VIVEK SHAH v. STARTENGINE CROWDFUNDING, INC., et al.

3/28/2026: AAA advises the parties that Respondent had failed to comply with AAA's policies regarding consumer claims and declines to administer Petitioner's arbitration claim.

7/1/2026: Petitioner files the instant Petition to Compel Arbitration, which is followed by Petitioner's Demand for Arbitration (7/2/2026) and Notice of Hearing (7/6/2026), Respondent's Opposition (8/4/2026), and Petitioner's Reply (8/5/2026).

TENTATIVE RULING: PETITIONER VIVEK SHAH'S PETITION TO COMPEL ARBITRATION is GRANTED in part and DENIED in part.

PETITION TO COMPEL ARBITRATION

Petitioner moves to compel the arbitration of his CIPA claim against Respondent pursuant to the arbitration provision in the Terms of Use for the Website. In support of this request, Petitioner submits a copy of Respondent's Terms of Use, which contain the following "Dispute Resolution" provision:

In the event of any claim, controversy or alleged dispute between you and StartEngine, its members or affiliates ("Dispute"), you hereby agree to attempt in good faith to amicably resolve any Dispute at least 30 days before instituting any legal proceeding. Each party agrees to submit any Dispute for resolution by final binding arbitration after serving written notice, which notice shall set forth in detail the controversy, question, claim or alleged breach along with your attempt to resolve such Dispute.

Upon such notice and attempt to resolve, the party may then commence an arbitration proceeding either (a) pursuant to the rules of the American Arbitration Association ("AAA") under its Commercial Arbitration Rules, before an arbitrator to be selected by the AAA or (b) with respect to offerings made pursuant to Regulation Crowdfunding where FINRA accepts jurisdiction over such arbitration, in accordance with FINRA's arbitration rules. Any such arbitration may only be commenced within one year after the party requesting arbitration obtains knowledge of the cause of action forming the basis of the controversy or claim accrued.

In any arbitration and subject to the ultimate discretion of the presiding arbitrator, each side will be limited to a maximum of one day of argument (including rebuttal), and the parties agree in good faith to minimize discovery burdens (e.g., confine the scope to actual areas in dispute and limit the topics and number of pages on which information is requested to matters directly relevant). The decision(s) of the arbitrator shall be final and binding and may not be appealed to any court of competent jurisdiction, or otherwise, except upon claim of fraud or corruption as provided by law, provided, however, that implementation of such decision(s) shall in no way be delayed or otherwise impaired pending the outcome of any such appeal.

Judgment upon the award rendered in such arbitration may be entered by any court having jurisdiction thereof. You agree that all Disputes will be limited between you, individually, and StartEngine. To the full extent allowable by law, you agree that no arbitration proceeding or other dispute resolution proceeding shall be joined with any other party or decided on a class-action basis. Notwithstanding the foregoing, you agree that the following matters shall not, at the election of StartEngine, be subject to binding arbitration: (1) any Dispute related to, or arising from allegations of criminal activity; (2) any Disputes concerning StartEngine's intellectual property rights; and (3) any claim for injunctive relief.

All arbitration proceedings will take place in California, United States of America. Any Dispute not subject to arbitration shall be decided by a court of competent jurisdiction within Los Angeles, California. Each party hereby waives any claim that such venue is improper or inconvenient (Shah Decl., Exh. 2, at p. 11.)

Petitioner declares that he "accepted and assented to Respondent's Terms of Use, continued using Respondent's website, and submitted a Demand for Arbitration to AAA pursuant to those Terms." (Id. P. 13.)

On March 28, 2026, AAA purportedly notified the parties that Respondent had "failed to comply with the [AAA] policies regarding consumer claims," including the Costs of Arbitration, "and/or removed themselves from the Consumer Clause Registry," and thus, AAA declined to administer the arbitration. (Id. P. 16, Exh. 5.) However, AAA also stated that it would "follow any court order regarding how the arbitration should proceed." (Id., Exh. 5.)

Under Code of Civil Procedure section 1281.2, "[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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..." (Bannister v. Marinidence Opco, LLC ¿ (2021) 64 Cal.App.5th 541, 543-44.)

The petitioner seeking to compel arbitration can meet its initial burden by attaching a copy of the parties' signed arbitration agreement. (Ibid.; see also Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218.)

Based on the evidence submitted by Petitioner, the Court finds that Petitioner has overcome his initial burden of establishing the existence of a valid written agreement to arbitrate the parties' CIPA dispute within Respondent's Terms of Use for the Website. Respondent does not appear to dispute the validity, enforceability, or applicability of the arbitration provision in the Terms of Use to the instant CIPA dispute. Thus, the Court finds that the arbitration provision in the Terms of Use governs Petitioner's CIPA claim.

Respondent opposes this petition on the grounds that the factual record does not satisfy the requirements set forth under Code of Civil Procedure section 1281.97. However, this petition is expressly brought under Code of Civil Procedure sections 1281, 1281.2, 1281.4, and 1281.6, not section 1281.97. (Pet., at p. 2; Rep., at p. 2.)

Even if the AAA closure letter (which is attached as Exhibit 5 to Petitioner's declaration) does not prove a default under Code of Civil Procedure section 1281.97 (although Petitioner does not seem to argue that it does), Respondent fails to show how such a finding would preclude Petitioner from compelling the underlying dispute to be heard in an arbitral forum, as agreed upon by the parties in the Website's Terms of Use. In other words, Respondent fails to demonstrate how the requirements under Code of Civil Procedure section 1281.97 are grounds for the denial of this petition in its entirety.

Additionally, to the extent that Respondent raises concerns regarding jurisdiction, it would appear that the parties expressly agreed to confer jurisdiction to " a court of competent jurisdiction within Los Angeles, California" in the forum-selection clause of the operative arbitration agreement. (Shah Decl., Exh. 2, at p. 11.)

Further, any claim challenging the merits of Petitioner's underlying CIPA claim are factual questions that should be reserved for the arbitrator, pursuant to the explicit agreement of the parties. (Ibid.)

As Respondent fails to set forth any argument demonstrating that the arbitration provision in its own Terms of Use is not enforceable here, the Court finds that the underlying CIPA dispute must be resolved in arbitration before the AAA in California pursuant to the terms agreed upon by the parties in the Terms of Use. (Shah Decl., Exh. 2, at p. 11.) All fees and costs shall be determined by the applicable AAA rules.

Therefore, the Petition to Compel Arbitration is GRANTED with respect to Petitioner's first through fourth requests for relief. However, Petitioner's request for fees, costs, and sanctions not otherwise covered by the applicable AAA rules is DENIED as Petitioner has not demonstrated that he is entitled to such relief.

Petitioner Vivek Shah to serve notice of ruling. This tentative ruling ("TR") shall be the order of the Court unless changed at the hearing and shall by this reference be incorporated into the Minute Order. TR emailed to counsel and posted to court website on 8/14/26 at 11:30 a.m. | Home -->)" -->