Judge: Gary I. Micon, Case: 24CHCV04317, Date: 2025-04-18 Tentative Ruling
Case Number: 24CHCV04317 Hearing Date: April 18, 2025 Dept: F43
Dept. F43
Date: 04-18-25
Case # 24CHCV04317, Rodriguez-Croitoru v. Hyundai
Motor America
Trial Date: None set.
COMPEL ARBITRATION
MOVING PARTY: Defendant Hyundai Motor America
RESPONDING PARTY: Plaintiff Clarissa Y.
Rodriguez-Croitoru
RELIEF REQUESTED
Order compelling plaintiff to arbitrate their
claims and staying this action.
RULING: Motion
is granted.
SUMMARY OF ACTION
Plaintiff Clarissa Y. Rodriguez-Croitoru sued
defendant Hyundai Motor America (Defendant) on November 21, 2024, alleging
Song-Beverly causes of action for (1) breach of express warranty; (2) breach of
implied warranty; and (3) violation of section 1793.2(b).
Plaintiff alleges that she purchased a 2021
Hyundai Sonata from a Mission Hills Hyundai dealership on June 23, 2021. Defendant’s express written warranty
accompanied the vehicle. The vehicle was
delivered to Plaintiff with several defects in the HVAC System, Infotainment
System, and airbags. These defects make
the vehicle unsafe to drive. Plaintiff
alleges that Defendant has failed to repair or replace the defective vehicle.
On January 3, 2025, Defendant filed a
petition to compel arbitration of Plaintiff’s claims according to arbitration
clauses in the Vehicle Owner’s Handbook & Warranty Information and the
Bluelink Connected Services Agreement.
Plaintiff opposes, asserting that she did not
assent to the Warranty’s arbitration clause.
Arbitration clauses hidden in warranties are not contracts that are
enforceable under the Federal Arbitration Act.
For this same reason, Plaintiff is not equitably estopped from asserting
breach of warranty claims. Just because Plaintiff did not opt out does not mean
she assented to arbitration.
Additionally, Defendant cannot use the Blue Connected Services Agreement
to compel arbitration because Plaintiff did not understand that enrolling in
Bluelink services was required to purchase or operate her vehicle. The Blue Connected Services Agreement is a
“click wrap” agreement that does not require a customer to view the agreement’s
terms and conditions before agreeing to the agreement’s terms and
conditions. Regardless, Defendant does
not present sufficient evidence that the click-wrap agreement provided
sufficient information to put Plaintiff on notice of the terms and conditions. Defendant replied presenting examples of
cases where other courts have granted its petitions for arbitration based on
the Vehicle Owner’s Handbook & Warranty Information and the Bluelink
Connected Services Agreement.
ANALYSIS
Request
for Judicial Notice
Defendant asks the court to take judicial
notice of Exhibit 4 - Plaintiff’s Complaint, filed on or about November 21,
2024. The court grants Defendant’s
request pursuant to Evidence Code § 452(d).
Arbitration
Civil Procedure Code section 1281.2 empowers
the Court to compel parties to arbitrate disputes pursuant to an agreement to
do so. “The court shall order the
petitioner and the respondent to arbitrate the controversy if it determines
that an agreement to arbitrate the controversy exists, unless it determines
that: (a) The right to compel arbitration has been waived by the
petitioner; or (b) Grounds exist for the revocation of the
agreement.” (Code Civ. Proc., § 1281.2,
subds. (a), (b).)
California law incorporates many of the basic
policy objectives contained in the Federal Arbitration Act, including a
presumption in favor of arbitrability. (Engalla
v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972.) The petitioner bears the burden of proving
the existence of a valid arbitration agreement by the preponderance of the
evidence, the party opposing the petition then bears the burden of proving by a
preponderance of the evidence any fact necessary to demonstrate that there should
be no enforcement of the agreement, and the trial court sits as a trier of fact
to reach a final determination on the issue.
(Rosenthal v. Great Western Financial Securities Corp. (1996) 14
Cal.4th 394, 413.)
Under both the Federal Arbitration Act and
California law, arbitration agreements are valid, irrevocable, and enforceable,
except on such grounds that exist at law or equity for voiding a contract. (Winter
v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must
establish the existence of a written arbitration agreement between the
parties. (Code Civ. Proc., §
1281.2.) This is usually done by
presenting a copy of the signed, written agreement to the court and by
including the provisions of the arbitration agreement that provide for
arbitration in the petition. (Cal. Rules
of Court, rule 3.1330.) The moving party
must also establish the other party’s refusal to arbitrate the
controversy. (Code Civ. Proc., § 1281.2;
Espejo v. Southern California Permanente Medical Group (2016) 246
Cal.App.4th 1047, 1060; see also Bannister v. Marinidence Opco, LLC (2021)
64 Cal.App.5th 541; Hyundai Amco America,
Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577 [filing a lawsuit against
the moving party for claims within the scope of the arbitration agreement].)
The arbitration agreements at issue in this
motion are contained in the Owner’s Handbook & Warranty Information (Warranty
Agreement) and the Bluelink Connected Services Agreement (Bluelink Agreement).
1. Applicable Law
Both parties concede that the Federal
Arbitration Act (FAA) governs the arbitration clause in the 2021 Owner’s
Handbook and Warranty Information. The Warranty
Agreement expressly states “This agreement evidences a transaction involving
interstate commerce and shall be governed by the Federal Arbitration Act.” (See Ameripour Dec., Exh. 3, p. 16.) The Bluelink Agreement’s arbitration clause also
states that the FAA “governs the interpretation and enforcement” of the
arbitration provision. (Declaration of Vijay
Rao, Exh. 2, p. 15.)
California law provides that the parties may
expressly designate that an arbitration proceeding should move forward under
the FAA’s procedural provisions rather than under state procedural law. (Cronus
Investments, Inc. v. Concierge Services (2005) 35 Cal. 4th 376, 394).
Accordingly, the FAA applies to both the
Warranty Agreement and Bluelink Service Agreement’s arbitration clauses.
2. Owner’s Handbook & Warranty Information
Defendant asserts that it provided its Warranty
Agreement directly to Plaintiff in connection with the vehicle purchase and
that the warranty contains the arbitration provision. Plaintiff alleges that the arbitration
provision is not enforceable because it is not a contract. The warranty is located in Plaintiff’s
Owner’s Handbook & Warranty Information and includes an agreement to
arbitrate. (Declaration of Ali
Ameripour, Exh. 3, pp. 15-16.)
The Warranty provides:
BINDING ARBITRATION FOR CALIFORNIA VEHICLES ONLY
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 . . . related to or arising out of your vehicle purchase, use of your
vehicle, the vehicle warranty, representations in the warranty, or 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), but excluding claims brought under
the Magnuson-Moss Warranty Act, 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.
In any arbitration, the arbitrator shall be bound by the
terms of this agreement and shall follow the applicable law. . . . The arbitrator cannot hear class or
representative claims or requests for relief on behalf of others purchasing or
leasing Hyundai Motor America vehicles as permitted by law. If a court or arbitrator decides that any
part of this agreement to arbitrate cannot be enforced as to a particular claim
for relief, then that claim (and only that claim) must be brought in court and
must be stayed pending arbitration o the arbitrable claims. If arbitration is elected by either party,
the parties collectively agree that they waive their right to a jury
trial. In no events shall class
arbitration be permitted.
Notwithstanding the above, you may file a lawsuit in
small claims court for any claims that otherwise require binding
arbitration. This agreement evidences a
transaction involving interstate commerce and shall be governed by the Federal
Arbitration Act, 9 U.S.C. §§ 1-16.
Judgment upon any award in arbitration may be entered in any court
having jurisdiction.
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 OPTOUT@HMAUSA.COM WITHIN
THIRTY (30) DAYS OF YOUR PURCHASE OR LEASE TO OPT-OUT OF THIS ARBITRATION
PROVISION.
(Ameripour Dec., Exh. 3, pp. 15-16.)
Therefore, Defendant presents the existence of an
agreement to arbitrate in the Warranty Agreement.
Plaintiff contends that the Warranty Agreement’s
arbitration provision is not enforceable because it lacks mutual assent and is
not a contract. Plaintiff states that
she did not receive a copy of the Warranty Agreement until after she purchased
her vehicle, did not sign the Warranty Agreement, and never opted into
arbitrating warranty claims. Plaintiff
also argues that her failure to opt out of the arbitration clause does not mean
she automatically agreed to arbitration.
The court finds that Plaintiff’s arguments
lacks merit. Plaintiff admits that her
vehicle purchase was accompanied by Defendant’s express written warranty and
does not state that the alleged arbitration clause was not included in the
Warranty Agreement. (Compl., ¶ 4, 8.) A consumer is not bound “by inconspicuous
contract provisions . . . contained in a document whose contractual nature is
not obvious.” (Norcia v. Samsung
Telecommunications Am., LLC (9th Cir. 2017) 845 F.3d 1279, 1284.) For example, an arbitration clause printed in
small print on the reverse side of an order form is inconspicuous. (Ibid.) And while silence does not
constitute consent to a contract if the offeree reasonably did not know the
offer was made, Plaintiff received a copy of the Warranty Agreement which is
contractual in nature: when Plaintiff purchased her vehicle with the express
warranty, Defendant agreed to repair any defects and any disputes regarding the
defects would be decided by arbitration unless Plaintiff opted out of the
arbitration clause within 30 days of purchasing the vehicle. (Ibid.) Additionally, the arbitration clause is not
inconspicuous because at least five pages of the Warranty Agreement include
information about arbitration which the opt-provision in bold print. (Ameripour Dec., Exh. 3, p. 16.) Because Plaintiff admits a warranty
accompanied her purchase, that she did not opt out of arbitration, and that she
now seeks relief based on the Warranty Agreement, Plaintiff cannot challenge
the agreement’s arbitration clause. (See
Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306 [“The
fundamental point’ is that a party is ‘not entitled to make use of [a contract
containing an arbitration clause] as long as it worked to [his or] her
advantage, then attempt to avoid its application in defining the forum in which
[his or] her dispute ... should be resolved.”].)
In response, Defendant argues that Plaintiff is estopped
from challenging the arbitration clause because Plaintiff simultaneously seeks
to reap the benefits of the Warranty Agreement while ignoring other terms of
the agreement.
“Under that doctrine [of equitable estoppel]
…a nonsignatory defendant may invoke an arbitration clause to compel a
signatory plaintiff to arbitrate its claims when the causes of action against
the nonsignatory are intimately founded in and intertwined with the underlying
contract obligations.” (JSM Tuscany, LLC v. Superior Ct. (2011) 193
Cal.App.4th 1222, 1237, quoting Boucher v. All Title Co. (2005) 127
Cal.App.4th 262, 271 and Goldman v. KPMG, LLP (2009) 173 Cal.App.4th
209, 217–18 (internal quotation marks omitted).) The sine qua non for
application of equitable estoppel as the basis for allowing a nonsignatory to
enforce an arbitration clause is, “that the claims plaintiff asserts against
the nonsignatory must be dependent upon, or founded in and inextricably
intertwined with, the underlying contractual obligations of the agreement
containing the arbitration clause.” (Goldman, supra, 173
Cal.App.4th at 217–18; accord, JSM Tuscany, LLC, supra, 193
Cal.App.4th at 1237.) “The fundamental point is that a party is not entitled to
make use of [a contract containing an arbitration clause] as long as it worked
to her advantage, then attempt to avoid its application in defining the forum
in which her dispute . . . should be resolved.” (Jensen v. U-Haul Co. of
Cal. (2017) 18 Cal.App.5th 295, 306 [quoting NORCAL Mut. Ins. Co. v.
Newton (2000) 84 Cal.App.4th 64, 84] [internal quotation marks omitted].)
Courts examine the facts alleged in the operative complaint to determine
whether equitable estoppel applies. (Goldman, supra, 173
Cal.App.4th at 229–30.)
In Felisilda, the Court of Appeal found
that an arbitration provision in a retail sales contract applied extended to a
nonsignatory car manufacturer because the provision provided for “arbitration
of disputes that include third parties so long as the dispute pertains to the
condition of the vehicle.” (Felisilda
v. FCA US, LLC (2020) 53 Cal.App.5th 640, 648.) The arbitration provision read in relevant
part that: “Any claim or dispute, whether in contract, tort, statute or
otherwise (including the interpretation and scope of this Arbitration
Provision, and the arbitrability of the claim or dispute), between you and us
or our employees, agents, successors or assigns, which arises out of or relates
to . . . condition of this vehicle, this contract or any resulting transaction
or relationship (including any such relationship with third parties who do not
sign this contract) shall, at your or our election, be resolved by neutral,
binding arbitration and not by a court action.”
(Felisilda, supra, 53 Cal.App.5th at p. 649.) The court concluded that the equitable
estoppel doctrine applied: “Because the [buyers] expressly agreed to arbitrate
claims arising out of the condition of the vehicle – even against third party
nonsignatories to the sales contract – they are estopped from refusing to
arbitrate their claim against [the manufacturer]. Consequently, the trial court properly
ordered the [buyers] to arbitrate their claim against FCA.” (Id. at p.
497.)
Unlike the parties in Felisilda, both
Defendant and Plaintiff are parties to the Warranty Agreement and the
agreement’s arbitration clause: “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.” (Ameripour
Dec., Exh. 3.)
Although Plaintiff argues the Warranty
Agreement’s arbitration clause is unenforceable due to her failing to silence
and lack of signature, Plaintiff concedes that her claims arise from the Defendant’s
alleged failure to abide by the Warranty Agreement’s terms and conditions. In conceding that she bases her Song-Beverly
Act claims on the written express warranty, Plaintiff is estopped from challenging
the arbitration clause’s enforceability for lack of mutual assent argument
fails. Plaintiff further contends that
under Norcia v. Samsung Telecommunications Am., LLC (2017), arbitration
provisions in Owner’s Warranty Manuals or Handbooks are unenforceable. (Norcia v. Samsung Telecommunications
America, LLC (9th Cir. 2017) 845 F.3d 1279, 1288 [citing Weinstat v.
Dentsply Int’l, Inc. (2010) 180 Cal.App.4th 1213, 1283.) However, Norcia did not address breach
of warranty claims against a manufacturer.
Therefore, the Warranty Agreement’s
arbitration clause is enforceable if it was available to Plaintiff when the
Warranty Agreement was made and the court finds the arbitration clause is not
unconscionable. (JSM Tuscany, LLC v.
Superior Court (2011) 193 Cal.App.4th 1222, 1239-40; Boucher, supra,
127 Cal.App.4th at p. 269.)
3. Enforceability of the Warranty Agreement’s Arbitration
Clause - Unconscionability
Once an arbitration agreement is presented to the court,
the burden shifts to the opposing party to challenge the agreement’s
enforceability with evidence. (Baker
v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.) Plaintiff does not present an unconscionable
argument.
Defendant argues the Warranty Agreement’s
Arbitration Clause is neither procedurally nor substantively unconscionable
because the agreement contains terms which are favorable to the consumer such
as an opt-out provision and that Defendant will pay all fees except the initial
filing fees.
“California courts analyze unconscionability as having a
procedural and a substantive element.” (Kinney
v. United Healthcare Services, Inc. (1999) 70 Cal.App.4th 1329.) The doctrine of unconscionability refers to
“an absence of meaningful choice on the part of one of the parties together
with contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc. v. Moreno
(2013) 57 Cal.4th 1109, 1133.) It
consists of procedural and substantive components, “the former focusing on oppression
or surprise due to unequal bargaining power, the latter on overly harsh or
one-sided results.” (Ibid.) Although both components of unconscionability
must be present to invalidate an arbitration agreement, they need not be
present to the same degree. (Armendariz
v. Found Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114.) “In other words, the more substantively
unconscionable the contract term, the less evidence of procedural
unconscionability is required to come to the conclusion that the term is
unenforceable, and vice versa.” (Ibid.) “The party resisting arbitration bears the
burden of proving unconscionability.” (Pinnacle
Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223,
247.)
a. Procedural Unconscionability
“Procedural unconscionability concerns the manner in
which the contract was negotiated and the circumstances of the parties at that
time. It focuses on factors of
oppression and surprise.” (Pinnacle
Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223,
247.) “Surprise differs from oppression.
Surprise is when a prolix printed form conceals the arbitration provision. [Citation.]
Oppression, on the other hand, occurs when there is a lack of
negotiation and meaningful choice.
[Citation.] The presence of
surprise or oppression requires higher scrutiny of the contract.” (Torrecillas v. Fitness International, LLC¿(2020)
52 Cal.App.5th 485, 493.)
“Adhesion contracts are form contracts a party with
superior bargaining power offers on a take-it-or-leave-it basis.” (Torrecillas, supra, 52
Cal.App.5th at p. 493.) Where a contract
of adhesion includes the unequal bargaining power of contracting parties, with
the weaker party’s inability to negotiate, this may indicate procedural
unconscionability in the form of surprise or oppression. (See Thompson v. Toll Dublin, LLC
(2008) 165 Cal.App.4th 1360, 1372.) In
the absence of “surprise or other sharp practices,” courts do not recognize
that “adhesive” arbitration agreements establish a high degree of procedural
unconscionability. (Baltazar v.
Forever 21 Inc. (2016) 62 Cal.4th 1237, 1246.)
The Warranty Agreement’s arbitration clause is not an
adhesion contract. The clause allowed
Plaintiff to opt out of the “arbitration provision” specifically by emailing
Defendant at opt-out@hmausa.com within 30 days of purchasing the vehicle, which
further minimized any degree of procedural unconscionability. (Ameripour Dec., Exh. 3, p. 16.) This indicates that the arbitration clause
was not a condition of the Warranty Agreement.
Plaintiff also fails to point to any section of the arbitration
clause that was a “surprise.” The Warranty
Agreement specified in capital and bold lettering for the customer to read the
alternative dispute resolution section in its entirety because it affects the
customer’s rights and that customers who purchased or leased their vehicle in
California made their warranty subject to the terms of the binding arbitration
provision. (Ameripour Dec., Exh. 3, p. 16.) Although Plaintiff alleges she did not agree
to the arbitration clause, Plaintiff fails to show that Defendant prevented her
from doing so or that Plaintiff even requested assistance with understanding
the clause.
Given the lack of evidence of procedural
unconscionability, the Court finds that the arbitration agreement has at most a
minimal degree of procedural unconscionability.
However, “a finding of procedural unconscionability does not mean that a
contract will not be enforced, but rather that courts will scrutinize the
substantive terms of the contract to ensure they are not manifestly unfair or
one-sided.” (Sanchez v. Valencia
Holding Co., LLC (2015) 61 Cal.4th 899, 915.)
b. Substantive Unconscionability
“Substantive unconscionability” focuses on the terms of
the arbitration agreement and whether those terms are “overly harsh or
one-sided.” (Kinney, supra,
70 Cal.App.4th at p. 1330; Carmona v. Lincoln Millennium Car Wash, Inc.¿(2014)
226 Cal.App.4th 74, 85).
When there is little procedural unconscionability, a
party opposing arbitration must show substantial substantive
unconscionability. (Armendariz v.
Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4th 82, 114.)
Under consumer arbitration law, an
arbitration clause requiring a consumer to pay its own filing fees is not
unconscionable unless the consumer shows that the filing fees are
unaffordable. (Sanchez v. Valencia
Holding Co., LLC (2015) 61 Cal.4th 899; Gutierrez v. Autowest, Inc. (2003)
114 Cal.App.4th 77; see also Civ. Code, §§ 1284.3, subds., (a)-(b)(1)-(3).) The Warranty Agreement’s arbitration clause
states that Defendant will pay all JAMS fees except for the initial filing
fees. (Ameripour Dec., Exh. 3, p.
15.) Although this provision is slightly
unconscionable, Plaintiff has made no statements regarding inability to cover
the $250 filing fees.
Because Plaintiff raises no other arguments
challenging the arbitration clause’s enforceability, the court finds that the
Warranty Agreement’s arbitration clause is not procedurally or substantively
unconscionable, and grants Defendant’s petition to compel arbitration.
In the alternative, Defendant presents the Bluelink
Services Agreement. The court does not
address this agreement because it finds the Warranty Agreement’s arbitration
clause is enforceable.
CONCLUSION
Defendant Hyundai Motor America’s petition to compel
arbitration is granted.
The case is stayed as to all parties, pending arbitration
pursuant to Code of Civil Procedure section 1281.2.
Defendant Hyundai Motor America to give notice.