Judge Lisa K. Sepe-Wiesenfeld, Case Number: 24SMCV01324, Date: 2024-11-05 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 24SMCV01324, Date: 2024-11-05 Tentative Ruling

Defendant VeoRide, Inc. (“Defendant”) moves to compel Plaintiff Michael Trump (“Plaintiff”) to submit his claims to arbitration and stay the proceedings in this manner on the ground that Plaintiff is bound by an enforceable agreement to arbitrate disputes included within the User Agreement accepted by Plaintiff before renting and using a scooter through Defendant’s app. Plaintiff contends that Defendant has not provided evidence that Plaintiff signed and consented to an arbitration agreement, and if the Court finds an agreement exists, Plaintiff argues the contract is unconscionable.

“[I]n considering a . . . petition to compel arbitration, a trial court must make the preliminary determinations whether there is an agreement to arbitrate and whether the petitioner is a party to that agreement (or can otherwise enforce the agreement).” (M & M Foods, Inc. v. Pac. Am. Fish Co. (2011) 196 Cal.App.4th 554, 559; see also Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284 [“petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence”].) In deciding a petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine whether plaintiff’s claims are covered by the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The burden then shifts to the opposing party to prove, by a preponderance of evidence, a defense to enforcement of the agreement. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, 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:

“The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.” (Eng’rs & Architects Ass’n v. Cmty. Dev. Dep’t (1994) 30 Cal.App.4th 644, 653.) General principles of contract law determine whether the parties have entered a binding agreement to arbitrate. (Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 640-641 [“The existence of a valid agreement to arbitrate involves general contract principles”].)

In the complaint, Plaintiff alleges he was operating one of Defendant’s electric scooters on July 22, 2022 when the brakes malfunctioned, failing to operate, and caused Plaintiff to fall to the ground, sustaining injuries. (Compl., p. 4.) Defendant moves to compel arbitration pursuant to Defendant’s User Agreement, which Plaintiff accepted by physically checking a box indicating that user has read and agreed to the User Agreement during the process of creating an account. (Mot., Xie Decl. ¶ 10.) The arbitration agreement reads in pertinent part:

If the no resolution is reached in the initial resolution process, either party may initiate binding arbitration as the sole means to resolve claims, as provided herein. All claims arising out of or relating to this Agreement, including access to and use of the Services, and use and rental of any Vehicle, shall be finally settled by binding arbitration administered by JAMS under the applicable commercial arbitration rules, excluding any rules or procedures governing or permitting class actions.

The arbitrator shall have exclusive authority to resolve all disputes arising out of or relating to the interpretation, applicability, enforceability or formation of this Agreement, including whether a claim is subject to arbitration. The arbitrator shall be empowered to grant whatever relief would be available in a court under law or in equity. The arbitrator’s award shall be written, non-appealable, and binding on the parties, and may be entered as a judgment in any court of competent jurisdiction.

To the extent the filing fee for the arbitration exceeds the cost of filing a lawsuit, Veo will pay the additional cost. The parties understand that, absent this mandatory provision, they would have the right to sue in court and have a jury trial. They further understand that, in some instances, the costs of arbitration could exceed the costs of litigation and the right to discovery may be more limited in arbitration than in court.

IF YOU DO NOT AGREE TO THIS AGREEMENT, PLEASE DO NOT USE THE SERVICES. VEORIDE RESERVES THE RIGHT TO MODIFY OR AMEND THIS AGREEMENT FROM TIME TO TIME WITHOUT NOTICE. YOUR CONTINUED USE OF THE SERVICES FOLLOWING THE PUBLICATION OF ANY SUCH CHANGE WILL CONSTITUTE YOUR ACCEPTANCE OF THIS AGREEMENT AS MODIFIED.

The Court finds that Defendant has demonstrated the existence of an arbitration agreement which may be invoked by Defendant against Plaintiff, and the dispute is covered by the agreement to arbitrate, as the provision requires submission of claims arising out of rental of an electric scooter. Plaintiff argues there is no evidence of a signed agreement by Plaintiff or that Plaintiff accepted to be bound by any agreement. This argument is not well taken. First, Defendant provides evidence that this provision was in the agreement on July 22, 2022, the date of Plaintiff’s alleged use of the scooter, Defendant provides evidence that a party could not rent a scooter without accepting this agreement in the app, and Defendant shows that Plaintiff created a user account on May 21, 2022, which was linked to his photo number and email address identified in an email to Defendant two days after the incident. (Mot., Xie Decl. ¶¶ 4-12, Exs. A-D.) The Court finds that Defendant has sufficiently showed that Plaintiff used Defendant’s app and created an account, thereby checking the box agreeing to the terms of the User Agreement, and this constitutes an enforceable arbitration agreement.

Defendant also argues that the agreement is unconscionable because it is unreasonable to expect someone to read a 20-page agreement and understand it, the arbitration agreement was hidden within the agreement, and the agreement was a take-it-or-leave-it contract of adhesion. As to unconscionability, it is axiomatic that “a party opposing the petition [to compel arbitration] bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Giuliano v. Inland Empire Personnel, Inc., supra, 149 Cal.App.4th at p. 1284.) “Courts analyze the unconscionability standard in Civil Code section 1670.5 as invoking elements of procedural and substantive unconscionability.” (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87 (McManus).) “The procedural element of unconscionability focuses on whether the contract is one of adhesion” and “whether there is oppression arising from an inequality of bargaining power or surprise arising from buried terms in a complex printed form.” (Ibid., quotation marks omitted.) “The substantive element addresses the existence of overly harsh or one-sided terms.” (Ibid.) “An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied.” (Ibid.)

“Procedural unconscionability pertains to the making of the agreement; it focuses on the oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) An arbitration provision is substantively unconscionable where the provision “does not fall within the reasonable expectations of the weaker or ‘adhering’ party,” is “unduly oppressive,” or has “overly harsh or one-sided” terms. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113-114 (Armendariz); McManus, supra, 109 Cal.App.4th at p. 87.) “An arbitration agreement is lawful if it (1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require [the assenting party] to pay either unreasonable costs or any arbitrators fees or expenses as a condition of access to the arbitration forum.” (Armendariz, supra, 24 Cal.4th at p. 102, quotation marks omitted.)

Presentation of an arbitration agreement on a “take it or leave it” basis does not automatically render the agreement procedurally unconscionable; Plaintiff must also show that there was no opportunity for meaningful negotiation or that he was subjected to oppressive tactics that forced him to sign the agreement. (See Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1127 [“a compulsory predispute arbitration agreement is not rendered unenforceable just because it is required as a condition of employment or offered on a ‘take it or leave it’ basis”].) Notably, Plaintiff makes no argument that he was not permitted to review and study the agreement before using the scooter, and there is no evidence that anyone exerted pressure on Plaintiff. Further, the agreement is in a normal sized typeface, with headings making clear that the agreement included a provision to arbitrate claims. The Court finds no basis to conclude that the arbitration agreement is unconscionable in any way.