Judge: Edward B. Moreton, Jr., Case: 22SMCV02759, Date: 2023-07-20 Tentative Ruling

Case Number: 22SMCV02759    Hearing Date: July 20, 2023    Dept: 205

Background

            On December 19, 2022, Plaintiff DANIELLE BROWN, formerly known as DANIELLE KEITH (“Plaintiff”) filed this action against Defendant ALMOND COW, INC. (“Defendant”), alleging two causes of action for misappropriation of name and image and violation of Civil Code section 3344.

            On February 23, 2023, Defendant filed the instant motion to compel arbitration and dismiss or stay proceedings.[1] On July 6, 2023, Plaintiff opposed the motion. On July 13, 2023, Defendant replied.

Motion to Compel Arbitration Standard

Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) said agreement covers the controversy or controversies in the parties’ dispute.¿(Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.) A party moving to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348, 356-357.)

            An arbitration clause that “clearly and unmistakably” empowers the arbitrator to decide issues of arbitrability is enforceable. (B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, 957.) “[T]he arbitration provision's ‘reference to the JAMS Rules further evidences the parties' clear and unmistakable intent to submit issues of arbitrability to the arbitrator.’” (Id.) [internal citations omitted]. “There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. [Citation.] Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.’ [Citations.] The ‘clear and unmistakable’ test reflects a ‘heightened standard of proof’ that reverses the typical presumption in favor of the arbitration of disputes.” (Id., at p. 957) [internal citations omitted].)

Analysis

            Preliminary Issue

            Contrary to Defendant’s contentions in its moving papers, the California Arbitration Act governs this motion. The fact that this dispute implicates interstate commerce and the fact that the subject agreement contains a Georgia choice-of-law clause are insufficient to conclude otherwise. In the absence of an express agreement incorporating the procedural provisions of the Federal Arbitration Act or Georgia law, the California Arbitration Act applies as the default procedural rules in California courts. (See Victrola 89, LLC v. Jaman Properties 8 LLC (2021) 46 Cal.App.5th 337, 345-346.) The Arbitration Agreement (as defined below) does not specify that either federal or Georgia law govern the enforcement of the Arbitration Agreement. (Yeretsian Decl., Ex. A, § 13, ¶ 14.7; see also Victrola 89, 46 Cal.App.5th at pp. 345-346 [noting that when an arbitration agreement provides its “enforcement” is governed by the California Arbitration Act or the Federal Arbitration Act, that particular law governs the motion to compel arbitration.]) Therefore, the California Arbitration Act governs this motion to compel arbitration.

Existence of Arbitration Agreement

Defendant has attached a copy of a contract between Plaintiff and Defendant that provides for arbitration of disputes thereunder between the parties and which appears to be signed by Plaintiff, (the “Arbitration Agreement”). (Yeretsian Decl., Ex. A.) This is sufficient for Defendant to meet its moving burden in establishing the existence of an arbitration agreement. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060 [parties seeking to compel arbitration met their initial burden by attaching a copy of the arbitration agreement].) The burden now shifts to Plaintiff to challenge its validity.

            Plaintiff contends there is no admissible evidence of any agreement to arbitrate Plaintiff’s claims. Plaintiff argues that the declaration of Sarkis Yeretsian, counsel for Defendant, is insufficient because the Arbitration Agreement is not authenticated and Defendant’s counsel lacks personal knowledge regarding the Arbitration Agreement.^[2]

            The Court finds Plaintiff’s arguments unpersuasive. Defendant is not required to authenticate the Arbitration Agreement bearing Plaintiff’s electronic signature when filing the motion. (Espejo, supra, 246 Cal.App.4th at p. 1060.) Authentication is only required once Plaintiff has challenged the validity of the Arbitration Agreement bearing Plaintiff’s electronic signature. (Id.) Plaintiff has not done that. Nowhere in Plaintiff’s declaration is there any contention that Plaintiff’s electronic signature is invalid. Accordingly, the Court finds that Defendant has satisfied its burden of establishing the existence of an Arbitration Agreement.

            Covered Claims and Arbitrability

            The next issue is whether the Arbitration Agreement covers Plaintiff’s claims. The Court will not address whether Plaintiff’s claims are covered because Paragraph 13.2 provides that, “[t]he Arbitrator shall have the sole power to rule on matters of jurisdiction, arbitrability, timeliness of claims, and issue preclusion.” (Yeretsian Decl., Ex. A, ¶ 13.2.) The Arbitration Agreement also provides that any claims under the subject agreement are to be settled by binding arbitration in accordance with the Commercial Rules of the American Arbitration Association. (Id.) The Court finds this to be “clear and unmistakable” evidence that the issue of arbitrability is determined by the arbitrator. (B.D., supra, 76 Cal.App.5th at pp. 957-958.)

Plaintiff’s citation to Cape Flattery Ltd. v. Titan Maritime, LLC (9th Cir. 2011) 647 F.3d 914, 919-920 is unavailing because that is a federal court decision which is not binding on California courts. (People v. Beltran (2013) 56 Cal.4th 935, 953.) Plaintiff’s citation to AT&T Technologies, Inc. v. Communication Workers of America (1986) 475 U.S. 643, 651 is also unavailing because that same case also specifically provides that, “[u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” (Id., at p. 649) [emphasis added].

Accordingly, whether Plaintiff’s claims fall within the scope of the Arbitration Agreement is for the arbitrator to decide, not the Court.

            Unconscionability

“[P]rocedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102 (“Armendariz”).) The courts invoke a sliding scale 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, i.e., the 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., at p. 114.)  Plaintiff bears the burden of proving that the provision at issue is both procedurally and substantively unconscionable. 

“Procedural unconscionability focuses on the elements of oppression and surprise. [Citations] ‘Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice … Surprise involves the extent to which the terms of the bargain are hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.’ [Citations]” (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469.)

“Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘overly harsh’ or ‘‘one-sided’ results’ [Citations] that is, whether contractual provisions reallocate risks in an objectively unreasonable or unexpected manner.  [Citation] Substantive unconscionability ‘may take various forms,’ but typically is found in the employment context when the arbitration agreement is ‘one-sided’ in favor of the employer without sufficient justification, for example, when ‘the employee’s claims against the employer, but not the employer’s claims against the employee, are subject to arbitration.’ [Citations]” (Roman, supra, 172 Cal.App.4th at pp. 1469-1470.)

The Court notes that Plaintiff does not contend that the provision governing arbitrability of disputes is unconscionable. (See B.D., supra, 76 Cal.App.5th at p. 957.) As such, Plaintiff has not presented any evidence to show that this provision is unconscionable. (Id., at p. 959.) Instead, Plaintiff’s unconscionability argument focuses on the Arbitration Agreement itself. Given the clear and unmistakable terms of the Arbitration Agreement delegating issues of arbitrability to the arbitrator, (Yeretsian Decl., Ex. A, ¶13.2), that issue falls outside the Court’s ability to determine here. (See Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 892 [issues regarding enforceability of the subject agreement and corresponding arbitration agreement may be delegated to the arbitrator].)

            Therefore, the Court will grant the motion to compel arbitration and stay proceedings. 

The Court denies defendant’s request to dismiss the case.   

Conclusion

            The Court GRANTS the motion to compel arbitration. This action is STAYED pending arbitration.

            Defendant to give notice.

Dated:  July 20, 2023

__________________________________________

Edward B. Moreton, Jr.

Judge of the Superior Court