Judge: John C. Gastelum, Case: 22-01256701, Date: 2023-03-27 Tentative Ruling
Petition to Compel Arbitration
Tentative Ruling: Defendants Amazon.com, LLC and Amazon Logistics filed a Petition to Compel Arbitration. The Petition is GRANTED and the action is STAYED pending arbitration.
First, the court finds the FAA applies. Plaintiff cites no persuasive authority that would lead the court to conclude that Plaintiff is a “worker” as described in 9 U.S.C. § 1, such that it is exempt from the FAA. Rather, case law points to the conclusion that a “worker” is an individual person and does not extend to an entity. (See e.g., Waithaka v. Amazon.com, Inc. (1st Cir. 2020) 966 F.3d 10, 20, cert. denied (2021) 141 S.Ct. 2794, reh’g denied (2021) 141 S.Ct. 2886 [explaining the categories of “people” who are exempt under FAA]; Lenz v. Yellow Transp., Inc. (8th Cir. 2005) 431 F.3d 348, 352 [establishing a factor test to determine whether an employee is so closely related to interstate commerce that “he or she” fits within the § 1 exemption of the FAA].)
For example, the Supreme Court of the United States in Circuit City Stores, Inc. v. Adams emphasizes the statute’s “explicit reference to ‘seamen’ and ‘railroad employees.’” (Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 114.) The court stated that “the location of the phrase ‘any other class of workers engaged in ... commerce’ in a residual provision, after specific categories of workers have been enumerated, undermines any attempt to give the provision a sweeping, open-ended construction.” (Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 118.) Based on these legal authorities, the court is not inclined to extend the term “worker” to an entity based solely on the holding in Citizens United v. Federal Election Com’n (2010) 558 U.S. 310. Accordingly, the FAA applies.
Next, Defendant establishes that Washington State law applies based on the choice of law provision in the contract. “[C]hoice of law provisions are usually respected by California courts.” (Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 464; Harris v. Bingham McCutchen LLP (2013) 214 Cal.App.4th 1399, 1404 [“California strongly favors enforcement of choice-of-law provisions and its courts have upheld application of other states’ internal statutes, rules and laws to arbitration contracts.”].) Given Defendants’ principal place of business is in Seattle, Washington, the court upholds the choice of law provision pursuant to the test set forth in Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459.
With that said, there appears to be an enforceable agreement to arbitrate between the parties. In support of their contention that the parties entered into an agreement to arbitrate, Defendants provide the Agreement with the arbitration provision and a declaration from one of its Senior Manage of Program Management, in which the witness testifies that Plaintiff signed the Agreement on September 21, 2020. In opposition, Plaintiff proffers zero evidence by way of a declaration or authenticated document to show that it did not sign the Agreement as Defendants contend. As such, based on the evidence before the court, it appears that there is an agreement to arbitrate between the parties.
Next, Plaintiff does not establish a defense to the Arbitration Agreement. In its opposition, Plaintiff argues that the Agreement is procedurally and substantively unconscionable and fraudulent. As an initial matter, Plaintiff states the Agreement is fraudulent without providing any analysis or explanation as to why. Therefore, Plaintiff has not carried its burden in establishing the defense of fraud. This leaves only the unconscionability argument.
Washington, like California, “recognize[s] two categories of unconscionability, substantive and procedural.” (Zuver v. Airtouch Communications, Inc. (2004) 153 Wash.2d 293, 303.) “Either substantive or procedural unconscionability is enough to void a contract.” (Hill v. Garda CL Northwest, Inc. (2013) 179 Wash.2d 47, 55; Burnett v. Pagliacci Pizza, Inc. (2020) 196 Wash.2d 38, 54.)
“Substantive unconscionability involves those cases where a clause or term in the contract is alleged to be one-sided or overly harsh.” (Zuver v. Airtouch Communications, Inc. (2004) 153 Wash.2d 293, 303.) “Procedural unconscionability is ‘the lack of meaningful choice, considering all the circumstances surrounding the transaction including ‘[t]he manner in which the contract was entered,’ whether each party had ‘a reasonable opportunity to understand the terms of the contract,’ and whether ‘the important terms [were] hidden in a maze of fine print.” (Id.)
Here, the arbitration provision was not “hidden in a maze of fine print.” Rather, the Arbitration Provision is clearly labeled, “Governing Law; Submission to Arbitration.” Portions of the provision are in all capital letters, while the majority of the Agreement is not in capital letters. Included in the capitalization is the sentence that “ANY DISPUTE ARISING OUT OF THIS AGREEMENT WILL BE RESOLVED BY BINDING ARBITRATION, RATHER THAN IN COURT.”
Plaintiff argues the Agreement is overly one sided because it allows Defendant to modify the provision at any time. While Defendant can modify the provision at any time, Plaintiff is not without recourse because the Agreement states that if Plaintiff does not agree to be bound by the modifications to the agreement, that it must stop performing work. These terms are in all capital letters.
Plaintiff proffered no evidence to show it did not receive adequate time to review the Agreement before signing the Agreement. Regardless, the terms of the agreement are “fully disclosed,” which tends to show that Plaintiff was positioned to contact counsel “with any concerns or questions” that it “had about the terms for the agreement.” (Zuver v. Airtouch Communications, Inc. (2004) 153 Wash.2d 293, 306.) Plaintiff is a business entity and therefore possesses a level of sophistication that would lead it to review and, possibly, negotiated the terms of the Agreement. In support of its unconscionability defense, Plaintiff presents no evidence that is sought to negotiate the terms of the Agreement but was denied this opportunity.
In addition, the Arbitration Provision provides that “an arbitrator can award on an individual basis the same damages and relief as a court (including injunctive and declaratory relief or statutory damages).”
All these factors weigh in favor of finding that the Agreement is not unconscionable and therefore the Agreement is enforceable.
As such, Petition to Compel Arbitration is GRANTED and the action is STAYED pending arbitration.
Moving party to give notice.