Preview
Electronically Filed
2/9/2021 3:34 PM
1 BOWMAN AND BROOKE LLP
Richard L. Stuhlbarg (SBN: 180631) Superior Court of California
2 970 West 190th Street, Suite 700 County of Stanislaus
Torrance, California 90502 Clerk of the Court
3 Tel No.: 310/ 768-3068 By: Mouang Saechao, Deputy
Fax No.: 310/ 719-1019
4
BOWMAN AND BROOKE LLP
5 Monica Y. Hernandez (SBN: 302509)
750 B Street, Suite 2200
6 San Diego, California 92101
Tel No.: 619/ 376-2500
7 Fax No.: 619/ 376-2501
8 Attorneys for Defendant,
FCA US LLC
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10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
11 FOR THE COUNTY OF STANISLAUS
12 EMMANUEL C. MPOCK, ) CASE NO.: CV-20-004355
)
13 Plaintiff, ) Assigned to: Hon. Stacy Speiller
) Department: 22
14 vs. )
) DEFENDANT FCA US LLC’S REPLY IN
15 FCA US, LLC; CENTRAL VALLEY ) SUPPORT OF MOTION TO COMPEL
CHRYSLER JEEP DODGE RAM; and ) ARBITRATION AND STAY ACTION;
16 DOES 1 through 10, inclusive, ) DECLARATION OF MONICA Y.
) HERNANDEZ
17 Defendants. )
) Date: February 18, 2021
18 ) Time: 8:30 a.m.
) Dept.: 22
19 )
) Action Filed: March 27, 2020
20 ) Trial: None
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23839098v1 1
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 Defendant FCA US LLC (“FCA US”) hereby submits the following reply to in
2 support of Motion to Compel Arbitration and Stay Action.
3 I. INTRODUCTION
4 Plaintiff’s Opposition is a far-fetched attempt at claiming that FCA US, as a non-
5 signatory, cannot compel arbitration on its own. In support, Plaintiff relies on a non-
6 binding federal case, Nation v. BMW of North America, 2020 WL 7868103. Plaintiff
7 inaccurately claims, based on the federal Nation matter (which Plaintiff incorrectly cites
8 in his briefing), that FCA US’s supporting case law—Dina Felisilda v. FCA US LLC, et
9 al. (2020) 53 Cal.App.5th 486, allowing FCA US to compel arbitration as a nonsignatory
10 to the Retail Installment Sales Contract (“RISC”)—is not applicable. In a futile attempt,
11 Plaintiff dismissed Defendant Central Valley Automotive, Inc. dba Central Valley
12 Chrysler Jeep Dodge Ram (erroneously sued as Central Valley Chrysler Jeep Dodge
13 Ram) (“Central Valley”) the day before his Opposition was filed in a clear attempt to
14 avoid his contractual obligation to arbitrate this matter. However, this attempt is
15 unavailing in light of the holding in Felisilda where those plaintiffs also dismissed the
16 dealership, but the appellate court still found that the claims against FCA US alone were
17 properly compelled to arbitration. (Felisilda, supra, 53 Cal.App.5th at 489.) Felisilda is
18 binding caselaw that allows FCA US to compel arbitration as a nonsignatory to the sales
19 contract (which has an identical arbitration provision to the one at issue in Felisilda), and
20 Plaintiff asserted identical claims against FCA US here as the plaintiffs in Felisilda. In
21 sum, Plaintiff’s Opposition attempts unsuccessfully to either distinguish Felisilda or
22 encourage this Court to ignore a California Court of Appeals case directly on point to the
23 facts at hand.
24 Applying Felisilda, which involved the same defendant, FCA US, seeking to
25 compel arbitration pursuant to the exact same arbitration provision, results in only one
26 possible result: Plaintiff’s claims against FCA US must be compelled to arbitration, and
27 this matter stayed in its entirety pending the completion of arbitration.
28 ///
23839098v1 2
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 II. ARGUMENT
2 A. Felisilda Allows FCA US to Compel Arbitration
3 Plaintiff wants this Court to follow federal case Kramer v. Toyota Motor Corp.,
4 705 F.3d 1122,1288 (9th Cir. 2013), a class action, products liability matter, which was
5 also rejected by Felisilda. (Felisilda, supra, 53 Cal.App.5th at 497) (also rejecting
6 Soto 1 and Jurosky at 497-98 2) and federal case Nation v. BMW of North America, 2020
7 WL 7868103. There are three reasons this Court should not follow these non-binding
8 federal cases.
9 First, lower federal court decisions on federal questions are persuasive authority,
10 but they are not otherwise binding on the California Courts of Appeal. (Credit Managers
11 Assn. of Cah'fomia v. Countrywide Home Loans, Inc. (2006) 144 Cal.App.4th 590, 598;
12 Water Replenishment District v. City of Cerritos (201 2) 204 Cal.App.4th 676, 684.)
13 Under the doctrine of Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450,
14 when deciding matters of California law, the doctrine of Stare Decisis requires that this
15 Court of inferior jurisdiction must follow the published decisions of California courts of
16 superior jurisdiction.
17 Second, the class-action plaintiffs in Kramer and the single plaintiff in Nation
18 sued only the manufacturer and not the dealer. But those are not our facts here. ln this
19 case, plaintiff sued both the dealer and FCA US. In Kramer, Toyota attempted to
20 compel arbitration with the putative class action representatives through an arbitration
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22 1 Soto I involved an arbitration provision that did not expressly include third parties as does the language
of the sales contract in this case.” (Felisilda v. FCA US LLC, supra, 497-98.)
2 “We are also not persuaded by the Felisildas’ reliance on Jurosky v. BMW of North America, LLC (S.D.
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Cal. 2020) 441 F.Supp.3d 963 (Jurosky). Jurosky involved an arbitration clause with the same language
24 as in this case insofar as it stated: ‘Any claim or dispute, whether in contract, tort, statute or otherwise
...between you and us or our employees, agents, successors or assigns, which arises out of or relates to
25 ... purchase or condition of this vehicle, the contact or any resulting transaction or relationship (including
any such relationship with thirdparties who do not sign thiscontract) shall, at your or our election, be
26 resolved by neutral, binding arbitration and not by a court action.’ (Id. at p. 975-976, italics added.) The
Jurosky court determined this language was ‘the same ‘you and us’ language’ that presented in Kramer,
27 supra, 705 F.3d 1122, and therefore did not compel a vehicle purchaser to arbitrate claim against the
manufacturer. (Jurosky, at p. 968-969.) However, as noted above, the arbitration clause in the sales
28 contract presented in Kramer did not extend the scope of arbitration to any third parties.” (Felisilda, supra,
53 Cal.App.5th at 498.)
23839098v1 3
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 clause in a similar RISC. After noting that Toyota was a nonsignatory to the RISC, the
2 Kramer Court explored whether the doctrine of equitable estoppel would permit Toyota
3 to compel arbitration. The Court ruled that equitable estoppel could apply under two
4 circumstances: “(1) whether a signatory must rely on the terms of the written agreement
5 in asserting its claims against the nonsignatory or the claims are ‘intimately founded in
6 and intertwined with’ the underlying contract (citing to Goldman, supra 173 Cal.App.4th
7 at 221), and (2) when the signatory alleges interdependent and concerted misconduct
8 by the nonsignatory and another signatory and ‘the allegations of interdependent
9 misconduct are founded in or intimately connected with the obligations of the underlying
10 agreement.’” (citing to Goldman, 173 Cal.App.4th at 219). Because the Kramer plaintiffs
11 only asserted claims against Toyota, based upon its advertising and sale of new Prius
12 vehicles, and, the implied warranty that accompanied them, the Kramer Court found no
13 interdependent and concerted misconduct by Toyota and its dealers justifying equitable
14 estoppel. (Id. at 1127.)
15 Unlike the Kramer case, the arbitration provision in this case provides for
16 arbitration of disputes that include third parties so long as the dispute pertains to the
17 purchase or condition of the vehicle. As discussed above, Plaintiff’s Complaint
18 makes clear that the Song-Beverly claims and the fraud claim against FCA US are
19 directly related to the purchase and condition of the Subject Vehicle. In addition,
20 Plaintiff’s claims against FCA US are clearly intertwined with the RISC. Plaintiff would
21 not have a cause of action for breach of implied warranty, or any claim for that matter,
22 had he not entered into the RISC.
23 Third, Felisilda is binding caselaw that allows FCA US to compel arbitration as a
24 nonsignatory to the sales contract (which has an identical arbitration provision to the
25 one at issue in Felisilda), and Plaintiff asserted identical claims against FCA US here as
26 the plaintiffs in Felisilda. (Felisilda, supra, 53 Cal.App.5th at 489).
27 Accordingly, this entire matter must be compelled to arbitration.
28 ///
23839098v1 4
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 B. The Language of the Arbitration Provision Explicitly Encompasses a
2 Third-Party Non-Signatory
3 Plaintiff also contends that FCA US has no third-party beneficiary interests. This
4 is simply not true. In GE Energy Power Conversion France SAS v. Outokumpu
5 Stainless USA, LLC (June 1, 2020) 140 S.Ct. 1637, the United States Supreme Court
6 recently re-affirmed state-law doctrines finding that nonsignatories may enforce
7 arbitration provisions through a number of various avenues. (“[W]e have recognized that
8 arbitration agreements may be enforced by nonsignatories through 'assumption,
9 piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary
10 theories, waiver and estoppel’” (GE Energy Power Conversion France SAS at 1643-44,
11 citing Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 630, 129 S.Ct. 1896.) In
12 California, “arbitration agreements are enforced with regularity against nonsignatory
13 parties.” (Mormile v. Sinclair (1994) 21 Cal.App.4th 1508, 1511.) Conversely, "[i]t is well
14 established that a nonsignatory beneficiary of an arbitration clause is entitled to require
15 arbitration." (Harris, supra, 188 Cal.App.3d at 478.) The Harris court found compelling
16 the nonsignatory’s consent and willingness to being included in a binding arbitration of a
17 dispute to which it is a party. (Id. at 477.)
18 Similarly, here, FCA US moved to compel arbitration and agreed to be bound by
19 the final arbitration award, regardless of the outcome of such proceedings. Although
20 “[t]raditional third party beneficiary principles do not require that the person to be
21 benefited be named in the contract,” this reference to relationships with third parties
22 who did not sign the contract shows further intent for FCA US, the manufacturer of the
23 vehicle, to benefit from the arbitration provision. (Harper v. Wausau Insurance Corp.
24 (1997) 56 Cal.App.4th 1079, 1086 [66 Cal.Rptr.2d 64].) As long as its benefit pursuant
25 to the contract is more than “incidental”, the third-party beneficiary can enforce those
26 obligations. (Gilbert Financial Corp v. Steelform Contracting Co. (1978) 82 Cal.App.3d
27 65, 69-70.) Here, the ability to pursue claims in arbitration is not an incidental benefit
28 conferred upon FCA US. The language of the Arbitration Provision specifically provides
23839098v1 5
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 that disputes against nonsignatories may also be compelled to arbitration.
2 Plaintiff’s reliance on the Northern District of California’s treatment of a similar
3 provision in the matter Soto v. American Honda Motor Co., Inc. (N.D. Cal. 2012) 946
4 F.Supp.2d 949, is misplaced and unpersuasive. The Soto court concluded that “third
5 parties who do not sign this contract” could refer only to a subsequent purchaser of the
6 vehicle after plaintiff’s purchase, and that the warranty obligation of the manufacturer or
7 distributor was not a “resulting relationship.” (Id. at 955.) However, that ruling, which is
8 not binding upon this Court and rejected by Felisilda, did not explain why third parties
9 other than a subsequent buyer could not also be a third-party beneficiary, and cited no
10 authority for the proposition that a warranty obligation was not a relationship resulting
11 from the signing of a purchase contract.
12 C. The RISC Has Not Been Rescinded
13 Plaintiff also makes the blanket contention that grounds exist for rescission of the
14 RISC because the Complaint alleges “he would not have entered into the RISC had
15 FCA disclosed the defective nature of the Vehicle.”. (Opposition, 15:22-16:3.) Plaintiff’s
16 assertion is conclusory at best, supported by no evidentiary basis, and has not been
17 determined by this Court. Therefore, the RISC is not rescinded as Plaintiff erroneously
18 concludes.
19 D. FCA US Did Not Waive Its Right to Compel Arbitration
20 In St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187,
21 our California Supreme Court held that waivers of the right to arbitrate “are not to be
22 lightly inferred and the party seeking to establish a waiver bears a heavy burden of
23 proof.” (St. Agnes, supra, 31 Cal.4th at 1195.) The Supreme Court set forth six factors
24 which are to be considered to a claim of waiver: “(1) whether the party’s actions are
25 inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been
26 substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the
27 party notified the opposing party of an intent to arbitrate; (3) whether a party either
28 requested arbitration enforcement close to the trial date or delayed for a long period
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DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim
2 without asking for a stay of the proceedings; (5) ‘whether important intervening steps
3 [e.g., taking advantage of judicial discovery procedures not available in arbitration] had
4 taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing
5 party.’” (St. Agnes, supra, 31 Cal.4th at 1196.). The first of these St. Agnes factors are
6 asserted by Plaintiff here.
7 Plaintiff cites a number of distinguishable cases which, if anything, affirm that
8 FCA US’s conduct to date has not waived the right to arbitrate. Plaintiff primarily relies
9 on Bower v. v. Inter-Con Security Systems, Inc., 232 Cal.App.4th 103 (2014). However,
10 the determining factor establishing waiver in Bower was the propounding of classwide
11 discovery, not the fact that the matter proceeded on a classwide rather than individual
12 basis. (Id. at 1043.) This offensive action in discovery by the party seeking arbitration as
13 to the substance of their opponents’ claims was what the Court found to be
14 “fundamentally inconsistent” with seeking arbitration. (Ibid.) The Bower Court further
15 reinforced that offensive discovery was the determinative factor by citing to Hoover v.
16 Am. Income Life Ins. Co., 206 Cal.App.4th 1193 (2012) for the proposition that seeking
17 “discovery unavailable in arbitration” is the type of conduct which waives the right to
18 arbitration. (Bower, supra, at 738.) Hoover itself confirms that “Prejudice is not found
19 where the party opposing arbitration shows only that it incurred court costs and legal
20 expenses in responding to an opponent's pleadings and motions.” (Hoover, supra, at
21 1205.) Indeed, the common theme in the cases cited by Plaintiff in his Opposition is
22 some affirmative action in discovery by a party later seeking arbitration. In Guess?, Inc.
23 v. Superior Court (2000) 79 Cal.App.4th 553, the party seeking arbitration “”fully
24 participated in the discovery process” and “took full advantage of every opportunity to
25 cross-examine” third party deponents. (Id. at 558.) Finally, in Adolph v. Coastal Auto
26 Sales, Inc. (2010) 184 Cal.App.4th 1443, the rare California case cited by Plaintiff which
27 found a waiver of arbitration by a party who had not affirmatively participated in
28 discovery, the Court found sufficient evidence to support a finding of bad faith by the
23839098v1 7
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 party seeking arbitration, who waited until just two months before the discovery cutoff to
2 file its motion to compel arbitration, in stark contrast to the actions of Defendants here.
3 To date, and contrary to Plaintiff’s crocodile tears regarding costs incurred, FCA US has
4 acted only in trying to move this case to the most efficient form of litigation possible, in
5 order to minimize the burden on the parties and on the Court. (See Declaration of
6 Monica Y. Hernandez at ¶¶ 2-12.) The true source of delay in this matter is simply
7 Plaintiff’s efforts to resist arbitration.
8 III. CONCLUSION
9 For the foregoing reasons, and as stated in the moving papers, FCA US
10 respectfully requests this Court grant this motion in its entirety and stay the entire matter
11 pending arbitration.
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13 DATED: February 9, 2021 BOWMAN AND BROOKE LLP
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16 BY:
Richard L. Stuhlbarg
17 Monica Y. Hernandez
Attorneys for Defendant,
18 FCA US LLC
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23839098v1 8
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 DECLARATION OF MONICA Y. HERNANDEZ
2 1. I am an attorney duly licensed to practice before all Courts of the State of
3 California and an attorney with Bowman and Brooke LLP, attorneys of record for
4 Defendant FCA US LLC (“FCA US”) and now-dismissed Central Valley Automotive, Inc.
5 dba Central Valley Chrysler Jeep Dodge Ram (erroneously sued as Central Valley
6 Chrysler Jeep Dodge Ram) (“Central Valley”) (collectively, “Defendants”). I have
7 personal knowledge of the facts set forth herein and if called upon I could and would
8 competently testify thereto.
9 2. On May 15, 2020, Defendants filed a motion for mandatory transfer of the
10 matter from Los Angeles County to Stanislaus County under Code Civ. Proc. § 397(a).
11 This was prior to the publication of Felisilda on August 14, 2020.
12 3. On August 5, 2020, Plaintiff stipulated to transfer venue to Stanislaus
13 County.
14 4. On August 19, 2020, the matter was transferred from Los Angeles County
15 to Stanislaus County.
16 5. On October 16, 2020, my office received notice of the Stanislaus County
17 case number and subsequently attempted to meet and confer with Plaintiff’s counsel to
18 obtain a stipulation to arbitrate the matter.
19 6. Without any response to Defendants’ meet and confer correspondence,
20 on November 25, 2020, Defendants filed and served their first motion to compel
21 arbitration and stay action.
22 7. On December 23, 2020, I received a telephone call from the clerk that
23 Defendants’ filing from November 25, 2020 had not been received.
24 8. On January 6, 2021, the parties filed a Joint Stipulation to continue the
25 hearing on Defendants’ first motion to compel arbitration and stay action, which was
26 rejected by the Court on January 8, 2021.
27 9. On January 21, 2021, Defendants filed the instant motion.
28 10. FCA US has not propounded its own discovery.
23839098v1 9
DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
1 11. Central Valley has not propounded its own discovery.
2 12. No depositions have been taken in this matter.
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4 I declare under the penalty of perjury under the laws of the State of California
5 that the foregoing is true and correct. Executed February 9th, 2021 in San Diego,
6 California.
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8 Monica Y. Hernandez
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DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND
STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ
Preview
Electronically Filed 2/9/2021 3:34 PM 1 BOWMAN AND BROOKE LLP Richard L. Stuhlbarg (SBN: 180631) Superior Court of California 2 970 West 190th Street, Suite 700 County of Stanislaus Torrance, California 90502 Clerk of the Court 3 Tel No.: 310/ 768-3068 By: Mouang Saechao, Deputy Fax No.: 310/ 719-1019 4 BOWMAN AND BROOKE LLP 5 Monica Y. Hernandez (SBN: 302509) 750 B Street, Suite 2200 6 San Diego, California 92101 Tel No.: 619/ 376-2500 7 Fax No.: 619/ 376-2501 8 Attorneys for Defendant, FCA US LLC 9 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 FOR THE COUNTY OF STANISLAUS 12 EMMANUEL C. MPOCK, ) CASE NO.: CV-20-004355 ) 13 Plaintiff, ) Assigned to: Hon. Stacy Speiller ) Department: 22 14 vs. ) ) DEFENDANT FCA US LLC’S REPLY IN 15 FCA US, LLC; CENTRAL VALLEY ) SUPPORT OF MOTION TO COMPEL CHRYSLER JEEP DODGE RAM; and ) ARBITRATION AND STAY ACTION; 16 DOES 1 through 10, inclusive, ) DECLARATION OF MONICA Y. ) HERNANDEZ 17 Defendants. ) ) Date: February 18, 2021 18 ) Time: 8:30 a.m. ) Dept.: 22 19 ) ) Action Filed: March 27, 2020 20 ) Trial: None ) 21 22 23 24 25 26 27 28 23839098v1 1 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 Defendant FCA US LLC (“FCA US”) hereby submits the following reply to in 2 support of Motion to Compel Arbitration and Stay Action. 3 I. INTRODUCTION 4 Plaintiff’s Opposition is a far-fetched attempt at claiming that FCA US, as a non- 5 signatory, cannot compel arbitration on its own. In support, Plaintiff relies on a non- 6 binding federal case, Nation v. BMW of North America, 2020 WL 7868103. Plaintiff 7 inaccurately claims, based on the federal Nation matter (which Plaintiff incorrectly cites 8 in his briefing), that FCA US’s supporting case law—Dina Felisilda v. FCA US LLC, et 9 al. (2020) 53 Cal.App.5th 486, allowing FCA US to compel arbitration as a nonsignatory 10 to the Retail Installment Sales Contract (“RISC”)—is not applicable. In a futile attempt, 11 Plaintiff dismissed Defendant Central Valley Automotive, Inc. dba Central Valley 12 Chrysler Jeep Dodge Ram (erroneously sued as Central Valley Chrysler Jeep Dodge 13 Ram) (“Central Valley”) the day before his Opposition was filed in a clear attempt to 14 avoid his contractual obligation to arbitrate this matter. However, this attempt is 15 unavailing in light of the holding in Felisilda where those plaintiffs also dismissed the 16 dealership, but the appellate court still found that the claims against FCA US alone were 17 properly compelled to arbitration. (Felisilda, supra, 53 Cal.App.5th at 489.) Felisilda is 18 binding caselaw that allows FCA US to compel arbitration as a nonsignatory to the sales 19 contract (which has an identical arbitration provision to the one at issue in Felisilda), and 20 Plaintiff asserted identical claims against FCA US here as the plaintiffs in Felisilda. In 21 sum, Plaintiff’s Opposition attempts unsuccessfully to either distinguish Felisilda or 22 encourage this Court to ignore a California Court of Appeals case directly on point to the 23 facts at hand. 24 Applying Felisilda, which involved the same defendant, FCA US, seeking to 25 compel arbitration pursuant to the exact same arbitration provision, results in only one 26 possible result: Plaintiff’s claims against FCA US must be compelled to arbitration, and 27 this matter stayed in its entirety pending the completion of arbitration. 28 /// 23839098v1 2 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 II. ARGUMENT 2 A. Felisilda Allows FCA US to Compel Arbitration 3 Plaintiff wants this Court to follow federal case Kramer v. Toyota Motor Corp., 4 705 F.3d 1122,1288 (9th Cir. 2013), a class action, products liability matter, which was 5 also rejected by Felisilda. (Felisilda, supra, 53 Cal.App.5th at 497) (also rejecting 6 Soto 1 and Jurosky at 497-98 2) and federal case Nation v. BMW of North America, 2020 7 WL 7868103. There are three reasons this Court should not follow these non-binding 8 federal cases. 9 First, lower federal court decisions on federal questions are persuasive authority, 10 but they are not otherwise binding on the California Courts of Appeal. (Credit Managers 11 Assn. of Cah'fomia v. Countrywide Home Loans, Inc. (2006) 144 Cal.App.4th 590, 598; 12 Water Replenishment District v. City of Cerritos (201 2) 204 Cal.App.4th 676, 684.) 13 Under the doctrine of Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 14 when deciding matters of California law, the doctrine of Stare Decisis requires that this 15 Court of inferior jurisdiction must follow the published decisions of California courts of 16 superior jurisdiction. 17 Second, the class-action plaintiffs in Kramer and the single plaintiff in Nation 18 sued only the manufacturer and not the dealer. But those are not our facts here. ln this 19 case, plaintiff sued both the dealer and FCA US. In Kramer, Toyota attempted to 20 compel arbitration with the putative class action representatives through an arbitration 21 22 1 Soto I involved an arbitration provision that did not expressly include third parties as does the language of the sales contract in this case.” (Felisilda v. FCA US LLC, supra, 497-98.) 2 “We are also not persuaded by the Felisildas’ reliance on Jurosky v. BMW of North America, LLC (S.D. 23 Cal. 2020) 441 F.Supp.3d 963 (Jurosky). Jurosky involved an arbitration clause with the same language 24 as in this case insofar as it stated: ‘Any claim or dispute, whether in contract, tort, statute or otherwise ...between you and us or our employees, agents, successors or assigns, which arises out of or relates to 25 ... purchase or condition of this vehicle, the contact or any resulting transaction or relationship (including any such relationship with thirdparties who do not sign thiscontract) shall, at your or our election, be 26 resolved by neutral, binding arbitration and not by a court action.’ (Id. at p. 975-976, italics added.) The Jurosky court determined this language was ‘the same ‘you and us’ language’ that presented in Kramer, 27 supra, 705 F.3d 1122, and therefore did not compel a vehicle purchaser to arbitrate claim against the manufacturer. (Jurosky, at p. 968-969.) However, as noted above, the arbitration clause in the sales 28 contract presented in Kramer did not extend the scope of arbitration to any third parties.” (Felisilda, supra, 53 Cal.App.5th at 498.) 23839098v1 3 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 clause in a similar RISC. After noting that Toyota was a nonsignatory to the RISC, the 2 Kramer Court explored whether the doctrine of equitable estoppel would permit Toyota 3 to compel arbitration. The Court ruled that equitable estoppel could apply under two 4 circumstances: “(1) whether a signatory must rely on the terms of the written agreement 5 in asserting its claims against the nonsignatory or the claims are ‘intimately founded in 6 and intertwined with’ the underlying contract (citing to Goldman, supra 173 Cal.App.4th 7 at 221), and (2) when the signatory alleges interdependent and concerted misconduct 8 by the nonsignatory and another signatory and ‘the allegations of interdependent 9 misconduct are founded in or intimately connected with the obligations of the underlying 10 agreement.’” (citing to Goldman, 173 Cal.App.4th at 219). Because the Kramer plaintiffs 11 only asserted claims against Toyota, based upon its advertising and sale of new Prius 12 vehicles, and, the implied warranty that accompanied them, the Kramer Court found no 13 interdependent and concerted misconduct by Toyota and its dealers justifying equitable 14 estoppel. (Id. at 1127.) 15 Unlike the Kramer case, the arbitration provision in this case provides for 16 arbitration of disputes that include third parties so long as the dispute pertains to the 17 purchase or condition of the vehicle. As discussed above, Plaintiff’s Complaint 18 makes clear that the Song-Beverly claims and the fraud claim against FCA US are 19 directly related to the purchase and condition of the Subject Vehicle. In addition, 20 Plaintiff’s claims against FCA US are clearly intertwined with the RISC. Plaintiff would 21 not have a cause of action for breach of implied warranty, or any claim for that matter, 22 had he not entered into the RISC. 23 Third, Felisilda is binding caselaw that allows FCA US to compel arbitration as a 24 nonsignatory to the sales contract (which has an identical arbitration provision to the 25 one at issue in Felisilda), and Plaintiff asserted identical claims against FCA US here as 26 the plaintiffs in Felisilda. (Felisilda, supra, 53 Cal.App.5th at 489). 27 Accordingly, this entire matter must be compelled to arbitration. 28 /// 23839098v1 4 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 B. The Language of the Arbitration Provision Explicitly Encompasses a 2 Third-Party Non-Signatory 3 Plaintiff also contends that FCA US has no third-party beneficiary interests. This 4 is simply not true. In GE Energy Power Conversion France SAS v. Outokumpu 5 Stainless USA, LLC (June 1, 2020) 140 S.Ct. 1637, the United States Supreme Court 6 recently re-affirmed state-law doctrines finding that nonsignatories may enforce 7 arbitration provisions through a number of various avenues. (“[W]e have recognized that 8 arbitration agreements may be enforced by nonsignatories through 'assumption, 9 piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary 10 theories, waiver and estoppel’” (GE Energy Power Conversion France SAS at 1643-44, 11 citing Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 630, 129 S.Ct. 1896.) In 12 California, “arbitration agreements are enforced with regularity against nonsignatory 13 parties.” (Mormile v. Sinclair (1994) 21 Cal.App.4th 1508, 1511.) Conversely, "[i]t is well 14 established that a nonsignatory beneficiary of an arbitration clause is entitled to require 15 arbitration." (Harris, supra, 188 Cal.App.3d at 478.) The Harris court found compelling 16 the nonsignatory’s consent and willingness to being included in a binding arbitration of a 17 dispute to which it is a party. (Id. at 477.) 18 Similarly, here, FCA US moved to compel arbitration and agreed to be bound by 19 the final arbitration award, regardless of the outcome of such proceedings. Although 20 “[t]raditional third party beneficiary principles do not require that the person to be 21 benefited be named in the contract,” this reference to relationships with third parties 22 who did not sign the contract shows further intent for FCA US, the manufacturer of the 23 vehicle, to benefit from the arbitration provision. (Harper v. Wausau Insurance Corp. 24 (1997) 56 Cal.App.4th 1079, 1086 [66 Cal.Rptr.2d 64].) As long as its benefit pursuant 25 to the contract is more than “incidental”, the third-party beneficiary can enforce those 26 obligations. (Gilbert Financial Corp v. Steelform Contracting Co. (1978) 82 Cal.App.3d 27 65, 69-70.) Here, the ability to pursue claims in arbitration is not an incidental benefit 28 conferred upon FCA US. The language of the Arbitration Provision specifically provides 23839098v1 5 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 that disputes against nonsignatories may also be compelled to arbitration. 2 Plaintiff’s reliance on the Northern District of California’s treatment of a similar 3 provision in the matter Soto v. American Honda Motor Co., Inc. (N.D. Cal. 2012) 946 4 F.Supp.2d 949, is misplaced and unpersuasive. The Soto court concluded that “third 5 parties who do not sign this contract” could refer only to a subsequent purchaser of the 6 vehicle after plaintiff’s purchase, and that the warranty obligation of the manufacturer or 7 distributor was not a “resulting relationship.” (Id. at 955.) However, that ruling, which is 8 not binding upon this Court and rejected by Felisilda, did not explain why third parties 9 other than a subsequent buyer could not also be a third-party beneficiary, and cited no 10 authority for the proposition that a warranty obligation was not a relationship resulting 11 from the signing of a purchase contract. 12 C. The RISC Has Not Been Rescinded 13 Plaintiff also makes the blanket contention that grounds exist for rescission of the 14 RISC because the Complaint alleges “he would not have entered into the RISC had 15 FCA disclosed the defective nature of the Vehicle.”. (Opposition, 15:22-16:3.) Plaintiff’s 16 assertion is conclusory at best, supported by no evidentiary basis, and has not been 17 determined by this Court. Therefore, the RISC is not rescinded as Plaintiff erroneously 18 concludes. 19 D. FCA US Did Not Waive Its Right to Compel Arbitration 20 In St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 21 our California Supreme Court held that waivers of the right to arbitrate “are not to be 22 lightly inferred and the party seeking to establish a waiver bears a heavy burden of 23 proof.” (St. Agnes, supra, 31 Cal.4th at 1195.) The Supreme Court set forth six factors 24 which are to be considered to a claim of waiver: “(1) whether the party’s actions are 25 inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been 26 substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the 27 party notified the opposing party of an intent to arbitrate; (3) whether a party either 28 requested arbitration enforcement close to the trial date or delayed for a long period 23839098v1 6 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim 2 without asking for a stay of the proceedings; (5) ‘whether important intervening steps 3 [e.g., taking advantage of judicial discovery procedures not available in arbitration] had 4 taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing 5 party.’” (St. Agnes, supra, 31 Cal.4th at 1196.). The first of these St. Agnes factors are 6 asserted by Plaintiff here. 7 Plaintiff cites a number of distinguishable cases which, if anything, affirm that 8 FCA US’s conduct to date has not waived the right to arbitrate. Plaintiff primarily relies 9 on Bower v. v. Inter-Con Security Systems, Inc., 232 Cal.App.4th 103 (2014). However, 10 the determining factor establishing waiver in Bower was the propounding of classwide 11 discovery, not the fact that the matter proceeded on a classwide rather than individual 12 basis. (Id. at 1043.) This offensive action in discovery by the party seeking arbitration as 13 to the substance of their opponents’ claims was what the Court found to be 14 “fundamentally inconsistent” with seeking arbitration. (Ibid.) The Bower Court further 15 reinforced that offensive discovery was the determinative factor by citing to Hoover v. 16 Am. Income Life Ins. Co., 206 Cal.App.4th 1193 (2012) for the proposition that seeking 17 “discovery unavailable in arbitration” is the type of conduct which waives the right to 18 arbitration. (Bower, supra, at 738.) Hoover itself confirms that “Prejudice is not found 19 where the party opposing arbitration shows only that it incurred court costs and legal 20 expenses in responding to an opponent's pleadings and motions.” (Hoover, supra, at 21 1205.) Indeed, the common theme in the cases cited by Plaintiff in his Opposition is 22 some affirmative action in discovery by a party later seeking arbitration. In Guess?, Inc. 23 v. Superior Court (2000) 79 Cal.App.4th 553, the party seeking arbitration “”fully 24 participated in the discovery process” and “took full advantage of every opportunity to 25 cross-examine” third party deponents. (Id. at 558.) Finally, in Adolph v. Coastal Auto 26 Sales, Inc. (2010) 184 Cal.App.4th 1443, the rare California case cited by Plaintiff which 27 found a waiver of arbitration by a party who had not affirmatively participated in 28 discovery, the Court found sufficient evidence to support a finding of bad faith by the 23839098v1 7 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 party seeking arbitration, who waited until just two months before the discovery cutoff to 2 file its motion to compel arbitration, in stark contrast to the actions of Defendants here. 3 To date, and contrary to Plaintiff’s crocodile tears regarding costs incurred, FCA US has 4 acted only in trying to move this case to the most efficient form of litigation possible, in 5 order to minimize the burden on the parties and on the Court. (See Declaration of 6 Monica Y. Hernandez at ¶¶ 2-12.) The true source of delay in this matter is simply 7 Plaintiff’s efforts to resist arbitration. 8 III. CONCLUSION 9 For the foregoing reasons, and as stated in the moving papers, FCA US 10 respectfully requests this Court grant this motion in its entirety and stay the entire matter 11 pending arbitration. 12 13 DATED: February 9, 2021 BOWMAN AND BROOKE LLP 14 15 16 BY: Richard L. Stuhlbarg 17 Monica Y. Hernandez Attorneys for Defendant, 18 FCA US LLC 19 20 21 22 23 24 25 26 27 28 23839098v1 8 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 DECLARATION OF MONICA Y. HERNANDEZ 2 1. I am an attorney duly licensed to practice before all Courts of the State of 3 California and an attorney with Bowman and Brooke LLP, attorneys of record for 4 Defendant FCA US LLC (“FCA US”) and now-dismissed Central Valley Automotive, Inc. 5 dba Central Valley Chrysler Jeep Dodge Ram (erroneously sued as Central Valley 6 Chrysler Jeep Dodge Ram) (“Central Valley”) (collectively, “Defendants”). I have 7 personal knowledge of the facts set forth herein and if called upon I could and would 8 competently testify thereto. 9 2. On May 15, 2020, Defendants filed a motion for mandatory transfer of the 10 matter from Los Angeles County to Stanislaus County under Code Civ. Proc. § 397(a). 11 This was prior to the publication of Felisilda on August 14, 2020. 12 3. On August 5, 2020, Plaintiff stipulated to transfer venue to Stanislaus 13 County. 14 4. On August 19, 2020, the matter was transferred from Los Angeles County 15 to Stanislaus County. 16 5. On October 16, 2020, my office received notice of the Stanislaus County 17 case number and subsequently attempted to meet and confer with Plaintiff’s counsel to 18 obtain a stipulation to arbitrate the matter. 19 6. Without any response to Defendants’ meet and confer correspondence, 20 on November 25, 2020, Defendants filed and served their first motion to compel 21 arbitration and stay action. 22 7. On December 23, 2020, I received a telephone call from the clerk that 23 Defendants’ filing from November 25, 2020 had not been received. 24 8. On January 6, 2021, the parties filed a Joint Stipulation to continue the 25 hearing on Defendants’ first motion to compel arbitration and stay action, which was 26 rejected by the Court on January 8, 2021. 27 9. On January 21, 2021, Defendants filed the instant motion. 28 10. FCA US has not propounded its own discovery. 23839098v1 9 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ 1 11. Central Valley has not propounded its own discovery. 2 12. No depositions have been taken in this matter. 3 4 I declare under the penalty of perjury under the laws of the State of California 5 that the foregoing is true and correct. Executed February 9th, 2021 in San Diego, 6 California. 7 ________________________________ 8 Monica Y. Hernandez 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23839098v1 10 DEFENDANT FCA US LLC’S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND STAY ACTION; DECLARATION OF MONICA Y. HERNANDEZ