Judge: H. Jay Ford, III, Case: 21STCV39962, Date: 2022-12-06 Tentative Ruling

Case Number: 21STCV39962    Hearing Date: December 6, 2022    Dept: O

Case Name:  Laks v. Tao of Wellness Santa Monica, et al.

SUBJECT:                 PETITION TO COMPEL ARBITRATION AND MOTION TO STAY

MOVING PARTY:   Defendant/Petitioner MaoShing Arthur Ni

RESP. PARTY:         Plaintiff Annie Laks

TENTATIVE RULING

            Defendant/Petitioner MaoShing Arthur Ni’s Petition to Compel Arbitration and Motion to Stay is GRANTED.  The action is stayed pending completion of arbitration between Ni and Plaintiff of Plaintiff’s claim for negligence against Ni. 

I.  Ni establishes that there is an applicable arbitration agreement

            Ni presents evidence of an applicable arbitration agreement.  See Memorandum in Support of Petition to Compel Arbitration, Dec. of M. Ni, ¶8; Petition to Compel Arbitration, Ex. A.  Ni testifies that Laks was presented with the agreement, given an opportunity to review it and signed it.  See Memorandum in Support of Petition to Compel Arbitration, Dec. of M. Ni, ¶9.  Ni agreed to treat her based on the execution of the arbitration agreement.  Id. at ¶10. 

            The arbitration agreement is extremely broad.  The agreement applies to medical malpractice claims, any claims regarding “whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered…”  Id. at ¶11; Petition to Compel Arbitration, Ex. A, Article 2.  The agreement also applies to “all claims,” which includes “any dispute that does not relate to medical malpractice, including disputes as to whether or not a dispute is subject to arbitration, as to whether this agreement is unconscionable, and any procedural disputes.”  Id. at ¶11; Petition to Compel Arbitration, Ex. A, Article 2.

            Plaintiff’s complaint alleges that Ni negligently misrepresented the health and wellness benefits of the far-infrared heat product, failed to warn of the product’s dangers and negligently and recklessly operated the product on Plaintiff.  See Complaint, ¶¶13, 19.  Ni is a licensed acupuncturist under Division 2, Chapter 12 of the Business and Professions Code, making him a “health care provider” under CCP §1295(g).  Plaintiff’s claim is based on administration of a heat treatment, which an acupuncturist is expressly allowed to prescribe.  See Bus. & Prof. Code §4937.  Plaintiff’s claim is therefore one for “professional negligence” under CCP §1295(g)(2).  See Memorandum in Support of Petition to Compel Arbitration, Dec. of M. Ni, ¶3; CCP §1295(g).

            Plaintiff’s negligence claim is therefore subject to arbitration pursuant to Article 1 of the parties’ arbitration agreement.  Plaintiff’s assertion that her claim is not one for medical malpractice and therefore not subject to arbitration is likewise subject to arbitration pursuant to Article 2 of the parties’ arbitration agreement.  See Petition, Ex. A, Article 2 (“disputes as to whether or not a dispute is subject to arbitration…will also be determined by submission to binding arbitration”). 

II.  Ni establishes that the FAA applies

            The Federal Arbitration Act (FAA, 9 USC §§ 1-14) governs contractual arbitration in written contracts involving interstate or foreign commerce or maritime transactions.  9 USC §§ 1, 2.  The FAA embodies a strong federal policy favoring arbitration. To assure uniform results as to arbitrability of disputes subject to the Act, conflicting state law is preempted under the Supremacy Clause: “Federal law in the terms of the Arbitration Act governs … (arbitrability) in either state or federal court.”  Southland Corp. v. Keating (1984) 465 US 1, 12.

            The Federal Act provides for enforcement of arbitration provisions in any contract “evidencing a transaction involving commerce.”  9 USC §2.  This term is functionally equivalent to “affecting commerce” and “signals an intent to exercise Congress' commerce power to the full.”  Allied-Bruce Terminix Cos., Inc. v. Dobson (1995) 513 US 265, 277.  “Involving” interstate commerce is the equivalent of “affecting” interstate commerce and should be applied broadly.  Id. at 273.  The parties need not have intended any interstate activity when they entered into the contract.  Allied-Bruce Terminix Cos., Inc. v. Dobson, supra, 513 US at 277 (lifetime termite protection contract between Alabama homeowner and termite control company “involved commerce” because termite control company was a multistate firm and shipped termite-treating and repair materials from outside the state).  The party claiming that the contract involves interstate commerce and that the FAA preempts state law has the burden of proof.  Woolls v. Sup.Ct. (Turner) (2005) 127 Cal.App.4th 197, 211-214.

            In Scott v. Yoho (2016) 248 Cal.App.4^th 392, defendants’ medical practice and the arbitration agreement “affected commerce” such that the FAA applied.  Based on uncontroverted evidence, (1) approximately 20% of the defendants’ supplies came from out of state, (2) some of the products used on the plaintiff during her procedure came from out of state, (3) defendants advertised on the internet and communicated with out-of-state patients by telephone, mail and email, (4) about 5% of defendants’ patients were from out of state, and (5) defendants had multiple, regular contacts with out of state companies.  See Scott, supra, 248 Cal.App.4^th at 401-402.  The undisputed evidence therefore established a “sufficient nexus with interstate commerce to require enforcement of the three arbitration agreements under the Federal Arbitration Act.”  Id. at 402. 

            According to Ni, every aspect of his business operations depends on transaction involving interstate commerce, including insurance, medical and office supplies and services used in treating patients like Laks.  See Memorandum in Support of Petition to Compel Arbitration, Dec. of M. Ni, ¶¶15-18.  Ni relies on out-of-state entities to process payments by credit card and to provide insurance.  Id. at ¶18.  Plaintiff does not dispute Ni’s assertion that the FAA applies. 

            Ni establishes that the FAA applies based on uncontroverted evidence.  Under 9 USCA §2, “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided in chapter 4.”

III.  Plaintiff fails to establish any basis to deny arbitration

            Plaintiff’s opposition is unsupported by any evidence.  Thus, based on the uncontroverted evidence, Plaintiff signed the arbitration agreement in connection with receipt of services from Ni.  Plaintiff was also given time to review the agreement and signed it voluntarily.  See Memo of Points and Authorities, Dec. of Ni, ¶¶8-10. 

            Plaintiff’s arguments regarding procedural and substantive unconscionability are subject to arbitration under Article 2 of the arbitration agreement.  Moreover, Plaintiff fails to identify any aspect of the transaction that would be procedurally or substantively unconscionable.  A plaintiff must establish both procedural and substantive unconscionability in order to avoid the arbitration clause on grounds of unconscionability.   See Crippen v. Central Valley RV Outlet, Inc. (2004) 124 Cal.App.4th 1159, 1165. 

            Plaintiff also asks that the Court exercise its discretion under CCP §1281.2(c) and refuse to enforce the arbitration agreement.  Plaintiff argues there are multiple defendants in the case that are not parties to the contract.  Plaintiff argues these defendants are named in the products liability causes of action and litigation of those claims will overlap factually and legally with the negligence claim against Ni.  Defendant Sunlighten, Inc. was served with this petition to compel arbitration and stay proceeding, but it did not file an opposition. 

            CCP §1281.2(c) expressly states that it does not apply to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to CCP §1295.  Plaintiff has not submitted any evidence challenging Defendant’s showing that he is a licensed acupuncturist and therefore a health care provider under CCP §1295.  Likewise, Plaintiff fails to establish that her claim for negligence is not a claim for professional negligence under CCP §1295.