Judge Upinder S. Kalra, Case Number: 24STCV15101, Date: 2025-01-08 Tentative Ruling

CASE NAME: Raquel D. Lebish v. Blue Cross of California dba Anthem Blue Cross, et al.

MOVING PARTY: Defendants Blue Cross of California dba Anthem Blue Cross and Anthem Blue Cross Life and Health Insurance Company

1. An Order compelling arbitration and staying the court proceedings pending arbitration.

On June 17, 2024, Plaintiff Raquel D. Lebish (Plaintiff) filed a Complaint against Defendants Blue Cross of California dba Anthem Blue Cross and Anthem Blue Cross Life and Health Insurance Company (Defendants) with causes of action for: (1) Negligence and (2) Promissory Fraud.

According to the Complaint, Plaintiff was covered under a group health plan through her employer that contracted with Defendants. Plaintiff alleges that Defendants wrongfully classified her cancer treatment as “not medically necessary” and denied case. Plaintiff further alleges that Defendants falsely promised Plaintiff could appeal the denial of a medical necessity claim.

On September 9, 2024, Defendants filed the instant Petition to Compel Arbitration and Stay Proceedings. On November 15, 2024, Plaintiff filed an opposition. On December 16, 2024, Defendants filed a reply. On December 27, 2024, Plaintiff filed a Supplemental Declaration In Support of her Opposition. On January 2, 2025, Plaintiff filed evidentiary objections regarding Defendants’ reply.

This court is unaware of any legal authority which requires a court to rule on evidentiary objections on a motion, except as to a motion for summary motion/adjudication [CCP § 437c (q)] or a special motion to strike [CCP § 425.16 (b)(2); see also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949.] As such, this court respectfully declines to rule on any of these objections.

The Federal Arbitration Act (“FAA”), while a federal statute, applies in California courts and requires state courts to enforce arbitration agreements as required by the federal common law developed under the FAA. (See Southland Corp. v. Keating (1984) 465 U.S. 1, 15-16 (Southland Corp.); Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1074-78, superseded by statute on another ground as stated in Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013) 733 F.3d 928, 937.).) The FAA preempts and invalidates state law and state judicial decisions that disfavor arbitration or require arbitration provisions to pass higher scrutiny. (Southland Corp., supra, at p. 12; Perry v. Thomas (1987) 482 U.S. 483, 490.) If the parties designate the FAA applies, then California arbitration law is preempted. (See, e.g., Rodriguez v. American Techs., Inc. (2006) 136 Cal.App.4th 1110, 1121-1122.)¿However, courts have found that where the FAA is found not to apply, the California Arbitration Act (Code Civ. Proc. § 1280 et seq.) applies. (See Valencia v. Smyth (2010) 185 Cal.App.4th 153, 178 (Valencia).)

¿A court’s inquiry is limited to a determination of (1) whether a valid arbitration agreement exists and (2) whether the arbitration agreement covers the dispute. (9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostics Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130; Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84; see Simula, Inc. v. Autoliv, Inc. (9th Cir. 1999) 175 F.3d 716, 720 [if the finding is affirmative on both counts the FAA requires the Court to enforce the arbitration agreement in accordance with its terms]; see Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961 [In determining the enforceability of an arbitration agreement, the court first considers “two ‘gateway issues’ of arbitrability: (1) whether there was an agreement to arbitrate between the parties, and (2) whether the agreement covered the dispute at issue”] Lacayo v. Cataline Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 257 (Lacayo) [Where moving party meets initial burden, “the party opposing arbitration must prove by a preponderance of the evidence any defense to the petition”].)

“An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” (United Steelworkers of America v. Warrior & Gulf Navigation Co. (1960) 363 U.S. 574, 582-583.)¿

¿Moreover, the general rule is that the FAA governs all agreements to arbitrate in contracts “involving interstate commerce.” (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.) The term “involving” commerce “is broad and is indeed the functional equivalent of “affecting’ commerce.” (Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 273-274.) The U.S. Supreme Court has held that this broad interpretation includes employment contracts. (See Circuit City Stores v. Adams (2001) 532 U.S. 105, 106.) The defendant bears the burden of proving applicability of the FAA by showing that its activities constitute interstate commerce. (Hoover v. Am. Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207.) Failure to demonstrate that the employment agreement affects interstate commerce renders the FAA inapplicable. (See Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 687-688 (Lane); Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 212.)

Even where the FAA governs the interpretation of arbitration clauses, California law governs whether an arbitration agreement has been formed in the first instance. (Baker v. Osborne Development Corp. (2008) 159 Cal.App.4th 884, 893.)¿

“Parties are not required to arbitrate their disagreements unless they have agreed to do so. [Citation.] A contract to arbitrate will not be inferred absent a ‘clear agreement.’ [Citation.] When determining whether a valid contract to arbitrate exists, we apply ordinary state law principles that govern contract formation. [Citation] In California, a ‘clear agreement’ to arbitrate may be either express or implied in fact. [Citation.]” (Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1092-93 [applying California law].) The court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.)

Defendants contend that Plaintiff enrolled in Plan benefits whereby she agreed to Terms of Service (or the Plan itself) that contains the arbitration provisions. The paper enrollment sheets provided by Defendant do not refer to an arbitration provision.[1] (Gilpin Decl., Exhibit A.) The purported login credentials are also suspect because the creation date is credited as July 25, 2015 while the last login date is supposedly June 21, 2024. (Gilpin Decl., Exhibit C.) Additionally, the Terms of Service are unambiguously limited to use those Terms of Service or use of the website – not to Plan benefits. (Gilpin Decl., Exhibit B.) Therefore, Defendants failed to provide evidence of a signed arbitration agreement with Plaintiff. But there is more.

Anthem is by the terms of the Benefit Booklet not one of the parties that can invoke the arbitration agreement therein. (Gilpin Decl., Exhibit D, pg. 131 “The member and CVT agree to be bound by this Binding Arbitration provision and acknowledge that they are each giving up their right to a trial by court or jury.”]) Anthem is not mentioned in the Binding Arbitration provision at all. Anthem is mentioned as the “claims administer” in the preceding “External Review” portion of the Benefit Booklet. (Gilpin Decl., Exhibit D, pgs. 129-130.)

Anthem Blue Cross argues that this is not fatal because they may invoke the arbitration clause under the doctrine of equitable estoppel. The court disagrees.

Under the doctrine of equitable estoppel, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237.)

The doctrine applies in either of two circumstances: (1) when the signatory must rely on the terms of the written agreement containing the arbitration clause in asserting its claims against the nonsignatory; or (2) when the signatory alleges “substantially interdependent and concerted misconduct” by the nonsignatory against a signatory and the alleged misconduct is “founded in or intimately connected with the obligations of the underlying agreement.” (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 218-219.)

However, at bottom, “the linchpin for equitable estoppel is equity—fairness.” (Id. at p. 220.) Accordingly, the concept of an equitable estoppel involves some element of fault or blame on the part of the party against whom the estoppel is asserted. (Gamboa v. Atchison, Topeka & Santa Fe Ry. Co. (1971) 20 Cal.App.3d 61, 65 [citing federal authorities].) Because equitable estoppel is an equitable doctrine, it shall not be applied against one who is blameless. (Wilcox v. Enstad (1981) 122 Cal.App.3d 641, 655; Ricciardi v. Los Angeles County (1953) 115 Cal.App.2d 569, 578.)

A nonsignatory seeking to enforce an arbitration agreement has the burden to establish at least one of these circumstances applies. (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 16.) Anthem argues that “[b]ecause Plaintiffs’ claims rely exclusively on alleged improper conduct with respect to the utilization management review and denial of treatment on the basis of medical necessity, Plaintiffs’ claims are premised upon and inextricably tied to Plaintiffs’ Benefit Booklet and covered under the arbitration provision.” (Mot., p. 13.) The court disagrees.

First, despite Anthem’s protestations, Anthem “corroborate[d] with CVT to prepare” the Benefits Booklet. (Barrio Decl. ¶ 7, Exhibit 4, Nelm Depo, 26:22-25.) Additionally, Anthem maintains the master copy of the Benefits Booklet. (Id. at 27:5-16.) Finally, there is no doubt that Anthem worked on the Benefits Booklet and agreed to its contents. (See Id. at 29:4-15; 57:1-4.) As such, Anthem helped create the conditions they now face, not Plaintiff. It is not clear how an equitable doctrine should be applied here where Plaintiff is less blameworthy than Anthem in the latter’s non-inclusion in the arbitration agreement in the Benefit Booklet.

Second, the pleadings necessarily allege the benefits as arising from the Benefit Booklet because the Benefit Booklet controlled the services that should have been provided to Plaintiff. Nothing else. If Plaintiff cannot rely on the benefits set out in the Benefit Booklet, it is unclear on what basis they can allege their claims. To hold Plaintiff blameworthy under these circumstances would result in a Catch-22. Plaintiff is not alleged to have had any control over the documents establishing the benefits as explained in the Benefit Booklet from the CVT. Anthem logic is explained thus: If Plaintiff cannot rely on the Benefit Booklet, they may not be able to sufficiently plead their claim absent some other document establishing their benefits; but if Plaintiff relies on the booklet, they become subject to terms they did not agree to (arbitration with Anthem) that will force them into a forum (arbitration) to which they did not agree, under circumstances where the party that drafted the arbitration agreement is now seeking to compel that clause despite failing to include itself within that clause.

The court thus determines that no arbitration agreement exist to invoke here.[2]

Under the Federal Arbitration Act the gateway issue of arbitrability presumptively is reserved for the court, but the parties also may delegate that issue to the arbitrator, provided that the language of their arbitration agreement provides “clear and unmistakable” evidence that this was their intent. (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944; Caremark, LLC v. Chickasaw Nation (9th Cir. Aug. 9, 2022) 43 F.4th 1021, 1029-1030.) A delegation of issues of formation to the arbitrator does not prevent the court from making that determination. (Granite Rock Co. v. International Broth. of Teamsters (2010) 561 U.S. 287, 299; Caremark, supra, at p. 1030.)

Here, the court elected to determine formation. Therefore, the delegation question is moot.

[1] The court also admonishes Defendants for failing to redact sensitive personal identity information pertaining to Plaintiff and her family before filing Exhibit A with the court in violation of CRC rule 1.201(a)(1) and (b).

[2] The court declines to address the unconscionability arguments as moot.