Wolf v. Clubcorp U.S.

1

LEA WOLF, an individual and on behalf of all others similarly situated, Plaintiff, v. CLUBCORP USA, INC., et al., Defendants.

No. 22-cv-1688-MMA (JLB)

United States District Court, S.D. California

June 30, 2023

ORDER GRANTING DEFENDANTS' MOTION TO COMPEL ARBITRATION [DOC. NO. 10]

HON MICHAEL M. ANELLO UNITED STATES DISTRICT JUDGE

Plaintiff Lea Wolf brings this putative class action against Defendants ClubCorp USA, Inc. (“ClubCorp”) and ClubCorp Golf of California LLC (“Morgan Run” and collectively with ClubCorp, “Defendants”). Defendants removed this action from the Superior Court of California, County of San Diego, to the United States District Court for the Southern District of California pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332. See Doc. No. 1.

Two motions are pending before the Court. Doc. Nos. 10, 11. Defendants move to compel arbitration of Plaintiff's claims, and dismiss or stay the action pursuant to the Federal Arbitration Act. See Doc. No. 10. Additionally and in the alternative, Defendants move to dismiss the Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6) and to strike portions of Plaintiff's Complaint pursuant to Rule 12(b)(6) or 12(f). Doc. No. 11. Plaintiff filed an opposition to both motions, to which Defendants replied. See Doc. Nos. 12-15. For the reasons set forth below, the Court GRANTS Defendants' motion to compel arbitration.

I. Motion to Compel Arbitration

A. Background

Broadly, Plaintiff alleges that Defendants engaged in sex discrimination “in services and privileges provided to the female members of the Defendant[s'] business establishment,” Morgan Run Resort & Club, a private tennis club in San Diego County. Doc. No. 1-4 (“Compl.”) ¶¶ 1, 8. Plaintiff alleges that both Defendants “own[] and [o]perate the CLUB.” Compl. ¶¶ 7-8. Defendants, through a declaration by Fernando Fry, the General Manager of Morgan Run Club and Resort, state that Morgan Run is “the owner and operator of the Club.” Doc. No. 10-2 (“Fry Decl.”) ¶ 3.^[1] On or about November 21, 2017, Plaintiff completed and signed an application for membership to the Club. Id. ¶ 8. The application contains the following text:

If accepted into membership, I/we agree to conform to and be bound by the enrollment terms contained herein, the Membership Bylaws, the Rules and Regulations, and written membership policies of the Club (“Membership Documents”) as they may be amended from time to time. I/We further understand that agreeing to be bound by the Membership Documents of the Club is a part of my/our agreement for membership privileges with the Club. I/We specifically understand this membership is not divisible. I/We hereby acknowledge receipt of a copy of the Membership Bylaws and the Rules and Regulations of the Club. I/We hereby acknowledge and understand that the ONE benefits are subject to change at any time and that the privileges associated therewith may change throughout the term of my membership.

See Doc. No. 10-3 (“Membership Application”) Ex. 1 at 4; see also Fry Decl. ¶ 8.

Plaintiff alleges that “[t]he CLUB treated the male members more favorably than [their] female counterparts.” Compl. ¶ 13. Plaintiff brings two causes of action against Defendants: (1) unlawful discrimination in violation of the Unruh Act, California Civil Code §§ 51, et seq.; and (2) unfair business practices in violation of the California Business and Professions Code §§ 17200, et seq. Id. ¶¶ 47-73.

B. Legal Standard

The Federal Arbitration Act (“FAA”) permits “[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. Upon a showing that a party has failed to comply with a valid arbitration agreement, the district court must issue an order compelling arbitration. Id.

The Supreme Court has stated that the FAA espouses a general policy favoring arbitration agreements. AT & T Mobility v. Concepcion, 563 U.S. 333, 339 (2011). Federal courts are required to rigorously enforce an agreement to arbitrate. See Id. Courts are also directed to resolve any “ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 476-77 (1989).

In determining whether to compel a party to arbitrate, the Court may not review the merits of the dispute; rather, the Court's role under the FAA is limited “to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (internal quotation marks and citation omitted). If the Court finds that the answers to those questions are “yes,” the Court must compel arbitration. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). If there is a genuine dispute of material fact as to any of these queries, a district court should apply a “standard similar to the summary judgment standard of [Federal Rule of Civil Procedure 56].” Concat LP v. Unilever, PLC, 350 F.Supp.2d 796, 804 (N.D. Cal. 2004).

Agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Courts must apply ordinary state law principles in determining whether to invalidate an agreement to arbitrate. Ferguson v. Countrywide Credit Indus., 298 F.3d 778, 782 (9th Cir. 2002). As such, arbitration agreements may be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability. Concepcion, 563 U.S. at 339-41.

C. Analysis

1. Arbitration of Claims Against Defendant Morgan Run

As an initial matter, it is undisputed that Plaintiff and Morgan Run are signatories to the contract in question-the membership contract. See Membership Application at 4, 5. Defendants argue that Plaintiff is “estopped from arguing that she did not agree to the arbitration provision in the Bylaws because her claims derive from the Bylaws.” Doc. No. 10-1 at 12. “Equitable estoppel precludes a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that contract imposes.” Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1128 (9th Cir. 2013) (quoting Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006) (internal quotation marks omitted)). However, Defendants provide no authority that the doctrine of equitable estoppel applies where two parties are both signatories of a contract, and the Court is unaware of any such authority. Cf. Pacific Fertility Cases, 85 Cal.App. 5th 887, 893 (2022) (internal citations and quotation marks omitted) (stating that “[i]n the context of arbitration, there are two circumstances in which equitable estoppel can apply. The first is when the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the nonsignatory.... The second is when the claims against the nonsignatory are founded in and inextricably bound up with the obligations imposed by the agreement containing the arbitration clause.”).

Alternatively, Defendants move the Court to compel Plaintiff to arbitrate her claims pursuant to the Bylaws of Morgan Run, which include an arbitration provision.

Doc. No. 10-1 at 12-15. Defendants argue that “there is no question that the parties consented to the arbitration of disputes” because Plaintiff signed a membership application, “wherein she [] acknowledged receipt of a copy of the Membership Bylaws . . . and agreed to conform to and be bound by . . . the membership Bylaws.” Doc. No. 10-1 at 13 (alterations in original omitted) (first citing Fry Decl. ¶ 8; and then citing Membership Application). Additionally, Defendants argue that “[e]ven if Plaintiff had not signed a form acknowledging receipt of and her agreement to be bound by the Bylaws at the time of application, the arbitration provision would still be enforceable because the arbitration provision was incorporated by reference” through Plaintiff's membership application to Morgan Run. Id. at 8, 14.

Plaintiff argues that the “membership contracts do not contain an arbitration agreement” and that the “membership contract[] do[es] not validly incorporate by reference the terms of the arbitration agreement[] that are contained in the Bylaws” and that Plaintiff therefore “did not provide mutual assent to arbitrate [her] dispute[].” Doc. No. 12 at 7-8. In particular, Plaintiff argues that although “[t]he membership contract states that the Bylaws were provided to the Plaintiff.... this language was buried in the contract[.]” Id. at 7. Additionally, Plaintiff urges that “the Bylaws containing the arbitration provision were not provided to the Plaintiff even after signing the membership agreement, upon request of the Plaintiff” and that Defendants only “provided the Plaintiff with the Bylaws right before they terminated her membership at the club.” Id. at 8-9 (citing Doc. No. 12-1 (“Pl. Decl.”)).

“Under California law, the party seeking to compel arbitration has the burden of proving . . . by a preponderance of the evidence” the existence of an agreement to arbitrate. Newton v. Am. Debt Servs., Inc., 854 F.Supp.2d 712 721 (N.D. Cal. 2012) (citing Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal.4th 394, 413 (1996)). “California law permits parties to consent to, and incorporate by reference into their contract, the terms of another document.” See Greenley v. Avis Budget Grp., Inc., No....