Vivian Badillo Velasco v. Javier Cisneros, Jonathan Martel, and Lyft Inc. (Lyft)

Analysis

"California law, like federal law, favors enforcement of valid arbitration agreements." (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.) "Under both federal and California state law, arbitration is a matter of contract between the parties." (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 787.) Arbitration agreements are valid and enforceable under both California and Federal Law. "A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract." (Code Civ. Proc., § 1281.) "General principles of contract law determine whether the parties have entered a binding agreement to arbitrate." (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) "The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability." (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

The preliminary question that must be addressed is the existence of the arbitration agreement. Lyft provided admissible evidence that plaintiff crated a Lyft user account on April 7, 2017. (Carr Decl., ¶ 11.) Plaintiff affirmatively accepted Lyft's Terms of Service within the Lyft App on four separate occasions. (Id., at ¶ 12 & Exh. 2.) The December 12, 2022, Terms of Service were in effect at the time of the July 6, 2024 accident. (Id., at ¶ 14.) "Plaintiff could not have proceeded to access content on the Lyft App without first accepting Lyft's Terms of Service by clicking the " 'I Agree' " button beneath the full text of Lyft's Terms of Service. If Plaintiff had exited the Lyft App without clicking the " 'I Agree' " button, Plaintiff would have been presented with the full Lyft Terms of Service every time Plaintiff opened the Lyft App until Plaintiff clicked the " 'I Agree' " button demonstrating agreement and consent to the Lyft Terms of Service." (Carr Decl., ¶ 18.)

Relevant portions of the Terms of Service, that were in effect at the time of the motor vehicle collision, include: "PLEASE BE ADVISED: THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS BETWEEN YOU AND LYFT CAN BE BROUGHT (SEE SECTION 17 BELOW). THESE PROVISIONS WILL, WITH LIMITED EXCEPTION, REQUIRE YOU TO: (1) WAIVE YOUR RIGHT TO A JURY TRIAL, AND (2) SUBMIT CLAIMS YOU HAVE AGAINST LYFT TO BINDING AND FINAL ARBITRATION ON AN INDIVIDUAL BASIS, NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY CLASS, GROUP OR REPRESENTATIVE ACTION OR PROCEEDING. AS A DRIVER OR DRIVER APPLICANT, YOU HAVE AN OPPORTUNITY TO OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS AS PROVIDED IN SECTION 17. (Exh. 9, pp. 1-2.)

"17. DISPUTE RESOLUTIION AND ARBITRATION AGREEMENT "(a) Agreement to Binding Arbitration Between You and Lyft. YOU AND LYFT MUTUALLY AGREE TO WAIVE OUR RESPECTIVE RIGHTS TO RESOLUTION OF DISPUTES IN A COURT OF LAW BY A JUDGE OR JURY AND AGREE TO RESOLVE ANY DISPUTE BY ARBITRATION, as set forth below. This agreement to arbitrate ('Arbitration Agreement') is governed by the Federal Arbitration Act ('FAA'); but if the FAA is inapplicable for any reason, then this Arbitration Agreement is governed by the laws of the State of Delaware, including Del. Code tit. 10, § 5701 et seq., without regard to choice of law principles. This Arbitration Agreement survives after the Agreement terminates or your relationship with Lyft ends. ANY ARBITRATION UNDER THIS AGREEMENT WILL TAKE PLACE ON AN INDIVIDUAL BASIS; CLASS ARBITRATIONS AND CLASS ACTIONS ARE NOT PERMITTED. Except as expressly provided below, this Arbitration Agreement applies to all Claims (defined below) between you and Lyft, including our affiliates, subsidiaries, parents, successors and assigns, and each of our respective officers, directors, employees, agents, or shareholders. This Arbitration Agreement also applies to claims between you and Lyft's service providers, including but not limited to background check providers and payment processors; and such service providers shall be considered intended third-party beneficiaries of this Arbitration Agreement.

"Except as expressly provided below, ALL DISPUTES AND CLAIMS BETWEEN US (EACH A 'CLAIM' AND COLLECTIVELY, 'CLAIMS') SHALL BE EXCLUSIVELY RESOLVED BY BINDING ARBITRATION SOLELY BETWEEN YOU AND LYFT. These Claims include, but are not limited to, any dispute, claim or controversy, whether based on past, present, or future events, arising out of or relating to: this Agreement and prior versions thereof (including the breach, termination, enforcement, interpretation or validity thereof), the Lyft Platform, the Rideshare Services, rental or use of bikes or scooters through the Lyft Platform, Lyft promotions, gift card, referrals or loyalty programs, any other goods or services made available through the Lyft Platform, your relationship with Lyft, the threatened or actual suspension, deactivation or termination of your User Account or this Agreement, background checks performed by or on Lyft's behalf, payments made by you or any payments made or allegedly owed to you, any promotions or offers made by Lyft, any city, county, state or federal wage-hour law, trade secrets, unfair competition, compensation, breaks and rest periods, expense reimbursement, wrongful termination, discrimination, harassment, retaliation, fraud, defamation, emotional distress, breach of any express or implied contract or covenant, claims arising under federal or state consumer protection laws; claims arising under antitrust laws, claims arising under the Telephone Consumer Protection Act and Fair Credit Reporting Act; and claims arising under the Uniform Trade Secrets Act, Civil Rights Act of 1964, Americans With Disabilities Act, Age Discrimination in Employment Act, Older Workers Benefit Protection Act, Family Medical Leave Act, Fair Labor Standards Act, Employee Retirement Income Security Act of 1974 (except for individual claims for employee benefits under any benefit plan sponsored by Lyft and covered by the Employee Retirement Income Security Act of 1974 or funded by insurance), and state statutes, if any, addressing the same or similar subject matters, and all other federal and state statutory and common law claims. All disputes concerning the arbitrability of a Claim (including disputes about the scope, applicability, enforceability, revocability or validity of the Arbitration Agreement) shall be decided by the arbitrator, except as expressly provided below.

"BY AGREEING TO ARBITRATION, YOU UNDERSTAND THAT YOU AND LYFT ARE WAIVING THE RIGHT TO SUE IN COURT OR HAVE A JURY TRIAL FOR ALL CLAIMS, EXCEPT AS EXPRESSLY OTHERWISE PROVIDED IN THIS ARBITRATION AGREEMENT. This Arbitration Agreement is intended to require arbitration of every claim or dispute that can lawfully be arbitrated, except for those claims and disputes which by the terms of this Arbitration Agreement are expressly excluded from the requirement to arbitrate." (Exh. 7, pp. 16-17.)

As plaintiff points out, courts have identified four different types of internet contract formation that are typically used: browsewraps, clickwraps, scrollwraps, and sign-in wraps. "'A ' "browsewrap' " agreement is one in which an internet user accepts a website's terms of use merely by browsing the site. A '"clickwrap"' agreement is one in which an internet user accepts a website's terms of use by clicking an ' "I agree" ' or ' "I accept" ' button, with a link to the agreement readily available. A ' "scrollwrap" ' agreement is like a ' "clickwrap," ' but the user is presented with the entire agreement and must physically scroll to the bottom of it to find the ' "I agree" ' or ' "I accept" ' button. . . . ' "Sign-in-wrap" ' agreements are those in which a user signs up to use an internet product or service, and the sign-up screen states that acceptance of a separate agreement is required before the user can access the service. While a link to the separate agreement is provided, users are not required to indicate that they have read the agreement's terms before signing up.' " [Citations.] Instead, " 'the website is designed so that a user is notified of the existence and applicability of the site's ' "terms of use" ' [usually by a textual notice] when proceeding through the website's sign-in or login process.' " [Citation.]" (Sellers v. JustAnswer LLC (2021) 73 Cal.App.5th 444, 463-464 (Sellers).)

While plaintiff argues that the Lyft Terms of Service fall under the sign-in-wrap category, the court disagrees. The Terms of Service applicable here appear to be a "scrollwrap" agreement. "At the time Plaintiff accepted the operative December 12, 2022, Terms of Service, Plaintiffs (like all users) was presented directly on the screen of their Lyft App with the full text of those Terms of Service, including the arbitration provision. At the top of the screen, immediately above the full text of the Lyft Terms of Service, the Lyft App presented Plaintiff with a banner stating, " 'Before you can proceed you must read and agree to Lyft's Terms of Service.' " At the bottom of the screen, immediately under the full text of the Lyft Terms of Service, the Lyft App presented Plaintiff with a large " 'I Agree' " button which Plaintiff was required to click to demonstrate consent and agreement to be bound by the Terms of Service and to proceed with use of the Lyft App." (Carr Decl., ¶ 15.)

"The " 'wrap' " methods of online contract-formation provide varying degrees of notice to users, with browsewrap providing the least and scrollwrap providing the most. [Citation.] Our court recognized in Sellers that California " 'and federal courts have reached consistent conclusions when evaluating the enforceability of agreements at either end of the spectrum, generally finding scrollwrap and clickwrap agreements to be enforceable and browsewrap agreements to be unenforceable.' " [Citation.]" (B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, 946.)

Plaintiff has provided no declaration, or other admissible evidence, that she did not click the "I Agree" button when presented with Lyft's Terms of Service. "Of course, the mere fact that a contract term is not read or understood by the non-drafting party or that the drafting party occupies a superior bargaining position will not authorize a court to refuse to enforce the contract." (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.) "An arbitration clause within a contract may be binding on a party even if the party never actually read the clause." (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012), supra, at p. 236.) Lyft has met its burden of demonstrating the existence of a valid, mutual, arbitration agreement with plaintiff.

In addition to the existence of a valid arbitration agreement, as noted above, the Terms of Service contain a delegation clause that provides. "All disputes concerning the arbitrability of a Claim (including disputes about the scope, applicability, enforceability, revocability or validity of the Arbitration Agreement) shall be decided by the arbitrator, except as expressly provided below."

"[W]hen a party is claiming that an arbitration agreement is unenforceable, it is important to determine whether the party is making a specific challenge to the enforceability of the delegation clause or is simply arguing that the agreement as a whole is unenforceable. If the party's challenge is directed to the agreement as a whole - - even if it applies equally to the delegation clause - - the delegation clause is severed out and enforced; thus, the arbitrator, not the court, will determine whether the agreement is enforceable. In contrast, if the party is making a specific challenge to the delegation clause, the court must determine whether the delegation clause itself may be enforced (and can only delegate the general issue of enforceability to the arbitrator if it first determines the delegation clause is enforceable). [Citation.]" (Malone v. Superior Court 92014) 226 Cal.App.4th 1551, 1559-1560.)

"The usual presumption is that a court, not an arbitrator, will decide in the first instance whether a dispute is arbitrable. [Citations.] The parties may agree to delegate authority to the arbitrator to decide arbitrability, but given the contrary presumption, evidence that the parties intended such a delegation must be " ' "clear and unmistakable" ' " before a court will enforce a delegation provision. [Citations.]" (Gostev v. Skillz Platform, Inc. (2023) 88 Cal.App.5th 1035, 1048.)

Here, the delegation clause is clear and unmistakable. The parties all agreed that the arbitrator will decide disputes regarding arbitrability. Plaintiffs' argument that the delegation clause is unenforceable is vague, conclusory, and lacking legal authority supporting the argument. Plaintiffs have not met their burden of showing that the delegation clause is unenforceable. "[I]f the parties did form an agreement to arbitrate containing an enforceable delegation clause, all arguments going to the scope or enforceability of the arbitration provision are for the arbitrator to decide in the first instance." (Caremark, LLC v. Chickasaw Nation (2022) 43 F.4th 1021, 1030.)

Plaintiff's next argument is that the motion should be denied pursuant to Code of Civil Procedure section 1281.2. That section provides in part: "On 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, unless it determines that: "(a) The right to compel arbitration has been waived by the petitioner; or "(b) Grounds exist for rescission of the agreement. "(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295. . . . "If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c), the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding." (Code Civ. Proc., § 1281.2.)

Plaintiff's argument ignores the fact that the parties have expressly agreed that the Federal Arbitration Act governs the agreement. In Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337 (Victrola), the court found that nearly identical language, that the agreement to arbitrate shall be governed by the Federal Arbitration Act, was sufficient to conclude that the procedural provisions of the Federal Arbitration Act govern the arbitration agreement. Unlike Code of Civil Procedure section 1281.2, the Federal Arbitration Act does not allow the court to deny arbitration based on plaintiff's arguments regarding conflicting rulings or inefficiency.

The action, as between plaintiff and Lyft, will be ordered to arbitration as the parties agreed. This action will be stayed, as to Lyft only, pending the completion of arbitration.

Tentative Ruling: Louis Orozco v. Phillip Andrew Decker, et al. Tentative Ruling: Louis Orozco v. Phillip Andrew Decker, et al.