and to stay the lawsuit with respect to those claims.

Plaintiff requests the Court not compel arbitration on the basis that the arbitration agreement does not apply and is unconscionable.

Moving Defendants request the Court admit Nicole Stewart, pro hac vice.

LEGAL STANDARD

A petition to compel arbitration must allege both (1) a “written agreement to arbitrate” the controversy, and (2) that a party to that agreement “refuses to arbitrate” the controversy. (Code Civ. Proc., § 1281.2.) The Court shall grant the petition unless the petitioner waived the right to compel arbitration, or other grounds exist for rescission of the agreement. (Id.) 

California Code of Civil Procedure § 1290.4, subdivision (b) requires a petition to compel arbitration under § 1281.2 to be served on the parties as provided in their arbitration agreement or, if no method was agreed to, in the same manner required for service of summons, if the party to be served has not previously appeared in the proceeding and has not previously been served in accordance with this subdivision. (Miranda v. 21st Century Ins. Co. (2004) 117 Cal.App.4th 913, 928.)

Under California law, an arbitration agreement must be in some measure both procedurally and substantively unconscionable in order for the agreement to be unenforceable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) “But they need not be present in the same degree. . . . [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.” (Id.)

Procedural unconscionability focuses on two factors: oppression and surprise. (A & M Produce Co. v.  FMC Corp. (1982) 135 Cal.App.3d 437, 486.) Oppression is an “inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice.’” (Id.) Surprise involves the extent to which the agreed upon terms are hidden away “by the party seeking to enforce the disputed terms.” (Id.)

Substantive unconscionability does not have a precise definition, but generally a contract is found to be “substantively suspect if it reallocates the risks of the bargain in an objectively unreasonable or unexpected manner.” (Id. at 487.)

DISCUSSION

Arbitration

A petition to compel arbitration must both allege a written agreement to arbitrate and that a party refuses to arbitrate the controversy. Plaintiff agreed to be bound by the Terms of Use Agreement by checking the box next to the sentence “I agree and assent to the Terms of Use Agreement,” which included a hyperlink to those terms. The terms contained a written agreement to arbitrate, which is identified in bold and capitalized font on the front page. There was even an option to opt out of the arbitration agreement by sending an email to ME.

The arbitration agreement explicitly states that parties must arbitrate all disputes between Plaintiff and any ME entities that arise out of or in any way relate to a service provided by a Massage Envy location or the subject agreement, including the validity, enforceability or scope of said agreement.

Plaintiff argues that Plaintiff never agreed to arbitration with MEF or MEL, only the specific Massage Envy Location. As articulated above, the arbitration agreement applies to all Massage Envy entities.

Plaintiff argues that the Terms of Use Agreement hyperlink did not put a reasonable user on notice of any agreement to arbitrate. The Court disagrees; the hyperlink was clearly displayed. Plaintiff could have easily clicked the link and seen the fact it contained an agreement to arbitrate. The Court also disagrees with Plaintiff’s argument that because the hyperlink and the title of the document are not exactly the same, there was no meeting on the minds. “Terms and Conditions” and “Terms of Use Agreement” are effectively the same in meaning and a reasonable user would understand that the two were the same, given the hyperlink linked to the other document. This is further made clear because the electronic ‘check in’ forms were clearly not a “Terms of Use Agreement,” as described by Plaintiff. All electronic forms asked for Plaintiff’s contact information, areas of focus for a massage, and basic consent for massage. Nothing resembled what a reasonable person would consider a term of use or terms and conditions agreement. Plaintiff was on notice as to the existence of a terms of conditions but opted not to read or ask about said terms prior to agreeing.

Plaintiff also argues that the arbitration agreement does not cover sexual assault claims. Plaintiff cites that the arbitration agreement only governs the use of the Massage Envy website or applications, scheduling appointments, entering into wellness agreements, or other associated tasks—nothing actually is related to the performance of massage services. However, the arbitration agreement includes all disputes, including disputes as to whether the arbitration agreement applies. As such, the Court finds that, at the very least, parties must be compelled to arbitration to determine if the arbitration agreement applies.

Unconscionability

Plaintiff finally argues that the arbitration agreement is unconscionable. Plaintiff cites that the arbitration agreement is substantively unconscionable as it is one-sided and oppressive. Plaintiff cites that it is 12 pages, single spaced, with strong limits of liability and confidentiality restrictions. It is a non-mutual document, making it procedurally unconscionable.

The Court disagrees. Although the contract is not up for debate, giving some level of procedural unconscionability, the Court does not find it substantively unconscionable. Moving Defendants operate a massage facility that has the potential to be sued for allegations of misconduct, as seen here. Moving Defendants are entitled to offset liability before providing a non-necessary service to customers. As such, the Court grants the motion to compel arbitration.

Pro Hac Vice

Stewart is in good standing in Arizona and Colorado and will be associated with California attorneys Lisa D. Angelo and Kelsey L. Maxwell. She is not regularly employed in California and do not regularly engage in substantial business, professional, or other activities in the State of California.

Stewart filed an application to be admitted Pro Hac Vice, which included the following information: her residential and office address, the courts that she is admitted to (along with dates of admissions), assurance she is in good standing, a record of all California pro hac vice appearances in the last two years, and information on the local attorney of record. ME submitted proof of service on parties who have appeared.

Defendants submitted proof of payment and submission. As such, the Court grants the motion.

CONCLUSION

Defendants Massage Envy Franchising, LLC and Massage Envy Limited, LLC’s Motion to Compel Arbitration is GRANTED. The claims asserted against MEL and MEF are stayed pending the outcome of arbitration.

Defendants Massage Envy Franchising, LLC and Massage Envy Limited, LLC’s Motion to Admit Nicole Stewart Pro Hac Vice is GRANTED.

            Moving party is ordered to give notice of this ruling.

Moving Party is ordered to file the proof of service of this ruling with the Court within five days.

The parties are directed to the header of this tentative ruling for further instructions.