Judge: Daniel M. Crowley, Case: 22STCV25429, Date: 2022-12-08 Tentative Ruling

Case Number: 22STCV25429    Hearing Date: December 8, 2022    Dept: 28

Motion to Compel Arbitration

            Having considered the moving, opposing, and reply papers, as well as the argument of counsel, the Court rules as follows.

BACKGROUND

This is an action that arises out of an alleged August 13, 2020 incident where the trunk door of a motor vehicle owned by Defendants Sahnoune Safia Tayjar (Tayjar) and Andkhoy Khatul (Khatul) and operated by Defendant Jawid closed on Plaintiff Aleeda A. Keys (Plaintiff).  Non-Party Jessica Letarte (Letarte) used the rideshare app of Defendants Uber Technologies, Inc. and its affiliates Rasier, LLC and Rasier-CA, LLC (collectively, Uber Defendants) to order the vehicle to transport herself and Plaintiff as passengers.

Plaintiff filed this action against Tayjar, Khatul, Jawid, and Uber on August 5, 2022, alleging causes of action for (1) negligence and (2) negligence per se.

PARTIES’ REQUESTS

Motion to Compel Arbitration

Uber Defendants argue Plaintiff expressly agreed to arbitrate any claims against them, including the claims she now asserts in this action.  As a result, Uber Defendants contend that Plaintiff’s filing of this action in state court violated this agreement.  Uber Defendants assert this action cannot proceed in the current forum, and it must be dismissed or stayed as to Uber Defendants to permit Plaintiff and Uber Defendants to engage in arbitration of Plaintiff’s claims as agreed.

Opposition

In opposition, Plaintiff contends she cannot be bound by the arbitration agreement because the action did not arise out of her use of “Services” as defined by the contract, the arbitration clause cannot be enforced against someone who is not the app-user, and Plaintiff is not a third-party beneficiary.  Plaintiff also argues the arbitration clause is unenforceable because Defendants induced Plaintiff to accept the agreement outside the presence of counsel.

Reply

In reply, Uber Defendants state Plaintiff is bound by the arbitration agreement because she willingly and independently entered it.  Moreover, each of Plaintiff’s claimed defenses to enforcement are ultimately issues of arbitrability that are reserved exclusively for the arbitrator to decide pursuant to the delegation clause.  Uber Defendants further argue they did not violate Rule 4.2 of the Rules of Professional Conduct.

LEGAL STANDARD

The Federal Arbitration Act (FAA) governs arbitration for contracts involving interstate commerce.  A party moving to compel arbitration under the FAA must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement.  (Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130.)  The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.).  (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414; Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

DISCUSSION

Existence of an Arbitration Agreement

The parties do not dispute whether an arbitration agreement exists, only whether the agreement covers the dispute and whether there are grounds for denial.

The relevant arbitration clause is as follows:

2. Arbitration Agreement

(a) Agreement to Binding Arbitration Between You and Uber.

(1) Covered Disputes: . . . 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 . . . , 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.

(4) Delegation Clause: 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. . .

(5) Application to Third Parties: This Arbitration Agreement shall be binding upon, and shall include any claims brought by or against any third parties, including but not limited to your spouses, heirs, third-party beneficiaries and assigns, where their underlying claims arise out of or relate to your use of the Services.  To the extent that any third-party beneficiary to this agreement brings claims against the Parties, those claims shall also be subject to this Arbitration Agreement.

(Buoscio Decl., Exh. C, pp. 10-11, 13-14.)

Dispute Covered by the Agreement

Plaintiff first argues her claim did not arise from the use of Plaintiff’s use of Uber Defendants’ “Services” as defined by the agreement.  (Opposition pp. 9-10.)  The relevant portion reads,

3. The Marketplace Platform and Services

. . . [Uber Defendants’ app] enables you to discover and receive: (i) services rendered by [Uber Defendants] that facilitate your requests to independent third-party providers . . . for the purchase of services, . . . such as transportation . . . ; (ii) . . . ; and (iii) any supporting services, including payment processing and customer support.  [Uber Defendants’ app] . . . and supporting services described in this Section are collectively referred to as “the Services.” . . .

. . . USE OF [Uber Defendants’ app] AND SERVICES DOES NOT ESTABLISH [Uber Defendants] AS[] PROVIDER[S] OF TRANSPORTATION . . . OR AS [] TRANSPORTATION OR PROPERTY CARRIERS.

[Uber Defendants] [ARE] NOT [] COMMON OR MOTOR CARRIER[S] [and] [DO] NOT TRANSPORT YOU . . .

. . . INDEPENDENT THIRD PARTY PROVIDERS, INCLUDING DRIVERS ARE NOT ACTUAL AGENTS, APPARENT AGENTS, OSTENSIBLE GENTS, OR EMPLOYEES OF [Uber Defendants] IN ANY WAY.

(Buoscio Decl., Exh. C, p. 18.)  The agreement defines “Services” as the use Defendants’ app to connect users to third-party providers, not to the separate driving and transportation services that Defendants broker.  Even if agreement applies to “any dispute, claim, or controversy in any way arising out of or relating to” Defendants’ services, the agreement would only bind Letarte, the app-user who Defendants were connecting to third-party providers.  (Buoscio Decl., Exh. C, p. 10; Keys Decl. ¶¶ 4-6.)

This leads to Plaintiff’s second argument, that Plaintiff was not the app-user.  “There 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.)  Uber Defendants contend Plaintiff agreed to arbitration after the incident and that the agreement applies “regardless whether the dispute, claim[,] or controversy occurred or accrued before or after” the agreement was made.  But Plaintiff is not asserting claims against Uber Defendants for services Uber Defendants previously provided to Plaintiff, which may be subject to the arbitration clause; Plaintiff asserts claims against Uber Defendants arising from an incident where Uber Defendants provided services for Letarte.

In reply, Uber Defendants cite the clause that subjects third-party beneficiaries to arbitration as a basis for compelling arbitration of Plaintiff’s claims in this action.  (Reply p. 9.)  Specifically, Uber Defendants contend that Plaintiff was a third-party beneficiary to Letarte’s agreement to arbitrate.  However, as a threshold matter, Uber Defendants raise this argument for the first time in reply and have submitted no evidence supporting their assertion that Letarte entered into a binding arbitration agreement that Uber Defendants are entitled to enforce against Plaintiff.  Uber Defendants only submit evidence relating to Plaintiff’s arbitration agreement with Uber Defendants.  Uber Defendants’ third-party beneficiary argument fails for additional two reasons.  First, as explained above, public policy does not favor arbitration of a dispute a party did not agree to arbitrate.  Here, Uber Defendants seek to compel Plaintiff to arbitrate claims based on Letarte’s agreement to arbitrate.  But absent an agency or similar relationship, courts refuse to enforce arbitration agreements against non-signatories.  (NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 76.)  Second, Plaintiff was not a third-party beneficiary of the agreement between Uber Defendants and Letarte.  A contract has a third-party beneficiary under Civil Code section 1559 when the agreement was made expressly for the benefit of a person who has the ability to enforce the contract.  The agreement was not made expressly for the benefit of Plaintiff, an acquaintance of Letarte.  Though Uber Defendants describe Plaintiff as a “guest rider and third-party beneficiary,” the only third-party beneficiaries named in the agreement are the app-user and Apple and its subsidiaries.  (Reply p. 8; Buoscio Decl., Exh. C, p. 19.)  Plaintiff is not a third-party beneficiary of the arbitration agreement between Letarte and Uber Defendants such that Uber Defendants may enforce that agreement against Plaintiff.

Therefore, this dispute is not covered by the arbitration agreement.

Grounds for Denial

Plaintiff alleges that Uber Defendants’ in-house legal department violated the California Rules of Professional Conduct, rule 4.2 by approaching Plaintiff outside the presence of counsel.  (Opposition p. 16.)  But Plaintiff agreed to Uber Defendants’ terms on her own.  (Reply p. 11.)  She was not approached or contacted by opposing counsel, and Uber Defendants did not have knowledge Plaintiff was represented.  (Reply p. 11.)

CONCLUSION        

Accordingly, Uber Defendants’ motion to compel arbitration is DENIED.

Moving party to give notice.