Judge: William A. Crowfoot, Case: 21STCV44815, Date: 2022-08-25 Tentative Ruling

Case Number: 21STCV44815    Hearing Date: August 25, 2022    Dept: 27

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

I.         BACKGROUND

On December 8, 2021 Plaintiff Debra King (“Plaintiff”) filed a Complaint.  The operative pleading is the First Amended Complaint, which was filed on December 22, 2021, and asserts causes of action for (1) negligence, (2) strict liability – design defect, (3) strict liability – failure to warn, (4) negligent failure to warn, (5) breach of implied warranty, (6) breach of express warranty, (7) negligent misrepresentation against Defendant DMH Aesthetics, LLC (“Defendant”).  The FAC alleges in relevant part that Plaintiff purchased Defendant’s “EMSCULPT” treatment package (“the Package”), which includes a non-invasive and hands-free device that builds muscle and burns fat.  The treatment was administered on Plaintiff, and then she was recommended another treatment, the BTL 360 (“BTL”).  After the BTL treatment was administered, Plaintiff suffered severe and permanent burns, severe pain, and permanent scarring.  

II.        LEGAL STANDARD

Under California and federal law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes.  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.)  Accordingly, whether an agreement is governed by the California Arbitration Act (“CAA”) or the Federal Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s scope in favor of arbitration.  (Moncharsh, at 9; Comedy Club, Inc. v. Improv West Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc. (1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability [citation] and a requirement that an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general [citation]”].)  “[U]nder both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ”  (Higgins v. Sup. Ct. (2006) 140 Cal.App.4th 1238, 1247.) 

          “Code of Civil Procedure section 1281.2 requires a trial court to grant a petition to compel arbitration ‘if the court determines that an agreement to arbitrate the controversy exists.’”  (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59, quoting Code Civ. Proc., § 1281.2.)  Accordingly, “when presented with a petition to compel arbitration, the court’s first task is to determine whether the parties have in fact agreed to arbitrate the dispute.”  (Ibid.)  A petition to compel arbitration is in essence a suit in equity to compel specific performance of a contract.  (Id. at 71.)  As with any other specific performance claim, “a party seeking to enforce an arbitration agreement must show the agreement’s terms are sufficiently definite to enable the court to know what it is to enforce.”  (Ibid. [internal citations omitted].)  “Only the valid and binding agreement of the parties, including all material terms well-defined and clearly expressed, may be ordered specifically performed.”  (Ibid.)  An arbitration agreement “must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.”  (Civ. Code, § 1636.)  The language of the contract governs its interpretation if it is clear and explicit.  (Civ. Code, § 1368.)  If uncertainty exists, “the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.”  (Civ. Code, § 1654.)  

          The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence.  (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)  It would then be opposing party’s burden to prove by a preponderance of the evidence any fact necessary to her opposition.  (See Ibid.)  “In these summary proceedings, 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.” (Ibid.) 

III. REQUEST FOR JUDICIAL NOTICE

          Plaintiff’s Request for Judicial Notice Nos. 1-2 is GRANTED.

IV.OBJECTIONS 

            Plaintiff’s Objections Nos. 1-3 are SUSTAINED.

V. DISCUSSION

          Defendant moves the Court to compel arbitration.

          Existence of a Valid Arbitration Agreement

In determining the enforceability of an arbitration agreement, the court 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.”  (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.)

          Defendant contends that there is a valid agreement to arbitrate based on the Arbitration Agreement (the “Agreement”) executed between the Parties on May 22, 2021.  (Holbus Decl. Exh. A.)  The Agreement provides in relevant part:

“Agreement to Arbitrate: It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration. . . . Both parties to this contract, by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration. . . All Claims Must be Arbitrated: It is also understood that any dispute that does not relate to medical malpractice, including disputes as to whether or not a dispute is subject to arbitration, will also be determined by submission to binding arbitration. It is the intention of the parties that this agreement bind all parties as to all claims, including claims arising out of or relating to treatment or services. . . .”  (Holbus Decl. Exh. A.)

The Court finds that Defendant has met its burden and showed that there is a valid agreement to arbitrate.  Here, Plaintiff signed the agreement to arbitrate.  In addition, all of the causes of action in the FAC are covered by the Agreement.  The Agreement is broad and covers any claims arising out of or relating to treatment or services rendered by Defendant.  Here, Plaintiff’s causes of action relate to treatment and services rendered to Plaintiff, and relate to the products that Defendant used for that treatment and services.

Accordingly, Defendant has met its initial burden to demonstrate the existence of a valid arbitration agreement that encompasses Plaintiff’s causes of action.  The burden now shifts to Plaintiff to offer any defenses to enforcement for arbitration.

Compliance with Code of Civil Procedure Section 1295

Plaintiff contends that the Agreement is unenforceable because it fails to comply with Code of Civil Procedure section 1295.

Specifically, Section 1295 states: 

“(a) Any contract for medical services which contains a provision for arbitration of any dispute as to professional negligence of a health care provider shall have such provision as the first article of the contract and shall be expressed in the following language: “It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. Both parties to this contract, by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration.” 

(b) Immediately before the signature line provided for the individual contracting for the medical services must appear the following in at least 10-point bold red type: 

‘NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL MALPRACTICE DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL. SEE ARTICLE 1 OF THIS CONTRACT.’” 

“A fundamental rule of statutory construction is that courts should ascertain the intent of the Legislature from a reading of the statute as a whole so as to effectuate its purpose. . . .  The terms ‘shall,’ ‘must,’ and ‘all’ (in subds. (a) and (b) of § 1295) are ordinarily ‘used in laws, regulations or directives to express what is mandatory.’ . . .  [E]very word, phrase or provision is presumed to have been intended to have a meaning and perform a useful function.  The very requirement that jury-waiver advisements be included in all medical service arbitration contracts in specified language, and be in prominent locations in 10-point bold red type, evidences an implicit legislative determination that they are critical to safeguard against patients unknowingly waiving their constitutional right to jury trial.”  (Rosenfield v. Superior Court (1983) 143 Cal.App.3d 198, 202 (emphasis added).)

Defendant contends that the Agreement substantially complies with Section 1295.  However, Defendant fails to point the Court to any authority that stands for the proposition that “substantial compliance” is sufficient under Section 1295.  As set forth above, terms such as “must” are used to express mandatory requirements, and Section 1295 states that the advisements must be placed “in prominent locations in 10-point bold red type,” as the advisements along with their placement is “critical to safeguard against patients unknowingly waiving their constitutional right to jury trial.”  (Rosenfield, supra, 143 Cal.App.3d at 202.)

Accordingly, the Court finds that the Agreement is unenforceable as to Plaintiff’s cause of action for negligence.  The Court notes that Defendant contends that it is not a “health care provider” under Section 1295, but fails to provide any evidence of its licensing, and that it does not fall under the definition of health care provider under Section 1295.  Furthermore, Plaintiff provides licensing details reflecting that Defendant is licensed under the Medical Board of California.  (See Pl. RJN EXH. 1.)

Unconscionability  

Plaintiff contends that the Agreement is unenforceable because it is procedurally and substantively unconscionable.

The doctrine of unconscionability refers to “an 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 A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133.)  It consists of procedural and substantive components, “the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.”  (Id.)  Although both components of unconscionability must be present to invalidate an arbitration agreement, they need not be present in the same degree.  (Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114 [abrogated in-part on other grounds by Concepcion, 563 U.S. 333.])  “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.  [Citations.]  In other words, the more substantively unconscionable the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.”  (Id.)  “The party resisting arbitration bears the burden of proving unconscionability.”  (Pinnacle Museum Tower Ass’n v. Pinnacle Market Dev. (US) (2012) LLC, 55 Cal.4th 223, 247.) 

Procedural Unconscionability

Procedural unconscionability “pertains to the making of the agreement.”  (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.)  Procedural unconscionability “focuses on two factors: ‘oppression’ and ‘surprise.’ ‘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 supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.”  (Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 484.)

A contract of adhesion typically denotes a standardized contract imposed and drafted by the party of superior bargaining strength which relegates to the subscribing party only the opportunity to adhere to the contract or reject it.  (Armendariz, supra, 24 Cal.4th at 113.)  The adhesive nature of a contract is one factor that the courts may consider in determining the degree of procedural unconscionability.  (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84 fn.4.)

The court accepts that the Agreement is procedurally unconscionable to a moderate degree because Defendant (the party of superior bargaining strength) drafted the Agreement, there was no negotiating involved, and Plaintiff was presented with the Agreement just before receiving treatment.  (King Decl., ¶¶ 3-7.)

Substantive Unconscionability

Plaintiff contends that the Agreement is substantively unconscionable because it does not explain to Plaintiff how to initiate and proceed with the arbitration process.

“‘Substantive unconscionability’ focuses on the terms of the agreement and whether those terms are ‘so one-sided as to “shock the conscience.”’  (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1330 (citations omitted).) A contractual provision that is substantively unconscionable may take various forms, but may generally be described as unfairly one-sided. (Id.) The paramount consideration in assessing [substantive] conscionability is mutuality. (Id.)

As a preliminary matter, substantive unconscionability focuses on the terms on the agreement and whether they are one-sided.  There is no requirement that Defendant provide the process for initiating the arbitration process.  In addition, contrary to Plaintiff’ contention, the agreement does provide the process for initiating the arbitration process:

“Article 3: Procedures and Applicable Law: A demand for arbitration must be communicated in writing to all parties. Each party shall select an arbitrator (party arbitrator) within thirty days and a third arbitrator (neutral arbitrator) shall be selected by the arbitrators appointed by the parties within thirty days thereafter. The neutral arbitrator shall then be the sole arbitrator and shall decide the arbitration. Each party to the arbitration shall pay such partys [sic] pro rata share of the expenses and fees of the neutral arbitrator, together with other expenses of the arbitration incurred or approved by the neutral arbitrator, not including counsel fees, witness fees, or other expenses incurred by a party for such partys [sic] own benefit. Either party shall have the absolute right to bifurcate the issues of liability and damage upon written request to the neutral arbitrator. . . . The parties agree that provisions of state and federal law, where applicable, establishing the right to introduce evidence of any amount payable as a benefit to the patient to the maximum extent permitted by law, limiting the right to recover non-economic losses, and the right to have a judgment for future damages conformed to periodic payments, shall apply to disputes within this Arbitration Agreement. The parties further agree that the Commercial Arbitration Rules of the American Arbitration Association shall govern any arbitration conducted pursuant to this Arbitration Agreement.”

Plaintiff’s reliance on OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111 is misplaced.  The OTO court was determining whether the subject arbitration agreement was substantively unconscionable, as it made the “arbitral process [] so inaccessible and unaffordable, [and[ considered as a whole, [] it [did] not offer an effective means for resolving [] disputes.”
          Here, unlike in OTO, Plaintiff is not arguing that there are any accessibility issues to arbitration, that it is unaffordable, or that there is no effective means for resolving their disputes.  Instead, Plaintiff argues that the Agreement is substantively unconscionable because it does not explain to Plaintiff how to initiate and proceed with the arbitration process, which as shown above is not correct.

While the agreement is moderately procedurally unconscionable, it is not substantively unconscionable.  Plaintiffs thus fails to meet her burden to prove unconscionability.

Waiver

Plaintiff contends that Defendant waived any right it may have had to seek arbitration.¿¿ 

In determining whether there was a waiver of arbitration, 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.¿ (Garcia v. Haralambos Beverage Co.¿(2021) 59 Cal.App.5th 534.)¿ No one of these factors predominates and each case must be examined in context.¿ (Lewis v. Fletcher Jones Motor Cars, Inc.¿(2012) 205 Cal.App.4th 436, 444.)¿¿¿¿ 

Plaintiff contends that Defendant waived its right to seek arbitration because it was aware of the Agreement’s existence.  In addition, instead of filing a motion to compel arbitration soon after the Complaint was filed, Defendant filed an answer almost six months after the Complaint was filed, and did not assert an affirmative defense referencing arbitration.  The first time that Defendant raised arbitration was when it served objection only responses to discovery, almost seven months after the Complaint was filed.  Plaintiff also contends that she will be prejudiced because Defendant’s is seeking to enforce an unenforceable arbitration agreement.

Plaintiff’s contention that Defendant waived its opportunity to enforce the Agreement because Defendant filed the instant motion approximately seven months after Plaintiff initiated this lawsuit is without merit.  While Defendant waited approximately seven months to file this motion, the facts show that it has not acted inconsistent with its right to arbitrate, as there are no facts indicating that either party has taken substantial steps or any steps in preparing the lawsuit, as Defendant has only filed an answer, and served objection only responses stating its right to arbitration.¿ (See e.g., Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal. App. 4th 651, 661 [delay of 14 months did not in itself constitute waiver.])

Accordingly, the Court finds that Defendant has not waived its right to arbitrate.

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Stay

Under CCP section 1281.4, when the Court has ordered the arbitration of a controversy which is an issue involved in an action or proceeding pending before the Court, it shall, upon motion of a party stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate.  Any party to a judicial proceeding “is entitled to a stay of those proceedings whenever (1) the arbitration of a controversy has been ordered, and (2) that controversy is also an issue involved in the pending judicial action.”  (Marcus v. Superior Court (1977) 75 Cal. App. 3d 204, 209.)  “The purpose of the statutory stay is to protect the jurisdiction of the arbitrator by preserving the status quo until arbitration is resolved.”  (Federal Ins. Co. v. Superior Court (1998) 60 Cal.App.4th 1370, 1374.)  “In the absence of a stay, the continuation of the proceedings in the trial court disrupts the arbitration proceedings and can render them ineffective.” (Id. at 1375.) 

In order to avoid conflicting rulings with Plaintiff’s negligence cause of action, and since the Court will order the arbitration as to Plaintiff’s second through seventh causes of action, the Court STAYS the action until the arbitration is completed.

VI.      CONCLUSION

            Defendant’s Motion to Compel Arbitraiton is GRANTED as to Plaintiff’s second through seventh causes of aciton. 

          Defendant’s Motion to Compel Arbitration is DENIED as to Plaintiff’s first cause of action.

          The Court STAYS the action until the arbitration is completed.

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’s 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.