Preview
1 SPENCER P. HUGRET (SBN 240424)
shugret@grsm.com
2
JEANETTE SUAREZ (SBN: 255141)
3 jsuarez@grsm.com
RESHMA A. BAJAJ (SBN: 227106)
4 rbajaj@grsm.com
consumerwarrantyhonda@grsm.com
5 GORDON REES SCULLY MANSUKHANI, LLP
275 Battery Street, Suite 2000
6 San Francisco, CA 94111
Telephone: (415) 986-5900
7
Facsimile: (415) 986-8054
8
Attorneys for Defendant
9 AMERICAN HONDA MOTOR CO., INC.
10
SUPERIOR COURT OF CALIFORNIA
11
Gordon Rees Scully Mansukhani, LLP
COUNTY OF SANTA CRUZ
275 Battery Street, Suite 2000
12
San Francisco, CA 94111
SHANNON CARABETTA AND NATHAN ) Case No. 23CV01110
13 ARRISON, )
) DEFENDANT AMERICAN HONDA
14 Plaintiffs, ) MOTOR CO., INC.’S REPLY BRIEF IN
) SUPPORT OF ITS MOTION TO
15 vs. ) COMPEL ARBITRATION AND STAY
) ACTION
16 AMERICAN HONDA MOTOR CO., INC.; )
and DOES 1 through 10, inclusive, ) [Concurrently filed with: Reply Declaration
17 ) of Reshma A. Bajaj]
Defendants. )
18 ) Date: March 1, 2024
) Time: 8:30 a.m.
19 ) Dept.: 10
) Judge: Hon. Timothy Schmal
20 )
)
21 ) Complaint Filed: May 12, 2023
) Trial Date: October 24, 2024
22 )
23
I. INTRODUCTION
24
Plaintiffs Shannon Carabetta and Nathan Arrison’s (“Plaintiffs”) Opposition to American
25
Honda Motor Co., Inc.’s (“Honda”) Motion spends an inordinate time arguing an issue that was
26 not even raised by Honda’s Motion – equitable estoppel. Honda’s Motion to Compel Arbitration
27 was not brought based on equitable estoppel but on grounds that it was a third-party beneficiary
28 of the arbitration agreement between Plaintiffs and dealer Manly Honda, as it was expressly
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DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO
COMPEL ARBITRATION AND STAY ACTION
1 named in the arbitration provision itself. Therefore, Plaintiffs’ arguments concerning equitable
2 estoppel are entirely irrelevant to this Motion and should be disregarded.
3 Plaintiffs’ other, cursory arguments, should also be rejected as meritless as the main point
4 of Honda’s Motion is substantively undisputed. Arbitration may be compelled when, as here, a
5 party is an express third-party beneficiary; and it was the contracting parties’ clear intent to
6 include Honda as a beneficiary of the arbitration provision as such intent is expressed in the
7 Lease Contract which Plaintiffs signed at the time they leased the Subject Vehicle, agreeing to
8 arbitrate “any dispute between YOU, HONDA or any involved third party…”. (Reshma Decl. ¶
9 2, Ex. 1, Lease Contract p. 6.) Consequently, this Court should grant Honda’s Motion, and
10 compel this matter to arbitration.
11 II. ARGUMENT
Gordon Rees Scully Mansukhani, LLP
A. The Arbitration Provision is Not Procedurally or Substantively Unconscionable
275 Battery Street, Suite 2000
12
San Francisco, CA 94111
13 Plaintiffs’ argument that the arbitration provision is unconscionable is without merit as
14 Plaintiffs fail to demonstrate that it is both procedurally and substantively unconscionable.
15 Plaintiffs incorrectly and baselessly contend that this is a one-sided arbitration provision.
16 Nothing in the agreement’s terms leads to the conclusion that only Plaintiffs are bound to
17 arbitrate their claims or that Plaintiffs cannot demand arbitration of their claims. Contrary to
18 Plaintiffs’ claims, this is not a one-sided agreement. In fact, the agreement clearly states that
19 “YOU, HONDA or any involved third party may pursue a Claim.” (Reshma Decl., ¶ 2, Ex. 1,
20 Lease Contract p. 6.) (emphasis added). Therefore, Plaintiffs also had the option to pursue their
21 claims in arbitration.
22 “A court may not refuse to enforce a contract clause unless it determines that the clause
23 is both procedurally and substantively unconscionable. (Gutierrez v. Autowest, Inc. (2003) 114
24 Cal.App.4th 77, 87, emphasis added.) Plaintiffs cannot demonstrate that the provision here
25 meets both those conditions. These two requirements exist on a sliding scale, or in other words,
26 when as here, procedural unconscionability is nonexistent, a plaintiff must establish even greater
27 substantive unconscionability. Id.
28 Plaintiffs argue the arbitration provision is substantively unconscionable because it
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DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO
COMPEL ARBITRATION AND STAY ACTION
1 impedes Plaintiffs’ rights under the Song Beverly Act. Plaintiffs cite to Boghos v. Certain
2 Underwriters at Lloyd's of London, 36 Cal. 4th 495, 507 (2005) which does not support Plaintiffs
3 argument. In Boghos the arbitration provision was found to be enforceable even when
4 arbitration costs were required to be shared (which they are not here). Further, Plaintiffs’
5 reliance on Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83 (2000) is
6 likewise misplaced as that case relates to arbitration clauses of employees, which is
7 distinguishable from the situation here as Plaintiffs are not employees of Honda or the selling
8 dealer. Regardless, even if applicable, in Armendariz the California Supreme Court recognized
9 that it is more appropriate to sever and restrict illegal terms that are collateral to the main purpose
10 of a contract than to find the entire contract invalid. (Armendariz, 24 Cal.4th at 124.) Here,
11 Plaintiffs do not even identify any illegal or unconscionable terms.
Gordon Rees Scully Mansukhani, LLP
275 Battery Street, Suite 2000
12 Plaintiffs do not cite, and Honda is unaware of, any precedent that holds that enforcement
San Francisco, CA 94111
13 of an otherwise valid arbitration clause is somehow against public policy merely because the
14 claims are brought under the Song-Beverly Act. Numerous cases have been brought before the
15 California Courts of Appeal (many cited by Plaintiffs in opposition such as Felisilda, Ochoa,
16 Montemayor, etc.1) dealing with arbitration clauses in Song-Beverly Act claims and the courts
17 have not rejected any of them based on the argument that no arbitration agreement is valid solely
18 if claims involve the Song-Beverly Act. Here, there is no unwaivable statutory right that would
19
20 1
Plaintiffs’ heavy reliance on Ford Motor Warranty Cases (2023) 89 Cal. App. 5th 1324 (“Ochoa”), and also, its
progeny, Rosanna Montemayor et al. v. Ford Motor Company (2023) 92 Cal.App.5th 958 (“Montemayor”) and
21 Kielar v. Superior Court of Placer County (2023) 94 Cal.App.5th 614 (“Kielar”), which rely directly on Ochoa,
are inapt. As noted in Sarti v. Salt Creek Ltd. (2008) 167 Cal.App.4th 1187, 1193 (cited in Ochoa): “All trial
22 courts are bound by all published decisions of the Court of Appeal (Auto Equity Sales, Inc. v. Superior Court
(1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937), the only qualifications being that the relevant point
23 in the appellate decision must not have been disapproved by the California Supreme Court and must not be in
conflict with another appellate decision.” Given the conflict between Ochoa (and Montemayor and Kielar) and
24 Felisilda, the Court in this case is not “bound” by Ochoa, Montemayor, or Kielar, and, has the discretion to
follow Felisilda, which has stood the test of time and is the better reasoned decision as explained below. See also,
25 Saerom v. Century West, LLC, No. 22STCV33452, 2023 WL 2785537 (Los Ang. Super. Ct.) (March 21, 2023)
(“Even if [Ochoa] were to be published when finally issued, this Court could still choose to follow Felisilda
26 because all trial courts are bound by all published decisions of the Court of Appeal.”) Moreover, not only has
review of Ochoa been granted by the California Supreme Court on July 19, 2023 (Case No. S279969), review in
27 the California Supreme Court has also recently been granted in Montemayor on September 20, 2023 (Case No.
S281237), and in Kielar on October 25, 2023 (Case No. S281937). As such, their purported precedential value
28 has been diminished because an opinion of the Court of Appeal is divested of any binding or precedential effect
where the Supreme Court has granted review of that decision. (See Cal. Rules of Ct. rule 8.1115(e)(1).)
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DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO
COMPEL ARBITRATION AND STAY ACTION
1 be impeded by arbitration of the dispute. In sum, Plaintiffs fail to demonstrate that the
2 Arbitration Provision at issue here is both procedurally and substantively unconscionable.
3 B. Honda is a Named Third Party Beneficiary to the Arbitration Provision
4 First, in GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC
5 (June 1, 2020) 140 S.Ct. 1637, the United States Supreme Court re-affirmed state-law doctrines
6 finding that nonsignatories may enforce arbitration provisions through a number of various
7 avenues. (“[W]e have recognized that arbitration agreements may be enforced by nonsignatories
8 through ‘assumption, piercing the corporate veil, alter ego, incorporation by reference, third-
9 party beneficiary theories, waiver and estoppel.’” GE Energy Power Conversion France SAS,
10 supra, 140 S.Ct. at 1643-1644 (citing Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624,
11 630, 129S.Ct. 1896) (emphasis added). In fact, third-party beneficiaries may enforce arbitration
Gordon Rees Scully Mansukhani, LLP
agreements even if they are not named in the agreement if they establish that the agreement is
275 Battery Street, Suite 2000
12
San Francisco, CA 94111
13 applicable to the controversy that is the subject of the litigation. (Keller Construction Company,
14 Inc. (1990) 220 CA3d 222, 229.) But, here, Honda does not seek recognition of a right to
15 arbitrate merely as a generic third-party beneficiary. In Plaintiffs’ Lease Contract, Honda is
16 expressly included as an intended third-party beneficiary of the Arbitration Provision.
17 As long as the benefit pursuant to the contract is more than “incidental,” a third-party
18 beneficiary can enforce those obligations. (Gilbert Financial Corp v. Steelform Contracting Co.
19 (1978) 82 Cal.App.3d 65, 69-70.) Under the Goonewardene2 factors, Honda is a third party
20 beneficiary as it clearly obtains a pecuniary benefit from lease of its vehicles. Honda directly
21 benefits from the contract when one of its manufactured vehicles is leased, as well as through
22 the use of its affiliated financial companies for financing of the lease, and as it also leads to
23 additional new inventory vehicles ordered by the dealer. Furthermore, Plaintiffs had a
24 reasonable expectation that Honda would be able to enforce arbitration as a third-party at the
25 time they entered into the contract as, once again, Honda is expressly named in the agreement
26 as a party that may compel arbitration of any claims, including warranty claims, which can only
27 be asserted against Honda as it provided the manufacturer warranty on the vehicle. Therefore,
28
2
Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830.
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DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO
COMPEL ARBITRATION AND STAY ACTION
1 enforcing the arbitration provision is consistent with the reasonable expectations of the parties,
2 as per the third Goonewardene factor.
3 In sum, Plaintiffs expressly agreed to arbitrate any disputes between them and HONDA,
4 including warranty disputes. Thus, as expressed in Honda’s moving papers, the intent to benefit
5 Honda appears in the plain language of the Arbitration Provision itself. (Bajaj Decl. ¶ 2, Ex. 1,
6 Lease Contract p. 6.). Hence, pursuant to all the Goonewardene factors, Honda is a third-party
7 beneficiary and has standing to compel arbitration of Plaintiffs’ claims against it.
8 C. Honda Has Met Its Burden to Show The Existence of An Arbitration Agreement
9 First, Plaintiffs’ argument that Honda has not met its evidentiary burden is disingenuous at
10 best because Plaintiffs, in response to Honda’s Request for Production of Document No. 1
11 requesting Plaintiffs to produce a copy of the Lease Agreement for the subject vehicle, produced
Gordon Rees Scully Mansukhani, LLP
a copy of the same Lease Agreement that was provided by Manly Honda.3
275 Battery Street, Suite 2000
12
San Francisco, CA 94111
13 Second, Plaintiffs’ contention that the arbitration provision is not properly authenticated is
14 not supported by the law. Authentication is not required. The party moving to compel arbitration
15 must establish the existence of a written arbitration agreement between the parties. (Code of Civ.
16 Proc. § 1281.2.) “With respect to the moving party’s burden to provide evidence of the existence
17 of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract
18 to the court. (See Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218, 105
19 Cal.Rptr.2d 597; see also Cal. Rules of Court, rule 3.1330 [“A petition to compel arbitration or to
20 stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in
21 addition to other required allegations, the provisions of the written agreement and the paragraph
22 that provides for arbitration. The provisions must be stated verbatim or a copy must be physically
23 or electronically attached to the petition and incorporated by reference”].) Once such a document
24 is presented to the court, the burden shifts to the party opposing the motion to compel, who may
25 present any challenges to the enforcement of the agreement and evidence in support of those
26 challenges.” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.)
27
3
Plaintiffs’ Verified Responses to Honda’s Requests for Production of Documents, Set One, and related
28 document production attached to the Reply Declaration of Reshma Bajaj (Bajaj Reply Decl.) as Exhibits 1, 2, 3
(CAR00024-CAR00029).
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DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO
COMPEL ARBITRATION AND STAY ACTION
1 Even a signed agreement is not necessary to demonstrate the existence of an agreement
2 (although we have a signed agreement here). (See Pinnacle Museum Tower Ass’n v. Pinnacle
3 Market Dev. (US), LLC (2012) 55 Cal.4th 223, 23 “A signed agreement is not necessary, however,
4 and a party’s acceptance [of an agreement to arbitrate] may be implied in fact….”).
5 Honda has met its burden by submitting a declaration, with the full copy of the signed
6 arbitration agreement. (Bajaj Decl. ¶ 2, Ex. 1, Lease Contract.) Now the burden shifts to Plaintiffs
7 to prove the falsity of the purported agreement, and no evidence or authentication is required to
8 find the arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th
9 215, 219.) Here, Plaintiffs have neither actually challenged the existence of the arbitration
10 agreement, nor have Plaintiffs asserted that their signature do not appear on the proffered
11 agreement. Therefore, Plaintiffs have not met their burden to prove the falsity of the agreement
Gordon Rees Scully Mansukhani, LLP
275 Battery Street, Suite 2000
12 submitted by Honda. As, Plaintiffs do not actually dispute the existence nor validity of the Lease
San Francisco, CA 94111
13 Contract, nor that it contains an arbitration provision, Plaintiffs’ argument that Honda has not met
14 its burden to allege the existence of an arbitration agreement must be rejected.
15 III. CONCLUSION
16 For the reasons stated here, Honda respectfully requests this Motion to Compel
17 Arbitration and Stay Action be granted and that the Court compel Plaintiffs to arbitrate their
18 claims and stay this action pending the completion of arbitration.
19
20 Dated: February 23, 2024 GORDON REES SCULLY MANSUKHANI, LLP
21
22 BY:_____________________________________
Spencer P. Hugret
23 Jeanette Suarez
Reshma A. Bajaj
24
Attorneys for Defendant
25 AMERICAN HONDA MOTOR CO., INC.
26
27
28
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DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO
COMPEL ARBITRATION AND STAY ACTION
PROOF OF SERVICE
1 Shannon Carabetta, et al. v. American Honda Motor Co., Inc., et al.
Santa Cruz County Superior Court Case No. 23CV01110
2
I am a resident of the State of California, over the age of eighteen years, and not a party
3 to the within action. My business address is: Gordon Rees Scully Mansukhani, LLP, 275
Battery Street, Suite 2000, San Francisco, CA 94111. On the date below, I served the within
4 documents:
5 DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN
SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION
6
by transmitting via facsimile the document(s) listed above to the fax number(s) set
forth below on this date before 5:00 p.m.
7
by transmitting VIA ELECTRONIC MAIL (from pcastro@grsm.com) the
document(s) listed above to the email address(es) set forth below on this date before
8
5:00 p.m. (Per agreement of the parties.)
9
by having Nationwide PERSONALLY DELIVER the document(s) listed above to the
person(s) at the address(es) set forth below.
10
Gordon Rees Scully Mansukhani, LLP
11 by placing the document(s) listed above in a sealed envelope with postage thereon
fully prepaid, in United States mail in the State of California at San Francisco,
275 Battery Street, Suite 2000
San Francisco, CA 94111
addressed as set forth below.
12
Tionna Carvalho
13 STRATEGIC LEGAL PRACTICES, APC
1888 Century Park East, 19th Floor
14 Los Angeles, CA 90067
Tel.: 310-929-4900
15
Fax: 310-943-3838
16 Email: tcarvalho@slpattorney.com
Email: mrajpal@slpattorney.com
17 Email: emailservices@slpattorney.com
Attorneys for Plaintiffs
18
I am readily familiar with the firm’s practice of collection and processing correspondence
19 for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same
day with postage thereon fully prepaid in the ordinary course of business. I am aware that on
20 motion of the party served, service is presumed invalid if postal cancellation date or postage meter
date is more than one day after the date of deposit for mailing in affidavit.
21
I declare under penalty of perjury under the laws of the State of California that the above
22 is true and correct.
23 Executed on February 23, 2024 at San Francisco, California.
24
Priscilla Castro
25
26
27
1304394/75495129v.1 28
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PROOF OF SERVICE
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1 SPENCER P. HUGRET (SBN 240424) shugret@grsm.com 2 JEANETTE SUAREZ (SBN: 255141) 3 jsuarez@grsm.com RESHMA A. BAJAJ (SBN: 227106) 4 rbajaj@grsm.com consumerwarrantyhonda@grsm.com 5 GORDON REES SCULLY MANSUKHANI, LLP 275 Battery Street, Suite 2000 6 San Francisco, CA 94111 Telephone: (415) 986-5900 7 Facsimile: (415) 986-8054 8 Attorneys for Defendant 9 AMERICAN HONDA MOTOR CO., INC. 10 SUPERIOR COURT OF CALIFORNIA 11 Gordon Rees Scully Mansukhani, LLP COUNTY OF SANTA CRUZ 275 Battery Street, Suite 2000 12 San Francisco, CA 94111 SHANNON CARABETTA AND NATHAN ) Case No. 23CV01110 13 ARRISON, ) ) DEFENDANT AMERICAN HONDA 14 Plaintiffs, ) MOTOR CO., INC.’S REPLY BRIEF IN ) SUPPORT OF ITS MOTION TO 15 vs. ) COMPEL ARBITRATION AND STAY ) ACTION 16 AMERICAN HONDA MOTOR CO., INC.; ) and DOES 1 through 10, inclusive, ) [Concurrently filed with: Reply Declaration 17 ) of Reshma A. Bajaj] Defendants. ) 18 ) Date: March 1, 2024 ) Time: 8:30 a.m. 19 ) Dept.: 10 ) Judge: Hon. Timothy Schmal 20 ) ) 21 ) Complaint Filed: May 12, 2023 ) Trial Date: October 24, 2024 22 ) 23 I. INTRODUCTION 24 Plaintiffs Shannon Carabetta and Nathan Arrison’s (“Plaintiffs”) Opposition to American 25 Honda Motor Co., Inc.’s (“Honda”) Motion spends an inordinate time arguing an issue that was 26 not even raised by Honda’s Motion – equitable estoppel. Honda’s Motion to Compel Arbitration 27 was not brought based on equitable estoppel but on grounds that it was a third-party beneficiary 28 of the arbitration agreement between Plaintiffs and dealer Manly Honda, as it was expressly -1- DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION 1 named in the arbitration provision itself. Therefore, Plaintiffs’ arguments concerning equitable 2 estoppel are entirely irrelevant to this Motion and should be disregarded. 3 Plaintiffs’ other, cursory arguments, should also be rejected as meritless as the main point 4 of Honda’s Motion is substantively undisputed. Arbitration may be compelled when, as here, a 5 party is an express third-party beneficiary; and it was the contracting parties’ clear intent to 6 include Honda as a beneficiary of the arbitration provision as such intent is expressed in the 7 Lease Contract which Plaintiffs signed at the time they leased the Subject Vehicle, agreeing to 8 arbitrate “any dispute between YOU, HONDA or any involved third party…”. (Reshma Decl. ¶ 9 2, Ex. 1, Lease Contract p. 6.) Consequently, this Court should grant Honda’s Motion, and 10 compel this matter to arbitration. 11 II. ARGUMENT Gordon Rees Scully Mansukhani, LLP A. The Arbitration Provision is Not Procedurally or Substantively Unconscionable 275 Battery Street, Suite 2000 12 San Francisco, CA 94111 13 Plaintiffs’ argument that the arbitration provision is unconscionable is without merit as 14 Plaintiffs fail to demonstrate that it is both procedurally and substantively unconscionable. 15 Plaintiffs incorrectly and baselessly contend that this is a one-sided arbitration provision. 16 Nothing in the agreement’s terms leads to the conclusion that only Plaintiffs are bound to 17 arbitrate their claims or that Plaintiffs cannot demand arbitration of their claims. Contrary to 18 Plaintiffs’ claims, this is not a one-sided agreement. In fact, the agreement clearly states that 19 “YOU, HONDA or any involved third party may pursue a Claim.” (Reshma Decl., ¶ 2, Ex. 1, 20 Lease Contract p. 6.) (emphasis added). Therefore, Plaintiffs also had the option to pursue their 21 claims in arbitration. 22 “A court may not refuse to enforce a contract clause unless it determines that the clause 23 is both procedurally and substantively unconscionable. (Gutierrez v. Autowest, Inc. (2003) 114 24 Cal.App.4th 77, 87, emphasis added.) Plaintiffs cannot demonstrate that the provision here 25 meets both those conditions. These two requirements exist on a sliding scale, or in other words, 26 when as here, procedural unconscionability is nonexistent, a plaintiff must establish even greater 27 substantive unconscionability. Id. 28 Plaintiffs argue the arbitration provision is substantively unconscionable because it -2- DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION 1 impedes Plaintiffs’ rights under the Song Beverly Act. Plaintiffs cite to Boghos v. Certain 2 Underwriters at Lloyd's of London, 36 Cal. 4th 495, 507 (2005) which does not support Plaintiffs 3 argument. In Boghos the arbitration provision was found to be enforceable even when 4 arbitration costs were required to be shared (which they are not here). Further, Plaintiffs’ 5 reliance on Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83 (2000) is 6 likewise misplaced as that case relates to arbitration clauses of employees, which is 7 distinguishable from the situation here as Plaintiffs are not employees of Honda or the selling 8 dealer. Regardless, even if applicable, in Armendariz the California Supreme Court recognized 9 that it is more appropriate to sever and restrict illegal terms that are collateral to the main purpose 10 of a contract than to find the entire contract invalid. (Armendariz, 24 Cal.4th at 124.) Here, 11 Plaintiffs do not even identify any illegal or unconscionable terms. Gordon Rees Scully Mansukhani, LLP 275 Battery Street, Suite 2000 12 Plaintiffs do not cite, and Honda is unaware of, any precedent that holds that enforcement San Francisco, CA 94111 13 of an otherwise valid arbitration clause is somehow against public policy merely because the 14 claims are brought under the Song-Beverly Act. Numerous cases have been brought before the 15 California Courts of Appeal (many cited by Plaintiffs in opposition such as Felisilda, Ochoa, 16 Montemayor, etc.1) dealing with arbitration clauses in Song-Beverly Act claims and the courts 17 have not rejected any of them based on the argument that no arbitration agreement is valid solely 18 if claims involve the Song-Beverly Act. Here, there is no unwaivable statutory right that would 19 20 1 Plaintiffs’ heavy reliance on Ford Motor Warranty Cases (2023) 89 Cal. App. 5th 1324 (“Ochoa”), and also, its progeny, Rosanna Montemayor et al. v. Ford Motor Company (2023) 92 Cal.App.5th 958 (“Montemayor”) and 21 Kielar v. Superior Court of Placer County (2023) 94 Cal.App.5th 614 (“Kielar”), which rely directly on Ochoa, are inapt. As noted in Sarti v. Salt Creek Ltd. (2008) 167 Cal.App.4th 1187, 1193 (cited in Ochoa): “All trial 22 courts are bound by all published decisions of the Court of Appeal (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937), the only qualifications being that the relevant point 23 in the appellate decision must not have been disapproved by the California Supreme Court and must not be in conflict with another appellate decision.” Given the conflict between Ochoa (and Montemayor and Kielar) and 24 Felisilda, the Court in this case is not “bound” by Ochoa, Montemayor, or Kielar, and, has the discretion to follow Felisilda, which has stood the test of time and is the better reasoned decision as explained below. See also, 25 Saerom v. Century West, LLC, No. 22STCV33452, 2023 WL 2785537 (Los Ang. Super. Ct.) (March 21, 2023) (“Even if [Ochoa] were to be published when finally issued, this Court could still choose to follow Felisilda 26 because all trial courts are bound by all published decisions of the Court of Appeal.”) Moreover, not only has review of Ochoa been granted by the California Supreme Court on July 19, 2023 (Case No. S279969), review in 27 the California Supreme Court has also recently been granted in Montemayor on September 20, 2023 (Case No. S281237), and in Kielar on October 25, 2023 (Case No. S281937). As such, their purported precedential value 28 has been diminished because an opinion of the Court of Appeal is divested of any binding or precedential effect where the Supreme Court has granted review of that decision. (See Cal. Rules of Ct. rule 8.1115(e)(1).) -3- DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION 1 be impeded by arbitration of the dispute. In sum, Plaintiffs fail to demonstrate that the 2 Arbitration Provision at issue here is both procedurally and substantively unconscionable. 3 B. Honda is a Named Third Party Beneficiary to the Arbitration Provision 4 First, in GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC 5 (June 1, 2020) 140 S.Ct. 1637, the United States Supreme Court re-affirmed state-law doctrines 6 finding that nonsignatories may enforce arbitration provisions through a number of various 7 avenues. (“[W]e have recognized that arbitration agreements may be enforced by nonsignatories 8 through ‘assumption, piercing the corporate veil, alter ego, incorporation by reference, third- 9 party beneficiary theories, waiver and estoppel.’” GE Energy Power Conversion France SAS, 10 supra, 140 S.Ct. at 1643-1644 (citing Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 11 630, 129S.Ct. 1896) (emphasis added). In fact, third-party beneficiaries may enforce arbitration Gordon Rees Scully Mansukhani, LLP agreements even if they are not named in the agreement if they establish that the agreement is 275 Battery Street, Suite 2000 12 San Francisco, CA 94111 13 applicable to the controversy that is the subject of the litigation. (Keller Construction Company, 14 Inc. (1990) 220 CA3d 222, 229.) But, here, Honda does not seek recognition of a right to 15 arbitrate merely as a generic third-party beneficiary. In Plaintiffs’ Lease Contract, Honda is 16 expressly included as an intended third-party beneficiary of the Arbitration Provision. 17 As long as the benefit pursuant to the contract is more than “incidental,” a third-party 18 beneficiary can enforce those obligations. (Gilbert Financial Corp v. Steelform Contracting Co. 19 (1978) 82 Cal.App.3d 65, 69-70.) Under the Goonewardene2 factors, Honda is a third party 20 beneficiary as it clearly obtains a pecuniary benefit from lease of its vehicles. Honda directly 21 benefits from the contract when one of its manufactured vehicles is leased, as well as through 22 the use of its affiliated financial companies for financing of the lease, and as it also leads to 23 additional new inventory vehicles ordered by the dealer. Furthermore, Plaintiffs had a 24 reasonable expectation that Honda would be able to enforce arbitration as a third-party at the 25 time they entered into the contract as, once again, Honda is expressly named in the agreement 26 as a party that may compel arbitration of any claims, including warranty claims, which can only 27 be asserted against Honda as it provided the manufacturer warranty on the vehicle. Therefore, 28 2 Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830. -4- DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION 1 enforcing the arbitration provision is consistent with the reasonable expectations of the parties, 2 as per the third Goonewardene factor. 3 In sum, Plaintiffs expressly agreed to arbitrate any disputes between them and HONDA, 4 including warranty disputes. Thus, as expressed in Honda’s moving papers, the intent to benefit 5 Honda appears in the plain language of the Arbitration Provision itself. (Bajaj Decl. ¶ 2, Ex. 1, 6 Lease Contract p. 6.). Hence, pursuant to all the Goonewardene factors, Honda is a third-party 7 beneficiary and has standing to compel arbitration of Plaintiffs’ claims against it. 8 C. Honda Has Met Its Burden to Show The Existence of An Arbitration Agreement 9 First, Plaintiffs’ argument that Honda has not met its evidentiary burden is disingenuous at 10 best because Plaintiffs, in response to Honda’s Request for Production of Document No. 1 11 requesting Plaintiffs to produce a copy of the Lease Agreement for the subject vehicle, produced Gordon Rees Scully Mansukhani, LLP a copy of the same Lease Agreement that was provided by Manly Honda.3 275 Battery Street, Suite 2000 12 San Francisco, CA 94111 13 Second, Plaintiffs’ contention that the arbitration provision is not properly authenticated is 14 not supported by the law. Authentication is not required. The party moving to compel arbitration 15 must establish the existence of a written arbitration agreement between the parties. (Code of Civ. 16 Proc. § 1281.2.) “With respect to the moving party’s burden to provide evidence of the existence 17 of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract 18 to the court. (See Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218, 105 19 Cal.Rptr.2d 597; see also Cal. Rules of Court, rule 3.1330 [“A petition to compel arbitration or to 20 stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in 21 addition to other required allegations, the provisions of the written agreement and the paragraph 22 that provides for arbitration. The provisions must be stated verbatim or a copy must be physically 23 or electronically attached to the petition and incorporated by reference”].) Once such a document 24 is presented to the court, the burden shifts to the party opposing the motion to compel, who may 25 present any challenges to the enforcement of the agreement and evidence in support of those 26 challenges.” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.) 27 3 Plaintiffs’ Verified Responses to Honda’s Requests for Production of Documents, Set One, and related 28 document production attached to the Reply Declaration of Reshma Bajaj (Bajaj Reply Decl.) as Exhibits 1, 2, 3 (CAR00024-CAR00029). -5- DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION 1 Even a signed agreement is not necessary to demonstrate the existence of an agreement 2 (although we have a signed agreement here). (See Pinnacle Museum Tower Ass’n v. Pinnacle 3 Market Dev. (US), LLC (2012) 55 Cal.4th 223, 23 “A signed agreement is not necessary, however, 4 and a party’s acceptance [of an agreement to arbitrate] may be implied in fact….”). 5 Honda has met its burden by submitting a declaration, with the full copy of the signed 6 arbitration agreement. (Bajaj Decl. ¶ 2, Ex. 1, Lease Contract.) Now the burden shifts to Plaintiffs 7 to prove the falsity of the purported agreement, and no evidence or authentication is required to 8 find the arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 9 215, 219.) Here, Plaintiffs have neither actually challenged the existence of the arbitration 10 agreement, nor have Plaintiffs asserted that their signature do not appear on the proffered 11 agreement. Therefore, Plaintiffs have not met their burden to prove the falsity of the agreement Gordon Rees Scully Mansukhani, LLP 275 Battery Street, Suite 2000 12 submitted by Honda. As, Plaintiffs do not actually dispute the existence nor validity of the Lease San Francisco, CA 94111 13 Contract, nor that it contains an arbitration provision, Plaintiffs’ argument that Honda has not met 14 its burden to allege the existence of an arbitration agreement must be rejected. 15 III. CONCLUSION 16 For the reasons stated here, Honda respectfully requests this Motion to Compel 17 Arbitration and Stay Action be granted and that the Court compel Plaintiffs to arbitrate their 18 claims and stay this action pending the completion of arbitration. 19 20 Dated: February 23, 2024 GORDON REES SCULLY MANSUKHANI, LLP 21 22 BY:_____________________________________ Spencer P. Hugret 23 Jeanette Suarez Reshma A. Bajaj 24 Attorneys for Defendant 25 AMERICAN HONDA MOTOR CO., INC. 26 27 28 -6- DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION PROOF OF SERVICE 1 Shannon Carabetta, et al. v. American Honda Motor Co., Inc., et al. Santa Cruz County Superior Court Case No. 23CV01110 2 I am a resident of the State of California, over the age of eighteen years, and not a party 3 to the within action. My business address is: Gordon Rees Scully Mansukhani, LLP, 275 Battery Street, Suite 2000, San Francisco, CA 94111. On the date below, I served the within 4 documents: 5 DEFENDANT AMERICAN HONDA MOTOR CO., INC.’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION AND STAY ACTION 6 by transmitting via facsimile the document(s) listed above to the fax number(s) set forth below on this date before 5:00 p.m. 7 by transmitting VIA ELECTRONIC MAIL (from pcastro@grsm.com) the document(s) listed above to the email address(es) set forth below on this date before 8 5:00 p.m. (Per agreement of the parties.) 9 by having Nationwide PERSONALLY DELIVER the document(s) listed above to the person(s) at the address(es) set forth below. 10 Gordon Rees Scully Mansukhani, LLP 11 by placing the document(s) listed above in a sealed envelope with postage thereon fully prepaid, in United States mail in the State of California at San Francisco, 275 Battery Street, Suite 2000 San Francisco, CA 94111 addressed as set forth below. 12 Tionna Carvalho 13 STRATEGIC LEGAL PRACTICES, APC 1888 Century Park East, 19th Floor 14 Los Angeles, CA 90067 Tel.: 310-929-4900 15 Fax: 310-943-3838 16 Email: tcarvalho@slpattorney.com Email: mrajpal@slpattorney.com 17 Email: emailservices@slpattorney.com Attorneys for Plaintiffs 18 I am readily familiar with the firm’s practice of collection and processing correspondence 19 for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid in the ordinary course of business. I am aware that on 20 motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after the date of deposit for mailing in affidavit. 21 I declare under penalty of perjury under the laws of the State of California that the above 22 is true and correct. 23 Executed on February 23, 2024 at San Francisco, California. 24 Priscilla Castro 25 26 27 1304394/75495129v.1 28 -1- PROOF OF SERVICE