Judge: John J. Kralik, Case: 24BBCV00508, Date: 2024-07-26 Tentative Ruling

Case Number: 24BBCV00508    Hearing Date: July 26, 2024    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff Robert E. Bartlett (“Plaintiff”) alleges that on November 23, 2023, he was involved in a motor vehicle accident with Defendant Avetis Hasratyan (“Hasratyan”), who was employed by Defendant Uber Technologies, Inc. (“Uber”).  He also alleges that the accident involved another motor vehicle operated by Defendant Marco Sandoval (“Sandoval”). 

The complaint, filed February 29, 2024, alleges causes of action for: (1) motor vehicle against Hasratyan and Uber; and (2) motor vehicle against Sandoval. 

B.     Cross-Complaint

On June 7, 2024, Sandoval filed a cross-complaint against Hasratyan and Uber for: (1) negligence (property damage); (2) equitable indemnity; (3) apportionment of fault/contribution; and (4) declaratory relief.

C.     Motion on Calendar

On May 30, 2024, Uber filed a motion to compel Plaintiff to submit all claims asserted against Uber to binding arbitration with ADR Services, Inc.  Uber also seeks an order that the proceedings be dismissed or stayed until the conclusion of the arbitration.

On July 1, 2024, Plaintiff filed an untimely opposition brief.  (The opposition was due by July 15, 2024).

On July 24, 2024, Uber filed a reply brief.

DISCUSSION

            Uber moves to compel Plaintiff to arbitrate his claims against Uber based on the Terms of Service and pursuant to the FAA. 

A.    Terms of the Arbitration Agreement

Uber argues that Plaintiff was a rider in a vehicle driven by Hasratyan (allegedly during the course of his employment with Uber), who was involved in a collision with another vehicle.  Uber states that non-party Bree Bartlett (“Account Holder,” son of Plaintiff) requested the subject ride on Plaintiff’s behalf.  Uber argues that Account Holder initially accepted Uber’s February 12, 2015 Terms of Service, and that he more recently accepted the Terms of Service on November 14, 2016, July 17, 2021, January 4, 2022, and January 28, 2023—all of which included an arbitration agreement.  (Yu Decl., ¶¶15-16.)  Uber argues that the July 2021 and January 2023 Terms of Service required that any third party, including but not limited to spouses, heirs, third-party beneficiaries, and assigns to arbitrate their claims against Uber for underlying claims arising out of relating to the Account Holder’s use of the services.  (Id., Ex. H [July 2021 Terms of Service, § 2(a).) 

In support of the motion, Uber provides the declaration of Chenshan Yu, a Data Scientist employed by Uber.  Mr. Yu provides the July 12, 2021 and January 17, 2023 Terms of Service.  As the subject accident occurred on November 23, 2023, the relevant terms of the January 17, 2023 Arbitration Agreement state:  

2. Arbitration Agreement

By agreeing to these Terms, you agree that you are required to resolve any claim that you may have against Uber on an individual basis in arbitration as set forth in this Arbitration Agreement, and not as a class, collective, coordinated, consolidated, mass and/or representative action. You and Uber are each waiving your right to a trial by jury. …

(a) Agreement to Binding Arbitration Between You and Uber.

(1) Covered Disputes: Except as expressly provided below in Section 2(b), you and Uber agree that any dispute, claim, or controversy in any way arising out of or relating to (i) these Terms and prior versions of these Terms, or the existence, breach, termination, enforcement, interpretation, scope, waiver, or validity thereof; (ii) your access to or use of the Services at any time; (iii) incidents or accidents resulting in personal injury to you or anyone else that you allege occurred in connection with your use of the Services (including, but not limited to, your use of the Uber Marketplace Platform or the driver version of the Uber App), regardless whether the dispute, claim, or controversy occurred or accrued before or after the date you agreed to these Terms, and regardless whether you allege that the personal injury was experienced by you or anyone else; and (iv) your relationship with Uber, will be settled by binding individual arbitration between you and Uber, and not in a court of law. This Arbitration Agreement survives after your relationship with Uber ends.

…

(4) Delegation Clause: Only an arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute arising out of or relating to the interpretation, applicability, enforceability, or formation of this Arbitration Agreement, including without limitation any claim that all or any part of this Arbitration Agreement is void or voidable. An arbitrator shall also have exclusive authority to resolve all threshold arbitrability issues, including issues relating to whether these Terms are applicable, unconscionable, or illusory and any defense to arbitration, including without limitation waiver, delay, laches, or estoppel. …

(5) Application to Third Parties: This Arbitration Agreement shall be binding upon, and shall include any claims brought by or against any third parties, including but not limited to your spouses, heirs, third-party beneficiaries and assigns, where their underlying claims arise out of or relate to your use of the Services. To the extent that any third-party beneficiary to this agreement brings claims against the Parties, those claims shall also be subject to this Arbitration Agreement.

(Yu Decl., Ex. H [January 17, 2023 Terms of Use at § 2(a) at pp. 43-44, 46]; see also [July 12, 2021 Terms of Use, § 2(a)].)  The Arbitration Agreement states that the agreement to arbitrate is governed by the FAA, states that the arbitration will be administered by ADR Service, Inc. in accordance with ADR’s rules, the process for resolving disputes and initiating arbitration, and has terms about arbitration fees and awards.  (January 17, 2023 Terms of Use at § 2(c)-(d) at pp.49-53.) 

            Plaintiff’s claims are regarding a motor vehicle accident and negligent conduct on the part of Uber, Hasratyan (who was driving on behalf of Uber), and Sandoval (the other vehicle operator involved in the accident) while Plaintiff was riding in an Uber vehicle secured for him by Account Holder Bree Bartlett.  According to the Arbitration Agreement, claims subject to arbitration include “incidents or accidents resulting in personal injury to [Account Holder] or anyone else that [Account Holder| allege occurred in connection with [Account Holder’s] use of the Services …, regardless whether the dispute, claim, or controversy occurred or accrued before or after the date [Account Holder] agreed to these Terms, and regardless whether [Account Holder] allege that the personal injury was experienced by [Account Holder] or anyone else….”  (January 17, 2023 Terms of Use at § 2(a)(1) [emphasis added].)  The Arbitration Agreement further states that it shall be binding upon and include any claims “brought by or against any third parties, including but not limited to your spouses, heirs, third-party beneficiaries and assigns, where their underlying claims arise out of or relate to your use of the Services. To the extent that any third-party beneficiary to this agreement brings claims against the Parties, those claims shall also be subject to this Arbitration Agreement.”  (Id. at §2(a)(5) [emphasis added].)  Based on the terms of the Arbitration Agreement, Plaintiff’s claims are covered by the broad scope of the Arbitration Agreement. 

In addition, although Plaintiff was not a signatory to the Terms of Use or the Arbitration Agreement and there is no express agreement between Plaintiff and Uber, he is a third-party beneficiary contemplated by the Arbitration Agreement.  California cases binding nonsignatories to arbitrate their claims fall into 2 categories: (1) “a nonsignatory was required to arbitrate a claim because a benefit was conferred on the nonsignatory as a result of the contract, making the nonsignatory a third party beneficiary of the arbitration agreement”; and (2) “the nonsignatory was bound to arbitrate the dispute because a preexisting relationship existed between the nonsignatory and one of the parties to the arbitration agreement, making it equitable to compel the nonsignatory to also be bound to arbitrate his or her claim.”  (County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 242.)  While appellate courts have stated that arbitration agreements are enforced with regularity against nonsignatories, such cases commonly involve a preexisting relationship between the nonsignatory and one of the parties to the arbitration agreement.  (Id.)  “There are circumstances in which nonsignatories to an agreement containing an arbitration clause can be compelled to arbitrate under that agreement. … [T]here are six theories by which a nonsignatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary’ ….”  (Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1513.)  Here, Account Holder Bree Bartlett secured the ride on behalf of Plaintiff using his account and Plaintiff received the benefit of Uber’s services by riding an Uber rideshare vehicle.  There is a preexisting relationship between Account Holder and Plaintiff, as Account Holder is Plaintiff’s son.  Although Account Holder was the user under the Uber app, Plaintiff’s claims arise directly from his use of serviced provided through the Uber app that was requested by Account Holder.  As such, he was the intended third-party beneficiary as he was the one that received the benefit of the ride service for this particular transaction.  This type of relationship was also contemplated under the Arbitration Agreement.   

Uber also argues that Plaintiff is estopped from refusing to arbitrate his claims.  It relies on JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, which provides:

[A] nonsignatory defendant may compel a signatory plaintiff to arbitrate under the doctrine of equitable estoppel. For the doctrine to apply, “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.” 

(JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1238.)  Uber argues that Plaintiff’s claims are inherently dependent on his use of and benefit from the Uber rider app the Terms of Use to which Account Holder expressly agreed.  Without use of the app, which required the consent of account holders to the Terms of Use (and the arbitration provision), Account Holder and thereby Plaintiff would not have been able to obtain the benefit of a ride with Uber’s drivers. Further, as discussed above, where a preexisting relationship exists, it may be equitable to compel the nonsignatory to be bound to arbitrate his claims.

Accordingly, the Court finds there is an enforceable agreement to arbitrate the claims asserted in the complaint and the scope of the arbitration provisions are sufficiently broad to cover the claims in this action between Plaintiff and Uber. 

B.     Unconscionability

Plaintiff argues that the arbitration agreement is unconscionable because the delegation clause forces Plaintiff to give up a substantive right to a jury trial based on the third-party beneficiary theory when Plaintiff did not consent to arbitration.  Plaintiff argues that the agreement dictates the procedure under which Plaintiff may pursue a claim against Uber, dictates what arbitration association must be used, dictates that Uber drivers are not agents or employees, attempts to extent arbitration to issues that Uber disclaims as any part to the services they provide, and include lopsided provisions that would be retroactive to claims already in progress regardless of Plaintiff’s retention of counsel.  (Opp. at p.11.)  

While courts often decide issues of “arbitrability,” the “'parties can agree to arbitrate “gateway” questions of “arbitrability,” such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.”' (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 891, quoting Rent–A–Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68-69.)  In the event a party is making a specific challenge to the delegation clause, the court must determine whether the delegation clause itself may be enforced and can only delegate the general issue of enforceability to the arbitrator if it first determines the delegation clause is enforceable. (Rent-A-Center, supra, 561 U.S. at 70.)  The parties may agree, clearly and unmistakably, that the enforceability issue will be delegated to the arbitrator.  (AT&T Technologies, Inc. v. Communications Workers (1986) 475 U.S. 643, 649.)  To establish this exception, it must be shown by “clear and unmistakable” evidence that the parties intended to delegate the issue to the arbitrator. (Rent-A-Center, supra, 561 U.S. at 68, 70, fn.1; Howsam v. Dean Witter Reynolds (2002) 537 U.S. 79, 84; Peleg v. Neiman-Marcus Group, Inc. (2012) 204 Cal.App. th 1425, 1439-1445.)

The terms of the Arbitration Agreement’s delegation clause are quoted above.  (See January 17, 2023 Terms of Use at § 2(a)(4).)  The terms of the Arbitration Agreement expressly included the delegation clause such that the issue of arbitrability and scope of a dispute would be within the determination of the arbitrator.  The Terms of Use clearly state that a dispute about whether this Arbitration Agreement can be enforced or applies to a dispute is for the arbitrator to decide.  The mere fact that the Arbitration Agreement includes a delegation clause will not be sufficient to make a finding that the agreement is substantively unconscionable. 

In addition, the terms of the Arbitration Agreement (i.e., that a jury trial is waived by the parties, that the parties will use ADR Service, Inc.’s services, etc.) are not unconscionable.  The waiver of a jury trial is an ordinary disclaimer in arbitration provisions.  Further, the use of a neutral arbitration service like ADR Service, Inc. and the use of their rules is not uncommon.  While Plaintiff argues that there are lopsided provisions, Plaintiff has not specifically identified what provisions are procedurally or substantively unconscionable in the Arbitration Agreement. 

Both procedural and substantive elements must be present in order for a Court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.  (Stirlen v. Supercuts (1997) 51 Cal.App.4th 1519, 1532.)  They need not be present in the same degree.  (Id.)  The Courts invoke a sliding scale which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves, i.e., the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.  (Armendariz v. Found. Health Psychcare Servs. (2000) 24 Cal. 4th 83, 114.)  Here, the Court finds that Plaintiff has not sufficiently identified terms that are procedurally and/or substantively unconscionable in the Arbitration Agreement.  As such, the Court does not find the Arbitration Agreement to be unconscionable.

For these reasons, the motion to compel arbitration is granted.

CONCLUSION AND ORDER

Defendant Uber Technologies, Inc.’s motion to compel arbitration is granted.  Plaintiff’s claims against Defendant Uber Technologies, Inc. shall proceed to arbitration and the remainder of the claims alleged against Defendants Avetis Hasratyan and Marco Sandoval shall be stayed pending the outcome of the arbitration. 

The Court sets a Status Conference re: Status of Arbitration for January 22, 2025 at 8:30 a.m. 

Defendant shall provide notice of this order.

DATED: July 26, 2024                                                           ___________________________

                                                                                          John J. Kralik

                                                                                          Judge of the Superior Court