Judge: Lee W. Tsao, Case: 22NWCV01746, Date: 2024-08-27 Tentative Ruling
Case Number: 22NWCV01746 Hearing Date: August 27, 2024 Dept: C
Brandii C Ewing vs Hyundai
Motor America
Case No.: 22NWCV01746
Hearing Date: August 27, 2024 @ 10:30 a.m.
#7
Tentative Ruling
Defendant Hyundai Motor America’s Motion to
Compel Arbitration is GRANTED. The case
is STAYED pending completion of the arbitration.
Defendant to give notice.
Background
Plaintiff Brandii C. Ewing (“Plaintiff”) filed this lemon
law action against Defendant Hyundai Motor America (“Defendant”) regarding the
purchase of a 2022 Hyundai Tucson, having VIN No.: 5NMJBCAE8NH075949 ("the
Subject Vehicle”). (Complaint, ¶8.) The
Complaint asserts causes of action for: (1) Breach of Express Warranty, (2)
Breach of Implied Warranty, and (3) Violation of the Song-Beverly Act Section
1793.2(b). These claims “arise out of
warranty and repair obligations of HYUNDAI MOTOR AMERICA in connection with a
vehicle that Plaintiff purchased and for which HYUNDAI MOTOR AMERICA issued a
written warranty.” (Ibid.)
Defendant now moves for an order from this Court compelling
arbitration under the Warranty and Bluelink Connected Services Agreement.
Legal Standard
Parties
may be compelled to arbitrate a dispute upon the court finding that: (1) there
was a valid agreement to arbitrate between the parties; and (2) said agreement
covers the controversy or controversies in the parties’ dispute.¿(Omar v.
Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.) A party moving to
compel arbitration has the burden of establishing the existence of a valid
agreement to arbitrate and the party opposing the petition has the burden of
proving, by a preponderance of the evidence, any fact necessary to its defense.
(Banner Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348,
356-357.)
Discussion
Arbitration Under the Owner’s Handbook and
Warranty Information
The 2022 Owner’s Handbook & Warranty Information
provides,
“PLEASE READ THIS SECTION IN ITS ENTIRETY AS IT AFFECTS
YOUR RIGHTS THIS SECTION DOES NOT PRECLUDE YOU FROM FIRST PURSUING ALTERNATIVE
DISPUTE RESOLUTION THROUGH BBB AUTO LINE AS DESCRIBED IN THE “ALTERNATIVE
DISPUTE RESOLUTION” PROVISION IN SECTION 3 OF THIS HANDBOOK.
If you purchased or leased your Hyundai vehicle in the
State of California, you and we, Hyundai Motor America, each agree that any
claim or disputes between us (including between you and any of our affiliated
companies) related to or arising out of your vehicle purchase, advertising for
the vehicle, use of your vehicle, the performance of the vehicle, any service
relating to the vehicle, the vehicle warranty, representations in the warranty,
or the duties contemplated under the warranty, including without limitation
claims related to false or misleading advertising, unfair competition, breach
of contract or warranty, the failure to conform a vehicle to warranty, failure
to repurchase or replace your vehicle, or claims for a refund or partial refund
of your vehicle's purchase price (excluding personal injury claims), but
excluding claims brought under the Magnuson-Moss Warranty Act, shall be
resolved by binding arbitration at either your or our election, even if the
claim is initially filed in a court of law. If either you or we elect to
resolve our dispute via arbitration (as opposed to in a court of law), such
binding arbitration shall be administered by and through JAMS Mediation,
Arbitration and ADR Services (JAMS) under its Streamlined Arbitration Rules &
Procedures, or the American Arbitration Association (AAA) under its Consumer
Arbitration Rules. We will pay all fees for any arbitration except for the
initial filing fee of $250 SECTION 4 for JAMS or $200 for AAA. The arbitration
will be held in the city or county of your residence. To learn more about
arbitration, including the applicable rules and how to commence arbitration,
please contact: JAMS at www.jamsadr.org; 800-352-5267; or AAA at www.adr.org;
800-778-7879. This agreement to arbitrate is intended to be broadly interpreted
and to make all disputes and claims between us (including our affiliated
companies) relating to or arising out of your vehicle purchase, use or
performance of your vehicle, or the vehicle warranty subject to arbitration to
the maximum extent permitted by law. The arbitrator (and not a court) shall
decide all issues of interpretation, scope, and application of this agreement.”
IF YOU PURCHASED OR LEASED YOUR VEHICLE IN
CALIFORNIA, YOUR WARRANTY IS MADE SUBJECT TO THE TERMS OF THIS BINDING
ARBITRATION PROVISION. BY USING THE VEHICLE, OR REQUESTING OR ACCEPTING
BENEFITS UNDER THIS WARRANTY, INCLUDING HAVING ANY REPAIRS PERFORMED UNDER
WARRANTY, YOU AGREE TO BE BOUND BY THESE TERMS. IF YOU DO NOT AGREE WITH THESE
TERMS, PLEASE CONTACT US AT OPT-OUT@HMAUSA.COM WITHIN THIRTY (30) DAYS OF YOUR
PURCHASE OR LEASE TO OPT-OUT OF THIS ARBITRATION PROVISION.”
(Ameripour Decl., Ex. 3, pp. 12-14.)
Plaintiff argues that the arbitration provision in the
Warranty is unenforceable because Defendant has presented no evidence that Plaintiff
agreed to the arbitration provision prior to, or during, the purchase of the
vehicle. In this regard, Plaintiff
presents evidence that at the time of sale she was never informed that any
warranty claims against Hyundai Motor America would be subject to binding
arbitration, or that an arbitration agreement existed within the Warranty
Booklet. (Ewing Decl., ¶5.) Plaintiff was never informed she was required to
opt out of the post-sale arbitration agreement and was completely oblivious to
it. (Id., ¶6.) Plaintiff never signed the post-sale arbitration
agreement (Id., ¶7) and she never relied upon it (Id., ¶8.)
However, as mentioned above, Plaintiff does rely on the
warranty in her Complaint: “These causes of action arise out of warranty and
repair obligations of HYUNDAI MOTOR AMERICA in connection with a vehicle that
Plaintiff purchased and for which HYUNDAI MOTOR AMERICA issued a written
warranty.” (Complaint, ¶8.) Defendant argues, and the Court agrees, that
arbitration is proper under the doctrine of equitable estoppel. “[A]
party is not entitled to make use of [a contract containing an arbitration
clause] as long as it worked to [his or] her advantage, then attempt to avoid
its application in defining the forum in which [his or] her dispute… should be
resolved.” (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486, 496.)
Plaintiff relies on the existence of the warranty in order to maintain the
causes of action alleged under the Song-Beverly Warranty Act and breach of
warranty claims. The doctrine of equitable estoppel is meant to “prevent a
party from playing fast and loose with its commitment to arbitrate, honoring it
when advantageous and circumventing it to gain undue advantage.” (Metalclad
Corp. v. Ventana Environmental Organizational Partnership (2003) 109
Cal.App.4th 1705, 1714.)
Accordingly, the Court determines
that Defendant has met its burden of proving the existence of a valid
arbitration agreement in the Warranty which covers the subject of this lawsuit.
Arbitration Under Hyundai’s Bluelink Service
Agreement
Defendant argues that arbitration may also be enforced
under the Bluelink Connected Services Agreement. Defendant contends that on or about January
11, 2022, Plaintiffs enrolled their vehicle in the Hyundai’s Bluelink Service
through the Dealer-Assisted Enrollment process. (Rao Decl., ¶5.) Hyundai’s Bluelink Service refers to a
connected car system that includes various functions and features. (Id. at ¶3.)
In order to enroll in Hyundai’s Bluelink services, customers must agree to the
then-effective Connected Services Agreement (“CSA”). (Id. at ¶ 4.) In order to enroll
in Hyundai’s Bluelink services, a person would have had to click a box to
acknowledge that they “read and agree[d] to the Blue Link Terms &
Conditions” and then click the “Complete” button. (Id. at ¶ 6.) The phrase
“Terms & Conditions” included a hyperlink to the CSA. (Id.) As presented to
Plaintiffs, the box acknowledging the Terms & Conditions would not have
been “prepopulated” with a check mark. (Id.) Plaintiff would have had to click
that box to acknowledge assent to the CSA, due to a customer not being able to
successfully activate Bluelink services through the Dealer-Assisted Enrollment
process unless they complete the step requiring them to click the box
acknowledging they agree to the Bluelink Terms and Conditions. (Id.)
The Bluelink Service Agreement states:
“IN THE UNLIKELY EVENT THAT THE APPROPRIATE CUSTOMER
SERVICE DEPARTMENT IS UNABLE TO RESOLVE YOUR CONCERNS, WE EACH AGREE TO RESOLVE
THOSE DISPUTES THROUGH BINDING ARBITRATION OR SMALL CLAIMS COURT INSTEAD OF IN
COURTS OF GENERAL JURISDICTION TO THE FULLEST EXTENT PERMITTED BY LAW, AND
SUBJECT TO THE TERMS OF THIS AGREEMENT. ARBITRATION IS MORE INFORMAL THAN A
LAWSUIT IN COURT. ARBITRATION USES A NEUTRAL ARBITRATOR INSTEAD OF A JUDGE OR
JURY, ALLOWS FOR MORE LIMITED DISCOVERY THAN IN COURT, AND IS SUBJECT TO VERY
LIMITED REVIEW BY COURTS. ARBITRATORS CAN AWARD THE SAME DAMAGES AND RELIEF
THAT A COURT CAN AWARD. ANY ARBITRATION UNDER THIS AGREEMENT WILL TAKE PLACE ON
AN INDIVIDUAL BASIS TO THE MAXIMUM EXTENT PERMITTED BY LAW; CLASS ARBITRATIONS,
CLASS ACTIONS OR REPRESENTATIVE ARBITRATIONS ARE NOT PERMITTED. HYUNDAI OR
GENESIS WILL PAY ALL ADMINISTRATIVE COSTS OF THE ARBITRATOR, NO MATTER WHO
WINS, SO LONG AS YOUR CLAIM IS NOT FRIVOLOUS OR BROUGHT IN BAD FAITH. HOWEVER,
IN ARBITRATION, BOTH YOU AND HYUNDAI WILL BE ENTITLED TO RECOVER ATTORNEYS´
FEES FROM THE OTHER PARTY TO THE SAME EXTENT AS YOU WOULD BE IN COURT.”
(Rao Decl., Ex. 2, § 15:Resolving Disputes(c).)
The Court determines that Defendant has not met its burden
of proving that Plaintiff’s claims are covered under the Bluelink Connected
Services Agreement. According to
Defendant, the Bluelink system refers to a connected car system that includes
various functions and features. (Rao Decl., ¶5.) It is unclear whether any of
Plaintiff’s claims involve the Bluelink system.
The Complaint does not mention the Bluelink system.
Accordingly, arbitration is not compelled under the
Bluelink Connected Services Agreement.
Unconscionability
Unconscionability
generally includes the absence of meaningful choice on the part of one of the
parties together with contract terms that unreasonably favor the other party. (Carboni
v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.) As the party asserting
unconscionability, Plaintiff has the burden of proving both procedural and
substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc.
(2004) 124 Cal.App.4th 1159, 1165). Courts analyze the unconscionability
standard in Civil Code section 1670.5 as invoking elements of procedural and
substantive unconscionability. (Nyulassy v. Lockheed Martin Corp. (2004) 120
Cal.App.4th 1267, 1280-81.)
Procedural unconscionability focuses on whether there is ‘oppression’ arising
from an inequality of bargaining power or ‘surprise’ arising from buried terms
in a complex printed form. (Id.) The substantive element addresses the
existence of overly harsh or one-sided terms. (Id.) An agreement to
arbitrate is unenforceable only if both the procedural and substantive elements
are satisfied. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519,
1533.) “[T]he 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. Foundation
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, at 114.)
i.
Procedural Unconscionability
Plaintiff
argues the warranty booklet’s arbitration clause is procedurally unconscionable
because Defendant has provided no evidence that the warranty booklet and its
arbitration provision were shown to Plaintiff prior to or at the time of
purchase, or that Plaintiff ever read the arbitration provision.
Plaintiff also argues that even if
Defendant had presented evidence that the booklet and its arbitration provision
were shown to Plaintiff, the arbitration clause would still be procedurally
unconscionable. Plaintiff argues that the arbitration agreement was not
disclosed to Plaintiff, it was buried in the warranty booklet, and she never
signed the agreement. But these
circumstances alone do not constitute procedural unconscionability. (See Dougherty
v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 103.)
Defendant
argues that it had no duty to call out or highlight the arbitration provision
in the Warranty and Plaintiffs were expressly provided an opt-out option for
the arbitration provision. (Sanchez v. Valencia Holding Co., LLC
(2015) 61 Cal.4th 899, 914.) Moreover, the Court notes that the
arbitration provision is prominently displayed in bold lettering in the first
section of the “Hyundai Warranty Information”. (Ameripour Decl., Ex. 3, pp. 12-14.)
Plaintiff has not met his burden of establishing
oppression or surprise.
ii.
Substantive
Unconscionability
Plaintiff argues that the arbitration provision is
substantively unconscionable because Plaintiff did not sign it and the 30 day
opt out provision is too short given the length of time a purchaser would typically
take to bring a vehicle in for repairs.
Defendant does not respond to these arguments other than to
reiterate that Plaintiff relies upon the Warranty in bringing suit. While it is true that Defendant gives a purchaser
only 30 days to opt out of the arbitration provisions, the fact remains that
the purchaser can choose to opt out.
Plaintiff has not met his burden of establishing that the arbitration
provision is overly harsh or one sided.
Thus, Plaintiff has not met his burden of establishing both
procedural and substantive unconscionability.
Accordingly, Defendant’s Motion to Compel Arbitration is
GRANTED.