Judge: Mark H. Epstein, Case: 24SMCV02292, Date: 2025-03-18 Tentative Ruling

Case Number: 24SMCV02292    Hearing Date: March 18, 2025    Dept: I

The court cannot fully understand the pleadings in this case.  According to all parties, DOE 2 was driving the vehicle in which plaintiff was a passenger and was also driving the vehicle owned by Roberto’s.  That seems strange.  The court will assume that one of these drivers was really DOE 1.

Uber seeks to compel plaintiff to arbitrate.  The argument is that in order to use Uber, one has to register on the Uber app.  According to Uber’s witness, the registration process includes agreeing to the terms of service, one of which is an agreement to arbitrate.  Plaintiff makes two principal arguments in response.

The first is that Uber has not satisfactorily established the existence of the contract.  Specifically, plaintiff claims that Yu, who is Uber’s witness, does not have sufficient knowledge to establish the bona fides of the contract.  Beltran testifies that there is no recollection of seeing the agreement as to the terms of use or anything relating to an arbitration provision, but plaintiff stops just short of denying that plaintiff did not register using the app or denying that the app actually said what Yu states was said or worked the way Yu said it worked.  Plaintiff also contends that even if there is a contract, the court ought not enforce the arbitration provision because there are other parties who are not parties to the contract and there is a risk of inconsistent judgments.  Specifically, plaintiff is worried about the “empty chair” problem.  The arbitrator might find that the fault lies with Roberto’s and that Uber and its driver (whichever DOE that might be) were not at fault.  But a jury, not being bound by the arbitrator’s award, might find that Roberto’s is not at fault because the Uber driver was at fault.  That leaves the plaintiff with nothing even though the one thing probably all agree upon is that plaintiff, as a passenger, was not at fault.

As to the first argument, the court must disagree with plaintiff.  It is true that Yu has no personal knowledge that the contract was signed or agreed upon in that Yu does not know plaintiff and was not there or present when plaintiff purportedly agreed to the terms.  But that is of no moment.  Yu claims to have knowledge of Uber’s data systems and how they work because that is the nature of Yu’s job.  According to Yu, the information in the database can be viewed by one with access (like Yu) but not altered in any way.  According to Yu, having reviewed the procedures that were in place at the time and archived, it would not have been possible for anyone to register to use Uber without going through the app, and the process could not be completed unless the user agreed to be bound by the terms of service, which were available for review by going to a link.  Yu stated that the terms were changed from time to time, but each time arbitration was required, and each time a user was required to go through the process.  At least as the court understands the papers, the arbitration provision was part of the terms of use at the time of the incident.  Plaintiff has made a good try, but the court believes that there is enough here to establish the contract. 

The court was far more persuaded by the inconsistent verdict issue.  The court sees that as a real risk.  Defendant argues that under the FAA, unlike the California equivalent, if any part of the case is subject to arbitration, then the arbitration must be done first and the rest of the case must wait.  Under California law, CCP section 1981.2 provides that in such a case, the court can deny the motion to compel arbitration.  So the question is whether the FAA bars such an argument.  The first question, then, is whether the FAA governs at all.  Although plaintiff contends that the FAA does not govern, the court cannot agree.  The agreement itself states that it is governed by the FAA.  And the court cannot say that Uber does not affect interstate commerce, even though plaintiff has not been driven across state lines.  But even putting the commerce issue to one side, the choice of the FAA as the governing law is sufficient.  (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337.)  But that does not fully answer the inconsistent judgment question.  Although Uber contends that Victrola states that the FAA preempts CCP section 1281.2, the case does not seem to so hold.  It held that the FAA preempts a different statute, in which an arbitration agreement need not be enforced in certain construction cases.  That is not at issue here.  Nor does Moses H. Cone Memorial Hospital v. Mercury Construction Corp. (1983) 460 U.S. 1, support Uber’s position.  All that case holds (with regard to arbitration) is that the FAA governs in appropriate cases.  The case did not deal with section 1281.2.  What the case says is that in other circumstances where some litigants are not parties to the agreement, the agreement must still be enforced.  An analysis of the facts is helpful.  There, Moses H. Cone Memorial Hospital (the “Hospital”) had a construction contract with Mercury Construction Corporation (“Mercury”).  That agreement had an arbitration provision, and the arbitrator was a specific architect (the “Architect”).  During construction, Mercury agreed, at the Architect’s request, to withhold its claims against the Hospital for delay until the work was done.  After the work was done, Mercury submitted to the Architect its claims for delay costs.  Eventually, the Hospital refused to pay anything on Mercury’s delay claims.  That led the Hospital to file an action for declaratory relief in state court naming Mercury and the Architect as defendants.  The Hospital asserted that Mercury’s claim was without merit and that to the extent it did owe Mercury money, the arbitration had a duty to indemnify the Hospital.  Mercury then filed an action in federal court to compel arbitration.  The federal court, at the Hospital’s request, stayed the federal suit pending resolution of the state action, and Mercury appealed.  It was that appeal that went to the Supreme Court.  The Court first determined that the order staying the action was appealable, but the bulk of the case dealt with the abstention doctrine (which is what the case is mostly known for), concluding that the doctrine did not support the federal court’s decision to stay its hand.  The issue for which Uber cites the case—that in a case where there are some parties that would not be subject to the agreement, the arbitration goes forward anyway—was not really the holding.  Rather, there is a more general statement to that effect, but the Court had no occasion to consider whether such would be the case if the plaintiff were left with the risk of inconsistent judgments.  The Court concluded that although it might be inefficient for the Hospital to arbitrate its claim against Mercury first and then potentially have to litigate its claim against the Architect, that was simply a byproduct of the parties’ agreement.  But that is not quite the case here.  In Moses H. Cone, the arbitration could go forward if necessary after the arbitration and (critically, in this court’s view) there was no possibility of inconsistent judgments.  If the arbitration concluded that there was no liability to Mercury, then there would be no claim as between the Hospital and the Architect because there would be nothing to indemnify.  And if the arbitration went against the Hospital, the Hospital could then pursue the Architect without any fear of inconsistency.  The Hospital did not have the risk of being left out in the cold.  The question, then, remains whether section 1281.2, which deals with a different issue, is preempted by the FAA.  The court believes that the rule articulated in that statute—that a plaintiff who signs an arbitration agreement need not be bound to arbitrate where there is a risk of inconsistent judgments—is not inconsistent with the FAA to the degree that the FAA preempts that statute or that the strong policies incorporated into that statute involving fundamental fairness and the right to have a dispute actually resolved are in any way inconsistent with the FAA.  This is not a case like Moses H. Cone where plaintiff will be subject to the inconvenience of piecemeal litigation; it is a case where plaintiff’s substantive right to obtain a recovery is in jeopardy.  The court does not believe that the arbitration agreement in Uber’s terms of service was meant to deprive, or potentially deprive, plaintiff of any recovery at all.  And if that was the intent, then the court would think that there is a very strong argument that the contract, as so interpreted, would be unconscionable.

The court notes that Uber did not really brief that issue in depth, and the court must confess that it has not done a deep dive into the issue yet.  Therefore, the court is inclined to allow further briefing on that point, as well as whether the delegation doctrine—under which the issue of 1281.2 and unconscionability would (according to Uber) be decided by the arbitrator rather than the court—applies where there is the risk of inconsistent judgments.  The delegation issue is a substantial one, but it was not really briefed by the parties.  In other words, there is no doubt in the court’s mind that it is for the court, not the arbitrator, to determine if there exists a contract to arbitrate at all.  But it is lawful for the parties to agree to delegate other questions, such as unconscionability, scope of the arbitration provision, and other subsidiary issues, to the arbitrator.

The court will discuss timing with the parties.