Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 200 

 

 

BACKGROUND 

 

  This is a lemon law case.  Plaintiff Arayik Arshakyan leased a 2020 Hyundai Ioniq Hybrid.  Defendant Hyundai Motor America (“HMA”) provided an express written warranty for the car, set forth in Plaintiff’s Owner’s Handbook & Warranty Information (“Warranty”).   

Plaintiff alleges that the car is defective and sues HMA for: (1) Breach of the Implied Warranty of Merchantability – Civil Code §1794; (2) Breach of Express Warranty – Civil Code §1794”; (3) Failure to Promptly Repurchase Product – Civil Code §1793.2(d); (4) Failure to Commence Repairs Within A Reasonable Time And To Complete Them Within 30 Days Civil Code §1794; and (5) Violation of Civil Code §1793.2(a)(3).  

The Warranty includes an arbitration provision requiring Plaintiff to resolve any disputes concerning the purchase or performance of the car by binding arbitration.  (Ex. 3 to Ameripour Decl.)  The arbitration provision is in a section titled in bold and all caps: “BINDING ARBITRATION FOR CALIFORNIA VEHICLES ONLY”.  (Ex. 3 to Ameripour Decl., pages 15- 16.)  It states:  

PLEASE READ THIS SECTION IN ITS ENTIRETY AS IT AFFECTS YOUR RIGHTS  

 

If you purchased or leased your Hyundai vehicle in the State of California, you and we each agree that any claim or disputes between us (including between you and any of our affiliated companies) related to or arising out of your vehicle purchase, use of your vehicle, the vehicle warranty, representations in the warranty, or the duties contemplated under the warranty, including without limitation claims related to the failure to conform a vehicle to warranty, failure to repurchase or replace your vehicle, or claims for a refund or partial refund of your vehicle's purchase price (excluding personal injury claims), shall be resolved by binding arbitration at either your or our election, even if the claim is initially filed in a court of law. If either you or we elect to resolve our dispute via arbitration (as opposed to in a court of law), such binding arbitration shall be administered by and through JAMS Mediation, Arbitration and ADR Services (JAMS) under its Streamlined Arbitration Rules & Procedures.  

 

We will pay all JAMS fees for any arbitration except for the initial filing fee of $250. The arbitration will be held in the city or county of your residence. To learn more about arbitration, including how to commence arbitration, you may call any JAMS office or go to www.jamsadr.org.  

 

This agreement to arbitrate is intended to be broadly interpreted and to make all disputes and claims between us (including our affiliated companies) relating to or arising out of your vehicle purchase, use of your vehicle, or the vehicle warranty subject to arbitration to the maximum extent permitted by law.  

 

                                                   *         *         * 

 

IF YOU PURCHASED OR LEASED YOUR VEHICLE IN CALIFORNIA, YOUR WARRANTY IS MADE SUBJECT TO THE TERMS OF THIS BINDING ARBITRATION PROVISION. BY ACCEPTING BENEFITS UNDER THIS WARRANTY, INCLUDING HAVING ANY REPAIRS PERFORMED UNDER WARRANTY, YOU AGREE TO BE BOUND BY THESE TERMS. IF YOU DO NOT AGREE WITH THESE TERMS, PLEASE CONTACT US AT OPT-OUT@HMAUSA.COM WITHIN THIRTY (30) DAYS OF YOUR PURCHASE OR LEASE TO OPT-OUT OF THIS ARBITRATION PROVISION.  

 

(Ex. 3 to Ameripour Decl., pages 15-16.) 

Hyundai also claims the parties entered into a separate arbitration agreement in connection with Plaintiff’s enrollment of her car in Hyundai’s Bluelink service.  Hyundai’s Bluelink services is a connected car system that includes various functions and features. (Rao Decl. ¶ 3.)  

In order to enroll in Hyundai’s Bluelink services, customers must agree to a Connected Services Agreement (“CSA”). (Id. ¶ 4.)  In order for Plaintiff to have enrolled in Hyundai’s Bluelink services, they would have had to click a box to acknowledge that they “read and agree[d] to the Blue Link Terms & Conditions” and then click the “Complete” button.  (Id. at ¶ 6.) The phrase “Terms & Conditions” included a hyperlink to the CSA. (Id.)  

The CSA contains a binding arbitration provision which states:  

Hyundai and you agree to arbitrate any and all disputes and claims between us arising out of or relating to this Agreement, Connected Services, Connected Services Systems, Service Plans, your Vehicle, use of the sites, or products, services, or programs you purchase, enroll in or seek product/service support for, whether you are a Visitor or Customer, via the sites or through mobile application, except any disputes or claims which under governing law are not subject to arbitration, to the maximum extent permitted by applicable law. This agreement to arbitrate is intended to be broadly interpreted and to make all disputes and claims between us subject to arbitration to the fullest extent permitted by law.  

 

                                        *     *       * 

 

The agreement to arbitrate otherwise includes, but is not limited to: claims based in contract, tort, warranty, statute, fraud, misrepresentation or any other legal theory; claims that arose before this or any prior Agreement (including, but not limited to, claims relating to advertising) […]  

 

(CSA, Ex. 2 to Rao Decl., page 15.) 

 

This hearing is on HMA’s motion to compel arbitration.  HMA argues that the parties have an arbitration agreement requiring binding arbitration which covers Plaintiff’s claims, and the Court should stay the proceedings pending completion of the arbitration.   

LEGAL STANDARD 

The FAA applies to any arbitration agreement that is “written” and in a contract “evidencing a transaction involving commerce.” (9 U.S.C. § 2.)  Both criteria are met here: (1) the arbitration provisions are in writing (Ex. 3 to Ameripour Decl., pages 14-16; Ex. 2 to Rao Decl., page 15), and (2) automotive sales necessarily involve interstate commerce, because even when used intra-state, “cars are themselves instrumentalities of interstate commerce.” (United States v. Oliver (9th Cir. 1995) 60 F.3d 547, 550.)  

Moreover, the Warranty explicitly states that “This agreement evidences a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16”, while the CSA states that “This Agreement evidences a transaction in interstate commerce, and thus the Federal Arbitration Act governs the interpretation and enforcement of this arbitration provision.” (Ex. 3 to Ameripour Decl., page 16; Ex. 2 to Rao Decl., page 15.)  When parties expressly adopt the FAA to govern their arbitration, the FAA controls. (Rodriguez v. Am. Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1122.)  

The FAA’s policy favors arbitration.  However, the policy is to make “arbitration agreements as enforceable as other contracts, but not more so.”  (Morgan v. Sundance, Inc. (2022) 596 U.S. 411, 418–19.)  Accordingly, a court must hold a party to its arbitration contract just as the court would to any other kind.  (Id.)  But a court may not devise novel rules to favor arbitration over litigation.  (Id.)  The federal policy is about treating arbitration contracts like all other contracts.  (Id.)   

Further, 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.)¿ “California law, like [federal law], reflects a strong policy favoring arbitration agreements[.]”¿ (Wagner Const. Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 31 (internal quotations omitted).)  

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

DISCUSSION 

In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law  help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541; Victoria v. Superior Court (1985) 40 Cal. 3d 734, 835.)¿¿  

Although “[t]he law favors contracts for arbitration of disputes between parties” (Player v. Geo. M. Brewster & Son, Inc. (1971) 18 Cal.App.3d 526, 534), “there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate[.]” (Weeks v. Crow (1980) 113 Cal. App. 3d 350, 353..)¿ “[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); see also Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1518 (“Because arbitration is a contractual matter, a party that has not agreed to arbitrate a controversy cannot be compelled to do so”).)¿¿¿¿¿¿¿  

HMA presents evidence of two arbitration agreements, one in a warranty manual and the other in the CSA.  Applying California law, the Ninth Circuit found no consent to an arbitration clause where it was unilaterally inserted into a warranty manual.  (Norcia v. Samsung Telecommunications (9th Cir. 2017) 845 F.3d 1279, 1285-1286.)   There, as here, the plaintiff did not expressly assent to any agreement in the manual.  Nor did the plaintiff sign the brochure or otherwise act in a manner that would show his intent to use his silence, or failure to opt out, as a means of accepting the arbitration agreement.  (Id.)  The Ninth Circuit noted that under California law, an offeree’s inaction after receipt of an offer is generally insufficient to form a contract, and therefore, Samsung’s offer to arbitrate all disputes with the plaintiff “cannot be turned into an agreement because the person to whom it is made or sent makes no reply, even though the offer states that silence will be taken as consent.”  (Id.)   

So it is here.  Plaintiff did not expressly assent to the arbitration provision in the manual.  (Arayik Arshakyan ¶6; Hasmik Arshakyan ¶5.)  Plaintiff was neither aware of nor presented with the arbitration provision in the manual.  (Id.)   

As to the CSA, Plaintiff attests he did not click the box, agreeing to enroll in the Bluelink Service, and therefore, he could not have agreed to the terms and conditions of the service, including the arbitration provision.  (Arayik Arshakyan ¶¶ 4-5; Hasmik Arshakyan ¶¶ 6, 8.)  HMA submits the declaration of Vijay Rao which states that Plaintiff enrolled in Bluelink on January 1, 2021, but fails to provide any documentary evidence of this.  HMA’s Rao does not have personal knowledge of the enrollment nor that Plaintiff actually clicked the box.  Accordingly, at best, the evidence is in equipoise, and because HMA must establish the existence of the arbitration agreement by a preponderance of the evidence, it fails to meet its burden.   

CONCLUSION 

For the foregoing reasons, the Court DENIES Defendant Hyundai Motor America’s motion to compel arbitration and for a stay.   

 

DATED:  December 6, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court