VARMA, et al. vs TESLA, INC.

(Kim Dec. Exh. 1, p. 3.)

Plaintiffs initiated this litigation on September 5, 2025, alleging various violations of the Song- Beverly Consumer Warranty Act against Defendant related to the purchase of the Subject Vehicle. Defendant moves to compel arbitration and stay proceedings, pursuant to the arbitration provisions in both the Order Agreement. Plaintiffs contend that Defendant has not established mutual consent to the terms of the arbitration provisions, and that the arbitration provisions are unconscionable and therefore unenforceable.

LEGAL STANDARD

An agreement to submit disputes to arbitration “is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281; see 9 U.S.C. § 2.)

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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 the recission of the agreement.” (Code Civ. Proc. § 1281.2.)

REQUEST FOR JUDICIAL NOTICE

Defendant’s unopposed Request for Judicial Notice is GRANTED IN PART. Notice is taken only of the existence of Plaintiff’s Complaint, and not the truth of factual matters asserted in the documents. (People v. Franklin (2016) 63 Cal. 4th 261, 280.)

DISCUSSION

Existence of a Valid Arbitration Agreement

The threshold question in a motion to compel arbitration is whether there is an agreement to arbitrate. (Fleming v. Oliphant Financial, LLC (2023) 88 Cal.App.5th 13, 19.) A court cannot

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

25CV140949: VARMA, et al. vs TESLA, INC. 05/26/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC. (Defendant) CRS# 040504872766 in Department 517 compel an individual to arbitrate a dispute if he or she did not agree to do so. (Id.) An arbitration agreement is subject to the same rules of construction and enforcement as any other contract. (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1221.)

The moving party bears the initial burden of proving the existence of a valid arbitration agreement. (Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787.) Facts necessary to determine an arbitration agreement’s enforcement are proven by affidavits or declarations. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218.)

Tesla submits the declaration of Raymond Kim, Defendant’s Business Resolution Manager. Kim states that he is familiar with Tesla’s record-keeping procedures and processes of the subject transaction. (Kim Dec. ¶ 2.) As noted above, Kim describes the procedure by which Plaintiffs placed the order for the Subject Vehicle, and the execution of the Order Agreement containing the Arbitration Provision. (Id. ¶ 4.) He states that the Order Agreement is placed in Plaintiffs’ electronic file after a consumer has executed the Order Agreement, and the file is kept in the ordinary course of business. (Id.) He further states that Tesla did not receive correspondence from Plaintiffs opting out of the Arbitration Provision. (Id. ¶ 5.) He states that the Order Agreement would not be in Tesla’s internal system without Plaintiffs’ execution regarding the purchase of the Subject Vehicle. (Id. ¶¶ 4, 8.)

The Court finds that Tesla establishes the existence of a valid arbitration agreement entered into by Plaintiffs. As Tesla has met its burden, Plaintiffs, as the party opposing arbitration, must prove by the preponderance of the evidence any defense to the motion to compel the dispute to be arbitrated. (Larian v. Larian (2004) 123 Cal.App.4th 751, 760.)

Plaintiffs contend that the agreement was not entered into with mutual assent. However, Plaintiffs do not submit sworn declarations stating that they did not enter into the Order Agreement which contained arbitration provisions as set forth in the Kim Declaration. There is no evidence submitted with the Opposition stating that Plaintiffs did not notice or was unable to review the Terms and Conditions containing the Arbitration Provision. Plaintiffs have not demonstrated by the preponderance of the evidence any defense to the existence of a valid arbitration agreement. As such, the Court finds that there are valid arbitration provisions in the agreements between Plaintiffs and Defendant.

Unconscionability

Plaintiff argues that the arbitration agreement is unenforceable because it is both procedurally and substantively unconscionable.

A court may refuse to enforce an unconscionable provision in a contract, such as an arbitration agreement. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) “[U]nconscionability has both a ‘procedural’ and a ‘substantive’ element, the former focusing on ‘oppression’ or ‘surprise’ due to unequal bargaining power, the latter on ‘overly

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

25CV140949: VARMA, et al. vs TESLA, INC. 05/26/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC. (Defendant) CRS# 040504872766 in Department 517 harsh’ or ‘one-sided’ results.” (Id.) Both procedural and substantive unconscionability must be found before an arbitration provision is deemed unenforceable, but they need not be present in the same degree. (Id.) Rather a sliding scale is involved under which "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." (Id.)

"[T]he 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.)

Procedural Unconscionability

Procedural unconscionability means “an absence of meaningful choice” on the part of one of the contracting parties and substantive unconscionability means terms that can be described as “overly harsh,” “unduly oppressive,” or “so one sided as to shock the conscience.” (Sonic- Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145 (citing cases).) Procedural unconscionability refers to the manner in which a party's consent was obtained. Consent, of course, is the basis of contractual arbitration. (Oto, L.L.C. v. Kho (2019) 8 Cal 5th 111, 129.)

Plaintiffs contend that the Order Agreement was a contract of adhesion as Plaintiffs had no meaningful opportunity to negotiate or discuss the terms. The adhesive nature of the contract establishes a degree of unconscionability but does not render the contract automatically unenforceable. (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 914.)

Plaintiffs further contend that the circumstances of the sales transaction increased procedural unconscionability. However, Plaintiffs do not submit evidence to establish the circumstances of the sales transaction. Based upon the declaration of Raymond Kim, it appears that Plaintiff initially purchased the Subject Vehicle online.

Pursuant to the foregoing, the Court finds a minimal amount of procedural unconscionability in the Arbitration Provision of the Order Agreement.

Substantive Unconscionability

Substantive unconscionability focuses on whether the provision is overly harsh or one-sided and is shown if the disputed provision of the contract falls outside of the reasonable expectations of the non-drafting party or is unduly oppressive. (Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 88.)

Plaintiffs contend that the class action waiver in both arbitration provisions eliminates their “only realistic means of enforcing their rights.” (Opposition Br. at p. 4.) However, Plaintiffs are not bringing a representative action here; the Complaint is specific to Plaintiffs and their purchase and experience with the Subject Vehicle. Plaintiffs are not prevented from bringing their

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

25CV140949: VARMA, et al. vs TESLA, INC. 05/26/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC. (Defendant) CRS# 040504872766 in Department 517 individual claims to enforce their rights to the warranties as alleged in the Complaint.

The Court finds insufficient grounds of substantive unconscionability.

CONCLUSION

Defendant meets its initial burden to show the existence of a valid arbitration agreement. Plaintiffs have not presented sufficient evidence to demonstrate that the agreement is so procedurally and/or substantively unconscionable that it cannot be enforced.

Pursuant to the foregoing, Defendant’s motion to compel arbitration is GRANTED. These proceedings are STAYED pending resolution of the arbitration. (C.C.P. § 1281.4.)

The initial case management conference scheduled for June 30, 2026 CONTINUED to January 14, 2027. No less than 15 days prior to the CMC, the parties shall file a joint CMC statement which either advises the Court of the status of arbitration proceedings, or requests a continuance if the arbitration remains pending.

HOW DO I CONTEST A TENTATIVE RULING?

THROUGH ECOURT

Notify the Court and all the other parties no later than 4:00 p.m. (but by Noon if possible) at least one (1) court day before the scheduled hearing, and briefly identify the issues you wish to argue through the following steps: 1. Log into eCourt Public Portal 2. Case Search 3. Enter the Case Number and select "Search" 4. Select the Case Name 5. Select the Tentative Rulings Tab 6. Select "Click to Contest this Ruling" 7. Enter your Name and Reason for Contesting 8. Select "Proceed"

BY EMAIL Send an email to the DEPARTMENT CLERK and all the other parties no later than 4pm (but by Noon if possible) at least one (1) court day before the scheduled hearing.

BOTH ECOURT AND EMAIL notices are required.

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SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

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