KEITH MUENZE, individually and derivatively on behalf of KIXIE ONLINE, INC. v. COOLEY LLP, et al.

the Court declines to issue an assignment order for payments owed or to be owed by the companies listed in Exhibit A to counsel's declaration, the Court also declines to issue a restraining order.¿ (See Garden City Boxing Club, Inc. v. Briano, No. CIV-F-06-1270 AWI GSA, 2007 U.S. Dist. LEXIS 95086, 2007 WL 4463264, at *2 (E.D. Cal. Dec. 13, 2007) ¿(declining to issue a restraining order upon denying a request for assignment).) CONCLUSION For the foregoing reasons, the Court DENIES Plaintiff's motion for an assignment and restraining order. DATED: September 3, 2026 ___________________________ Edward B. Moreton, Jr. Judge of the Superior Court

Superior Court of California County of Los Angeles - West District Beverly Hills Courthouse / Department 20 5 KEITH MUENZE, individually and derivatively on behalf of KIXIE ONLINE, INC., Plaintiff, v. COOLEY LLP, et al., Defendant s. | Case No.: 2 5 SMCV0 5405 Hearing Date: September 3, 2026 [TENTATIVE] order RE: defendant s' MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS | BACKGROUND This is a legal malpractice case. Defendant Cooley LLP served as Plaintiff Kixie Online, Inc. 's corporate counsel for more than a decade (from 2013 to 2025) . (Compl. paragraph 11.)

Defendant Joshua Seidenfeld was the assigned attorney on the Kixie engagement. Cooley helped form the company, draft its bylaws, prepare its financing instruments, and advise its founders. (Id.) Plaintiff claims that in 2024, at the behest of one founder, Jeff Kuei, Cooley advised and assisted actions to remove the other founder, Plaintiff Keith Muenze, from the Board of Directors, even though Kixie's bylaws, which were drafted by Cooley expressly prohibited such action. (Paragraph 12.) Plaintiff claims these actions by Cooley violated the California General Corporation Law, Delaware General Corporation Law, and Cooley's fiduciary duties to its clien t. (Paragraph 13.)

Plaintiff further alleges that Cooley's conduct destabilized the company, triggered shareholder litigation, and caused Kixie to incur substantial financial and reputational harm. (Paragraph 14.) The operative complaint alleges claims for (1) legal malpractice, (2) breach of fiduciary duty, (3) fraud and concealment, and (4) aiding and abetting breach of fiduciary duty. The original complaint was filed by Kixie, but the first amended complaint is filed by Muenze individually and derivatively on behalf of Kixie.

Cooley's engagement agreement with Kixie provides that " should a dispute arise between us which cannot be resolved " through communication, ' then to the extent permitted by law, we and the Company agree to be bound by the Arbitration Provision attached hereto as Schedule B and incorporated herein. " (Ex. A to Tanoury Decl.,

section 13.) The Arbitration Provision provides, in pertinent part: " Any claim, dispute or controversy of whatever nature arising out of or relating to this Engagement Agreement (' Agreement ') or any engagement or services rendered pursuant to this Agreement, including, without limitation, any action or claim based on tort, contract, or statute, or concerning the interpretation, effect, termination, validity, performance and/or breach of this Agreement or services rendered hereunder (' Claim '), shall be resolved by final and binding arbitration (except to the extent that final and binding arbitration of disputes involving the payment of fees is prohibited by California law). " (Id., Schedule B) This hearing is on Defendants' motion to compel arbitration.

Defendants argue that they have a valid, binding arbitration agreement with Kixie, which requires that the claims alleged in this action be arbitrated. LEGAL STANDARD California¿ has a strong public policy that 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, ¿ 563 U.S. at 339.)¿ To further that policy, C ode C iv. P ro c. Sec. 1281.2 requires a trial court to enforce a written arbitration agreement unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for rescission of the agreement or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues.

When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by a preponderance of evidence.¿ (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.)¿ It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement's provisions.¿ (Gamboa, 72 Cal.App.5th at 165.)¿ The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause.¿ (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.)

The trial court then weighs all the evidence submitted and uses its discretion to make a final determination.¿ (Id.)¿ If the court orders arbitration, then the court shall stay the action until arbitration is completed.¿ (See Code Civ. Proc., Sec. 1281.4.) REQUEST FOR JUDICIAL NOTICE Cooley requests judicial notice as to three other lawsuits initiated by Plaintiff. Cooley relies on the suits to argue that Plaintiff's claim that he cannot afford arbitration/arbitrator fees is disingenuous. The Court concludes that the request is unnecessary to the ultimate resolution of this motion, and therefore, denies the request.

DISCUSSION In ruling on a motion to compel arbitration, the Court must first determine whether there is an agreement to arbitrate. Under California law, a contract is valid if there are mutual assent and valid consideration. (DLLE v. Transpacific Trans. Co. (1977) 69 Cal. App. 3d 268, 274-75; Civ. Code Sec. 1550.) Here, both founders of Kixie (including Muenze) signed the engagement agreement containing the arbitration clause on behalf of Kixie. (Ex. A to Tanoury Decl.) The signature line indicates that they were signing for Kixie, not for themselves personally.

Cooley also signed the agreement. (Id.) The cover letter to the engagement agreement also makes clear that the services were to be provided to Kixie and not the individual founders. The opening paragraph to the cover letter states: " We are pleased that we have been engaged to assist Kixie Inc. (the "Company") in connection with its formation and to represent the Company as its primary outside counsel. As we discussed, we are going to represent only the newly formed Company and will not be able to represent any founder's or other owner's interest (including your own interest as a founder of the Company) separately. " Notwithstanding, Plaintiffs argue that Kixie's founders could not bind Kixie to the engagement agreement containing the arbitration clause.

In opposition, Cooley argues that Kixie ratified the agreement by accepting the benefits of Cooley's representation and by paying for its legal services. The Court agrees with Cooley.

"A ratification can be made ... by accepting¿or retaining the benefit of the act, with notice thereof." (Civ. Code, Sec. 2310.)¿ Kixie benefitted from Cooley's legal services. Kixie's founders also had notice of the agreement because they signed the engagement agreement, and their knowledge as admitted founders of Kixie is necessarily imputed to the company. In Cleveland v. Johnson (2012) 209 Cal. App. 4th 1315, the Court held that a pre- incorporation contract can be ratified where the later formed company accepted the benefits of the contract, some of the directors knew of the contract, and the directors with advance knowledge had no personal interest in the transaction. (Id. at 1336.)

This case presents an even argument for ratification than Cleveland because all of the founders of Kixie knew about the engagement agreement, and there is no evidence of self-dealing. In fact, the cover letter to the engagement agreement makes clear that the legal services were being provided to the Company and not the founders, so the founders did not receive a direct, personal benefit. Turning to the second element required to find a valid contract, Cooley clearly provided consideration for the agreement in the form of its legal services.

As there is both consideration and mutual assent, there is a valid agreement to arbitrate. Of course, this lawsuit is brought not by Kixie directly but by its shareholder, Mr. Muenze. However, under California law, a corporation's agreement to arbitrate is bind ing on a shareholder bringing a derivative action. (Frederick v. First Union Securities, Inc. (2002) 100 Cal.App.4 th 694, 697-98.) In reaching its holding, the Frederick court reasoned as follows: " Because shareholder derivative actions are brought ' to enforce a¿ corporate ¿cause of action against officers, directors and third parties, ' [citations], the shareholders, 'standing in the shoes of the corporation' have no rights greater than those of the corporation, nor can those they¿choose to sue be deprived of defenses they could assert against the corporation's claims."

To be sure, Mr. Muenze claims he is bringing individual actions. But a close read of each claim indicates that his claims are purely derivative, and not individual. Plaintiff's first cause of action for legal malpractice/professional negligence makes clear that the duty of care was owed to Kixie, not Mr. Muenze, and further alleges that the harm was to Kixie, not Mr. Muenze individually. (Paragraph s 42, 44.) There is no allegation that Mr. Muenze suffered any unique injury. The second cause of action for breach of fiduciary duty makes clear that the fiduciary relationship is between Kixie and Cooley, not between Mr.

Muenze and Cooley. (Paragraph 51.) Further, a s with the first cause of action, the second cause of action for breach of fiduciary duty also alleges harm only to Kixie, and seeks damages for Kixie, not Mr. Muenze. (Paragraphs 54-55.) As to the third cause of action for fraud, while the Complaint alleges that misrepresentations were made to Kixie's shareholders (including presumably Mr. Muenze), the claim only alleges reliance on Kixie's part and as with the other claims, alleges injury to only Kixie. (Paragraphs 61-62.)

As to the fourth cause of action for aiding and abetting breach of fiduciary duty, the Complaint alleges that the duty was owed to Kixie, not Mr. Muenze, and like the other claims, it alleges harm to only Kixie. (Paragraph 70.) Thus, there are no true individual claims, and because all the claims are derivative and filed on behalf of Kixie, Mr. Muenze is bound by the arbitration agreement. As to Mr. Seidenfeld, he was not a signatory to the agreement. But he is entitled to enforce the arbitration agreement under the equitable estoppel doctrine.

Under that doctrine, a¿ non-signatory defendant ¿may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the non-signatory are " intimately founded in and intertwined " with the underlying contract obligations.¿(Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 27 1.)¿ Here, there can be no serious dispute that Mr. Mueze's claims against Mr. Seidenfeld are intimately related to the engagement agreement containing the arbitration provision.

Mr. Seidenfeld was the Cooley attorney performing services under the Agreement. As to whether the claims in the Complaint fall within the scope of the arbitration provision, Defendants argue that the parties have delegated that question to the arbitrator. The Court agrees. " There are two prerequisites for a¿delegation¿clause to be effective. First, the language of the clause must be¿clear¿and¿unmistakable.¿[Citation.] Second, the¿delegation¿must not be revocable under state contract defenses such as fraud, duress, or unconscionability. [Citations.]

The ' clear¿and¿unmistakable ' test reflects a '

heightened ¿standard of proof ' that reverses the typical presumption in favor of the arbitration of disputes." (Aanderud v. Superior Court ¿(2017) 13 Cal.App.5th 880, 892.) Here, the parties' arbitration agreement clearly and unequivocally states: " The Arbitrator(s), and not a court, shall also be authorized to determine whether this Arbitration Provision applies to a Claim sought to be resolved hereunder. " As this delegation clause is clear and there is no evidence of fraud, duress or unconscionability as to the delegation clause itself, the Court defers to the arbitrator the issue of whether the claims here fall within the arbitration provision.

Plaintiff argue s that the arbitration provision (including the delegation clause) is procedurally and substantively unconscionable. But his arguments are not targeted to the delegation clause itself, but rather the arbitration provision as a whole. Where there is a clear delegation clause, as here, arguments about the unconscionability of an arbitration provision (as opposed to the delegation clause) are reserved for the arbitrator and not the court. Even assuming that Plaintiff's arguments of unconscionability are targeted to the delegation clause, they would still fail.

Both procedural and substantive unconscionability must¿be present before a contract or term will be deemed unconscionable.¿Both, however, need not be present to the same degree.¿A¿sliding¿scale is applied so that "the more substantively oppressive the contract¿term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa." (Lhotka v. Geographic Expeditions, Inc. ¿(2010) 181 Cal.App.4th 816, 821. The burden is on Plaintiff, as the part y challenging the arbitration agreement, to prove both procedural and substantive unconscionability. (Crippen v.

Central Valley RV Outlet ¿(2004) 124 Cal.App.4th 1159, 1164-116 5.) Plaintiff argues that the arbitration provision is procedurally unconscionable because it is oppressive and surprising. It is oppressive because it is found in an adhesive contract (Opp. at 3-4) and surprising because the JAMS Comprehensive Arbitration Rules & Procedures ("JAMS Rules") were not attached to the Agreement (id. at 4-5) . Both arguments are without merit. The Agreement is not a contract of adhesion. There is no adhesion where the client has an opportunity to review the agreement with a lawyer of its choice and negotiate the agreement. (Mt.

Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal. App. 4th 1299, 1309, as modified on denial of reh'g (Oct. 21, 2013) (concluding retainer agreement containing arbitration provision not adhesive where "agreement expressly advised Jones to consult independent counsel if she wished to be advised on the agreement") . T he engagement agreement states that Kixie was "given a reasonable opportunity to seek the advice of independent counsel of its choice" and that Kixie "availed itself of that opportunity if and to the extent [Kixie] deemed it appropriate to do so." (Agreement Sec. 12.)

In fact, Kixie negotiate d "an alternative billing arrangement" (Agreement Sec. 2)), which suggests the Agreement is not a contract of adhesion. Even if the engagement a greement is adhesive, adhesion alone is not a basis to find an agreement unconscionable. (See Ramirez, 16 Cal. 5th at 492-93 (Contracts of adhesion "remain valid and enforceable unless the resisting party can also show that one or more of the contract's terms is substantively unconscionable or otherwise invalid."); see also id. at 494 ("[A] dhesion alone generally indicates only a low degree of procedural unconscionability[.]").

Plaintiff also argues that "the Engagement Agreement is procedurally unconscionable because Cooley did not attach the governing JAMS' [] Rules" . (Opp. at 5) . This argument conflicts with California law. (See Peng v. First Republic Bank (2013) 219 Cal. App. 4th 1462, 1472 (2013) ("the failure to attach the [procedural] rules [governing arbitration], standing alone, is insufficient grounds to support a finding of procedural unconscionability"). There can be no surprise where the Agreement identifies the specific arbitration rules, and those rules are readily available. (Lane v.

Francis Cap. Mgmt. LLC (2014) 224 Cal. App. 4th 676, 691-92 ("There could be no surprise, as the arbitration rules referenced in the agreement were easily accessible" and the plaintiff did "not appear to lack the means or capacity to locate and retrieve a copy of the referenced rules."); Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1246 (2016) (failure to attach AAA rules to arbitration agreement not procedurally unconscionable as challenged clause was "clearly delineated in the agreement").

Here, the

Arbitration Provision explicitly "adopts JAMS' Comprehensive Arbitration Rules & Procedures" (Agreement at Schedule B), which are readily available. Plaintiff argues that the engagement agreement does not specify what "JAMS fees and expenses" are or where the founders could find JAMS' "fee schedule." But Plaintiff included the JAMS' fee schedule in his Opposition, demonstrating that the fee schedule is readily available. Moreover, the Arbitration Provision specifically states that each party will pay its pro rata share of JAMS fees (see Agreement at Schedule B), removing any possibility of surprise pertaining to cost sharing.

As to substantive unconscionability, Plaintiff argues that JAMS' fees are very high, with some Bay Area neutrals charg ing rates of up to $17,000 per day and JAMS charging a case management fee equal to 13% of the arbitrator fees - all payable in advance. Further, under the arbitration provision, any party can demand that " the arbitration shall be conducted by and submitted to three [a] rbitrators ...", which " permits either party to unilaterally triple an already substantial category of arbitration costs. " Plaintiff then points to the " massive disparity in resources between him and Cooley. " But Plaintiff has submitted no evidence that he cannot afford arbitration.

Absent such a showing, the Court cannot conclude there is substantial unconscionability. (See Sanchez, 61 Cal. 4th at 920 (finding an arbitration provision "cannot be held unconscionable" due to affordability "absent a showing that . . . [the] fees and costs in fact would be unaffordable or would have a substantial deterrent effect in [the plaintiff's] case."); see also Tompkins v. 23andMe, Inc. (9 th Cir. 2016) 840 F.3d 1016, 1027 (finding no substantive unconscionability under California law where plaintiffs present "no evidence . . . that the arbitration fees are unaffordable for them").

In sum, the Court finds that there is a valid agreement to arbitration; the delegation clause reserves questions of unconscionability to the arbitrator, unless the delegation clause itself is deemed unconscionable, and Plaintiff has not shown that the delegation clause is unconscionable. Accordingly, the Court grants the motion to compel arbitration. Because the Court compels arbitration, it will also stay the action pursuant to California Code of Civil Procedure. (See Cal. Code Civ. Proc. Sec. 1281.4 (A court "shall" stay pending litigation "until an arbitration is had in accordance with the order to arbitrate"); Thomas v.

Westlake (2012) 204 Cal. App. 4th 605, 620 (where the "court must order arbitration of all of [plaintiff's] claims against defendants, it must also stay proceedings on the claims until completion of arbitration"). CONCLUSION For the foregoing reasons, the Court GRANTS Defendant s ' motion to compel arbitration and stay s the proceedings pending completion of the arbitratio n. DATED: September 3, 2026 ___________________________ Edward B. Moreton, Jr. Judge of the Superior Court Case Number: 26SMCV02840 Hearing Date: September 3, 2026 Dept: 205 Superior Court of California County of Los Angeles - West District Beverly Hills Courthouse / Department 20 5 MAURISSA GEORGE, Plaintiff, v.

COMMUNITY CORPORATION OF SANTA MONICA c/o TAR A HENDERSON-BARAUSKAS, et al., Defendant s. | Case No.: 2 6 SMCV0 2840