Judge Marcella O. Mclaughlin, Case Number: 37-2023-00021509-CU-PO-CTL, Date: 2024-05-17 Tentative Ruling

Judge: Marcella O. Mclaughlin, Case: 37-2023-00021509-CU-PO-CTL, Date: 2024-05-17 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

DEPT.:

EVENT DATE:

EVENT TIME:

HALL OF JUSTICE

TENTATIVE RULINGS - May 16, 2024

05/17/2024 09:00:00 AM C-72 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Marcella O McLaughlin

CASE NO.:

CASE CATEGORY:

EVENT TYPE:

CASE TITLE: CASE TYPE:

Civil - Unlimited PI/PD/WD - Other Motion Hearing (Civil) 37-2023-00021509-CU-PO-CTL MORENO VS TWITCH INTERACTIVE INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 04/24/2024

1. MOTION TO STAY Defendant Kairos Media's motion to stay pending appeal in the related case is DENIED.

Nothing in Code of Civil Procedure section 1294 suggests that the statute applies when an appeal is filed in a different case. Moreover, the court declines to exercise its inherent authority to stay this case – which has now been pending for a year – as the court believes that any such delay would not be in the interests of justice. See Grewal v. Jammu (2011) 191 Cal.App.4th 977, 999 (''Justice delayed is justice denied.'').

2. MOTION TO COMPEL ARBITRATION Defendant Kairos Media's motion to compel arbitration is DENIED.

A. Plaintiff's objections to the Parnell declaration (ROA 139) are sustained.

B. Turning to the merits, the court notes that the arbitration provision contains a New York choice-of-law clause. (See Parnell Decl., Ex. A at ¶ 11.) California courts follow the principles of the Restatement section 187 in analyzing contractual choice-of-law clauses. Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 465-66. Under this approach, the court must first determine: '(1) whether the chosen state has a substantial relationship to the parties or their transaction, or (2) whether there is any other reasonable basis for the parties' choice of law.' Id. at 466. 'If neither of these tests is met, that is the end of the inquiry, and the court need not enforce the parties' choice of law.' Id. Such is the case here. It is undisputed that the subject incident occurred in California. No evidence has been submitted showing that either plaintiff or Kairos Media has a substantial relationship to New York.

Nor has Kairos Media suggested a reasonable basis for applying New York law. Accordingly, the court will evaluate the arbitration provision under California law.

C. Under California law, '[t]he party seeking arbitration bears the burden of proving the existence of an arbitration agreement by the preponderance of the evidence.' Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 777.

In this case, the arbitration provision is set forth in a two-page Participant Release Form ('PRF').

(Parnell Decl., Ex. A.) Plaintiff concedes that she signed the PRF (Moreno Decl., ¶ 4), which is sufficient Calendar No.: Event ID: TENTATIVE RULINGS

3126511 5 CASE NUMBER: CASE TITLE: MORENO VS TWITCH INTERACTIVE INC [IMAGED] 37-2023-00021509-CU-PO-CTL to establish her assent to all its terms. See Martinez v. BaronHR, Inc. (2020) 51 Cal.App.5th 962, 967; see also Rodriguez v. Oto (2013) 212 Cal.App.4th 1020, 1027. The fact that plaintiff was unaware of the arbitration provision does not disturb this conclusion. 'A party cannot avoid the terms of a contract on the ground that he or she failed to read it before signing.' Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049. In sum, the court finds that Kairos Media has established the existence of an agreement to arbitrate between itself and plaintiff.

D. '[T]he party opposing arbitration bears the burden of proving any defense, such as unconscionability.' Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236. 'Unconscionability, as the definition suggests, has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.' Fisher v. MoneyGram Intern., Inc. (2021) 66 Cal.App.5th 1084, 1093. Both are present here.

Procedural Unconscionability A procedural unconscionability analysis begins with an inquiry into whether the contract is one of adhesion. OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126. 'An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power 'on a take-it-or-leave-it basis.'' Id. In this case, Kairos Media does not dispute that it drafted the PRF and presented it to plaintiff on a take-it-or-leave-it basis. Indeed, according to Kairos Media, plaintiff was 'told to sign the Participant Release Form if she wanted to participate in the Face-Off Challenge.' (Reply at 3:26-27.) Thus, the PRF was a contract of adhesion, which establishes 'at least some degree of procedural unconscionability[.]' Fisher, 66 Cal.App.5th at 1095.

There is also evidence of surprise. The title of the PRF does not indicate that it contains an arbitration provision. Nor is there any sort of special heading preceding the arbitration provision. To the contrary, the arbitration provision is buried in the middle of the very last paragraph on the second page of the PRF. It is not highlighted, bolded, or otherwise prominently distinguished from the other ten paragraphs in the PRF.

In sum, based on the adhesive nature of the PRF and the inconspicuous formatting of the arbitration clause, the court finds that there is a moderate level of procedural unconscionability. See The McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330, 1349 ('[P]rocedural unconscionability requires either oppression or surprise.') (italics omitted).

Substantive Unconscionability Substantive unconscionability arises when a contract imposes unduly harsh or one-sided results.

Haydon v. Elegance at Dublin (2023) 97 Cal.App.5th 1280, 1289.

Here, the arbitration provision requires the parties to arbitrate in New York. This forum selection clause is substantively unconscionable because there is nothing to suggest that plaintiff – a California resident participating at an event in California – reasonably could have expected at the time of contracting that she would be required to resolve any disputes in New York. See Gostev v. Skillz Platform, Inc. (2023) 88 Cal.App.5th 1035, 1061 (requiring mobile app users to arbitrate their claims in San Francisco regardless of where the users were located was substantively unconscionable); see also Magno v. The College Network, Inc. (2016) 1 Cal.App.5th 277, 288-89 (requiring college-aged students to travel from San Diego to Indiana to arbitrate claims against a company that solicited their business in California was substantively unconscionable).

In addition, the court agrees with plaintiff that the PRF lacks mutuality because it reserves to Kairos Media the right to pursue certain claims and remedies outside of arbitration. 'An agreement may be Calendar No.: Event ID: TENTATIVE RULINGS

3126511 5 CASE NUMBER: CASE TITLE: MORENO VS TWITCH INTERACTIVE INC [IMAGED] 37-2023-00021509-CU-PO-CTL unfairly one-sided if it compels arbitration of the claims more likely to be brought by the weaker party but exempts from arbitration the types of claims that are more likely to be brought by the stronger party.' Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 724. In this case, the arbitration provision states that 'each party may enforce its or its affiliates' intellectual property rights in any court of competent jurisdiction, including but not limited to equitable relief.' (Parnell Decl., Ex. A at ¶ 11.) However, Kairos Media does not dispute that it is more likely to bring intellectual property claims against plaintiff than vice versa. Indeed, there is no evidence that plaintiff even possesses intellectual property rights. More importantly, Kairos Media offers no business justification for the one-sided provision. See Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 487 (explaining that if the drafting party does not have a reasonable justification for a one-sided arrangement, the court 'must assume' that the lack of mutuality is unconscionable). The provision, therefore, is substantively unconscionable.

Conclusion Based on the foregoing, the court finds that plaintiff has made a sufficiently strong combined showing of procedural and substantive unconscionability to render the arbitration agreement unenforceable. The court further finds that the arbitration provision is 'permeated' by unconscionability such that severance of the offending terms is not feasible. See Magno, 1 Cal.App.5th at 292. Accordingly, the motion to compel arbitration is denied and the stay issued by the court pursuant to Code of Civil Procedure section 1281.4 (ROA 193) is hereby dissolved.

E. Having concluded that the arbitration agreement is unenforceable, the court declines to address whether defendant Intel Corporation can be compelled to arbitration as a nonsignatory. See Dobbs v. Jackson Women's Health Organization (2022) 597 U.S. 215, 348 (Roberts, C.J., concurring) ('If it is not necessary to decide more to dispose of a case, then it is necessary not to decide more.').

3. DEMURRERS TO PLAINTIFF'S COMPLAINT Defendants Kairos Media's and Lenovo's demurrers to plaintiff's complaint are SUSTAINED with leave to amend.

A. 'California does not recognize a distinct common law cause of action for gross negligence apart from negligence.' Jimenez v. 24 Hour Fitness USA, Inc. (2015) 237 Cal.App.4th 546, 552, fn.3. Moreover, insufficient facts have been pled showing either a 'want of even scant care' or 'an extreme departure from the ordinary standard of conduct. See City of Santa Barbara v. Superior Court (2007) 41 Cal.4th 747, 754; see also Dino, Inc. v. Boreta Enterprises, Inc. (1964) 226 Cal.App.2d 336, 340 ('[U]ltimate facts must be pleaded, rather than legal conclusions[.]').

B. 'Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.' Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227. Accordingly, consistent with the foregoing, plaintiff is granted leave to amend to allege facts (if she can) supporting a theory of gross negligence as to defendants Kairos Media and Lenovo.

The first amended complaint must be filed and served by May 28, 2024. Any future pleadings challenges to the forthcoming FAC must be coordinated by defendants and set for hearing on the same day.

4. DEMURRER TO TWITCH INTERACTIVE CROSS-COMPLAINT Cross-defendant Lenovo's demurrer to cross-complainant Twitch Interactive's cross-complaint is OVERRULED.

A. The demurrer to count 2 is overruled.

The equitable indemnity claim is not 'premature.' '[A] defendant may pursue a comparative equitable Calendar No.: Event ID: TENTATIVE RULINGS

3126511 5 CASE NUMBER: CASE TITLE: MORENO VS TWITCH INTERACTIVE INC [IMAGED] 37-2023-00021509-CU-PO-CTL indemnity claim against other tortfeasors either (1) by filing a cross-complaint in the original tort action or (2) by filing a separate indemnity action after paying more than its proportionate share of the damages through the satisfaction of a judgment or through a payment in settlement.' Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1197-98 (emphasis added). In addition, although Twitch Interactive may not recover on both its express indemnity and equitable indemnity claims (see Regional Steel Corp v. Superior Court (1994) 25 Cal.App.4th 525, 527), it may plead the theories in the alternative and make inconsistent allegations. See Adams v. Paul (1995) 11 Cal.4th 583, 593.

B. The demurrer to count 3 is overruled. Lenovo has not cited any authority holding, as a matter of law, that a claim for apportionment and contribution is 'duplicative' of a claim for equitable indemnity.

Compare CACI 406 with 3800 and 3801.

C. Lenovo must file and serve an answer to the cross-complaint by May 28, 2024.

D. In issuing this ruling, the court has not considered the trial court rulings cited in the moving and opposition briefs. This is improper. '[A] written trial court ruling has no precedential value.' Bolanos v. Superior Court (2008) 169 Cal.App.4th 744, 761.

Calendar No.: Event ID: TENTATIVE RULINGS

3126511 5