Judge: Gregory Keosian, Case: 23STCV08414, Date: 2023-09-28 Tentative Ruling

Case Number: 23STCV08414    Hearing Date: January 23, 2024    Dept: 61

Defendants SSA Terminals, LLC, SSA Terminals (Pier A), Pacific Maritime Services, LLC, and Frank Hall’s Motion to Compel Arbitration is GRANTED.

I.                OBJECTIONS

Plaintiff Plentitude Transportation, Inc. (Plaintiff) submits objections to the materials submitted by Defendants SSA Terminals, LLC, SSA Terminals (Pier A), Pacific Maritime Services, LLC, and Frank Hall (Defendants) in support of the motion to compel arbitration. These objections to the declarations of Candice Woods and Henry Russell are OVERRULED, as these witnesses provide sufficient basis to testify (respectively) to the business and legal context in which Defendants operate, and to the physical circumstances of the terminal in question.

Defendants’ objections to the materials submitted by Plaintiff are OVERRULED, as they consist not of arguments as to the admissibility of the evidence, but arguments as to its legal significance.

II.             MOTION TO COMPEL ARBITRATION

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[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 related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court's discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Defendants SSA Terminals, LLC, SSA Terminals (Pier A), Pacific Maritime Services, LLC, and Frank Hall (Defendants) move to compel arbitration of the claims raised by Plaintiff Plentitude Transportation, Inc. (Plaintiff) based on an arbitration provision contained in the corporate Defendants’ Marine Terminal Operator Schedule of Rates, Regulations and Practices (MTO Schedule). (Woods Decl. ¶ 5.) That schedule requires arbitration of “all disputes between the parties,” particularly “[a]ny dispute, claim or controversy involving Customer and Operator . . . which in any fashion arises out of or relates to (i) this Schedule or the breach, termination, enforcement, interpretation or validity thereof including the determination of the scope or applicability of this agreement to arbitrate; (ii) any services provide pursuant to this schedule; and/or (iii) any events occurring on a terminal facility subject hereto.” (Woods Decl. Exh. A, § 40, ¶¶ A, B.)

Plaintiff never executed any agreement containing these provisions, but Defendants refer to 46 U.S.C. § 40501, which states the following:

Marine terminal operator schedules.--A marine terminal operator may make available to the public a schedule of rates, regulations, and practices, including limitations of liability for cargo loss or damage, pertaining to receiving, delivering, handling, or storing property at its marine terminal. Any such schedule made available to the public is enforceable by an appropriate court as an implied contract without proof of actual knowledge of its provisions.

(46 U.S.C. § 40501, subd. (f).) Thus Defendants argue that, under the above statute, the public promulgation of its schedule, including the arbitration provision, “is enforceable by an appropriate court as an implied contract without proof of actual knowledge of its provisions.” Defendants note that notices of the MTO schedule were displayed in signage at the entrances and security checkpoints for its terminal facilities. (Russell Decl. ¶¶ 4–5, Exh. A.)

Plaintiff in opposition contends that the above statute allows Defendants to set their own schedule of “rates, regulations, and practices . . . pertaining to receiving, delivering, handling, or storing property at its marine terminal,” which does not include the authority to prescribe arbitration as the mode for resolution of disputes. (Opposition at pp. 11–12.) Plaintiff also argues that the arbitration provisions contain unconscionable waivers of entitlement to punitive damages and automatic use of expedited arbitration procedures which limit their right to discovery. (Opposition at pp. 13–15.) Plaintiff also argues that its claims are beyond the scope of the arbitration clause. (Opposition at pp. 15–20.) Plaintiff also argues that Defendants waived the right to compel arbitration by waiting six months to file their motion and filing a motion to strike beforehand. (Opposition at pp. 20–21.)

Defendants may enforce their arbitration provision pursuant to 46 U.S.C. § 40501, subd. (f). Per that statute, Defendants’ may prescribe “rates, regulations, and practices  . . . pertaining to receiving, delivering, handling, or storing property at its marine terminal.” (46 U.S.C. § 40501, subd. (f).) The imposition of a lawful arbitration provision governing disputes arising from the use of the operator’s terminal is properly construed as a “regulation” pertaining to the use of that terminal under the statute. The statute expressly gives operators the power to prescribe “limitations of liability for cargo loss or damage,”  indicating that the extent of their scheduling authority is not limited to on-site codes of conduct, but rather encompasses in some measure the relief available to customers concerning the use of their facilities. An interpretation of the statute that includes the power to enforce limitations of liability in MTO schedules, as it expressly does, reasonably includes the power to enforce arbitration agreements. Although Plaintiff correctly notes that arbitration is fundamentally a creature of contract (Opposition at p. 12; see AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339 [noting the “fundamental principle that arbitration is a matter of contract”]), the same is true for limitations of liability and other matters embraced in the MTO schedule. (Philippine Airlines, Inc. v. McDonnell Douglas Corp. (1987) 189 Cal.App.3d 234, 242 [noting that “contractual allocations of risk in nonconsumer commercial settings are routinely upheld”].) The statute at issue expressly grants Defendants the power to enforce such terms as contracts. (46 U.S.C. § 40501, subd. (f).)

Plaintiff’s claims are embraced within the arbitration clause at issue. That provision embraces “any dispute which in any fashion arises out of or relates to” three subject areas: (i) the schedule itself, (ii) “any services provided pursuant to this schedule,” and (iii) “any events occurring on a terminal facility.” (Russell Decl. Exh. A.) This plainly embraces Plaintiff’s fourth through ninth causes of action, which expressly relate to Defendants’ obstruction of Plaintiff’s access to the terminal, and indeed the breach of the covenant of fair dealing implicit in the schedule itself. (Complaint ¶¶ 56–98.) These claims by their terms arise out of and relate to the schedule and the services provided pursuant to the schedule.

Plaintiff’s first three causes of action for defamation and trade libel also fall within the arbitration provision, as they relate to the accusations of misconduct related to an alleged theft of a vehicle chassis from a port facility, published in a “ban notice” explaining why Plaintiff would be excluded from the facility. The allegations arise out of and relate to services at Defendants facility provided pursuant to their schedule, and to events occurring on a terminal facility. Plaintiffs rely on Medical Staff of Doctors Medical Center in Medesto v. Kamil (2005) 132 Cal.App.4^th 679, in which the court declined to apply an arbitration agreement to defamation claims arising from statements made by an insurance company concerning the reasons for terminating its agreement with the medical staff of a certain hospital. However, that case is distinguishable on a number of grounds. It involved a far narrower arbitration clause — one that applied only to disputes “concerning the terms of this Agreement.” (Id. at p. 683.)  That case concerned defamatory statements published “in press releases and newspaper articles,” as opposed to the statements here contained in a “ban notice” issued against Plaintiff for all Defendant-affiliated container terminals. (Id. at p. 682–683; Complaint ¶ 22.) Finally, the court held the claims at issue exempt from arbitration pursuant to a separate exception in the contract. (Kamil, supra, 132 Cal.App.4^th at pp. 684–685.) No such exception is applicable here. Each of Plaintiff’s claims is arbitrable pursuant to the arbitration provisions at issue here.

Plaintiff next argues that the arbitration agreement is unconscionable, as it is applied to Plaintiff by the operation of law and includes oppressive limitations on discovery and a limitation on punitive damages. “Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Plaintiff has demonstrated a substantial degree of procedural unconscionability here, as they are correct that the arbitration agreement applies to them by the operation of 46 U.S.C. § 40501.

However, Plaintiff does not demonstrate any substantive unconscionability in the agreement. Plaintiff claims that the arbitration agreement requires expedited procedures that limit each party to one deposition, and which don’t allow motions to compel or dispositive motions. (Motion at pp. 16–17.) But these expedited procedures do not in fact prevent motions to compel or dispositive motions, but rather direct that discovery issues be resolved “on an expedited basis” with preference for “brief letters” over “lengthy briefs,” and that dispositive motions be submitted pursuant to JAMS Recommended Arbitration Discovery Protocols for Domestic Commercial Cases. (Opposition Exh. 4.)[1] Moreover, while the parties are not limited to one deposition, but are entitled to a minimum of one deposition, and are permitted more upon a showing of need. (Opposition Exh. 4.) Similar provisions have been upheld against unconscionability challenges (See Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 982) Nor does Plaintiff present authority for the proposition that the schedule’s waiver of punitive damages is unconscionable, since 46 U.S.C. § 40501, subd. (f) expressly recognizes the potential for limitations of liability.

There is no merit to Plaintiff’s final argument that Defendants have waived the right to compel arbitration. Defendant’s initially moved to compel arbitration before the present case was even filed. In the related case of Plentitude Transportation v. SSA Terminals, LASC Case No. 22STCV37306, featuring allegations that were identical in most material respects, Defendants’ first appearance in court was the filing of a motion to compel arbitration on December 30, 2022. Plaintiff dismissed that case and filed the present one. Defendants’ motion to strike the present complaint, though denied, was in the furtherance of its initial motion to compel arbitration. Although Plaintiff argues that Defendant has responded to discovery, these responses consisted of objections passed on the pending motion to compel arbitration. (Opposition Exh. 3.) Plaintiff has identified no conduct inconsistent with the intent to arbitrate.

The motion is therefore GRANTED.