Judge: Salvatore Sirna, Case: 24PSCV03646, Date: 2025-05-19 Tentative Ruling
Case Number: 24PSCV03646 Hearing Date: May 19, 2025 Dept: G
Defendant’s Motion to Compel Arbitration
Respondent: Plaintiff Gillian Berrow
TENTATIVE RULING
Defendant’s Motion to Compel Arbitration is GRANTED. Proceedings are STAYED pending the outcome of arbitration.
BACKGROUND
This is a Song Beverly action. On March 8, 2022, Plaintiff Gillian Berrow (Plaintiff) purchased a 2022 Hyundai IONIQ 5 (Subject Vehicle) valued at approximately $78,383.92. (Complaint, ¶ 8.) Defendant Hyundai Motor America (Defendant) issued a written warranty when Plaintiff purchased the Subject Vehicle. (Complaint, ¶¶ 8-9.) Plaintiff alleges that the Subject Vehicle was delivered to her with serious defects including, but not limited to, electrical, engine, and structural defects. (Complaint, ¶ 10.) Plaintiff presented the Subject Vehicle for repairs in February 2023, February 2024, and June 2024 to no avail. (Complaint, ¶¶ 11-13.)
Plaintiff filed a complaint against Defendant and Does 1-10, alleging the following causes of action: (1) Violation of Song-Beverly Act - Breach of Express Warranty, (2) Violation of Song-Beverly Act - Breach of Implied Warranty, and (3) Violation of Song-Beverly Act Section 1793.2.
On February 4, 2025, Defendant filed the present Motion to Compel Arbitration (Motion). Plaintiff filed an Opposition on April 17, 2025. Defendant filed a Reply on April 23, 2025.
A hearing on the Motion and a case management conference are set for May 19, 2025.
REQUEST FOR JUDICIAL NOTICE
Defendant requests that the court take judicial notice of Plaintiff’s Complaint filed on October 28, 2024. The court GRANTS Plaintiff’s request for judicial notice, as the court may take judicial notice of court records. (Evid. Code, § 452(d).) However, the court will not take judicial notice of the truth of assertions within. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)
EVIDENTIARY OBJECTIONS
Plaintiff submits a total of four (4) evidentiary objections to the Declaration of Ali Ameripour (Ameripour) and the Declaration of Vijay Rao (Rao). The court OVERRULES all four (4) objections.
ANALYSIS
Defendant argues Plaintiff’s complaint is subject to a valid and binding arbitration agreement. For the following reasons, the court agrees.
Legal Standard
“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.” (Code Civ. Proc., § 1281.) The court must grant a petition to compel arbitration unless it finds no written agreement to arbitrate exists, the right to compel arbitration has been waived, grounds exist for revocation of the agreement, or litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2.)
“[T]he moving party bears the burden of producing ‘prima facie evidence of a written agreement to arbitrate the controversy.’” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (Gamboa).) To establish prima facie evidence of an arbitration agreement, the party moving for arbitration need only provide a copy of the arbitration provision that purports to be signed by the parties or set forth the agreement’s terms in the motion. (Ibid.) If the moving party meets its initial prima facie burden, then the opposing party “bears the burden of producing evidence to challenge the authenticity of the agreement” and can do so with statements under oath. (Ibid.) If the opposing party meets their burden, the moving party must then establish a valid arbitration agreement with admissible evidence by preponderance of the evidence. (Ibid.)
Once the court finds an arbitration agreement exists, the opposing party bears the burden of establishing a defense to enforcement by preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) In interpreting an arbitration agreement, courts apply the same principles used to interpret contractual provisions with the fundamental goal of giving effect to the parties’ mutual intentions and applying contractual language if clear and explicit. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 177.) Because public policy strongly favors arbitration, “any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.)
The Federal Arbitration Act (FAA) applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement. (See Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355 [“[T]he presence of interstate commerce is not the only manner under which the FAA may apply.… [T]he parties may also voluntarily elect to have the FAA govern enforcement of the Agreement”].) Pursuant to the FAA, the court’s role “is limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” (Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 840, quoting U.S. ex rel. Welch v. My Left Foot Children’s Therapy, LLC (9th Cir. 2017) 871 F.3d 791, 796.)
Existence of an Arbitration Agreement
In this case, Defendant argues that Plaintiff’s action is subject to two different arbitration provisions, including a provision in the Subject Vehicle’s Owner’s Handbook and Warranty Information (Owner’s Handbook) and a provision in the Connected Services Agreement Terms and Conditions (Bluelink Agreement).
Owner’s Handbook
Defendant claims Plaintiff entered into a binding arbitration agreement when she purchased the Subject Vehicle on March 8, 2022 because the Owner’s Handbook, which included an agreement to arbitrate, accompanied the purchase. (Motion, p. 4, lines 6-7.) To support the existence of this agreement, Defendant quotes the arbitration clause verbatim and submits Ameripour’s declaration, to which a copy of the Owner’s Handbook is attached. (Motion, pp. 4-5; Ameripour Decl., Exhibit 3.) Therefore, Defendant met its initial burden of producing prima facie evidence of a written agreement to arbitrate. Accordingly, the burden shifts to Plaintiff to produce evidence challenging the agreement’s authenticity.
One of the ways the opposing party can challenge the authenticity of the agreement is to “testify under oath or declare under penalty of perjury that the party never saw or does not remember seeing the agreement….” (Gamboa, supra, 72 Cal.App.5th at p. 165.) Here, Plaintiff challenges the authenticity of the agreement by declaring that she never saw the arbitration agreement because she was not provided with the Owner’s Handbook or given notice by either the dealership or Defendant that the Owner’s Handbook contained an arbitration provision. (Plaintiff Decl., ¶ 5.) This declaration is sufficient to meet Plaintiff’s burden to challenge the agreement’s authenticity. Accordingly, the burden shifts to Defendant to prove the existence of the agreement with admissible evidence by preponderance of the evidence.
Aside from the statements in Ameripour’s declaration and the copy of the Owner’s Handbook attached to that declaration, Defendant provides no other evidence proving the existence of the agreement. This evidence is sufficient for Defendant to meet its initial burden, but it is insufficient to prove the existence of the agreement by preponderance of the evidence.
Accordingly, the court finds that an arbitration agreement does not exist pursuant to the arbitration clause in the Owner’s Handbook.
Bluelink Agreement
Defendant argues that when Plaintiff enrolled in Defendant’s Bluelink services, Plaintiff agreed to the Bluelink Agreement, which included an arbitration clause. (Motion, p. 13, lines 21-26; Rao Decl., ¶¶ 4-6.) To support the existence of this agreement, Defendant quotes the arbitration clause verbatim and submits Rao’s declaration, to which a copy of the agreement is attached. (Motion, pp. 6-7; Rao Decl., Exhibit 2.) Therefore, Defendant met its initial burden of producing prima facie evidence of a written agreement to arbitrate. Accordingly, the burden shifts to Plaintiff to produce evidence challenging the agreement’s authenticity.
Plaintiff argues that the arbitration clause in the Bluelink Agreement cannot be enforced because Defendant failed to establish mutual assent to the agreement. However, Plaintiff fails to present any evidence that establishes Plaintiff did not agree to the Bluelink Agreement. In fact, while Plaintiff provided a declaration that discusses the Owner’s Handbook, Plaintiff avoids any discussion of the Bluelink Agreement. Thus, Plaintiff has failed to meet the burden of challenging the Bluelink Agreement’s authenticity.
Accordingly, the court finds that an arbitration agreement exists pursuant to the Bluelink Agreement.
Defenses Against Enforcement
Lack of Mutual Assent
Plaintiff contends that the Bluelink Agreement cannot be enforced because Defendant failed to establish mutual assent. (Opposition, p. 11, lines 8-9.) The court disagrees.
Plaintiff argues that the claims in Rao’s declaration as well as the attached exhibits are not specific to Plaintiff, and thus Rao cannot state that he has personal knowledge of Plaintiff’s enrollment in Bluelink services. (Opposition, p. 11, lines 19-25.) Rao is Defendant’s “Director of Connected Ops & Owner Apps/Web,” and in that capacity, he administers business activities and processes relating to Defendant’s Bluelink services. (Rao Decl., ¶ 1.) In his declaration, Rao explains that when people activate Bluelink services, they are required to click a box confirming their assent to be bound by the Bluelink Agreement. (Rao Decl., ¶¶ 4-6.) Attached as “Exhibit 1” to Rao’s declaration is a “screen capture that reflects the content and general layout that Plaintiff would have seen when they activated Bluelink services on March 8, 2022.” (Rao Decl., ¶ 6.) Rao further explains that “[t]o enroll, Plaintiff would have had to click the box to acknowledge that they ‘read and agree[d] to the Blue Link Terms & Conditions’ and then click the ‘Complete’ button… A customer cannot successfully activate Bluelink services unless they complete the step requiring them to click the box acknowledging they agree to the Bluelink Terms and Conditions.” (Rao Decl., ¶ 6.) This explanation is sufficient to show that Plaintiff must have clicked the acknowledgment box to have enrolled in Bluelink services. Rao’s personal knowledge about both the date Plaintiff enrolled and the acknowledgement that Plaintiff must have clicked may be inferred by virtue of Rao’s role in administering Defendant’s Bluelink services. Moreover, Plaintiff does not deny that she enrolled in Bluelink services on the date Rao indicates. In fact, Plaintiff appears to admit that she assented to the Bluelink Agreement later in her Opposition, when she argues that she had no choice but to “click the check box on her smartphone’s app.” (Opposition, p. 15, lines 10-12.) Thus, Plaintiff’s lack of mutual assent defense fails.
Scope
Plaintiff contends that the Bluelink Agreement does not apply to Plaintiff’s warranty claims. (Opposition, p. 12, lines 5-6.) Specifically, Plaintiff argues that in the context of the entire agreement, the arbitration clause is limited to disputes over “Connected Services” that cannot be resolved by Defendant’s customer service department. (Opposition, p. 11, lines 19-25.) The court disagrees.
The arbitration clause in the Bluelink Agreement states, in relevant part:
“Hyundai and you agree to arbitrate any and all disputes and claims between us arising out of or relating to this Agreement, Connected Services, Connected Services Systems, Service Plans, the Vehicle, use of the sites, or products, services, or programs you purchase…. This agreement to arbitrate is intended to be broadly interpreted and to make all disputes and claims between us subject to arbitration to the fullest extent permitted by law…. The agreement to arbitrate otherwise includes, but is not limited to: claims based in contract, tort, warranty, statute, fraud, misrepresentation or any other legal theory; claims that arose before this or any prior Agreement (including, but not limited to, claims relating to advertising)....” (Rao Decl., Exhibit 2, § 15(C)(a), italics added.)
Plaintiff argues that the only reasonable interpretation of this provision is that it only covers disputes related to the “Connected Services.” (Opposition, p. 13, lines 8-16.) However, the explicit language of the provision indicates that it is an agreement to arbitrate all disputes relating to the Vehicle, including claims based in warranty. Plaintiff further argues that the phrase “all disputes and claims between us arising out of or relating to… the Vehicle” cannot reasonably be interpreted to include any claim relating to the vehicle because such an interpretation would render the rest of the specified types of disputes as surplusage. (Opposition, p. 13, lines 10-16.) Plaintiff’s argument fails to recognize that the surrounding provisions (included in the quote above) corroborate the meaning of the plain language. In short, the agreement is clear that it is intended to be broadly interpreted and that it intends to encompass all claims relating to the vehicle. Based on the broad applicability of these provisions, the court finds that the arbitration provision is applicable to Plaintiff’s claims.
Waiver
Plaintiff argues that Defendant waived its right to arbitration by engaging in conduct that is inconsistent with the intent to arbitrate, namely by serving written discovery requests on Plaintiff on the same date Defendant filed the present Motion. (Opposition, p. 9, lines 1-4.)
“Although a court may deny a petition to compel arbitration on the ground of waiver (§ 1281.2, subd. (a)), waivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.” (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.)
“In determining waiver, a court can consider (1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.” (Ibid. at 1196.)
Here, the court is not persuaded by Plaintiff’s contention that Defendant’s service of written discovery requests is sufficient to support waiver. Before filing the present Motion, Defendant had not filed any pleadings in this case. There is currently no trial date set. Plaintiff does not allege that Defendant committed any sort of delay or that Defendant’s conduct has caused her prejudice. Aside from the discovery requests, Plaintiff does not allege any other conduct that suggests that Defendant waived its right to arbitration. Based on this information, it does not appear that the “litigation machinery” has been substantially invoked. Accordingly, Plaintiff’s argument that Defendant waived its right to arbitration fails.
Unconscionability
“Under both federal and state law, arbitration agreements are valid and enforceable, unless they are revocable for reasons under state law that would render any contract revocable” including “fraud, duress, and unconscionability.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.) In this case, Plaintiff contends the Bluelink Agreement is unenforceable due to procedural and substantive unconscionability.
“‘[U]nconscionability 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.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz), quoting A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486-487.) While both elements must be present to prevent enforcement, courts evaluate them as a sliding scale in that “the 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.” (Ibid.)
Procedural Unconscionability
Plaintiff argues the Bluelink Agreement is procedurally unconscionable because it is a contract of adhesion against which Plaintiff had no ability or opportunity to negotiate. (Opposition, p. 15, lines 6-9.)
A contract of adhesion is “a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Neal v. State Farm Ins. Companies (1961) 188 Cal.App.2d 690, 694.) Where a contract is adhesive, the question shifts to “whether circumstances of the contract’s formation created such oppression or surprise that closer scrutiny of its overall fairness is required.” (OTO, L.L.C. v. Kho, (2019) 8 Cal. 5th 111, 126.) When “there is no other indication of oppression or surprise, ‘the degree of procedural unconscionability of an adhesion agreement is low, and the agreement will be enforceable unless the degree of substantive unconscionability is high.’” (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704, quoting Ajamian v. CantorCO2e (2012) 203 Cal.App.4th 771, 796.)
Oppression
In this case, Plaintiff argues the agreement was oppressive because she had no way of negotiating the terms– she had no choice but to click the box or forgo the Bluelink services. (Opposition, p. 15, lines 10-12.) Although Plaintiff claims that she lacked any meaningful choice in accepting the Bluelink Agreement, Plaintiff does not allege that enrolling in Bluelink services was mandatory. In fact, Plaintiff specifically states that Defendant offered 3 years of complimentary Bluelink services with the sale of the Subject Vehicle. (Opposition, p. 15, lines 12-15.) Accordingly, Plaintiff’s argument that the agreement is oppressive because she lacked meaningful choice in accepting the Bluelink Agreement fails.
Surprise
Plaintiff also argues that surprise was apparent because the arbitration section was located near the end of the 16-page agreement and its section heading looked no different from the other section headings. (Opposition, p. 15, lines 20-27.) To support her argument, Plaintiff explains, “while the ‘binding arbitration’ section starts with a paragraph in all capital letters (before later moving back to lowercase), the immediately preceding sections (Nos. 13 and 14) and the immediately following section (No. 16) each contain provisions that are also in all capital letters.” (Opposition, p. 15, lines 22-25.) Plaintiff’s argument is essentially that the arbitration section was “hidden” because its heading looked like the other headings. This is an unconvincing argument. Like the other headings throughout the agreement, the “Resolving Disputes” heading under which the arbitration clause lies is in bold, capital letters. (Rao Decl., Exhibit 2, § 15.) Furthermore, the “Binding Arbitration” sub-heading is in bold letters like the other sub-headings throughout the agreement. (Rao Decl., Exhibit 2, § 15(C).) The fact that the headings are in bold, capitalized letters indicates that those sections are not hidden. There is no obligation to highlight the arbitration clause of a contract, nor is it required to specifically call attention to that clause. (Sanchez v. Valencia Holding Co. (2015) 61 Cal.4th 899, 914 (citing Doctor’s Assocs., Inc. v. Casarotto (1996) 517 U.S. 681, 684, 687-88).) Additionally, Plaintiff provides no authority suggesting that the provision was hidden because it was located near the end of the document. Accordingly, Plaintiff’s argument about surprise fails.
Therefore, the court finds the degree of procedural unconscionability is low.
Substantive Unconscionability
Plaintiff argues the Bluelink Agreement is substantively unconscionable because (1) it is one-sidedly in favor of Defendant, (2) it illegally permits Defendant to recover statutory attorney fees if Defendant prevails in arbitration, and (3) it includes a provision reducing the statute of limitations period. (Opposition, p. 16-19.)
One-Sidedness
First, Plaintiff contends the arbitration clause is substantively unconscionable because its applicability to warranty claims is one-sidedly in favor of Defendant. (Opposition, p. 16, lines 21-23.) Plaintiff’s rationale is that the agreement to arbitrate warranty claims can only realistically impact Plaintiff’s rights, since Defendant would never have a warranty claim against Plaintiff. (Opposition, p. 17, lines 22-24.) Plaintiff’s argument is unconvincing because the authorities on which Plaintiff relies deem unconscionable arbitration provisions that “primarily if not exclusively [apply] to claims...which are virtually certain to be filed against, not by” the party seeking to compel arbitration. (Navas v. Fresh Venture Food, LLC, (2022) 85 Cal.App.5th 626, 636; Stirlen v. Supercuts, Inc., (1997) 51 Cal.App.4th 1519, 1540-41.) Plaintiff’s argument fails to recognize that the arbitration provision here applies to claims based on any legal theory, not just warranty claims. (Rao Decl., Exhibit 2, § 15(C)(a).) Therefore, it cannot be said that the arbitration provision here exclusively applies to claims that are filed against Defendant. Accordingly, Plaintiff’s argument fails.
Attorney Fees
Next, Plaintiff contends the Bluelink Agreement is substantively unconscionable because it illegally permits Defendant to recover statutory attorney fees if Defendant prevails in arbitration. (Opposition, p. 17, line 27.)
The provision that Plaintiff refers to states, “...BOTH YOU AND HYUNDAI WILL BE ENTITLED TO RECOVER ATTORNEYS’ FEES FROM THE OTHER PARTY TO THE SAME EXTENT AS YOU WOULD BE IN COURT.” (Rao Decl., Exhibit 2, § 15(C).)
Defendant argues that Plaintiff misinterprets this provision. (Reply, p. 12, lines 18-21.) The court agrees. The provision does not, as Plaintiff argues, grant Defendant the ability to recover attorney fees to the same extent that Plaintiff would be able to recover them. (Opposition, p. 18, lines 10-12.) The phrase “to the same extent as you would be in court” simply limits the parties to what they would ordinarily be entitled to in court. Defendant ratifies this interpretation in its Reply. (Reply, p. 12, lines 18-21.) Accordingly, Plaintiff’s argument fails.
Reduced Limitations Period
Finally, Plaintiff contends the arbitration clause is substantively unconscionable because it includes a provision reducing the statute of limitations period for warranty claims from four years to one year. (Opposition, p. 19, lines 5-8.)
The provision that Plaintiff refers to states, “EXCEPT WHERE PROHIBITED BY LAW, YOU ARE NOT ALLOWED TO BRING ANY CLAIM AGAINST HYUNDAI (OR ANY OTHER THIRD PARTY BENEFICIARY) MORE THAN ONE YEAR AFTER THE CLAIM ARISES.” (Rao Decl., Exhibit 2, § 15(B).)
Defendant argues that Plaintiff misinterprets this provision. (Reply, p. 12, lines 21-24.) The court agrees. In quoting the provision, Plaintiff conveniently omits the phrase “Except where prohibited by law.” (Opposition, p. 19, lines 5-7.) The phrase “Except where prohibited by law” is vital to the meaning of the provision, as it indicates that the provision does not attempt to illegally reduce the statute of limitations period. Accordingly, Plaintiff’s argument fails.
Therefore, the court finds the degree of substantive unconscionability is low.
Based on the foregoing, the court determines Plaintiff failed to demonstrate procedural and/or substantive unconscionability. Plaintiff also failed to demonstrate any other applicable defenses against enforcement of the arbitration clause in the Bluelink Agreement.
Accordingly, the court GRANTS Defendant’s Motion.
CONCLUSION
Based on the foregoing, Defendant’s Motion is GRANTED. This action is STAYED pending completion of arbitration.