Fahmy vs. Tesla, Inc.

Defendant Tesla, Inc.’s motion to compel arbitration is GRANTED. (Code Civ. Proc., § 1281.2.)

Plaintiff Omar Ali Fahmy is ORDERED to arbitrate his claims against defendant with the American Arbitration Association, in accordance with the terms of the subject arbitration agreement in the Motor Vehicle Order Agreement [MVOA]. (Kim Decl., Ex. 1, p. 3.) Defendant’s request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d)(1).)

Defendant has met its burden to demonstrate the existence of an agreement to arbitrate the controversy by a preponderance of the evidence. (See Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 [three-step burden shifting process]; Kim Decl., ¶¶ 3-7; Ex. 1 thereto [MVOA, p. 3 [requiring arbitration of “[a]ny claim or dispute, whether in contract, tort, statute or otherwise ... between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship”].)

Further, the potential existence of other arbitration agreements is not relevant, because the MVOA specifically provides that if the buyer does not opt out, “this agreement to arbitrate overrides any different arbitration agreement between us, including any arbitration agreement in a lease or finance contract.” (Kim Decl., Ex. 1, p. 3.) Moving party provides evidence that plaintiff did not opt out (Id., ¶ 7), and plaintiff provides no evidence that he did.

The court finds there is no procedural unconscionability. Adhesiveness, standing alone, “establish[es] only a modest degree of procedural unconscionability.” (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 244.) Here, the “modest” amount of procedural unconscionability is ameliorated by the “opt-out” provision in the MVOA, which precludes a finding of adhesion, since the arbitration agreement may be avoided altogether by opting out. (Mohamed v. Uber Technologies, Inc. (2016) 848 F.3rd 1202, 1210-1211.)

The Court also finds there is no substantive unconscionability. The arbitration provision applies to both parties, and does not contain any substantively unconscionable terms. Contrary to the authorities cited in the Opposition, the arbitration provision in the MVOA does not allow moving party to choose the arbitral forum. Further, the arbitration provision in the MVOA is not substantively unconscionable as to costs; it requires the buyer to pay only the initial arbitration filing fee directly to AAA, which will be reimbursed if the buyer prevails, and moving party is required to pay all subsequent arbitration fees. (Kim Decl., Ex. 1, p. 3.)

This action is stayed in its entirety, pending completion of arbitration. (Code Civ. Proc., § 1281.4.) The Court sets a status conference re: binding arbitration for May 10, 2027 at 9 AM.