Wong v. Bob's Disc. Furniture

KENNETH WONG, individually and on behalf of all others similarly situated, Plaintiff, v. BOB'S DISCOUNT FURNITURE, LLC, Defendant.

No. CV 22-4220 DSF (JEMx)

United States District Court, C.D. California

December 27, 2022

ORDER GRANTING MOTION TO COMPEL INDIVIDUAL ARBITRATION (DKT. 12)

Dale S. Fischer, United States District Judge

Defendant Bob's Discount Furniture, LLC (BDF) moves to compel individual, non-class arbitration based on contracts between Defendant and Plaintiff Kenneth Wong. Dkt. 12 (Mot.). Wong opposes. Dkt. 28 (Opp'n). The Court deems this matter appropriate for decision without oral argument. See Fed.R.Civ.P. 78; Local Rule 7-15.

I. BACKGROUND

BDF is one of the fastest growing furniture chains in the nation. Dkt. 1 (Compl.) ¶ 56. BDF markets, promotes, and sells furniture with added protection plans known as “Goof Proof.” Id. ¶ 1. BDF describes “Goof Proof” as a service contract and “the best way to protect your investment from a wide variety of accidents for 5 years.” Id. ¶ 2-3. Wong alleges that the plan does not protect the furniture customer's purchase and is riddled with exclusions that are disclosed to purchasers only after they purchase the plan and receive the full agreement by mail or email. Id. ¶¶ 11-14.

Wong alleges that the plan excludes coverage for customer misuse - even if unintentional, unexpected, or unforeseen - and even if it is considered “general wear & tear.” Id. ¶ 8, 10. BDF also classifies rips, tears breaks, and punctures as defects that are also excluded. Id. ¶18. The most common reason BDF denies claims is because the claimant cannot identify the specific event that caused the damage. Id. ¶15. In such cases, the denial is categorized as customer misuse or wear and tear. Id. ¶16. BDF also denies claims if customers are unable to identify the date the accident occurred, or if there is more than one mark or puncture in the furniture. Id. ¶¶ 19, 21. BDF categorizes other denials of claims as “accumulated [stains/tears/etc],” “frame defects,” “repetitive,” or “preventable.” Id. ¶ 23.^[1]

On March 23, 2019, Wong purchased a Jaxon sofa and chair combo for $749.00, and the “Goof Proof” plan for $129.00 at the Bob's Discount Furniture store at 19800 Hawthorne Blvd. Torrance, CA 90503. Id. ¶ 29. During the sales process, BDF representatives offered Wong the “Goof Proof” plan and assured him that it would cover any possible damage. Id. ¶ 52. Wong asked what the plan covered and was told it would cover any issue that would come up over a five-year period. Id. ¶ 53. Wong relied on this representation when he made his purchase. Id. In June 2020, Wong submitted claims for his purchase because the chair arm became deformed and warped, and the seat cushions suffered loss of resiliency. Id. ¶ 31. BDF denied his claim on the grounds that it was not a customer caused accident and the plan did not cover loss of foam resiliency. Id. ¶¶ 32-33, 37.

Wong alleges that BDF makes most of its profit through the sale of “Goof Proof' plans. Id. ¶ 58. BDF sales personnel receive bonuses for the number of plans sold creating the incentive to give customers false assurances about the coverage provided. Id. ¶¶ 59-60. Wong alleges that he would not have purchased the plan if he knew “its exclusions would be used to swallow up coverage.” Id. ¶ 63. He asserts that the plan is worth less than he paid, and he would not have paid as much, or anything, for the plan absent BDF's false and misleading statements and omissions. Id. ¶ 64.

Wong brings a putative class action suit on behalf of all California citizens “who purchased Goof Proof for personal or household use within the statutory period.” Id. ¶74. Wong asserts six causes of action: (1) violation of California's Unfair Competition Law (UCL), (2) false and misleading advertising in violation of California's False Advertising Law (FAL), (3) violation of California's Consumer Legal Remedies Act (CLRA), (4) breach of express warranty, implied warranty of merchantability, and violation of the Magnusson-Moss Warranty Act, (5) bad faith insurance deal, and (6) unjust enrichment. Id. ¶¶ 89-146.

II. LEGAL STANDARD

“[T]he Federal Arbitration Act (FAA) makes agreements to arbitrate ‘valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'” AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 336 (2011) (quoting 9 U.S.C. § 2). “By its terms, the [FAA] ‘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.'” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985)).

Generally, a court's role under the FAA is limited to determining “two ‘gateway' issues: (1) whether there is an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute.” Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). Even these gateway issues can be submitted to an arbitrator where there is clear and unmistakable evidence that the parties intended that result. See id. (citing AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649 (1986)). The FAA “establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver [or] delay.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 626 (1985). The burden to prove that a matter should not be stayed and referred to arbitration is on the party opposing arbitration. Green Tree Fin. Corp. Alabama v. Randolph, 531 U.S. 79, 91 (2000).

III. DISCUSSION

The parties do not dispute that the March 23, 2019 sales receipt^[2], reflecting Wong's purchase of furniture and the “Goof Proof” coverage as well as the “Goof Proof” terms and conditions each contain an arbitration provision. Wong contends that the arbitration provisions are unenforceable. BDF contends the provisions compel individual arbitration and preclude class arbitration.

A. Enforceability

BDF contends that Wong entered into two agreements that require him to arbitrate the dispute. Mot. at 2. The sales receipt contains an arbitration provision. Id. at 2-3 (citing Dkt. 12-1 (Lotufo Decl.), Ex. A. BDF points out that the page Wong signed states: “I acknowledge that the information on the above page(s) is accurate and that I have read and agree to the sales terms on the following page.” Id. (citing Lotufo Decl., Ex. A). BDF also relies on the “Goof Proof' terms and conditions, a document that contains a separate arbitration provision. Id. at 3 (citing Lotufo Decl., Ex. B). The Court finds that the agreement to arbitrate is enforceable.

1. Validity

Wong argues that the agreement he signed is not valid for various reasons. Opp'n at 6-10. First, he asserts in a single conclusory sentence that there was no meeting of the minds or mutual assent on all essential terms. Id. at 7. No further evidence or argument is presented. But such contentions must be supported and the Court “is neither required to hunt down arguments the parties keep camouflaged, nor required to address perfunctory and undeveloped arguments.” Khademi v. South Orange Cnty. Cmty. College Dist., 194 F.Supp.2d 1011, 1027 (C.D. Cal. 2002) (quoting Williams v. Eastside Lumberyard & Supply Co., 190 F.Supp.2d 1104, 1114 (S.D. Ill. 2001)). In any event, BDF counters that Wong manifested his intention to be bound by the terms of the document by signing it and acknowledging “I have read and agree to the sales terms of the following page.” Reply at 1. The Court agrees.

Next, Wong contends that the “incorporation by reference” doctrine “excludes” the arbitration provision accompanying the sales receipt. Mot. at 7. He states that since the sales terms “failed to clearly and unequivocally refer to the incorporated [arbitration] provision nor called it to Plaintiff's attention, Defendant's reliance on incorporation by reference must fail.” Id. at 7-8 (simplified). But the doctrine does not apply here because the sales receipt contains the arbitration provision at issue; it is not “incorporated by reference.”

Wong also asserts that oral representations made to him contradicted the terms and conditions and that although the parole evidence rule generally bars the admission of evidence contradicting the terms of an agreement, such evidence is allowed to show fraud in the inducement. Opp'n at 10. He specifically alleges that after being offered the “Goof Proof” plan, Wong asked what the plan would cover and was told that it would cover “any issues.” Id. “When the crux of the complaint is not the invalidity of the contract as a whole, but rather the arbitration provision itself, then the federal courts must decide whether the arbitration provision is invalid and unenforceable under 9 U.S.C. § 2[.]” Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1264 (9th Cir. 2006).

But “when the crux of the complaint challenges the validity or enforceability of the agreement containing the arbitration provision, then the question . . . must be referred to the arbitrator.” Id. (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S 440 (2006)); see Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70 (2010) (“[A] party's challenge to another provision of the contract, or to the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate.”). Wong's claim is not specific to the arbitration provision and...