Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

MOVING PARTY: Amazon.com Services, LLC  

 

RESPONDING PARTY: Plaintiff Eric Mendoza 

 

BACKGROUND 

Defendant Amazon.com Services LLC (“Amazon”) provides an online platform through which third parties can sell products.  Plaintiff Eric Mendoza created a third party seller account on Amazon, under the name “Works Concepts, Inc.”, which sells automotive parts and accessories.  (Compl., ¶8.)   

All third party sellers must accept and agree to Amazon’s Business Solutions Agreement (“BSA”) as a condition for selling on Amazon.com.  (Lake Decl. ¶¶4-5.)  The BSA contains a mandatory arbitration provision.  (Exs. B, C to Lake Decl. § 18.)  Plaintiff and Amazon both agreed to resolve “any dispute” through binding arbitration: “Amazon and you both consent that any dispute with Amazon or its Affiliates or claim relating in any way to this Agreement or your use of the Services will be resolved by binding arbitration[.]”  (Id.)        

In December 2020, Amazon advised Works Concepts that its account was suspended due to listing automotive parts and accessories that were not permitted for sale on Amazon because they violated Title II of the Clean Air Act.  (Compl. ¶16.)  Plaintiff attempted to remove these restricted items from his inventory but claims Amazon’s platform would not allow him to do so.  (Id. ¶¶17, 23.)  Plaintiff alleges Amazon improperly deactivated his seller account and failed to return the reserve funds in the account that Plaintiff was required to maintain in the event of claims or customer chargebacks from sales.  (Id. ¶¶ 16-29.)     

The Complaint asserts four claims for (1) breach of the implied covenant of good faith and fair dealing, (2) breach of contract, (3) negligent interference with prospective economic relations and (4) conversion.  Plaintiff seeks $5,444.88 for the reserve funds and $299,444.88 for the loss of business income he claims he could have made through his Amazon account.  (Id. ¶¶ 39, 47, 57, 64.)  Plaintiff is appearing in pro per.         

This hearing is on Amazon’s motion to compel arbitration.  Amazon argues that a valid arbitration agreement exists which requires arbitration of any disputes between Amazon and Plaintiff.   

LEGAL STANDARD 

The Federal Arbitration Act (“FAA”) applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement.  Here, the arbitration agreement states that “[t]he Governing Laws will govern this Agreement.”  (Ex. B to Lake Decl. § 18)  “Governing Laws” is defined to include the FAA.  (Ex. B to Lake Decl. at p. 9.)  Accordingly, the parties agreed the FAA governs the arbitration agreement.  

Under the FAA, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration …”.  (Moses H. Cone Memorial Hospital v. Mercury Constr. Corp. (1983) 460 U.S. 1, 24–25.)  This federal policy favoring arbitration preempts any state law impediments to the policy’s fulfillment.  If a state law interferes with the FAA’s purpose of enforcing arbitration agreements according to their terms, the FAA preempts the state law provision, no matter how laudable the state law’s objectives. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352.)  Under the supremacy clause of the United States Constitution (art. VI, cl. 2), the FAA requires any conflicting state law to give way. (Nitro-Lift Technologies, L. L. C. v. Howard (2012) 133 S.Ct. 500, 504). 

However, while the arbitration agreement here is governed by the FAA, the agreement may be enforced via the summary procedures provided by California arbitration law.  (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal. 4th 394, 409-410.)  It is a “general and unassailable proposition . . . that States may establish the rules of procedure governing litigation in their own courts,” even though the controversy is governed by substantive federal law.  (Felder v. Casey (1988) 487 U.S. 131, 138.)  By the same token, however, a state procedural rule must give way “if it impedes the uniform application of the federal statute essential to effectuate its purpose, even though the procedure would apply to similar actions arising under state law.” (McCarroll v. L.A. County etc. Carpenters (1957) 49 Cal. 2d 45, 61, 62.)   

“We think it plain the California procedures for a summary determination of the petition to compel arbitration serve to further, rather than defeat, the enforceability policy of the [FAA.]”  (Rosenthal, 14 Cal. 4th at 409.)  Code Civ. Proc. § 1281.2 and 1290.2 are neutral as between state and federal law claims for enforcement of arbitration agreements.  (Id.)  “They display no hostility to arbitration as an alternative to litigation; to the contrary, the summary procedure provided, in which the existence and validity of the arbitration agreement is decided by the court in the manner of a motion, is designed to further the use of private arbitration as a means of resolving disputes more quickly and less expensively than through litigation.”  (Id.) 

As with federal law, under California law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes.  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion, 563 U.S. at 339.)  To further that policy, Code Civ. Proc. §1281.2 requires a trial court to enforce a written arbitration agreement unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for rescission of the agreement or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues.    

When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by a preponderance of evidence.  (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.)  It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement’s provisions.  (Gamboa, 72 Cal.App.5th at 165.)  The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause.  (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.)  The trial court then weighs all the evidence submitted and uses its discretion to make a final determination.  (Id.)   

If the court orders arbitration, then the court shall stay the action until arbitration is completed.  (See Code Civ. Proc., § 1281.4.) 

 

 

 

DISCUSSION 

Existence of Arbitration Agreement 

In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute.  Because Washington law is the governing law under the BSA (Ex. B to Lake Decl. at p. 9), Washington contract law will help guide the court in making this determination.  Even when the FAA applies, “interpretation of the arbitration agreement is governed by state law principles.”  (Tjart v. Smith Barney, Inc. (2001) 107 Wn. App. 885, 895.) 

Although the law favors contracts for arbitration, there is no policy compelling persons to accept arbitration of controversies which the parties have not agreed to arbitrate.  “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” (AT&T Technologies v. Communications Workers (1986) 475 U.S. 643, 648 (citations and internal quotations omitted).)¿¿¿¿¿¿¿  

Here, Amazon has produced a copy of an arbitration agreement whereby Plaintiff agreed to submit to binding arbitration “any dispute” with Amazon relating to the BSA or Plaintiff’s use of Amazon’s services.  Accordingly, Amazon has met its burden of proving the existence of an arbitration agreement.     

Unconscionability  

The Court must next consider whether the arbitration agreement is unconscionable.  Washington courts recognize two categories of unconscionability, procedural and substantive.  (Zuver v. Airtouch Communications (Wash. 2004) 153 Wn.2d 293, 303¿(citation omitted).)   

Procedural unconscionability is present when there is a “lack of a meaningful choice, considering all the circumstances surrounding the transaction,” including (1) “the manner in which the contract was entered,” (2) whether the party had “a reasonable opportunity to understand the terms of the contract,” and (3) whether “the important terms¿[were] hidden in a maze of fine print.”¿ (Schroeder v. Fageol Motors, Inc. (Wash. 1975) 86 Wn.2d 256, 260¿(quoting¿Williams v. Walker-Thomas Furniture Co. (D.C. Cir. 1965) 350 F.2d 445, 449).)¿ 

“Substantive unconscionability involves those cases where a clause or term in the contract is alleged to be one-sided or overly harsh[.]”¿(Adler¿v. Fred Lind Manor (Wash. 2004) 153 Wn.2d 331, 344.)  Terms used to define substantive unconscionability include “shocking to the conscience,” “monstrously harsh,” and “exceedingly calloused.”¿(Zuver, 153 Wn 2d at 303.)¿ “In Washington, either substantive¿or¿procedural unconscionability is sufficient to void a contract.”¿(Gandee v. LDL Freedom Enters., Inc. (Wash. 2013) 176 Wn.2d 598, 603.)¿ The party attacking the contract or contract terms bears the burden of proving unconscionability.¿ (Tjart, 107 Wn. App. at 898.) 
Plaintiff argues that the arbitration agreement is procedurally unconscionable because it is a contract of adhesion.¿ Washington courts analyze the following factors to determine whether an adhesion contract exists: (1) whether the contract is¿a standard form contract, (2) whether it was prepared by one party and submitted to the other on a “take it or leave it” basis, and (3) whether there was no true equality of bargaining power between the parties.¿ (Yakima Cty. (West Valley) Fire Prot. Dist. No. 12 v. City of Yakima, 122 Wn.2d 371, 393¿(quoting¿Standard Oil Co. of Cal. v. Perkins, 347 F.2d 379, 383 n. 5 (9th Cir. 1965)).  The fact that a contract is an adhesion contract is relevant to, though not dispositive of, the procedural¿unconscionability inquiry.¿ (Id.) 

The Court agrees with Plaintiff that the arbitration agreement is a contract of adhesion. The agreement is a standard form contract presented to all sellers.¿The agreement was prepared by Amazon and presented to Plaintiff as a condition of using Amazon's services, i.e., on a “take it or leave it” basis.  There is no indication that Plaintiff enjoyed an “equality of bargaining power” with Amazon such that Plaintiff could negotiate the terms of the BSA.  “However, the fact that an agreement is an adhesion contract does not necessarily render it procedurally unconscionable.” ¿(Zuver, 153 Wn 2d at 306.)  Whether or not a contract is one of adhesion, the key inquiry for finding procedural unconscionability is whether the party challenging the contract lacked meaningful choice.¿ (Id. at 305.) 

Here, Plaintiff had notice of the arbitration agreement, and therefore had a meaningful choice not to accept its terms.  While the arbitration agreement was contained in a ”miscellaneous” section, the arbitration agreement was set out in bold including that “[t]here is no judge or jury in arbitration, and court review of an arbitration award is limited.”  (Ex. B to Lake Decl. §18.)  The Ninth Circuit has held in similar circumstances, “[t]here is no procedural unconscionability in the presentation of [Amazon’s] arbitration clause … which appears in the same size as the rest of the [agreement], with key terms bolded.”  (Wisely v. Amazon.com, Inc. (9th Cir. 2017) 709 Fed. Appx. 862, 864.) 

Under Washington law, contracts formed in Internet transactions where parties must click a button stating they agree to the contract terms (referred to as “clickwrap” agreements) are enforceable like any other contract.  See, e.g., Doe v. Project Fair Bid Inc. (W.D. Wash. Aug. 11, 2011) 2011 U.S. Dist. LEXIS 89511 at *10 (“This kind of ‘clickwrap’ agreement has been upheld in several cases in this circuit and elsewhere.”); Hauenstein v. Softwrap Ltd. (W.D. Wash. Aug. 17, 2007)  2007 U.S. Dist. LEXIS 60618 at *6-*8 (enforcing arbitration agreement where plaintiff manifested his agreement by clicking the appropriate box); Riensche v. Cingular Wireless, LLC (W.D. Wash. Dec. 27, 2006) 2006 U.S. Dist. LEXIS 93747 at *5-*6 (compelling arbitration where plaintiff “was required to agree to the Terms online”).)   

More specifically, courts across the country routinely hold that Amazon’s arbitration agreement is binding on those who accept it—just as Plaintiff did here.  In Peters v. Amazon Services, LLC (W.D. Wash. 2013) 2 F.Supp.3d 1165 which involved a third party seller just like Plaintiff, the court held that plaintiffs accepted the BSA and agreed to its arbitration clause when they subscribed as Amazon sellers.  (Id. at 1170-72; see also Wisely 709 Fed. Appx. at 864 (enforcing Amazon’s arbitration agreement with a customer who accepted the agreement by clicking a box, over customer’s challenge that the agreement was unconscionable); Fagerstrom v. Amazon.com, Inc. (S.D. Cal. 2015) 141 F. Supp.3d 1051, 1057-60, 1064-76 (finding plaintiffs agreed to arbitration when they made purchases on Amazon and rejecting argument that agreement was unconscionable); Ekin v. Amazon Services, LLC (W.D. Wash. 2014) 84 F. Supp. 3d 1172, 1175-78 (finding plaintiffs agreed to arbitration when they made purchases on Amazon and enforcing arbitration agreement over plaintiffs’ objection that agreement was unconscionable).)        

We now address whether the Agreement is substantively unconscionable.  Substantive unconscionability focuses on the one-sidedness or overly harsh effect of the contract term or clause.  (Adler, 153 Wn.2d at 344.)   

Here, the arbitration agreement is not one-sided as both Amazon and the seller are required to submit “any dispute” (with exceptions not applicable here) to binding arbitration.  (Ex. B to Lake Decl. § 18.)  The arbitration agreement also provides that Plaintiff is entitled to the same damages and relief as a court may allow.  (Id.)  ¿The arbitration agreement obliges Amazon to pay all arbitrator fees and costs for claims under $10,000, to unilaterally waive its claims for attorneys’ fees, and also allows Plaintiff to arbitrate by “telephone, written submission or in person at a mutually agreed location.”  (Id. (emphasis added).)  Arbitration is conducted not according to¿some rules created by Amazon, but rather by the American Arbitration Association's (“AAA’s”) published and accessible rules, which Plaintiff has not shown are substantively unconscionable.   

Plaintiff argues the arbitration provision is overly broad because it was not “foreseeable at the time of contracting” that Amazon would suspend Plaintiff’s account under this specific set of circumstances, claiming his suspension was “egregious” and “hypocritical”.  Plaintiff’s argument is not supported by any authority, and accepting it would render every arbitration agreement that required the arbitration of “any dispute” substantively unconscionable.        

In sum, the Court finds that there is no procedural or substantive unconscionability.   

Arbitrability 

The Court next considers who should decide the arbitrability of the dispute, i.e., whether the arbitration provision encompasses the claims asserted by Plaintiff.¿ Although threshold questions of arbitrability are ordinarily for courts to decide in the first instance, under the FAA, the parties to an arbitration agreement may agree to delegate to the arbitrator, instead of a court, questions regarding the enforceability of the agreement.  (Thach v. Matrix Anesthesia P.S., 2019 Wash. App. LEXIS 2184 at *10 (citing Henry Schein, Inc. v. Archer and White Sales, Inc. (2019) 139 S. Ct. 524, 527.)¿ When the¿parties delegate the threshold¿arbitrability question to an¿arbitrator, the court has no power to decide the issue, even if the argument that arbitration applies to the dispute appears wholly groundless.¿ (Id.)  But to be effective, the language of the delegation clause must be clear and unmistakable.  (Id.)   

Here, the arbitration provision incorporates arbitration rules that give the arbitrator the authority to decide arbitrability.  (Ex. B to Lake Decl. §18.)  “[I]ncorporation of AAA rules constitutes clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability.”  (Brennan v. Opus Bank (9th Cir. 2015) 796 F.3d 1125, 1130; accord Johnson v. Maker Ecosystem Growth Holdings, Inc. (N.D. Cal. Sept. 25, 2020) 2020 U.S. Dist LEXIS 176923 at *4 (“[T]he arbitration clause incorporates the AAA rules, and pursuant to those rules, ‘the arbitrability of any claim’ is delegated to the arbitrator.”).)   “Virtually every circuit to have considered the issue has determined that incorporation of the [AAA] arbitration rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability.”  (Oracle Am., Inc. v. Myriad Grp. A.G. (9th Cir. 2013) 724 F.3d 1069, 1074.)  

Accordingly, the Court defers to the arbitrator the question of whether Plaintiff’s claims are within the scope of the arbitration agreement.¿¿¿ 

Dismissal of Proceedings¿ 

“Although the plain text of the FAA appears to mandate a¿stay pending¿arbitration upon application of a party, binding precedent establishes that district courts may¿dismiss suits when, as here, all claims are subject to¿arbitration.”  (Forrest v. Spizzirri (9th Cir. 2023) 62 F.4th 1201, 1203.)  The Court, therefore, dismisses the Complaint.  ¿¿¿ 

CONCLUSION 

Based on the foregoing, the Court GRANTS Defendant’s motion to compel arbitration and dismisses the Complaint.   

 

IT IS SO ORDERED. 

 

DATED:  August 10, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court