Judge: Ronald F. Frank, Case: 24TRCV02278, Date: 2025-01-24 Tentative Ruling
Case Number: 24TRCV02278 Hearing Date: January 24, 2025 Dept: 8
Tentative Ruling
HEARING DATE: January 24, 2025
CASE NUMBER: 24TRCV02278
CASE NAME: Shakhzoda Kasimova v. Tesla Motors, Inc., et al.
MOVING PARTY: Defendant, Tesla Motors, Inc.
RESPONDING PARTY: Plaintiff, Shakhzoda Kasimova
TRIAL DATE: Not Set.
MOTION: (1) Motion to Compel Arbitration
Tentative Rulings: (1) GRANTED. The litigation will be stayed and the Court will set an arbitration status conference before year-end. Tesla shall post the initial arbitration fees and contact the AAA within 30 days
I. BACKGROUND
A. Factual
On July 9, 2024, Plaintiff, Shakhzoda Kasimova (“Plaintiff”) filed a complaint against Defendant, Tesla Motors, Inc., and DOES 1 through 10. The complaint alleges causes of action for” (1) Violation of Civil Code section 1793.2(d); (2) Violation of Civil Code section 1793.2(b); (3) Violation of Civil Code section 1793.2(a)(3); (4) Breach of Express Written Warranty – Civil Code section 1791.2(a); 1794; (5) Breach of Implied Warranty of Merchantability – Civil Code section 1791.1; 1794.
The complaint is based on a March 31, 2023 purchase by Plaintiff of a 2023 Tesla Model Y, manufactured and/or distributed by Defendant, with corresponding Vehicle Identification Number 7SAYGAEE5PF738612. (Complaint, ¶ 5.) Plaintiff notes she purchased the Vehicle from a person or entity in the business of manufacturing, distributing, or selling consumer goods at retail. (Complaint, ¶ 8.) Plaintiff contends she received an express written warranty with their purchase. (Complaint, ¶ 9.) Plaintiff states defects and nonconformities to the warranty manifested themselves within the applicable express warranty period and that Tesla continued to misrepresent its ability to repair the vehicle in conformity with the warranty throughout the warranty period. (Complaint, ¶¶ 10-17.)
Defendant, Tesla Motors, Inc. (“Tesla”) filed a Motion to Compel Binding Arbitration as its initial responsive pleading.
B. Procedural
On August 28, 2024, Tesla filed a Motion to Compel Binding Arbitration. On January 13, 2025, Plaintiff filed an opposition brief. On January 16, 2025, Tesla filed a reply brief.
II. REQUEST FOR JUDICIAL NOTICE
In addition to filing Tesla’s Motion to Compel Arbitration, Tesla also filed a request for this Court to take Judicial Notice of the following document:
1. Plaintiff Shakhzoda Kasimova’s Complaint, filed on or about July 9, 2024, a true and correct copy of which is attached to the Declaration of Ali Ameripour as Exhibit “2”
This Court GRANTS Tesla’s request and takes judicial notice of the above.
III. ANALYSIS
A. Legal Standard
California Code of Civil Procedure, Section 1281 provides that “[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 revocation of any contract.”¿ “California law, like federal law, favors enforcement of valid arbitration agreements.”¿ (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.)¿ “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” unless grounds exist not to compel arbitration.¿ (Code Civ. Proc. § 1281.2.) The Song-Beverly Act also favors arbitration of Lemon Law disputes with a series of “carrot and stick” provisions that immunize a warrantors from a species of civil penalty if they have a certified lemon arbitration program in place. The AAA arbitration provision in Tesla’s contract is not the pre-litigation lemon arbitration program contemplated by Song-Beverly, but rather is a litigation diversion provision contemplated by the Federal Arbitration Act and by the California Arbitration Act. Tesla’s provisions do not indicate that federal law controls, so this Tentative Ruling will rest on California law.
“There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.” (Engineers & Architects Assn. v. Community Development Dept.¿(1994) 30 Cal.App.4th 644, 653.) Nevertheless, the strong public policy promoting private arbitration of civil disputes gives rise to a presumption in favor of arbitrability and compels the Court to construe liberally the terms of the arbitration agreement. (Vianna v. Doctors’ Management Co.¿(1994) 27 Cal.App.4th 1186, 1189).
B. Discussion
i. Existence of Arbitration Agreement
Here, the parties agree that there was a written agreement, between the parties, the Retail Installment Sales Contract (“RISC”), and that it included an arbitration agreements. However, Plaintiff argues that the RISC is a contract of adhesion and is unconscionable and/or otherwise revocable.
Here, the RISC contained an arbitration agreement, which stated:
“ARBITRATION PROVISION”
“PLEASE REVIEW – IMPRTANT – AFFECTS YOUR LEGAL RIGHTS”
1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.
2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.
3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.
Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. […]
(Sale Contract, Ex. 1 to Kim Decl., page 6.)
This Court finds that the complaint alleges various statutory violations for alleged vehicle defects. The Arbitration Agreement applies to, “any claim or dispute, whether in contract, tort, statute, or otherwise…” (Kim Decl., Ex. 1, p. 6.) The court finds that the claims in Plaintiff’s complaint are covered within the scope of the arbitration agreement. Because Plaintiff does not raise any issues of the claims not arising within the agreement, and only focuses on the unconscionability argument, this Court finds that on the face of the agreement made between the parties, the Arbitration clause is enforceable.
ii. Applicability of Ford Motor Warranty Cases
Generally, only signatories to an arbitration agreement may enforce it. (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1284.) However, there are several exceptions to the nonsignatory enforcement rule. (Bouton v. USAA Cas. Ins. Co. (2008) 167 Cal.App.4th 412, 424.)
In her opposition brief, Plaintiff relied in part on the recent Second District nonsignatory exception case of Ochoa vs. Ford, also cited as Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324. Plaintiff’s reliance is misplaced. In Ochoa, the Second District converged from the First District in Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486 as to the equitable estoppel exception to the general rule that nonsignatory parties to an arbitration agreement cannot compel a signatory party to arbitrate a suit filed in the court system. Regardless of the appellate district’s analysis of the equitable estoppel exception, both Felisilda and Ochoa discuss a manufacturer’s ability to enforce an arbitration provision given to the buyer by the selling dealership as opposed to the manufacturer’s own arbitration agreement. This case is distinguishably different. Here, Tesla is not only the manufacturer, but also sells its vehicles directly to the consumer. Tesla is one of the signatories to the arbitration agreements at issue, and does not have third-party dealerships that handle the ordering and selling of its vehicles. As such, Plaintiff’s reliance on the nonsignatory exception case of Ochoa is unavailing. Because Tesla does not use third-party dealerships to order and sell their vehicles, and because they directly contract and sell their vehicles to consumers, there is no nonsignatory seeking to enforce a dealer’s arbitration agreement. Tesla is a signatory to the contract with Plaintiff. No exception to a rule regarding non-signatories is needed or even relevant here.
iii. Unconscionability
Plaintiff’s main argument in her opposition is that the contract drafted by Tesla is one of adhesion and is unconscionable and/or otherwise revocable. Unconscionability is a valid defense to a petition to compel arbitration. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1143.) State law governs the “unconscionability” defense. (Doctor’s Assocs., Inc. v. Casarotto (1996) 517 US 681, 687.) The core concern of the unconscionability doctrine is the “absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas, supra, 57 Cal.4th at 1145.) The unconscionability doctrine ensures that contracts—particularly contracts of adhesion—do not impose terms that have been variously described as overly harsh, unduly oppressive, so one-sided as to shock the conscience, or unfairly one-sided. (Id.) Here, Plaintiff has not identified any overly harsh or unduly oppressive provisions, other than depriving her of the court system to resolve her dispute without any other option. The Court finds that such a deprivation, without much more, is not overly harsh, unduly oppressive, nor shocking of the conscience.
“The procedural element of unconscionability focuses on whether the contract is one of adhesion. (Armendariz, supra, 24 Cal.4th at p. 113; Mercuro v. Superior Court, supra, 96 Cal.App.4th at p. 174.) 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. (Armendariz, supra, 24 Cal.4th at p. 114; Mercuro v. Superior Court, supra, 96 Cal.App.4th at p. 174.) The substantive element addresses the existence of overly harsh or one-sided terms. (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 [130 Cal.Rptr.2d 892, 63 P.3d 979]; Armendariz, supra, 24 Cal.4th at p. 114.) An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied. (Armendariz, supra, 24 Cal.4th at p. 113; Mercuro v. Superior Court, supra, 96 Cal.App.4th at p. 174.) 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 p. 114; see also Kinney v. United HealthCare
Services, Inc., supra, 70 Cal.App.4th at p. 1329.).” McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87.)
1. Procedural Unconscionability
Plaintiff argues that the Purchase Agreement is adhesive and therefore procedurally unconscionable. Plaintiffs base their arguments on the fact that the Order Agreement is a ‘take it or leave it’ contract that gave Plaintiffs no meaningful opportunity to negotiate or discuss any of the terms outlined in the Agreements. In Plaintiff’s unconscionability argument, they make reference the case of Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899. However, the Court finds that the facts of Sanchez are not the inherently analogous to the facts here. In Sanchez, the contract at issue was printed on a single page which was the standard 8 ½ inches wide but a scroll-like 26 inches long. The paper was covered in different provisions which were printed on the front and the back, but only the front of the paper had signature blocks. (Id. at 908.) The arbitration agreement was hiding on the back at the bottom, as far away from notice as it could possibly be. (Ibid.) Additionally, the contract in Sanchez was one of adhesion, which is the primary reason the Court found procedural unconscionability. (Id. at 913-915.) None of these features are plead here. The Arbitration Agreement appears in the RISC and has normal printing and margins. The arbitration clause is located on the page before Plaintiff’s signature (i.e., page 5 of 6) and contains a clear opt-out procedure. (Kim Decl., ¶ 4, Exhibit 1.)
As such, while there is procedural unconscionability here, the level of same is low in comparison to other more onerous, adhesive, and arguably hidden or deceptively presented arbitration provisions. Plaintiff had the option to opt out of arbitration. Plaintiff was presented with the arbitration provision in the same manner – on a digital platform – as the purchase contract itself.
2. Substantive Unconscionability
Next, Plaintiff argues that the arbitration provisions are substantively unconscionable because the exclusive requirement of using the arbitration forum of AAA in the Arbitration Provision is substantively unconscionable due to its unfairness. An arbitration agreement is generally enforceable, if it (1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require the parties to pay unreasonable costs and fees as a condition of access to an arbitration forum. (See Armendariz, supra, 24 Cal.4th at p. 102.) There is no evidence before the Court on this motion that the AAA forum does not meet these threshold standards. Tesla’s choice of an arbitration forum to which Plaintiff consented is in sharp contrast to the forum selection and other provisions of the agreement in Lathrop v. Thor Motor Coach, Inc. (2024) 105 Cal.App.5th 808, 816–817.) In Lathrop, the motor home warranty required application of Indiana law which provided lesser remedies and rights than the Song-Beverly Act, and arguably required plaintiff to bring his claims in an Indiana forum. Those type of provisions are substantively unconscionable, leading the court there to deny the defendant its preferred forum. In contrast here, the AAA rules provide for the application of California law, an arbitration forum in California, and appear to otherwise meet the substantive standards for validity.
Plaintiff argues that Tesla’s Arbitration Agreement severely limits discovery, including a lack of any depositions. (See AAA Rules, R-22.) Further, beyond a very ambiguous description of the exchange of information (i.e., “specific documents and other information”), the AAA rules state: “No other exchange of information beyond what is provided for in section (a) above is contemplated under these rules, unless an arbitrator determines further information exchange is needed to provide for a fundamentally fair process.” What Plaintiff fails to acknowledge is that these discovery limitations apply equally to both sides. Tesla also will be deprived of the right to take depositions, but it will be required to exchange specific documents and, on application to the arbitrator, both sides may be required to exchange other information such as expert reports. Armendariz requires that an enforceable arbitration provision must provide for discovery sufficient to “adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s) and subject to limited judicial review.” (Armendariz, supra, 24 Cal.4th at p. 106.) The AAA rules provide that the Arbitrator shall make the determination as to what information exchange is required, and each side will be at liberty to seek specific discovery that a side believes it requires which can include citation of this ruling and the Armendariz precedent as support for the requesting party’s position.
Accordingly, the Court does not find that Plaintiff has carried her burden in showing how the arbitration provisions are unconscionable or against public policy. As such, and without any argument as to waiver by Tesla under the recent decision in Quach, the court GRANTS Tesla’s Motion to Compel Arbitration.
III. CONCLUSION
For the foregoing reasons, Tesla’s Motion to Compel Arbitration is GRANTED.
Tesla is ordered to give notice, and to post the initial arbitration fees and contact the AAA within 30 days.