Judge: Gregory Keosian, Case: 22STCV17643, Date: 2023-03-21 Tentative Ruling

Case Number: 22STCV17643    Hearing Date: March 21, 2023    Dept: 61

Plaintiff Cintyia Lemus’s Motion to Appoint Arbitrator is DENIED.

I.       MOTION TO APPOINT ARBITRATOR

This court granted Defendant Nissan North America’s motion to compel arbitration on October 10, 2022, over the opposition of Plaintiff Cintha Lemus (Plaintiff). Plaintiff now brings the present motion, styled as a motion to compel arbitration, to compel Defendant to arbitrate Plaintiff’s claims before JAMS or Judicate West, rather than before the American Arbitration Association (AAA), as Defendant insists.

If the arbitration agreement provides a method of appointing an arbitrator, that method shall be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed. In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.

When a petition is made to the court to appoint a neutral arbitrator, the court shall nominate five persons from lists of persons supplied jointly by the parties to the arbitration or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration. The parties to the agreement who seek arbitration and against whom arbitration is sought may within five days of receipt of notice of the nominees from the court jointly select the arbitrator whether or not the arbitrator is among the nominees. If the parties fail to select an arbitrator within the five-day period, the court shall appoint the arbitrator from the nominees.

(Code Civ. Proc. § 1281.6.)

The arbitration agreement provides a method of appointing the arbitrator. The agreement states: “You may choose the American Arbitration Association . . ., or any other organization to conduct the arbitration subject to our approval.” (Motion at pp. 1–23) Plaintiff argues that Defendant insists upon conducting arbitration with AAA, and refuses to consent to arbitration before JAMS or Judicate West, despite language in the agreement allowing Plaintiff to pick the forum.

Plaintiff raised an identical argument in opposition to the motion to compel arbitration, which this court rejected, finding that Plaintiff had presented no evidence that Defendant’s preference for AAA was in bad faith or unreasonable. (See 10/10/2022 Ruling.) The argument misreads the agreement. It permits the purchaser to arbitrate their claim in AAA without any need for further consent from the respondent, or to arbitrate in a different forum if they and the respondent agree. This language permits both plaintiffs and defendants to insist upon arbitration with the AAA, as that is the only forum specifically provided for in the agreement. To interpret the language otherwise would be to render the specific inclusion of AAA surplusage. (See In re Marriage of Nassimi (2016) 3 Cal.App.5th 667, 688.) Thus Defendant is within its rights to veto arbitral fora other than AAA.

Plaintiff also argues that AAA has a bias problem, as AAA’s CEO is married to the general counsel for Ford Motor Company. (Motion at p. 5.) But whatever bias problems this fact poses to arbitrations involving Ford Motor Company, it does not pose a problem here, where Plaintiff’s claims are against a different manufacturer.

Plaintiff next argues that Defendant’s insistence upon AAA, and refusal of JAMS and Judicate West, is not in good faith. (Motion at pp. 6–11.) Plaintiff relies on the covenant of good faith and fair dealing that exists in all contracts, and the principle that “where a contract confers on one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing.” (300 DeHaro Street Investors v. Department of Housing & Community Development (2008) 161 Cal.App.4th 1240, 1253.) Plaintiff argues that AAA arbitration carries numerous disadvantages that harm consumers, and that Defendant’s insistence upon the forum is designed to deprive Plaintiff the benefit of the agreement. (Motion at pp. 4–9.) Plaintiff cites the following disadvantages of AAA:

·         AAA requires parties to submit questionnaires concerning the nature of the case, then provides a list of arbitrators that it contends are the best match, without providing background information about the arbitrators, unlike other arbitration agencies, which provide pubic resumes for each arbitrator. Further information on arbitrators can be had for the paying of a fee.

·         AAA’s arbitration statistics disclose that only 7.23% of consumers that arbitrate their cases with AAA are “prevailing parties.”

·         AAA’s discovery rules state that the arbitrator “may direct” that discovery be conducted, without ensuring that it will be.

(Motion at pp. 6–11; Barry Decl. ¶¶ 12–13.)

Although Plaintiff has demonstrated a basis for their good faith belief that another forum is appropriate, they have not demonstrated that Defendant’s choice of AAA is made in bad faith or done to deprive Plaintiff of the benefits of the agreement. As Defendant argues in opposition, there are good reasons for a party to prefer administrative selection of the arbitrator, followed by objections, rather than a list-and-strike approach, such as the minimization of gamesmanship. (Motion at p. 5.) Plaintiff’s statistical analysis is also unpersuasive, as it does not include any comparative data with other tribunals, or account for settlement of claims before final decision. Defendant in opposition, meanwhile, cites several good faith reasons to prefer AAA, chief among them being cost, which Plaintiff does not dispute in reply. (Opposition at pp. 5–7.)

The motion is therefore DENIED.