Judge: Lisa R. Jaskol, Case: 23STCV07240, Date: 2023-07-20 Tentative Ruling
Case Number: 23STCV07240 Hearing Date: September 25, 2023 Dept: 28
Having considered the moving, opposing, and reply papers, the Court rules as follows.
BACKGROUND
On April 3, 2023, Plaintiff Zheng Jiang Xiao (“Plaintiff”) filed this action against Defendants National Railroad Passenger Corporation d/b/a Amtrak and Does 1-30 for negligence and negligent hiring, supervision and retention. Plaintiff alleges that an Amtrak employee negligently drove a redcap cart taking Plaintiff from the Union Station concourse to the platform where his ticketed train was waiting, injuring Plaintiff.
On June 7, 2023, Defendant National Railroad Passenger Corporation, service mark Amtrak (“Amtrak”), filed a motion to compel arbitration and for a stay to be heard on August 7, 2023. The Court continued the hearing to September 25, 2023. On September 11, 2023, Plaintiff filed an opposition. On September 15, 2023, Amtrak filed a reply.
Trial is currently scheduled for September 30, 2024.
PARTIES’ REQUESTS
Amtrak requests that the Court compel arbitration and grant a stay.
Plaintiff requests that the Court deny the motion.
LEGAL STANDARD
A. Federal Arbitration Act
“[T]he Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., was intended to reverse long standing judicial hostility to arbitration.” (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 954 (“Brown”.) “FAA establishes a federal policy favoring arbitration.” (Ibid.)
“Section 2 of the FAA provides that written arbitration agreements ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” (Brown, supra, 168 Cal.App.4th at p. 954, quoting 9 U.S.C. § 2.) “ ‘[G]enerally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2.’ ” (Ibid., quoting Doctor's Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 687.)
B. California Arbitration Act
“A
written agreement to submit to arbitration an existing controversy or a controversy
thereafter arising is valid, enforceable, and irrevocable, save upon such grounds
as exist for the rescission of any contract."
(Code Civ. Proc., § 1281.)
Code of Civil Procedure section 1281.2 provides in part:
“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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:
“(a) The right to compel arbitration has been waived by the petitioner; or
“(b) Grounds exist for rescission of the agreement.
* * *
(Code Civ. Proc., § 1281.2, subds. (a), (b).)
“Arbitration is a favored procedure. An ‘ “ ‘arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.’ ” ’ ” (Salgado v. Carrows Restaurants, Inc. (2019) 33 Cal.App.5th 356, 360, quoting Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 397.) “Doubts about the applicability of the arbitration clause to the dispute should be resolved ‘in favor of sending the parties to arbitration.’ ” (Ibid., quoting Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 642.)
C. Unconscionability
“Unconscionability constitutes a generally applicable defense to enforcement of contracts.” (Brown, supra, 168 Cal.App.4th at p. 955, citing Civ. Code, § 1670.5.) “Courts have specifically held that unconscionability constitutes a defense against agreements to arbitrate.” (Ibid., citing Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1099 (Szetela ).) The party opposing arbitration has the burden of establishing that an arbitration provision is unconscionable. (Ibid.)
“Unconscionability has a procedural and a substantive element." (Brown, supra, 168 Cal.App.4th at p. 955, citing Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).) “ ‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for the court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’ ” (Ibid., quoting Armendariz, supra, 24 Cal.4th at p. 114.)
“ ‘Substantive unconscionability addresses the fairness of the term in dispute. Substantive unconscionability “traditionally involves contract terms that are so one-sided as to ‘shock the conscience,’ or that impose harsh or oppressive terms.” ’ ” (Brown, supra, 168 Cal.App.4th at p. 956, quoting Szetela, supra, 97 Cal.App.4th at p. 1100; see Szetela, supra, 97 Cal.App.4th at p. 1099 [“Substantive unconscionability addresses the impact of the term itself, such as whether the provision is so harsh or oppressive that it should not be enforced”].)
“Procedural unconscionability addresses the manner in which agreement to the disputed term was sought or obtained, such as unequal bargaining power between the parties and hidden terms included in contracts of adhesion.” (Szetela, supra, 97 Cal.App.4th at p. 1099, citing 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1212–1213.)
Substantive and procedural unconscionability “need not be present to the same degree. ‘[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.’ ” (Szetela, supra, 97 Cal.App.4th at pp. 1099-1100, quoting Armendariz, supra, 24 Cal.4th at p. 114.)
DISCUSSION
A. Amtrak’s moving papers
At 1:44 p.m. on April 3, 2021, Plaintiff purchased a ticket from Amtrak’s online website for travel on Amtrak Train 4 departing later that evening. (Tewari Decl. ¶¶ 5, 10.)
To purchase a ticket from Amtrak, whether on the website, mobile website, or app, customers must first affirmatively accept Amtrak’s Terms and Conditions, which include a mutual agreement to arbitrate any claims between the customer and Amtrak (“Arbitration Agreement”). When making an online ticket purchase through Amtrak’s website, passengers must click a box acknowledging that they “have read and agree[d] to the terms and conditions, including the binding arbitration agreement" before they can complete their purchase. (Tewari Decl. ¶ 4.)
This provision also contains a hyperlink directly to the Terms and Conditions. When Plaintiff purchased his ticket on April 3, 2021, he clicked the box stating that he had read and agreed to Amtrak’s Terms and Conditions, version 2.9.4. (Tewari Decl. ¶ 5.)
A notice at the top of the Terms and Conditions states:
These terms and conditions contain a binding Arbitration Agreement below. Please read the Arbitration Agreement carefully because it applies mutually to You and Amtrak and requires that you resolve claims and disputes with Amtrak on an individual basis through arbitration and not by way of court or jury trial. By purchasing a ticket for travel on Amtrak, You are agreeing to these terms and conditions and agreeing to the Arbitration Agreement.
(Tewari Decl. ¶ 6.)
The Arbitration Agreement states:
Mutual Agreement to Arbitrate (“Arbitration Agreement”). This Arbitration Agreement is intended to be as broad as legally permissible, and, except as it otherwise provides, applies to all claims, disputes, or controversies, past, present, or future, that otherwise would be resolved in a court of law or before a forum other than arbitration. Amtrak and Customer (on behalf of yourself and any individuals for whom you purchase tickets, including, without limitation, family members, minor passengers, colleagues and companions (collectively “You” or “Your”), AGREE that this Arbitration Agreement applies, without limitation, to claims Amtrak may have against You and claims You may have against Amtrak and any affiliates or related entities, or against any party to which Amtrak owes indemnity (which party may also enforce this Agreement), including without limitation any host railroad, based upon or related to: these Terms and Conditions, breach of contract, tort claims, common law claims, Your relationship with Amtrak, tickets, services and accommodations provided by Amtrak, carriage on Amtrak trains and equipment, any personal injuries (including, but not limited to, claims for negligence, gross negligence, physical impairment, disfigurement, pain and suffering, mental anguish, wrongful death, survival actions, loss of consortium and/or services, medical and hospital expenses, expenses of transportation for medical treatment, expenses of drugs and medical appliances, emotional distress, exemplary or punitive damages arising out of or related to any personal injury), and any claims for discrimination and failure to accommodate, which shall be decided by a single arbitrator through binding arbitration and not by a judge or jury. Except with respect to the Class Action Waiver below, the arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the validity, applicability, enforceability, unconscionability or waiver of this Arbitration Agreement, including, but not limited to any claim that all or any part of this Arbitration Agreement is void or voidable. This Arbitration Agreement is governed by the Federal Arbitration Act (“FAA”) and evidences a transaction involving commerce. The arbitration will be conducted before a single arbitrator under the Consumer Arbitration Rules of the American Arbitration Association ("AAA"), which are available at the AAA website (www.adr.org). A court of competent jurisdiction shall have the authority to enter judgment upon the arbitrator's decision/award. The parties agree to bring any claim or dispute in arbitration on an individual basis only, and not as a class or representative action, and there will be no right or authority for any claim or dispute to be brought, heard or arbitrated as a class or representative action ("Class Action Waiver"). Regardless of anything else in this Arbitration Agreement and/or the applicable AAA Rules, any dispute relating to the interpretation, applicability, enforceability or waiver of the Class Action Waiver may only be determined by a court and not an arbitrator. This Arbitration Agreement does not apply to any claim or dispute that an applicable federal statute states cannot be arbitrated.
Customers cannot complete their ticket purchase until they check the box signaling agreement to the Terms and Conditions including the binding Arbitration Agreement. (Tewari Decl. ¶ 8.)
Plaintiff agreed to Terms and Conditions version 2.9.4 when he purchased his ticket on April 3, 2021. (Tewari Decl. ¶ 9.) Plaintiff affirmatively clicked the box stating that he had read and understood the Terms and Conditions on April 3, 2021, according to Amtrak's electronic ticket purchase records. (Tewari Decl. ¶ 10.)
Based on these facts, Amtrak asserts that it has proved the existence of an arbitration agreement which the Court should enforce under the Federal Arbitration Act and the California Arbitration Act.
B. Plaintiff’s opposition
Plaintiff argues that the arbitration agreement is substantively unconscionable because it requires submission to arbitration as a condition of purchasing a ticket from Amtrak. (Opposition p. 6.) According to Plaintiff, “[t]he Arbitration Agreement in question, due to its oppressive nature and the lack of meaningful choice for passengers, falls squarely within the ambit of unconscionability.” (Opposition p. 8.)
Plaintiff’s argument that passengers must submit to arbitration in order to purchase a ticket addresses procedural unconscionability. Accordingly, Plaintiff cites the Court of Appeal’s discussion in Szetela of procedural unconscionability. (Opposition p. 8, citing Szetela, supra, 97 Cal.App.4th at p. 1100 [rejecting argument that “a contract provision lacks procedural unconscionability unless the opposing party can demonstrate that no meaningful opportunity existed to obtain the offered goods or services from any other provider without the offending contract term”].)
Plaintiff
has the burden of proving both substantive and procedural unconscionability. Even assuming Plaintiff has proven procedural
unconscionability, Plaintiff has failed to prove substantive unconscionability.
By
itself, an arbitration provision like this one that applies equally to both parties is not “so
harsh or oppressive that it should not be enforced.” (See Szetela, supra,
97 Cal.App.4th at p. 1099.)
The Court grants the motion.
CONCLUSION
The Court GRANTS Defendant National Railroad Passenger Corporation, service mark Amtrak’s motion to compel arbitration and for a stay. Plaintiff is ordered to arbitrate his claims against Amtrak. The Court stays the action pending the outcome of arbitration.
On the Court's own motion, the hearing on the amended application for pro hac vice admission scheduled for 9/25/2023 is vacated.
A post-Arbitration Status Conference is scheduled for 04/25/2024 at 08:30 AM in Department 28 at Spring Street Courthouse.
Moving party is ordered to give notice of this ruling.
Moving party is ordered to file the proof of service of this ruling with the Court within five days.