Judge: Mark A. Young, Case: 23SMCV02650, Date: 2024-02-14 Tentative Ruling
Case Number: 23SMCV02650 Hearing Date: February 14, 2024 Dept: M
CASE NAME: Elizondo v. City
of Los Angeles, et al.
CASE NO.: 23SMCV02650
MOTION: Petition/Motion
to Compel Arbitration
HEARING DATE: 2/14/2024
Legal
Standard
Under California and federal law,
public policy favors arbitration as an efficient and less expensive means of
resolving private disputes. (Moncharsh
v. Heily & Blase (1992)
3 Cal.4th 1, 8-9; AT&T Mobility
LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an
agreement is governed by the California Arbitration Act (“CAA”) or the Federal
Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s
scope in favor of arbitration. (Moncharsh, supra, 3 Cal.4th at 9;
Comedy Club, Inc. v. Improv West
Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc.
(1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic
policy objectives contained in the Federal Arbitration Act, including a
presumption in favor of arbitrability [citation] and a requirement that an
arbitration agreement must be enforced on the basis of state law standards that
apply to contracts in general”].) “[U]nder both the FAA and California law,
‘arbitration agreements are valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.’ ” (Higgins v. Superior Crout (2006) 140 Cal.App.4th 1238, 1247.)
“Code of
Civil Procedure section 1281.2 requires a trial court to grant a petition to
compel arbitration if the court determines that an agreement to arbitrate the
controversy exists.” (Avery v.
Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59,
quotations omitted.) Accordingly, “when presented with a petition to compel
arbitration, the court’s first task is to determine whether the parties have in
fact agreed to arbitrate the dispute.” (Ibid.) A petition to compel arbitration is in essence a suit in equity
to compel specific performance of a contract. (Id. at 71.) As with any other specific performance claim, “a
party seeking to enforce an arbitration agreement must show the agreement’s
terms are sufficiently definite to enable the court to know what it is to
enforce.” (Ibid. [internal citations omitted].) “Only
the valid and binding agreement of the parties, including all material terms
well-defined and clearly expressed, may be ordered specifically performed.” (Ibid.) An arbitration agreement “must be so interpreted as to give
effect to the mutual intention of the parties as it existed at the time of
contracting, so far as the same is ascertainable and lawful.” (Civ. Code, §
1636.) The language of the contract governs its interpretation if it is clear
and explicit. (Civ. Code, § 1368.) If uncertainty exists, “the language of a
contract should be interpreted most strongly against the party who caused the
uncertainty to exist.” (Civ. Code, § 1654.)
The party
seeking to compel arbitration bears the burden of proving the existence of a
valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing
the motion, to prove by a preponderance of the evidence any fact necessary to her
opposition. (See Ibid.) “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.” (Ibid.)
Analysis
Defendants
City of Los Angeles assert that the instant claims are required to go to
arbitration because Plaintiff signed an arbitration agreement with a third party,
Bird Rides, Inc. (“Bird”) covering his claims.
As with any contract, mutual assent
or consent is necessary for the formation of a valid arbitration agreement.
(Civ. Code, §§ 1550, 1565.) “Consent is not mutual, unless the parties all
agree upon the same thing in the same sense.” (Civ. Code, § 1580.) The moving
party bears the initial burden of showing the existence of an agreement to
arbitrate by a preponderance of the evidence. (Mitri v. Arnel Mgmt. Co. (2007) 157 Cal.App.4th 1164, 1169
[“Because the existence of the agreement is a statutory prerequisite to
granting the petition, the petitioner bears the burden of proving its existence
by a preponderance of the evidence.”].)
Defendant argues that Plaintiff
agreed to binding arbitration with Bird. Bird operates an on-demand personal
electric scooter sharing network. (Kapur Decl., ¶ 3.) All users of the Bird App
must review and agree to the Bird Rental Agreement, Waiver of Liability and
Release (“Bird Rental Agreement”). (Id., ¶¶ 7–8 & Ex. A.) By accepting the terms
and conditions of the Bird Rental Agreement, Elizondo agreed to a binding
arbitration agreement (“Arbitration Agreement”). (Kapur Decl., Ex. A, § 9.2.)
The agreement is between the Rider (Plaintiff) and the Operator (Bird and
subsidiaries). (Id., p. 1.) The agreement further provides if the parties (i.e.,
Bird and Plaintiff) do not resolve a dispute informally, then either party
(Bird or Plaintiff) may initiate binding arbitration as the sole means to
resolve such claims.
Section 9.2 then sets forth the
parties’ agreement to settle claims by binding arbitration:
[A]ll claims arising out of or
relating to use and rental of a Vehicle, this Agreement, and
the parties’ relationship with each
other shall be finally settled by binding
arbitration… administered by JAMS,
or alternatively a mutually agreed upon arbitrator or
arbitration service, under the
applicable commercial arbitration rules for JAMS or the mutually agreed upon
arbitration service, excluding any rules or procedures governing or permitting
class actions.
(Id., § 9.2.) Section 9.2 further provides a delegation
provision stating that “[t]he arbitrator, and not any federal, state or local
court or agency, 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.” (id.)
As the City is not a party to this
agreement, the City must demonstrate how it may enforce the arbitration
agreement and the arbitrability clause as a third-party. Third parties who did not sign
the agreement to arbitrate may be entitled to enforce it and prosecute the
arbitration in their own names. (Gravillis v. Coldwell Banker Residential
Brokerage Co. (2006) 143 Cal.App.4th 761, 772.) There are six legal theories
that bind a non-signatory to arbitrate: (a) incorporation by reference; (b)
assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f)
third-party beneficiary. (Suh v. Superior Court (2010) 181 Cal.App.4th
1504, 1513.) Here, the City proceeds
under a theory of being a third-party beneficiary.
A third-party beneficiary is someone who
may enforce a contract because the contract is made expressly for his benefit. (Jensen
v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 301.) The mere fact
that a contract results in benefits to a third party does not render that party
a “third party beneficiary.” (Id. at 302.) Nor does knowledge that the third
party may benefit from the contract suffice. (Goonewardene v. ADP, LLC
(2019) 6 Cal.5th 817, 830.) Rather, the parties to the contract must have
intended the third party to benefit. (Hess v. Ford Motor Co. (2002) 27
Cal.4th 516, 524.) A third party must therefore show that, under the express
terms of the contract at issue and any other relevant circumstances under which
the contract was made, (1) "the third party would in fact benefit from the
contract"; (2) "a motivating purpose of the contracting parties was
to provide a benefit to the third party"; and (3) permitting the third
party to enforce the contract "is consistent with the objectives of the
contract and the reasonable expectations of the contracting parties." (Goonewardene,
supra, 6 Cal.5th at 830.)
Here, the City proffers evidence that they
are an express, intended third party beneficiary of the Bird Agreement,
specifically as to the arbitration provisions. The City cites to section 9.7,
which states:
9.7 Third Party Beneficiary –
Municipalities / Entities Requiring Permit
Any Municipality or government or entity
authorizing use of Service through permit or
license or other legally applicable method
is an intended third party beneficiary of this
Arbitration and Class Action Waiver
provision (Sections 9.1-9.9)
Plaintiff and Bird, therefore,
expressed their intent to have the arbitration provisions apply to
municipalities such as the City of Los Angeles. Given this express statement,
the Court concludes that a motivating purpose of the contracting parties was to
provide this specific benefit to the City. Holding otherwise would be
inconsistent with the express terms of the agreement, and therefore
inconsistent with the reasonable expectations of the contracting parties.
Furthermore, the arbitration
provisions apply to the instant dispute. This action arises out of Plaintiff’s
rental and operation of a Bird scooter on March 26, 2022. (Compl., ¶¶ 1-2.) Plaintiff claims that he sustained injuries
when he fell off his scooter in the roadway as a result of a dangerous
condition on City property. As such, this action arises “out of or relating to
use and rental of a [Bird] Vehicle.”
Critically, the City also demonstrates
that the Arbitrator must decide the arbitrability of the instant claims,
including any defenses thereto. (AT & T Technologies v.
Communications Workers (1986) 475 U.S. 643, 649 [the parties may, by clear
and unmistakable agreement,
elect to have the arbitrator, rather than the court, decide which grievances
are arbitrable]; Rodriguez v. American Technologies, Inc. (2006) 136
Cal.App.4th 1110, 1123 [with an unmistakable delegation clause, any issues
concerning the scope of the arbitration clause should be determined by the
arbitrator in the arbitration proceeding].)
Accordingly, the motion is GRANTED.
The Court orders Plaintiff’s claims to arbitration, as discussed above. The
entire action is STAYED pending the completion of the arbitration. (CCP §
1281.4.) The Court sets a status
conference re arbitration for December 10, 2024 at 8:30 a.m.