Judge: William A. Crowfoot, Case: 21STCV40488, Date: 2022-08-04 Tentative Ruling

Case Number: 21STCV40488    Hearing Date: August 4, 2022    Dept: 27

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

I.            INTRODUCTION

On November 3, 2021, plaintiff Daniel Richardson (“Plaintiff”) filed this action against defendants Los Angeles County Metropolitan Transportation Authority (“MTA”), City of Los Angeles (“City”), County of Los Angeles (“County”), the People of The State of California, acting by and through the Department of Transportation (“DOT”) (erroneously sued as “California Department of Transportation”), Uber Technologies, Inc. (“Uber”), and John Doe.  Plaintiff alleges that on or about January 21, 2021, he was a passenger in John Doe’s vehicle while it was traveling down Spring Street.  Plaintiff alleges John Doe stopped the vehicle without caution and in an unsafe manner for Plaintiff to exit.  Plaintiff also alleges an individual employed by one of the public entity defendants was operating a vehicle which then violently collided into John Doe’s vehicle and caused Plaintiff to endure severe injury and pain. 

MTA filed an Answer on April 20, 2022.  Uber filed an Answer on May 4, 2022.  County filed an Answer on May 10, 2022.  DOT filed an Answer on May 1, 2022.  On June 6, 2022, Plaintiff dismissed County from the Complaint without prejudice.  On June 15, 2022, Plaintiff dismissed City from the Complaint without prejudice.  The remaining parties in this action are Plaintiff, Uber, MTA, and DOT. 

On July 7, 2022, Uber filed this motion to compel arbitration. 

II.          LEGAL STANDARD

“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, subds. (a), (b).)  The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence.  (Fagelbaum & Heller LLP v. Smylie (2009) 174 Cal.App.4th 1351, 1363.) 

III.        DISCUSSION

A.   The Existence of an Arbitration Agreement

Uber claims that Plaintiff agreed to arbitrate his claims by expressly agreeing to Uber’s July 2021 Terms of Use (“July 2021 Terms”).  Uber’s counsel, Peter J. Schulz, authenticates Plaintiff’s discovery responses which identify Plaintiff as the registered user for the accounts “D. White” and “Numbaz S.”  (Schulz Decl., Ex. F, SROG Nos. 2, 14.)  Plaintiff also confirmed that he requested the subject trip involved in this action through his registered account (“D. White”) on the Uber Rides Platform.  (Id. at SROG No. 14.)  Ryan Buoscio, who is Uber’s Sr. Program Manager, Safety & Core Services + CLO Tech Operations, explains that Plaintiff was presented with an in-app blocking pop-up screen on August 4, 2021, with the header “We’ve updated our terms.”  (Buoscio Decl., ¶ 7, Ex. A.)  It continues, in large type, "We encourage you to read our Updated Terms in ful and under that message had the phrases "Terms of Use" and "Privacy Notice," which were displayed underlined and in bright blue text, all of which set the text apart from other text on the screen and indicated a hyperlink.  (Ibid.)  Buoscio declares that when a user clicked either hyperlink, the Terms of Use or Privacy Notice, respectively, were displayed.  (Ibid.)  The in-app blocking pop-up screen also expressly stated that; "By checking the box, I have reviewed and agreed to the Terms of Use and acknowledge the Privacy Notice.  Buoscio authenticates Uber’s records showing that Plaintiff assented to the July 2021 Terms under his “Numbaz S.” account.  (Buoscio Decl., Ex. B.)  s. A-C.)  A copy of the July 2021 Terms, is attached as Exhibit C.  Section 2 of the July 2021 Terms concerns the arbitration agreement which Uber now seeks to enforce.  (See Buoscio Decl., Ex. C.) 

Having reviewed the July 2021 Terms as well as the documents authenticated by both Schulz and Buoscio, the Court finds that Uber has met its initial burden to show that a valid arbitration agreement exists.  Plaintiff and MTA both oppose the motion to compel. 

B.   Plaintiff’s Opposition

a.    Enforceability of the Delegation Clause and the Applicability of the FAA

Plaintiff raises several arguments in opposition to Uber’s motion (which Uber then addresses on reply) that require determining whether the delegation clause of the Arbitration Agreement is enforceable and whether the Federal Arbitration Act (“FAA”) applies.  The Court addresses both these threshold issues first. 

If there is a clause delegating the enforcement of the agreement to the arbitrator, the court may only adjudicate the enforceability of the delegation clause itself; if found enforceable, questions regarding the enforceability of the underlying agreement as a whole are reserved for the arbitrator.  (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 72.)  In order for a delegation clause to be enforceable, there must be a showing that the parties “clearly and unmistakably agreed that an arbitrator, not a court, would decide the question of enforceability.”  (Peleg v. Neiman Marcus Group, Inc. (2012) 204 Cal.App.4th 1425, 1442.)

Here, the Arbitration Agreement sets forth the following text which definitively shows that the parties agreed that an arbitrator would decide the question of enforceability:

The parties agree that the arbitrator ("Arbitrator"), and not any federal, state, or local court or agency, shall have exclusive authority to resolve any disputes relating to the interpretation, applicability, enforceability or formation of this Arbitration Agreement, including any claim that all or any part of this Arbitration Agreement is void or voidable. The Arbitrator shall also be responsible for determining all threshold arbitrability issues, including issues relating to whether the Terms are applicable, unconscionable or illusory and any defense to arbitration, including waiver, delay, laches, or estoppel. If there is a dispute about whether this Arbitration Agreement can be enforced or applies to a dispute, you and Uber agree that the arbitrator will decide that issue.

Next, under the FAA, 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 [if the finding is affirmative on both counts the FAA requires the Court to enforce the arbitration agreement in accordance with its terms].)  

Plaintiff argues that the FAA does not apply to the arbitration agreement because the agreement does not evidence a transaction involving interstate commerce.  However, under the section with the heading “Rules and Governing Law” the agreement states that “[n]otwithstanding any choice of law or other provision in the Terms, the parties agree and acknowledge that this Arbitration Agreement evidences a transaction involving interstate commerce.”  (Buoscio Decl., Ex. C, ¶ 2(c).)  The agreement also states the parties agree that “the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (‘FAA’) will govern its interpretation and enforcement and proceedings pursuant thereto.  It is the intent of the parties to be bound by the provisions of the FAA for all purposes, including, but not limited to, interpretation, implementation, enforcement, and administration of this Arbitration Agreement, and that the FAA and AAA Rules shall preempt all state laws to the fullest extent permitted by law.  If the FAA and AAA Rules are found to not apply to any issue regarding the interpretation or enforcement of this Arbitration Agreement, then that issue shall be resolved under the laws of the state where you reside when you accept these Terms.”  (Buoscio Decl., Ex. C.)  

Thus, the FAA governs this motion to compel arbitration. (See Victrola 89, LLC v. Jamon Properties 8 LLC (2020) 46 Cal.App.5th 337, 346 [finding the FAA governs a motion to compel arbitration when an agreement provides its ‘enforcement’ shall be governed by the FAA].)

b.   Waiver and Unconscionability

Typically, a party seeking to prove waiver of a right to arbitration must demonstrate: (1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration.”  (Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th  1193, 1203.)  However, under the delegation clause and the FAA, the issue of waiver is reserved for the arbitrator.  The only question for this Court is whether "the particular agreement to delegate arbitrability . . . is itself unconscionable.  (Brennan v. Opus Bank (9th Cir. 2015) 796 F. 3d 1125, 1132.) 

In other words, it is not enough to demonstrate that the delegation clause is part of an arbitration agreement that is substantively unconscionable. Rather, the burden is on the party opposing arbitration to show that the delegation clause itself is substantively unconscionable.

Plaintiff fails to meet this burden. He argues generally that the entire contract is illusory because Defendant reserves the ability to change the terms of use and does not allow users to opt out of the Arbitration Agreement. But this type of argument is directed at the entire contract and not specifically at the delegation clause and therefore is appropriately left for the arbitrator.  (See Plaintiff’s Opp., 12:18-26.) 

c.    MTA as a Nonsignatory to the Arbitration Agreement

Next, Plaintiff argues that the Court has discretion under CCP § 1281.2(c) to deny this motion because MTA did not sign the Arbitration Agreement.  But, as stated above, the parties agreed that it was their intent “to be bound by the provisions of the FAA for all purposes, including, but not limited to, interpretation, implementation, enforcement, and administration of this Arbitration Agreement.”  Accordingly, California’s state laws regarding arbitration are inapplicable.   

C.   MTA’s Opposition

MTA repeats Plaintiff’s arguments regarding its status as a nonsignatory to the Arbitration Agreement and requests that even if the motion is granted, that the case be allowed to proceed between MTA and Plaintiff so that the parties may conduct discovery.  

As stated above, California law affords a court several options when a party to an arbitration agreement is also a party to a pending court action with a third party, and there is a possibility of conflicting rulings on a common issue of law or fact.  It may refuse to compel arbitration, or it may stay either the arbitration or the court proceeding pending completion of the proceedings in the other forum. (Code of Civ. Proc., § 1281.2, subd. (c).) 

However, under the FAA, when a plaintiff asserts claims against both a signatory and a non-signatory to the arbitration agreement, Section 3 of the FAA “requires [the trial court] to stay litigation where issues presented in the litigation are the subject of an arbitration agreement” and proceeding with the litigation against the non-signatory would adversely affect the signatory’s right to arbitration.  (Subway Equipment Leasing Corp. v. Forte (5th Cir. 1999) 169 F.3d 324, 329.) 

Here, there are common issues of law and fact involving this single automobile accident.  Accordingly, allowing the litigation to proceed concurrently would adversely affect Uber’s right to arbitration. 

IV.         CONCLUSION

Based on the foregoing, Uber’s motion to compel arbitration is GRANTED and the entire action is STAYED.  The Court sets a status conference re: arbitration proceedings for April 4, 2023 at 8:30 a.m. in Department 27.

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org.  Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter.  Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue.  If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.