Judge: Maurice A. Leiter, Case: 24STCV18441, Date: 2025-06-02 Tentative Ruling

Case Number: 24STCV18441    Hearing Date: June 2, 2025    Dept: 54

Hearing Date: June 2, 2025

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration

Moving Party: Defendant Tesla Motors, Inc.

Responding Party: Plaintiff Adriana Mendez

T/R:     DEFENDANT’S MOTION TO COMPEL ARBITRATION IS GRANTED.

THE ACTION IS STAYED.

DEFENDANT TO NOTICE.  

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, opposition, and reply.

BACKGROUND

This is a lemon law action arising out of Plaintiff’s purchase of a 2022 Tesla Model X manufactured and distributed by Defendant Tesla.

ANALYSIS

“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 a 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….”  (CCP § 1281.2.)  The right to compel arbitration exists unless the court finds that the right has been waived by a party’s conduct, other grounds exist for revocation of the agreement, or where a pending court action arising out of the same transaction creates the possibility of conflicting rulings on a common issue of law or fact.   (CCP § 1281.2(a)-(c).)  “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the 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.)

A. Existence of Arbitration Agreement

Defendant moves to compel arbitration based on the arbitration provision in the Motor Vehicle Order Agreement (MVOA) executed by Plaintiff on February 28, 2022.  The agreement provides, “...you agree that any dispute arising out of or relating to any aspect of the relationship between you and Tesla will not be decided by a judge or jury but instead by a single arbitrator in an arbitration administered by the American Arbitration Association (AAA) under its Consumer Arbitration Rules.” (Decl. Kim, Exh. 1.) This action arises from the relationship between Plaintiff and Tesla.

Defendant has met its burden to establish the existence of an arbitration agreement. The burden shifts to Plaintiff to establish any defenses to enforcement.

B. Enforceability

1.    Unconscionability

Unconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.) As the party asserting unconscionability, Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165). Courts analyze the unconscionability standard in Civil Code section 1670.5 as invoking elements of procedural and substantive unconscionability. (See id. at 1280-81.)

Procedural unconscionability focuses on whether there is ‘oppression’ arising from an inequality of bargaining power or ‘surprise’ arising from buried terms in a complex printed form. (Id.) The substantive element addresses the existence of overly harsh or one-sided terms. (Id.) An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.) However, Armendariz held, ‘[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.’ (Armendariz, at 114).”  (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87 (citations omitted).)

Plaintiff asserts that agreement is procedurally unconscionable because it is an adhesion contract, and it is substantively unconscionable because it restricts discovery and requires that arbitration be conducted by AAA. As stated in the moving papers, the arbitration agreement at issue contains an opt out clause that allows the consumer to opt out of arbitration. Plaintiff did not exercise this option. Any procedural unconscionability is extremely low. As for substantive unconscionability, the agreement itself contains no restrictions on discovery or available remedies. The agreement is not unconscionable.

2.    Limitation of Liability

Plaintiff also argues that the agreement should not be enforced because the MVOA contains an improper “Limitation of Liability” clause that states, “We are not liable for any incidental, special or consequential damages arising out of this Agreement. Your sole and exclusive remedy under this Agreement will be limited to reimbursement of your Order Fee, Order Deposit and Transportation Fee.”

Plaintiff asserts that this provision amounts to an illegal waiver of the statutory rights of the Song-Beverly Act. The Limitation of Liability provision, however, is not a part of the arbitration clause of the MVOA, and does not affect the merits of this motion.

3.    Waiver and Authentication

Plaintiff argues that the motion should be denied because the agreement was not properly authenticated, and Defendant waived the right to arbitrate. The Court disagrees. Defendant properly authenticated the agreement by describing the process for purchasing one of their vehicles. Defendant has not acted inconsistently with the right to arbitrate and their participation in litigation has been relatively minimal.

Defendant’s motion to compel arbitration is GRANTED.