Judge Elaine W. Mandel, Case Number: 21SMCV01935, Date: 2023-11-30 Tentative Ruling

Judge: Elaine W. Mandel, Case: 21SMCV01935, Date: 2023-11-30 Tentative Ruling

Case Number: 21SMCV01935 Hearing Date: November 30, 2023 Dept: P

Tentative Ruling

Marvisi v. TheRealReal, Inc. et al., Case No. 21SMCV01935

Hearing Date November 30, 2023

Defendant United Parcel Service, Inc.’s Motion to Compel Arbitration

Plaintiff Marvisi alleges defendants The RealReal and United Parcel Service lost watches he intended to consign. Defendant UPS moves to compel arbitration pursuant to its agreement with The RealReal.

UPS’s service terms and conditions state “claimant and UPS agree that . . . any controversy or claim, whether at law or equity, arising out of or related to the provision of services by UPS, regardless of the date of accrual of such dispute, shall be resolved in its entirety by individual (not class-wide nor collective) binding arbitration.” UPS, Exhibit A §54. The terms define “claimant” as “any person asserting or against whom UPS asserts any claim in any forum for legal or equitable relief . . . arising out of or related to the provision of services by UPS.” Id. §2.

Marvisi did not contract with UPS; the contract was between UPS and The RealReal. UPS argues the arbitration clause is enforceable against Marvisi because his claims are intertwined with the UPS/RealReal contract, and Marvisi is a third-party beneficiary. Nonsignatory claims that rely upon, reference or are intertwined with claims under a contract with an arbitration clause are arbitrable. Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1287.

Marvisi’s claims against UPS stem from obligations created by the contract between UPS and The RealReal. The FAC alleges “RealReal contracted with UPS to effectuate the delivery of the Watches to Mr. Marvisi.” FAC pg. 3.

Marvisi argues it would be unconscionable to compel arbitration, since he was unaware of the arbitration agreement between TheRealReal and UPS and did not waive his right to litigate. He argues federal cases cited are inapplicable. This court is not bound by federal precedent, but plaintiff does not address state court cases cited, nor does he present authority that enforcement of an arbitration clause against a third party can be deemed unconscionable. Generally, unconscionable contracts contain one-sided terms favoring the party with greater bargaining power or are formed under conditions of surprise or coercion. Those elements are not present.

Under Exline, supra, when a claim relies on or references a contract containing an arbitration clause, the arbitration clause is enforceable against a third-party plaintiff. Marvisi’s claims against UPS are dependent on the agreement between UPS and The RealReal. Without that agreement, UPS would not have had the watches, and there would be no basis for Marvisi to sue UPS. Marvisi’s claims are intertwined with the UPS/RealReal contract, and its arbitration clause is valid and enforceable against him.

Under Cal. Code of Civ. Proc. §1281.2(c), a court may deny a motion to compel arbitration when “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of transactions and there is a possibility of conflicting rulings on a common issue of law or fact.”

Marvisi next argues the motion should be denied under §1281.2(c), because he and The RealReal are engaged in JAMS arbitration, creating the possibility of conflicting rulings if the claim against UPS proceeds to AAA arbitration.

The claims against UPS and The RealReal share overlapping issues of law and fact -- whether The RealReal or UPS was responsible for loss of the watches. The dispute between UPS and Marvisi is governed by the Federal Arbitration Act, not the California Code of Civil Procedure. As UPS is an interstate carrier and a Georgia corporation, while plaintiff is a California resident, so the FAA applies. 9 U.S.C. §2. The FAA includes no third-party litigation exception allowing a court to deny arbitration to prevent inconsistent rulings of law or fact. See, Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1116. The court lacks discretion to deny arbitration under §1281.2(c).

Marvisi seeks to consolidate the claims against UPS with the JAMS arbitration. Doing so would contradict the terms of the UPS agreement, which is enforceable. Marvisi presents no authority to allow this court to alter the agreement’s terms and compel arbitration before JAMS, rather than AAA. GRANTED. The claims against UPS are stayed.