Judge Kerry Bensinger, Case 20STCV44666 2023-02-08 Tentative Ruling

On November 20, 2020, plaintiff Sarkis Avagyan (“Plaintiff”) initiated this action against defendants The State of California (the “State”), California Highway Patrol (“CHP”), Officer Leal (I.D. No. 21879) (“Leal”), Lyft, Inc. (“Lyft”), Jose Gabriel Martinez (“Martinez”), and Eugene Min Lee (“Lee”) alleging causes of action for (1) general negligence (2) negligence per se; (3) and statutory negligence. The first and second causes of action were asserted against Defendants Lyft, Martinez, and Lee, and the third cause of action was asserted against Defendants the State, CHP, and Leal.

On November 18, 2022, Plaintiff filed the operative First Amended Complaint (“FAC") asserting five additional causes of action against Lyft for negligence/gross negligence, negligent supervision, fraud, intentional misrepresentation, negligent misrepresentation, and violation of Business & Professions Code § 17200 et seq.

According to the FAC, on December 23, 2019, Plaintiff was a passenger in a vehicle operated by Martinez in service of Lyft. The vehicle was involved in an accident on the freeway, causing Plaintiff’s injuries. At the time of the accident, Martinez was blocked from using the Lyft application as a driver. However, Martinez simply logged into the Lyft app using his brother’s username and password. Martinez drove his own vehicle, which was listed on Martinez’s own Lyft profile, and added his vehicle under his brother’s profile.

On November 23, 2022, Lyft filed the instant motion to compel arbitration. Plaintiff opposes.

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972.) The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, the party opposing the petition then bears the burden of proving by a preponderance of the evidence any fact necessary to demonstrate that there should be no enforcement of the agreement, and the trial court sits as a trier of fact to reach a final determination on the issue. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.) The Court is empowered by Code of Civil Procedure section 1281.2 to compel parties to arbitrate disputes pursuant to an agreement to do so.

“The court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(c) 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. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.”

The party petitioning to compel arbitration under written arbitration agreement bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, and party opposing petition must meet the same evidentiary burden to prove any facts necessary to its defense. The trial court acts as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence. (Code Civ. Proc., § 1281.2; Provencio v. WMA Securities, Inc. (2005) 125 Cal.App.4th 1028, 1031.)

Here, the arbitration agreement expressly states that “the agreement to arbitrate is governed by the Federal Arbitration Act.” (Henry Decl., Ex. 3.) Parties to an arbitration agreement may voluntarily elect to have the Federal Arbitration Act (“FAA”) govern enforcement of that agreement. (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355.) Here, the parties have so elected. Accordingly, the Court finds that the FAA applies.

Under both Title 9 section 2 of the United States Code (known as the FAA) and Title 9 of Part III of the California Code of Civil Procedure commencing at section 1281 (known as the California Arbitration Act, hereinafter “CAA”), arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (Code of Civ., Proc. § 1281.2.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.) Once petitioners allege that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219.)

“With respect to the moving party’s burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court. (See Condee, supra, 88 Cal.App.4th at 218; see also Cal. Rules of Court, rule 3.1330 [“A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference”].) Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges. [Citation]” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.)

Here, Lyft has met its initial burden of showing that an arbitration agreement exists between the parties. On August 26, 2019, Plaintiff accepted Lyft’s updated Terms of Service. (Henry Decl. ¶ 15.) As found in Lyft’s August 2019 Terms, the arbitration provision states in pertinent part:

Except as expressly provided below, ALL DISPUTES AND CLAIMS BETWEEN US (EACH A “CLAIM” AND COLLECTIVELY, “CLAIMS”) SHALL BE EXCLUSIVELY RESOLVED BY BINDING ARBITRATION SOLELY BETWEEN YOU AND LYFT. These Claims include, but are not limited to, any dispute, claim or controversy, whether based on past, present, or future events, arising out of or relating to: … the Lyft Platform … background checks performed by or on Lyft’s behalf, … unfair competition, … fraud, defamation … claims arising under federal or state consumer protection laws; … and all other federal and state statutory and common law claims.”

(Henry Decl. ¶ 14-18, Ex. 3.) Here, Plaintiff suffered an injury on December 23, 2019 arising out of his use of the Lyft Platform. Further, Plaintiff’s new causes of action in the FAC include negligence/gross negligence, negligent supervision, fraud, intentional misrepresentation, negligent misrepresentation, and violation of Business & Professions Code § 17200 et seq. Consequently, this arbitration agreement would encompass Plaintiff’s injury and the new causes of action alleged in the FAC. Plaintiff does not dispute having assented to the August 2019 Terms of Service or deny the existence of the arbitration agreement.

Based on the foregoing, the Court finds that Lyft has proven the existence of the arbitration agreement.

In opposition, Plaintiff contends that (1) Lyft waived the right to arbitrate by failing to plead arbitration as an affirmative defense and through its litigation conduct, and (2) the FAC does not expand the scope so as to revive Lyft’s right to arbitration.

The Court finds that Lyft waived the right to arbitrate. “To decide whether a waiver has occurred, the court focuses on the actions of the person who held the right.” (Morgan v. Sundance (2022) 142 S.Ct. 1708, 1713.) “Courts have recognized that where the FAA applies, whether a party has waived a right to arbitrate is a matter of federal, not state, law. [Citation.]” (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.) In St. Agnes v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196, the California Supreme Court adopted a multi-factor test from the Tenth Circuit opinion in Peterson v. Shearson/American Express, Inc. (10th Cir. 1988) 849 F.2d 464 wherein a court may consider: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the “litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings: (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party. (Peterson, supra, 849 F.2d at pp. 467-68; St. Agnes, at p. 1196.) However, following the U.S. Supreme Court’s decision in Morgan, courts may no longer condition a determination of waiver on prejudice. (See Morgan, supra, at p. 1713.) The remaining Peterson factors are proper considerations in the waiver inquiry. (Davis, supra, at p. 963.)

Here, the sum of Lyft’s conduct suggests a waiver of the right to arbitrate. Lyft did not plead arbitration as an affirmative defense; Lyft conducted discovery and resorted to the Court’s discovery procedures to enforce discovery; Lyft filed oppositions to Plaintiff’s motions to continue the trial and to amend the complaint; Lyft’s counsel represented to the court that she had reserved a date for a motion for summary judgment for November 2023, and that Lyft would need time to defend and litigate issues in support of its summary judgment motion, which prompted the Court to change the trial date from April 19, 2023, to December 4, 2023 in the Court’s tentative ruling to grant Plaintiff’s motion to continue trial; and, Lyft waited over two years before invoking its right to arbitrate. (Burunsuzyan Decl. ¶ 6, Ex. 4.) Lyft has plainly acted inconsistently with its right to arbitrate.

Lyft argues that waiver is an issue of arbitrability delegated to the arbitrator under this arbitration agreement. The court disagrees. Waiver by litigation conduct is presumptively for the court to decide. (Martin v. Yasuda (2016) 829 F.3d 1118, 1123.) “If the parties intend that an arbitrator decide [whether a party has waived his right to arbitration by litigation conduct] under a particular contract, they must place clear and unmistakable language to that effect in the agreement.” (Hong v. CJ CGV America Holdings, Inc. (2013) 222 Cal.App.4th 240, 258.) Here, the arbitration agreement does not contain clear and unmistakable language delegating the issue of waiver by litigation conduct to an arbitrator. Lyft points to the arbitration language “all disputes concerning the arbitrability of a claim” as a clear and unambiguous expression of delegation regarding the arbitrability of waiver issues. (Henry Decl., ¶¶ 14-15, Ex. 3, at 17(a).) However, the language highlighted by Lyft relates to “dispute[s] about the scope, applicability, enforceability, revocability, or validity of arbitration agreement.” It does not clearly and expressly cover issues of waiver. Absent clear and unmistakable language, the issue of waiver by litigation conduct is properly before this Court.

Alternatively, Lyft argues that it may now assert its right to arbitrate because Plaintiff’s FAC has expanded the scope of the action by including new causes of action. However, “the filing of an amended complaint does not automatically revive all defenses or objections that the defendant may have waived in response to the initial complaint. That principle applies to the right to compel arbitration.” (Solis v. Experian Information Solutions, Inc. (C.D. Cal. 2022) 2022 WL 4376077, at *3, citing Krinsk v. SunTrust Banks, Inc., (11th Cir. 2011) 654 F.3d 1194, 1202.) That Plaintiff amended his complaint to include causes of action for fraud, negligent misrepresentation, intentional misrepresentation, and a violation of Business & Professions Code § 17200, et seq. does not enlarge the scope of this action entitling Lyft to revive it’s right to invoke arbitration.

A review of the cases upon which Lyft relies confirms this conclusion. Krinsk v. SunTrust Banks, Inc. (11th Cir. 2011) 654 F.3d 1194, 1203-1204 concerned a revival of a right to arbitrate where a lender amended the complaint to define the class in a class action to include thousands of persons not included in the original definition. The court in Krinsk explained that a lost right to arbitrate can be revived only if the amendment “unexpectedly changes the scope or theory of the plaintiff’s claims.” (Krinsk, 654 F.3d at p. 1202.) Lyft cannot claim to be surprised by Plaintiff’s amended pleadings considering they are based on Lyft’s knowledge of Martinez’s improper use of the Lyft application.(See Burunsuzyan Decl. ¶ 2, Ex. 1; ¶ 3, Ex. 2.))

Keating v. Superior Court (1982) 31 Cal.3d 548, another class action, concerned franchisees who, “[i]n seeking coordination and amendment of their complaints … considerably expanded the scope of their pleadings” by raising several new causes of action, injecting new factual elements, and refocusing the direction of their claims. (Keating, 31 Cal.3d at p. 607.) Plaintiff has added new causes of action and injected new factual elements, but not in the context of a class action case where multiple plaintiffs were coordinating their pleadings. Therefore, Plaintiff’s new causes of action are not a like comparison to Keating.

In sum, the Court finds that Lyft has waived its right to arbitrate through its participation in the litigation. Further, Plaintiff’s amended complaint does not set forth new facts or causes of action that dramatically alter the scope of the case such as to revive Lyft’s right to compel arbitration. Accordingly, the Court denies Lyft’s motion to compel arbitration.

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

Hon. Kerry Bensinger

Judge of the Superior Court