Jurosky v. BMW of N. Am., LLC

441 F.Supp.3d 963

Frederick J. JUROSKY, Plaintiff,

v.BMW OF NORTH AMERICA, LLC, Defendant.

Case No.: 19cv706 JM (BGS)

United States District Court, S.D. California.

Signed February 27, 2020

Christine J. Haw, Gregory Sogoyan, Tionna Dolin, Caitlin Scott, Kyle Raine Tracy, Payam Shahian, Strategic Legal Practices, APC, Michael Harris Rosenstein, Law Offices of Micheal H. Rosenstein, LC, Los Angeles, CA, Dara Tabesh, EcoTech Law Group, P.C., San Francisco, CA, for Plaintiff.

Garrick Y. Chan, Molly Moriarty Lane, Morgan, Lewis & Bockius, San Francisco, CA, Shelby Kathryn Kroeger, Dinsmore & Shohl, LLP, San Diego, CA, for Defendant.

ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION AND STAY ALL PROCEEDINGS

JEFFREY T. MILLER, United States District Judge

Defendant BMW of North America, LLC ("BMW") moves for an order compelling Plaintiff Frederick J. Jurosky ("Plaintiff") to arbitrate his claims related to alleged defects in a BMW vehicle. (Doc. No. 16.) BMW also requests a stay of all proceedings pending completion of the arbitration. The motion has been briefed and the court finds it suitable for submission without oral argument in accordance with Civil Local Rule 7.1(d)(1). For the below reasons, the motion is DENIED.

I. BACKGROUND

On March 5, 2013, Plaintiff purchased a used 2010 BMW ("the vehicle") from Bob Smith BMW ("the dealership"). The purchase agreement between Plaintiff and the dealership contained an arbitration clause. Plaintiff received an express written warranty from BMW. During the warranty period, the vehicle's engine allegedly contained or developed defects and BMW declined to replace the vehicle or provide restitution.

On July 17, 2018, Plaintiff filed a complaint in the California Superior Court for the County of Sacramento against BMW and the dealership alleging violations of the Song-Beverly Consumer Warranty Act, CAL. CIV. CODE §§ 1790 -90.4. On November 6, 2018, the case was transferred to the County of San Diego. On April 15, 2019, Plaintiff dismissed the dealership as a defendant. On April 17, 2019, BMW filed an answer and removed the case to federal court based on diversity jurisdiction.

On September 18, 2019, BMW filed the instant motion to compel arbitration. Plaintiff also filed a request for judicial notice of the purchase agreement, (Doc. No. 17 at 9-10), and a January 30, 2019 order by San Diego Superior Court Judge Randa Trapp granting the dealership's motion to compel arbitration, (id. at 12-13). On October 7, 2019, Plaintiff responded in opposition. (Doc. No. 19.) BMW replied on October 11, 2019. (Doc. No. 20.) BMW also filed a request for judicial notice of two district court orders granting other motions to compel arbitration by BMW. (Doc. No. 20-1.) On October 14, 2019, Plaintiff provided a notice of supplemental authority consisting of an October 11, 2019 district court order denying a motion to compel arbitration by BMW. (Doc. No. 22.) On October 15, 2019, BMW filed its third request for judicial notice, this time of a September 10, 2019 district court order granting a motion to compel arbitration. (Doc. No. 23.) On November 5, 2019, Plaintiff filed a "supplemental" request for judicial notice of several additional district court filings, including the purchase agreements from two other cases cited in the parties' filings. (Doc. No. 28.)

II. LEGAL STANDARD

The Federal Arbitration Act (FAA) allows "a party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States District Court .... for an order directing that .... arbitration proceed in the manner provided for in [the arbitration] agreement." 9 U.S.C. § 4. The FAA promotes a general policy favoring arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ; see also Hall Street Assoc., L.L.C. v. Mattel, Inc. , 552 U.S. 576, 581, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008). The FAA thus "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds Inc. v. Byrd , 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985).

"[A]n agreement to arbitrate is a matter of contract." Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 (9th Cir. 2000). When a party seeks an order compelling arbitration, interpreting the parties' intent on certain issues in the agreement remains "within the province of judicial review." Momot v. Mastro , 652 F.3d 982, 987 (9th Cir. 2011). Arbitration "is a way to resolve those disputes – but only those disputes – the parties have agreed to submit to arbitration." Id. (citing First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ). "[A] party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." United Steelworkers v. Warrior & Gulf Navigation Co. , 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). The party seeking to compel arbitration bears the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence. Norcia v. Samsung Telecoms. Am., LLC , 845 F.3d 1279, 1283 (9th Cir. 2017) (citing Knutson v. Sirius XM Radio Inc. , 771 F.3d 559, 565 (9th Cir. 2014) ).

III. DISCUSSION

The parties dispute whether BMW, as a nonsignatory to the purchase agreement containing the arbitration clause, can compel Plaintiff to arbitrate his claims. BMW contends that the question of whether it has standing to compel arbitration is one of arbitrability that must be decided by an arbitrator. BMW also argues it may compel arbitration under a theory of equitable estoppel or as a third party beneficiary. In addition to opposing these arguments, Plaintiff argues that BMW waived its right to compel arbitration.

A. Arbitrability

BMW first argues that the question of whether it can compel arbitration must be answered by an arbitrator, not a court, because the arbitration clause states that questions of arbitrability shall be decided by an arbitrator. (Doc. No. 16 at 10-11, 15-16.) The purchase agreement, which is signed by Plaintiff and the dealership, but not BMW, states:

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 .... purchase or condition of this vehicle, the contact 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.

(Doc. No. 17 at 10.)¹

The issue of arbitrability is for the court to decide unless the parties' agreement clearly and unmistakably provides otherwise. Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). In Kramer v. Toyota Motor Corp. , 705 F.3d 1122, 1126-27 (9th Cir. 2013), cert. denied , 571 U.S. 818, 134 S.Ct. 62, 187 L.Ed.2d 26 (2013), the Ninth Circuit addressed whether a defendant manufacturer could compel a group of buyer plaintiffs to arbitrate based on purchase agreements that were signed by the plaintiffs and their respective dealerships, but not the manufacturer. The dealerships were not parties to the lawsuit. Id. at 1127. The manufacturer argued that because the purchase agreements provided that arbitrators shall decide issues of interpretation, scope, and applicability of the arbitration clauses, the arbitrators should decide the issue of arbitrability. Id. The court held that the district court could decide issues of arbitrability because the "you and us" language in the arbitration clauses evidenced the plaintiffs' intent to arbitrate disputes with the dealerships, but not the manufacturer. Id. at 1128. The court stated, "[i]n the absence of a disagreement between Plaintiffs and the Dealerships, the agreement to arbitrate arbitrability does not apply." Id. Therefore, the court also stated, "[g]iven the absence of clear and unmistakable evidence that Plaintiffs agreed to arbitrate arbitrability with nonsignatories, the district court had the authority to decide whether the instant dispute [was] arbitrable." Id. at 1127 ; see also Mundi v. Union Sec. Life Ins. Co. , 555 F.3d 1042, 1045 (9th Cir. 2009) (finding a nonsignatory defendant could not compel arbitration in the absence of language in the arbitration clause stating otherwise); Kim v. BMW of N. Am., LLC , 408 F. Supp. 3d 1155, 1158 (C.D. Cal. 2019) (finding that whether BMW, as a nonsignatory, can be bound by an arbitration clause "is not a question for the arbitrator"); Roth v. Jaguar Land Rover N. Am., LLC , No. 17cv1522 AGD (FM), 2017 WL 10545074, at *4 (C.D. Cal. Dec. 4, 2017) ("Determining if Plaintiff's claims against a nonsignatory defendant should be arbitrated doesn't depend on the scope of the arbitration agreement, and it is properly within a district court's authority.").

The arbitration clause here contains the same "you and us" language the court in Kramer found to include only the buyer and dealership, and not the manufacturer. See also Vincent v. BMW of N. Am., LLC , No. 19cv6439 AS, 2019 WL 8013093, at *4 (C.D. Cal. Nov. 26, 2019) (finding the same issue to be arbitrable based on the same language in the arbitration clause). As discussed below, BMW's various arguments attempting to distinguish Kramer are not persuasive. Because no dispute currently exists between Plaintiff and the dealership, and because there is no clear and unmistakable evidence indicating otherwise, the issue of whether the instant dispute is arbitrable given BMW's status as a nonsignatory need not be decided by an...