Judge Lee S. Arian, Case Number: 21STCV26396, Date: 2023-11-09 Tentative Ruling

On July 19, 2021, Plaintiff Vahe Karapet (“Plaintiff”) filed this action against Defendants Nejdeh Yaghoubian (“Yaghoubian”), Lyft, Inc., a Delaware Corporation (“Lyft”), Nancy Gaignard (“Gaignard”), and Does 1 through 50 for motor vehicle and negligence arising out of an automobile accident that occurred on August 2, 2019. Plaintiff alleges she was a passenger in a Lyft vehicle driven by Gaignard when Yaghoubian weaved through traffic in his vehicle and side swiped Gaignard’s vehicle.

On May 31, 2023, Lyft moved to compel arbitration and stay judicial proceedings pending the completion of arbitration. On July 20, 2023, Plaintiff filed an opposition arguing that Lyft waived its right to arbitrate. On July 26, 2023, Lyft filed a reply.

At a hearing on August 2, 2023, the Court stated that Lyft’s motion “refers to a declaration that has not been provided and refers to corresponding exhibits that are attached to the motion instead of the absent declaration. Among the exhibits is the purported arbitration agreement which provides that the Federal Arbitration Act is the controlling law.” (8-02-23 Minute Order, pp. 1-2.) The Court ordered that Lyft was to file and serve the missing declaration by August 7, 2023. (Ibid.)

Subsequently, on August 18, 2023, Plaintiff filed a supplemental opposition requesting that the Court continue Lyft’s motion to compel arbitration until after Indian Harbor’s motion to intervene was heard. In that supplemental opposition, Plaintiff also requested that, in the case that the Court compels arbitration as to Lyft, arbitration proceedings should be stayed pending the resolution of the claims in this case against Gaignard and Yaghoubian, on the grounds that the arbitration provision Lyft relies on does not extend to claims against non-Lyft drivers.

At a hearing on September 7, 2023, the Court continued Lyft’s motion to compel arbitration to October 16, 2023, for the Court to first hear Indian Harbor’s motion to intervene.

On October 16, 2023, the Court granted Indian Harbor’s motion to intervene on behalf of Gaignard and continued Lyft’s motion to compel arbitration to November 9, 2023. The Court granted Indian Harbor leave to file an opposition to the motion to compel and Lyft leave to file a reply. To date, Indian Harbor did not file an opposition and, thus, Lyft has not filed an additional reply.

When seeking to compel arbitration of a plaintiff’s claims, the defendant must allege the existence of an agreement to arbitrate. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.) The burden then shifts to the plaintiff to prove the falsity of the agreement. (Ibid.) After the Court determines that an agreement to arbitrate exists, it then considers objections to its enforceability. (Ibid.) The Court must grant a motion to compel arbitration unless the defendant has waived the right to compel arbitration or if there are grounds to revoke the arbitration agreement. (Ibid.; Code Civ. Proc., § 1281.2.)

Under the Federal Arbitration Act (“FAA”), an agreement to arbitrate “shall be valid, irrevocable, and enforceable.” (9 U.S.C. § 2). The United States Supreme Court has broadly interpreted the FAA.¿Under this interpretation, the statute is to be read “as insisting that the ‘transaction’ in fact ‘involve’ interstate commerce, even if the parties did not contemplate an interstate commerce connection.” (Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 28).¿ “The statute’s language, background, and structure establish that section 2’s ‘involving commerce’ words are the functional equivalent of the phrase ‘affecting commerce,’ which normally signals Congress’ intent to exercise its commerce power to the full[.]” (Id. at p. 265.) “Congress Commerce Clause power ‘may be exercised in individual cases without showing any specific effect upon interstate commerce’ if in the aggregate the economic activity in question would represent ‘a general practice ... subject to federal control.’ [Citations.] Only that general practice need bear on interstate commerce in a substantial way.” (Citizens Bank v. Alafabco, Inc. (2003) 539 U.S. 52, 56-57.)¿

An arbitration clause is governed by the FAA if the agreement is a contract “evidencing a transaction involving commerce.” (9 U.S.C. § 2.) Courts “broadly construe” this phrase, because the FAA “embodies Congress’ intent to provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause.” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1286.)

Lyft has not filed an additional declaration, as requested by the Court at the August 2, 2023 hearing. (8-02-23 Minute Order, pp. 1-2.) However, the Court finds that Lyft’s moving papers did in fact contain the declarations of Quinn Graham and Katye Coombs, which laid the foundation for the exhibits containing the purported arbitration agreement. Thus, no additional declarations are necessary and the Court moves on to the merits of the motion.

Lyft contends it is entitled to an order compelling arbitration for the following reasons: (1) Plaintiff agreed to arbitrate all disputes with Lyft by accepting Lyft’s Terms of Service (TOS) on multiple occasions before and after the accident; (2) it is well- accepted that assent to TOS prior to gaining access to a service is sufficient and binding to enforce a contractual arbitration clause; and (3) Plaintiff’s claims fall squarely within the scope of the agreement. Thus the Court must enforce the agreement and require arbitration and stay the action pending the outcome of arbitration.

As stated above, the first step in analyzing a motion to compel arbitration is to determine whether an arbitration agreement exists. Lyft attaches Exhibits 1 through 3, containing the Terms of Service accepted by Plaintiff in order to use the Lyft application, as evidence of the arbitration agreement. (Coombs Decl. ¶ 12.) Though Plaintiff accepted multiple TOS agreements, the terms pertinent to arbitration remained identical in each. The agreements stated the following:

“PLEASE BE ADVISED: THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS YOU AND LYFT HAVE AGAINST EACH OTHER CAN BE BROUGHT (SEE SECTION 17 BELOW). THESE PROVISIONS WILL, WITH LIMITED EXCEPTION, REQUIRE YOU TO SUBMIT CLAIMS YOU HAVE AGAINST LYFT TO BINDING AND FINAL ARBITRATION . . . By entering into this Agreement, and/or by using or accessing the Lyft Platform you expressly acknowledge that you understand this Agreement (including the dispute resolution and arbitration provisions in Section 17) and accept all of its terms. IF YOU DO NOT AGREE TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT, YOU MAY NOT USE OR ACCESS THE LYFT PLATFORM OR ANY OF THE SERVICES PROVIDED THROUGH THE LYFT PLATFORM” (Coombs Decl. ¶ 12 Ex. 2 at p.1.)

The actual arbitration provision, entitled “DISPUTE RESOLUTION AND ARBITRATION AGREEMENT” in bold and all caps, stated the following:

“YOU AND LYFT MUTUALLY AGREE TO WAIVE OUR RESPECTIVE RIGHTS TO RESOLUTION OF DISPUTES IN A COURT OF LAW BY A JUDGE OR JURY AND AGREE TO RESOLVE ANY DISPUTE BY ARBITRATION, as set forth below.” (See Ex. 2 at ¶17(a).)

Given the proof of these terms, the Court finds that Lyft has satisfied its burden of proving the existence of an arbitration agreement between the parties. Now, Plaintiff must demonstrate that the agreement is unenforceable.

However, first, Plaintiff contends in opposition that Lyft has waived its right to arbitrate.

Plaintiff contends that Lyft has waived its right to arbitrate due to its unreasonable delay in compelling arbitration and its failure to file a petition to compel arbitration at or before the time it filed its Answer.

Lyft was served with this action on September 24, 2021 and filed its answer 14 months later, on November 30, 2022, in which it pled as its Sixteenth Affirmative Defense that Plaintiff entered into a binding arbitration agreement with Lyft at the time of the incident. Given that by this time the parties had initiated written discovery, Plaintiff contends that the delay in compelling arbitration amounted to a waiver of the right to arbitrate.

The Court finds that Lyft has not waived its right to arbitrate on the grounds of unreasonable delay. Plaintiff cannot meet is heavy burden of proving Lyft has acted inconsistently with its right to arbitrate. Lyft has not invoked the litigation machinery thus far by, for example, making discovery requests. Thus, Lyft’s delay in compelling arbitration alone does not constitute actions sufficient to demonstrate a waiver of its right to arbitrate.

Additionally, Plaintiff contends that, pursuant to CCP § 1281.5, Lyft has waived its right to compel arbitration because the instant motion to compel arbitration was not brought until more than 20 months after the Complaint was served and more than six months after Lyft filed a responsive pleading. However, as Lyft contends in its reply, this section is applicable only to parties attempting to enforce a claim of lien, which Lyft is not.

IV. The Presence of a Third Party Defendant Does Not Preempt Arbitration Under the FAA

Plaintiff contends that, pursuant to CCP § 1281.2(c), the Court must deny the motion to compel arbitration if it finds that “[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.”

Here, Plaintiff has alleged negligence and motor vehicle personal injury against Lyft, its driver (Gaignard), and a third party, non-Lyft driver (Yaghoubian). Thus, Plaintiff contends, if the claims were to proceed to arbitration, there is the possibility that the claims between Plaintiff and Lyft and Gaignard are decided in a manner that is inconsistent with the claims between Plaintiff and Yaghoubian.

However, the arbitration agreements in this case are governed by the FAA, per the terms of the agreements. On application of a signatory, the FAA mandates arbitration when a valid agreement exists. (Dean Witter Reynolds, Inc. v. Byrd (1985) 470 U.S. 213, 218.) CCP section 1281.2 does not apply when the FAA’s rules govern. (See Rodriguez v. Am. Techs., Inc. (2006) 136 Cal.App.4th 1110, 1115-16.) Accordingly, Plaintiff’s argument is rejected. Lyft is thus entitled to enforce the arbitration clause. Therefore, Lyft’s motion to compel arbitration is GRANTED.

The Court will hear from the parties regarding the issue of a stay, unless the parties reach an agreement on that issue.

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. Lee S. Arian

Judge of the Superior Court