Judge: Steven A. Ellis, Case: 21STCV40580, Date: 2023-10-31 Tentative Ruling
Case Number: 21STCV40580 Hearing Date: October 31, 2023 Dept: 29
Tentative
The motion
to compel arbitration is GRANTED.
The
requests for sanctions are DENIED.
Background
On November 3, 2021, Plaintiff Louisa Eyler filed a complaint
against Defendants ITV America, Inc.; USA Network; NBCUniversal
Media, LLC; Comcast Corporation; Discovery Science Center of Los Angeles; Kevin
Wehrenberg; and Does 1 to 100, inclusive alleging causes of action for premises
liability and negligence. Defendants’
insurance company is QBE. The complaint
alleges that on November 4, 2019, Plaintiff was lawfully on Defendant’s premise
and sustained injury while participating in a reality television competition
series produced by Defendants.
On September 14, 2023, Defendants ITV
America, Inc., Upper Ground Enterprises, Inc., (“UGE”), USA Network Media
Productions LLC, NBCUniversal Medica, LLC, Comcast Corporation, and Kevin
Wehrenberg (collectively “Defendants”) filed this instant Motion to Compel
Arbitration, Stay Litigation, and for Sanctions Pursuant to CCP § 128.5.
On October 18, 2023, Plaintiff filed an opposition. Defendant filed a reply on October 24, 2023.
Summary
Moving Arguments
Defendants move to
stay this action and compel arbitration of Plaintiff’s claims arguing that
there is a valid and enforceable agreement to arbitrate.
Plaintiff entered into written agreement with Defendants on September 11, 2019,
entitled “Applicant Agreement, Release, and Arbitration Provisions” (the
“Agreement”). The Agreement required
Plaintiff to submit all disputes between Plaintiff and Defendants related to
the television series to mandatory mediation and, if necessary, arbitration. Defendants assert Plaintiff’s counsel refuses
to sign the stay stipulation or arbitrate.
Defendants also argue that non-signatory moving defendants are entitled
to enforce the arbitration clause and compel Plaintiff to arbitrate her claims.
Defendants further assert that Plaintiff
and Plaintiff’s counsel should be sanctioned for engaging in bad faith actions.
Opposing Arguments
Plaintiff argues the arbitration clause should
be invalidated because it is both procedurally and substantively unconscionable,
thus rendering them void and enforceable as an adhesion contract. Plaintiff argues the contract was procedurally
unconscionable because Defendants are the parties with the superior bargaining strength,
and they drafted the agreement.
Plaintiff argues she was given zero opportunity to negotiate the terms
of the agreement. Further, Plaintiff did
not have a meaningful choice because she could only accept the agreement or not
participate in Defendants’ production.
Plaintiff asserts that she reviewed and signed the Agreement without the
aid of an attorney. Additionally, the
Agreement did not bring Petitioner’s attention to the arbitration clause. The font and format used for the Arbitration
Clause was used for several other unrelated clauses and provisions throughout
the dispute.
Plaintiff argues the arbitration clause was
substantively unconscionable and unenforceable because Plaintiff could not
participate in the production without signing the Agreement. Additionally, if Plaintiff is forced to
arbitrate this matter, she will be significantly limited in her recovery and
waive her right to a jury trial. While
the arbitration clause provides that the parties first resolve the dispute
through confidential mediation, there is no information on how Plaintiff would
initiate such mediation. Additionally,
the arbitration clause provides that should parties be unsuccessful in
mediation, they proceed to JAMS Arbitration.
The arbitration clause is, again, silent as to how Plaintiff would
initiate a JAMES arbitration process. Plaintiff further argues the arbitration
clause and agreement is filled with statutory references and legal jargon which
makes it impossible for a layperson like Plaintiff to comprehend.
Plaintiff further asserts the language of the
Arbitration Clause is impermissible vague.
Plaintiff also argues the Motion was brought in bad faith because
Plaintiff’s counsel has made several attempts to resolve the dispute but
Defendants refuse to engage in good faith settlement discussions. Plaintiff also argues the Motion was brought
in bad faith because Plaintiff’s counsel has made several attempts to resolve
the dispute, but Defendants refuse to engage in good faith settlement
discussions. Defendant’s motion is not
supported by any personal knowledge of Plaintiff ever signing any arbitration
agreement. Plaintiff also argues
Defendants’ motion for sanctions is improper because it was included in the
motion to compel arbitration and stay proceedings and asks for unreasonable
sanctions in the amount of $22,055.00.
Reply Arguments
In
reply, Defendants argue that Plaintiff fails to demonstrate procedural
unconscionability because the cases Plaintiff cites in support of their
adhesion contract argument solely involve employment or housing matters. Plaintiff’s contract was for participating in
a reality television show, not one for a “needed service”. Defendants contend that even if the Agreement
is a contract of adhesion, Plaintiff cannot assert oppression because she does
not cite any facts supporting her understanding that she had to sign the
Agreement immediately to participate in the Series. Plaintiff does not provide who from the
Defendants communicated with Plaintiff, what did the individual say to give
Plaintiff such an impression, and what tactics were employed. Defendants also assert that they repeatedly
drew Plaintiff’s attention to the Arbitration Clause.
Defendants assert Plaintiff’s substantive
unconscionability claims fail because the Agreement was for her to participate in
a recreational activity and contained the extensive assumption of risk
provisions directly related to those activities. Second, California has a strong policy
favoring arbitration over a jury trial.
Third, the Arbitration Clause creates information on how to initiate
mediation or arbitration. Fourth, the
arbitration clause contains only one statutory reference. Finally, the governing law provision is not
substantially unconscionable because the arbitration clause clearly states that
California law governs.
Defendants argue that Plaintiff’s
arguments fail as a matter of law, Defendants did not act in bad faith, and
Plaintiff’s evidentiary objections are devoid of merit.
Finally, Defendants argue that Plaintiff
and her counsel should be ordered to pay Defendants’ fees because Plaintiff
does not provide any evidence stating that the hours spent on the stipulation
and motion were unreasonable or that the hourly rates are unconscionable.
Objections
Plaintiff’s Objections to Defendants’ evidence are OVERRULED.
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.) “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 such
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, unless it determines that: (a) The right to compel
arbitration has been waived by the petitioner; or (b) Grounds exist for the
revocation of the agreement.” (Code Civ. Proc., § 1281.2.)
In ruling on a motion to compel arbitration, “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.” (Peng v. First Republic
Bank (2013) 219 Cal.App.4th 1462, 1468.) The court’s involvement 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.”
(See Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955.)
“California has a strong public policy in favor of arbitration and any doubts
regarding the arbitrability of a dispute are resolved in favor of
arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of Cal.
(2000) 83 Cal.App.4th 677, 686.)
“The party seeking arbitration bears the burden of proving the
existence of an arbitration agreement by a preponderance of the evidence, and
the party opposing arbitration bears the burden of proving by a preponderance
of the evidence any defense, such as unconscionability.” (Pinnacle
Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223,
236.)
Discussion
Existence of Valid Written Agreement to Arbitrate
Defendants move to compel Plaintiff to arbitrate her claims, arguing
Plaintiff entered into a valid and enforceable arbitration agreement.
Defendants
argue that Plaintiff entered a valid arbitration agreement on September
11, 2019, when Plaintiff was sent a copy of the Applicant Agreement, Release
and Arbitration Provisions (“Agreement”).
(Decl. Banks, ¶ 3.) Plaintiff
signed the Agreement on the same day and returned an executed copy on September
12, 2019. (Id.) Additionally, Plaintiff argues that UGE and
Plaintiff are parties to the agreement because UGE and Non-Signatory Moving
Defendants are agents of one another. (Decl.
Bandlow, ¶ 3; Ex. D, ¶ 5(g).) Therefore,
non-signatory moving defendants are entitled to enforce the Arbitration Clause
and compel Plaintiff to arbitrate her claims.
The
relevant language of the arbitration provision contained in Defendants’ Agreement
states:
Mediation & Arbitration. Where a
controversy, dispute, or claim arises between me and any Released Parties
relating to the Series, the parties will first try to resolve each dispute
through confidential mediation. If such
mediation is unsuccessful, the parties will then commence arbitration. Any
confidential mediation or arbitration will be administered by JAMS or its
successor in accordance with its comprehensive rules and procedures
(collectively, “JAMS Rules,” available at www.JAMSADR.com , hard copies provided
upon request). The JAMS Rules for selection of mediators and arbitrators will
be followed, except that any mediation will be (i) experienced in the
entertainment industry and licensed to practice law in California, or (ii) a
retired judge.
(ITV
Decl., Exh. A, ¶51a.)
Based on
the foregoing, Defendants have met their initial burden to show that an
arbitration agreement exists between them and Plaintiff.
Unconscionability
“Unconscionability
has both procedural and substantive elements. [Citation] Although both must appear
for a court to invalidate a contract or one of its individual terms
[Citations], they need not be present in the same degree: ‘[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.’ [Citations]” (Roman v. Superior Court¿(2009)
172 Cal.App.4th¿1462, 1469.)¿
Procedural Unconscionability
“Procedural
unconscionability focuses on the elements of oppression and surprise.
[Citations] ‘Oppression arises from an inequality of bargaining power which
results in no real negotiation and an absence of meaningful choice…
Surprise involves the extent to which the terms¿of the bargain are hidden in a
‘prolix printed form’ drafted by a party in a superior bargaining position.’”
[Citations]” (Id.)
Plaintiff
contends the Arbitration Agreement is procedurally unconscionable because it is
a contract of adhesion. (Opposition, pp.
3-7.) Plaintiff argues Defendants were
in a position of superior bargaining power and did not give Plaintiff any
opportunity to negotiate the terms of the agreement and arbitration
clause. (Opposition, pg. 6.) Further, Plaintiff did not have any
meaningful choice as her only option was to accept the agreement or not
participate in the production.
Additionally, Plaintiff understood she had to sign it immediately and
Plaintiff reviewed and signed it without the aid of any attorney. (Opposition, pg. 6; Decl. Eyler ¶¶ 4-5.) Plaintiff argues Defendants did not bring her
attention to the Arbitration Clause and Defendants strategically chose to
conceal the Arbitration Clause on page thirteen of the twenty-page document, as
opposed to having it appear on page one or right above the signature
block. (Opposition, pg. 6.)
Here, in
considering the totality of the circumstances, the Court finds that the Arbitration
Agreement was not procedurally unconscionable.
While Plaintiff states that she believed she had to sign the contract
immediately to participate in the television show, Plaintiff returned the
signed contract a day after receiving it.
Additionally, the Agreement conspicuously in capitalized, bold lettering
states “Mandatory Mediation and Arbitration; Governing Law & Forum;
Remedies” on page 13. (Decl. ITV, Exh.
A, ¶ 51.) Further, the arbitration
clause is listed in page 13 of the Agreement, and Plaintiff’s signature appears
15. (Decl. ITV, Exh. A.) Notably, the four sentence block above
Plaintiff’s signature states, in capital and bold lettering, that Plaintiff
understands that she is giving up certain legal rights without limitation,
including her right to file a lawsuit in court “with respect to any claim
arising in connection with this agreement.”
(Id.) Therefore, the arbitration
clause was not hidden within the twenty-page document, as Plaintiff signed the
a few paragraphs below the arbitration clause.
Thus, the
Court finds the Agreement is not procedurally unconscionable.
B.
Substantive Unconscionability
“Substantive unconscionability focuses on the actual terms of the
agreement and evaluates whether they create ‘overly harsh’ or ‘one-sided’
results, [Citations] that is, whether contractual provisions reallocate risks
in an objectively unreasonable or unexpected manner. [Citation] Substantive
unconscionability ‘may take various forms,’ but typically is found in the
employment context when the arbitration agreement is ‘one-sided’ in favor of
the employer without sufficient justification, for example, when ‘the
employee's claims against the employer, but not the employer's claims against
the employee, are subject to arbitration.’ [Citations]” (Roman,
supra, 172 Cal.App.4th¿at pp. 1469-1470.)¿¿¿
Plaintiff argues the arbitration clause and Agreement are
substantially unconscionable because Plaintiff believed that if she did not
sign the agreement, she could not participate in the production. (Opposition, pg. 8; Decl. Eyler, ¶ 4.) Additionally, Plaintiff argues that her
recovery in arbitration will be significantly limited and does not guarantee
her a right to a jury trial.
(Opposition, pg. 8.) Further,
Plaintiff states that the Arbitration Clause provides zero information on how
to initiate mediation or commence the JAMS Arbitration Clause. Also, Plaintiff argues the Arbitration Clause
and Agreement is complex and filled with statutory references and legal
charging, making it impossible for Plaintiff to comprehend.
Here, the Court does not find that the arbitration clause and
Agreement are substantially unconscionable.
First, as stated above, Plaintiff signed the agreement and sent it to
Defendants a day after she received it. There
is no indication that Defendants pressured her to sign the agreement
immediately to participate in the show. Second,
although Plaintiff gave up her right to a jury trial, that is the case for all
arbitration agreements, as the parties choose a quicker and more inexpensive
forum to resolve their disputes. (Pillar Project AG v. Payward Ventures,
Inc. (2021) 64 Cal.App.5th 671, 681 [“arbitration is a speedy and
relatively inexpensive means of resolving disputes”].) Additionally, the arbitration clause allows
that per the maximum extent permitted by law, Parties’ damages be limited to
actual damages. (Decl. of ITV, Exh. A, ¶
51 (b).) Finally, the Court does not
find that the arbitration agreement is complex, as it is plainly stated and
does not contain legal jargon. While the arbitration clause lacks specific information
about initiating mediation or commencing JAMS arbitration, neither of those
procedures is particularly difficult, especially for a represented party, and
the omission of that procedural information does not (whether in itself or in
combination with Plaintiff’s other arguments) make the arbitration clause and
agreement is not substantially unconscionable.
Based on the foregoing, the Court finds the arbitration clause and
Agreement is not substantially unconscionable.
Accordingly, the arbitration clause is not unconscionable.
Plaintiff’s
Remaining Arguments
Plaintiff argues various provisions of the arbitration clause are impermissibly
vague and unenforceable. Plaintiff also
argues Defendants’ motion was brought in bad faith because Defendants’
participation in mediation is contingent on Plaintiff’s submission to
arbitration should the matter fail to resolve at mediation.
Here, the Court does not find any provisions in the arbitration clause
that are impermissibly vague and unenforceable. Nor does the Court find that Defendants
brought the instant motion in bad faith.
Since the Court finds that the arbitration agreement is valid and
enforceable, Plaintiff is subject to arbitrate her claims should the case fail
to settle at mediation.
Sanctions
Defendants
request sanctions in the amount $22,055.00 pursuant to CCP § 128.5.
Defendants argue
Plaintiff and her counsel of record, Daniel D. Geoulla, should be sanctioned for
engaging in bath faith actions and tactics that were without merit and meant to
harass Defendants. Specifically,
Defendants argue this is evidenced by: (1) filing, serving, and pursuing a
claim in state court despite having knowledge of the Agreement and its Arbitration
Clause; (2) providing an oral agreement to stipulate to stay proceedings
pending arbitration and then reneging on that agreement; (3) claiming that
Arbitration Clause was invalid and unenforceable without providing any explanation
when requested to do so on multiple occasions; and (4) claiming that
Arbitration Clause was invalid and unenforceable, despite attempting to enforce
the mediation provision of the Arbitration Clause against Moving Defendants. (Motion, pp. 14-15.) Defendants argue they were forced to expend
time and resources on negotiating, drafting, and revising the Stay Stipulation
and the instant motion.
CCP section 128.5 provides that “[a] trial court may order a
party, the party’s attorney, or both, to pay the reasonable expenses, including
attorney’s fees, incurred by another party as a result of actions or tactics,
made in bad faith, that are frivolous or solely intended to cause unnecessary
delay.” (Code Civ. Proc., § 128.5(a).) “‘Actions or tactics’
include, but are not limited to, the making or opposing of motions or the
filing and service of a complaint, cross-complaint, answer, or other responsive
pleading.” (Id., § 128.5(b)(1).) “‘Frivolous’ means totally
and completely without merit or for the sole purpose of harassing an opposing
party.” (Id., § 128.5(b)(2).)
CCP section 128.5 also contains a similar safe harbor provision
providing that “[i]f the alleged action or tactic is making or opposing of a written
motion . . . that can be withdrawn or appropriately corrected, a notice of the
motion shall be served as provided in [CCP] Section 1010, but shall not be
filed with or presented to the court, unless 21 days after service of the
motion or any other period as the court may prescribe, the challenged action or
tactic is not withdrawn or appropriately corrected.” (Code Civ. Proc., §
128.5(f)(1)(B).)
Defendants
fail to provide evidence of compliance with the 21-day safe harbor provision
under CCP section 128.5. According to
the proof of service attached to the instant motion, Plaintiff was served on
September 14, 2023, the same date in which the instant motion was filed.
Moreover,
even if Defendants did comply with the safe harbor provisions, the Court finds that
Plaintiff’s actions were not in bad faith.
“‘A bad faith action or tactic is considered
‘frivolous’ if it is ‘totally and completely without merit’ or instituted ‘for
the sole purpose of harassing an opposing party.’’” (In re Marriage of
Sahafzadeh-Taeb & Taeb (2019) 39 Cal.App.5th 124, 135 (quoting Levy v. Blum
(2001) 92 Cal.App.4th 625, 635).) “‘Whether an action is frivolous is
governed by an objective standard: any reasonable attorney would agree it
is totally and completely without merit.’” (Id. (quoting Levy,
supra, 92 Cal.App.4th at 635).) Plaintiff’s
arguments challenging the enforceability of the arbitration clause have not
been successful, but the Court finds that Plaintiff’s arguments were reasonable
and do not approach the standard of being “totally and completely without merit.”
Finally, a motion for sanctions should be made separately
from other motions and requests. (Code
of Civ. Proc., § 128.5, subd. (f)(1).)
Defendants erroneously brought the motion for sanctions with the motion
to compel arbitration.
Accordingly, Defendants’ request for sanctions is denied.
Conclusion
Accordingly, Defendants’ ITV
America, Inc., Upper Ground Enterprises, Inc., USA Network Media Productions
LLC, NBCUniversal Medica, LLC, Comcast Corporation, and Kevin Wehrenberg Motion to Compel
Arbitration is
GRANTED.
The litigation proceedings against the moving
parties are stayed pending the completion of the arbitration.
The Court sets an OSC re status of arbitration
in approximately 6 months.
Defendants’ request for sanctions is
DENIED.
Moving parties to give notice.