Prakyath Madadi vs Tesla, Inc.

I. BACKGROUND

On April 11, 2023, Plaintiff Prakyath Madadi (“Plaintiff”) purchased a new 2023 Tesla Model 3, VIN No. 5YJ3E1EA5PF555074 (“Subject Vehicle”). (Complaint at ¶ 9.) Plaintiff ordered the vehicle online and in so doing, executed a Motor Vehicle Order Agreement (“MVOA”). (Declaration of Raymond Kim [“Kim Decl.”] at ¶ 3.) The MVOA contains an arbitration clause as follows:

Agreement to Arbitrate. Please carefully read this provision, which applies to any dispute between you and Tesla, Inc. and its affiliates, (together “Tesla”). If you have a concern or dispute, please send a written notice describing it and your desired resolution to resolutions@tesla.com If not resolved within 60 days, you agree that any dispute arising out of relating to any aspect of the relationship between you and Tesla will not be decided by a judge or jury but instead by a single arbitrator in an arbitration administered by the American Arbitration Association (AAA) under its Consumer Arbitration Rules.

This includes claims arising before this Agreement, such as claims related to statements about our products. You further agree that any disputes related to the arbitrability of your claims will be decided by the court rather than an arbitrator, notwithstanding AAA rules to the contrary. To initiate the arbitration, you will pay the filing fee directly to AAA and we will pay all subsequent AAA fees for the arbitration, except you are responsible for your own attorney, expert, and other witness fees and costs unless provided by law.

If you prevail on any claim, we will reimburse you your filing fee. The arbitration will be held in the city or county of your residence. To learn more about the Rules and how to begin an arbitration, you may call any AAA office or go to www.adr.org. The arbitrator may only resolve disputes between you and Tesla, and may not consolidate claims without the consent of all parties. The arbitrator cannot hear class or representative claims or requests for relief on behalf of others purchasing or leasing Tesla vehicles.

In other words, you and Tesla may bring claims against the other only in your or its individual capacity and not as a plaintiff or class member in any class or representative action. If a court or arbitrator decides that any part of this agreement to 13

arbitrate cannot be enforced as to a particular claim or relief or remedy, then that claim or remedy (and only that claim or remedy) must be brought in court and any other claims must be arbitrated. If you prefer, you may instead take an individual dispute to small claims court. You may opt out of arbitration within 30 days after signing this Agreement by sending a letter to: Tesla, Inc.; P.O. Box 15430; Fremont, CA 94539-7970, stating your name, Order Number, or Vehicle Identification Number, and intent to opt out of the arbitration provision.

If you do 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 at p. 3.) Plaintiff did not opt-out of the arbitration agreement. (Kim Decl. at ¶ 7.) Upon delivery of the vehicle, Plaintiff executed a Retail Installment Sales Contract (“RISC”). The RISC also includes an arbitration clause as follows:

ARBITRATION PROVISION PLEASE REVIEW – IMPORTANT – AFFECTS YOUR LEGAL RIGHTS 1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS 3. DISCOVERY AND RIGHTS TO APEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION. Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), 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 (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action . . .

(Kim Decl., Ex. 2 at p. 5.)

Plaintiff brings this action for breach of express and implied warranties under the Song- Beverly Act against Defendant Tesla, Inc. (“Defendant”). Defendant filed the instant Motion to Compel Arbitration on December 17, 2025. Plaintiff filed his Opposition on April 8, 2025. Defendant filed its Reply on April 15, 2025.

II. LEGAL STANDARD

In ruling on a motion to compel arbitration, the Court must inquire as to (1) whether there is a valid agreement to arbitrate, and (2) if so, whether the scope of the agreement covers the claims alleged. (See Howsan v. Dean Witter Reynolds (2002) 537 U.S. 79, 84.) “Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitration. [Citations.] The threshold question requires a response because if such an agreement exists, then the court is statutorily required to order the matter to arbitration.” (Fleming v. Oliphant Financial, LLC (2023) 88 Cal.App.5th 13, 19 [internal quotation marks omitted].) The arbitration clause at issue is subject to the Federal Arbitration Act.

“The FAA [Federal Arbitration Act], which includes both procedural and substantive provisions, governs [arbitration] agreements involving interstate commerce.” (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 840.) However, “[t]he procedural aspects of the FAA do not apply in state court absent an express provision in the arbitration agreement.” (Ibid.) Here, the Agreement expressly provides “[a]ny arbitration under this Arbitration Provision shall be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) and not by any state law concerning arbitration.” (See Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1122 [“[t]he phrase ‘pursuant to the FAA’ is broad and unconditional,” and unambiguously adopts both the procedural and substantive aspects of the FAA].)

Under the FAA, the Court must grant a motion to compel arbitration if any suit is brought upon “any issue referable to arbitration under an agreement for such arbitration” (9 U.S.C. § 3), subject to “such grounds as exist at law or in equity for the revocation of any contract...” (9 U.S.C. § 2). The moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. (See Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396 [under both federal and state law, “the threshold question presented by a petition to compel arbitration is whether there is an

agreement to arbitrate”]; Rosenthal v. Great Western Fin’l Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal) [moving party’s burden is a preponderance of evidence].) The burden then shifts to the resisting party to prove a ground for denial. (Rosenthal, supra, 14 Cal.4th at p. 413.) “In determining the rights of parties to enforce an arbitration agreement within the FAA’s scope, courts apply state contract law while giving due regard to the federal policy favoring arbitration.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle).)

But the FAA’s policy favoring arbitration ... is merely an acknowledgment of the FAA’s commitment to overrule the judiciary’s longstanding refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as other contracts. Or in another formulation: The policy is to make arbitration agreements as enforceable as other contracts, but not more so. Accordingly, a court must hold a party to its arbitration contract just as the court would to any other kind. (Morgan v. Sundance, Inc. (2022) 596 U.S. 411 [internal citations and quotation marks omitted].)

III. ANALYSIS

Defendant argues Plaintiff’s claims for the manufacture, sale, and repair of the vehicle fall within the scope of the arbitration clauses for both the MVOA and RISC. (Mtn. to Compel Arbitration at pp. 7:4-8:12.) Moreover, Defendant argues courts have recognized the validity of “clickwrap” or “clickthrough” agreements like the one at issue here. (Id. at pp. 8:13-9:8.) Thus, Plaintiff has agreed to be bound by the MVOA.

Plaintiff challenges the sufficiency of the Declaration of Raymond Kim (“Kim Declaration”) in so far as it fails to depict the website and hyperlinks where notice was provided of the MVOA. (Opposition at pp. 2:19-3:4.) Plaintiff argues the MVOA does not contain a VIN No., which did not exist at the time it was executed. (Id. at p. 3:8-11.) Plaintiff further notes that the RISC contains an integration clause providing this instrument to be the entire agreement between the parties. (Id. at p. 4:22-28.) Plaintiff argues the MVOA only pertains to the order of the Tesla vehicle and nothing else. (Id. at p. 10:1-3.)

The Court first addresses whether a valid agreement to arbitrate exists. It then proceeds to consider whether the dispute falls within the scope of the agreements.

A. Whether an Agreement to Arbitrate Exists

“While Internet commerce has exposed courts to many new situations, it has not fundamentally changed the requirement that ‘ “[m]utual manifestation of assent, whether by written or spoken word or by conduct, is the touchstone of contract.”’ (Nguyen v. Barnes & Noble Inc. (2016) 245 Cal.App.4th 855, 862 (Long). Mutual assent is determined under an 16

objective standard applied to the outward expressions of the parties, with due regard for context. (See ibid.) “California law is clear—‘an offeree, regardless of apparent manifestation of his consent is not bound by inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious.’ [Citation.]” (Ibid.) Courts have distinguished between “two flavors” of Internet contracts: “ ‘ “clickwrap” (or “click-through”) agreements, in which website users are required to click on an “I agree” box after being presented with a list of terms and conditions of use; and “browsewrap” agreements, where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen.’” (Long, supra, 245 Cal.App.4th at p. 862 [quoting Nguyen, supra, 763 F.3d at pp. 1175-1176].) “Some internet contracts are a blend of the two, and have been called a ‘hybrid design,’ ‘modified clickwrap’, or ‘sign-in wrap’ agreement. ‘Sign-in-wrap’ agreements are those in which a user signs up to use an internet product or service, and the signup screen states that acceptance of a separate agreement is required before the user can access the service.” (Colgate v.

Juul Labs, Inc. (N.D. Cal. 2019) 402 F.Supp.3d 728, 763.)

The Kim Declaration outlines the following process that was followed in this case:

4. Plaintiff placed the order for the Subject Vehicle by clicking a button that read “Place Order” on Tesla’s website. Plaintiff would not have been able to place the order without clicking this button on Tesla’s website or authorizing someone to do so on their behalf. Immediately below the “Place Order” button would have appeared text in bold font advising Plaintiff that by clicking “Place Order” he would be agreeing to terms and conditions of the MVOA. The Motor Vehicle Order Agreement appeared in bold font and was displayed as a hyperlink. If Plaintiff clicked on this hyperlink, a new window would have opened revealing the agreement or policy described in the hyperlink.

(Kim Decl. at ¶ 4.)

At first glance, the procedure followed seems to set up a hybrid design where clicking the Place Order button itself manifests assent to the terms but the Order Agreement is separately provided through a hyperlink. However, since prior to placing the order, Plaintiff sees a text that advises him that agreeing to the order means that he is agreeing to the Order Agreement, the Court construes this to be a clickwrap agreement where notice of the specific intent to assent to the contract is provided. (Second Declaration of Raymond Kim [“Second Kim Decl.”], Ex. 3.) Clickwrap agreements are generally enforceable. (See Disney Enters. v. Redbox Automated Retail, LLC (C.D. Cal. 2018) 336 F.Supp. 3d 1146, 1153; In re Facebook Biometric Info. Privacy Litig. (N.D. Cal. 2016) 185 F.Supp. 3d 115, 165.) (Reply at p. 2:20-21.) In fact,

courts have consistently enforced modified clickwrap agreements less conspicuous than those at issue here. (See Lee v. Ticketmaster L.L.C. (9th Cir. 2008) 817 F.App’x 393, 394-395; Dohrmann v. Inuit, Inc. (9th Cir. 2020) 823 F.App’x 482, 484.)

To the extent Plaintiff argues Defendant failed to offer any evidence concerning the website and the depiction of the hyperlinks, the court in Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158 (Gamboa) has aptly summarized the process for challenging the authenticity of an agreement to arbitrate:

[T]he moving party bears the burden of producing “prima facie evidence of a written agreement to arbitrate the controversy.” [Citation.] The moving party “can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party’s] signature.” [Citation.] Alternatively, the moving party can meet its burden by setting forth the agreement’s provisions in the motion. [Citations.] For this step, “it is not necessary to follow the normal procedures of document authentication.” [Citation.] If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion.

If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement. [Citations.] The opposing party can do this in several ways. For example, the opposing party may testify under oath or declare under penalty of perjury that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement. [Citations.]

If the opposing party meets its burden of producing evidence, then in the third step, the moving party must establish with admissible evidence a valid arbitration agreement between the parties. The burden of proving the agreement by a preponderance of the evidence remains with the moving party. (Id. at pp. 165-166 [citing and quoting Rosenthal, supra, 14 Cal.4th at p. 413; Bannister v. Marindence Opco, LLC (2021) 64 Cal.App.5th 541, 543-544; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 (Condee); Cal. Rules of Court, rule 3.1330].) Here, Defendants have met their prima facie burden of proving a written agreement to arbitrate by setting forth the provisions in the motion and attaching verbatim copies. Nevertheless, as noted in both Gamboa and Condee, “[f]or purposes of a petition to compel 18

arbitration, it is not necessary to follow the normal procedures of authentication.” (Gamboa, supra, 72 Cal.App.5th at pp. 165-166; Condee, supra, 88 Cal.App.4th at p. 219.) (Reply at p. 1:15-17.) Moreover, “the custodian of a document need not have been present or employed when the document was created or signed to authenticate a document in a company’s files.” (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 758-759.) Mr. Kim adequately describes the website and where the hyperlinks to the MVOA can be found, and includes a corresponding depiction of the website on Reply. (Kim Decl. at ¶ 4; Second Kim Decl, Ex. 3.) (Reply at p. 2:13-19.)

The clickwrap agreement here is enforceable and the MVOA is a valid agreement to arbitrate. Plaintiff argues the RISC contains an integration clause and supersedes the MVOA. The integration clause provides, “HOW THIS CONTRACT CAN BE CHANGED. This contract contains the entire agreement between you and us relating to this contract. Any change to the contract must be in writing and both you and we must sign it. No oral changes are binding.” (Kim Decl., Ex. 2 at p. 6.) Plaintiff is incorrect that Defendant does not move to arbitrate under the RISC.

Defendant moves to arbitrate under both the MVOA and the RISC. The RISC bears Plaintiff’s signature and includes an arbitration clause that is outlined in bold lettering. Accordingly, a valid agreement to arbitrate exists under both the MVOA and the RISC.

B. Scope of the Arbitration Agreements

The arbitration clause in the MVOA provides that it shall apply to “any dispute between you and Tesla, Inc. and its affiliates . . .” (Kim Decl., Ex. 1 at p. 3.) The RISC provides that arbitration shall apply to “any claim or dispute, whether in contract, tort, statute, or otherwise. . . .” (Id., Ex. 2 at p. 5.) Plaintiff’s claims here concern the breach of express and implied warranties under the Song-Beverely Act. Both the MVOA and RISC are broadly worded and thus include the nature of Plaintiff’s claims.

Plaintiff, however, argues manufacturer warranties are independent of retail sales contracts and do not arise from the contractual relationship between buyer and seller. (Opposition at pp. 3:27-4:2.) Plaintiff cites Davis v. Nissan North America, Inc. (2024) 100 Cal.App.5th 825 (Davis) in support. (Ibid.) There, the Court noted “[u]nder California law, manufacturer warranties that accompany the sale of the vehicle without regard to the substantive terms of the sale contract between the buyer and the dealer are independent of the sale contract.” (Id. at p. 837.)

There, the sales contract between the plaintiff and dealership expressly included “ ‘no warranty, nor any assurance regarding the quality of the vehicle sold, nor any promised repairs or other remedies in the event problems arise.’” (Ibid. [internal citations omitted].) The sales contract there and in other similarly situated cases disclaimed any warranty on the part of the dealership. (Ibid.) The court noted that “ ‘[t]his differentiation . . . demonstrates an intent to distinguish and distance the dealership’s purchase agreement from any warranty that [Nissan] “may” provide.’” (Ibid. [internal citations omitted].)

Here, the MVOA cites the Tesla New Vehicle Warranty and Tesla Used Vehicle Limited Warranty. (Kim Decl., Ex. 1 at p. 4.) It references a copy of the warranty with a hyperlink to the website. (Ibid.) On the other hand, the RISC provides:

If you do not get a written warranty, and the Seller does not enter into a service contract within 90 days from the date of this contract, the Seller makes no warranties, express, or implied on the vehicle, and there will be no implied warranties of merchantability or of fitness for a particular purpose. This provision does not affect any warranties covering the vehicle that the vehicle manufacturer may provide. If the Seller has sold you a certified used vehicle, the warranty of merchantability is not disclaimed. (Kim Decl., Ex. 2 at p. 4, ¶ 4.)

Thus, the warranty is only disclaimed if Defendant does not enter into a service contract within 90 days. There is no indication that the Defendant failed to do so here. Thus, unlike Davis and the cases cited therein, there is no clear intent to distinguish and distance the dealership’s purchase agreement from any warranty it may provide. Therefore, the breach of warranty claims arise under the scope of both agreements.

As noted by Defendants, all of Plaintiff’s claims arise out of the relationship between him and Tesla. (Reply at p. 5:10-11.) “There would be no claim for breach of warranty under the Song-Beverly Consumer Warranty Act but for these relationships, as Plaintiff’s Claims in the Complaint allege that this action arises out of the warranty obligations of Tesla, for a vehicle purchased by Plaintiff, for which Tesla issued a written warranty, and for which implied warranties arose by virtue of the purchase.” (Id. at p. 5:14-18.)

The Court need not address Defendant’s preemptive unconscionability arguments. (See Mtn. to Compel Arbitration at pp. 10:23-12:13.) The enforceability of the agreements has not been raised by Plaintiff. Since the Court has determined that valid agreements to arbitrate exist and the claims fall within the scope of those agreements, the Motion to Compel Arbitration is GRANTED.

IV. CONCLUSION

The Motion to Compel Arbitration is GRANTED. This action is hereby STAYED pending the outcome of arbitration. (Code Civ. Proc. § 1281.4; 9 U.S.C. § 3.)

The June 18, 2026, Case Management Conference is VACATED.

A Status Review re: Arbitration shall be set for February 5, 2027, at 11:00 a.m. in Department 13.

The Court will prepare the final order. - oo0oo -

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