Request for Judicial Notice

Cal. Super. - 5th Dist.April 13, 2021

1o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Tionna Dolin (SBN 299010) Email: tdolin@slpattorney.com Daniel Law (SBN 308855) Email: dlaw@slpattorney.com STRATEGIC LEGAL PRACTICES A PROFESSIONAL CORPORATION 1840 Century Park East, Suite 430 Los Angeles, CA 90067 Telephone: (310) 929-4900 Facsimile: (3 10) 943-3838 Attorneys for Plaintiff, MARIA SOLEDAD CAMPOS E-FILED 11/15/2021 11:32 PM Superior Court of California County of Fresno By: Estela Alvarado, Deputy SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF FRESNO MARIA SOLEDAD CAMPOS, Plaintiff, vs. HYUNDAI MOTOR AMERICA; and DOES 1 through 10, inclusive, Defendants. Case No.2 21CECG01052 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S OPPOSITION TO DEFENDANT HYUNDAI MOTOR AMERICA’S MOTION TO COMPEL BINDING ARBITRATION Date: November 30, 2021 Time: 3:30 pm. Courtroom: 503 Judge: Hon. Kimberly Gaab Action Commenced: April 16, 2021 Trial Date: TBD [Filed conatrrently with Plainnfi'k Opposition t0 Defendant ’s Motion t0 Compel Arbitration, Declaration ofDam'el Law] 1 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S OPPOSITION TO MOTION TO COMPEL ARBITRATION 2 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S OPPOSITION TO MOTION TO COMPEL ARBITRATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REQUEST FOR JUDICIAL NOTICE TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD HEREIN: PLEASE TAKE NOTICE THAT Plaintiff MARIA SOLEDAD CAMPOS (“Plaintiff”), through her attorneys of record, requests that the Court take judicial notice, pursuant to Evidence Code sections 452 and 453, of the following documents in support of her opposition to Defendant HYUNDAI MOTOR AMERICA’s Motion to Compel Binding Arbitration: • Order denying defendant’s Motion to Compel Arbitration in the matter of Messih v. Mercedes-Benz USA, LLC (N.D. Cal., June 24, 2021) No. 21-CV-03032-WHO, 2021 WL 2588977, a true and correct copy attached hereto as Exhibit A • Order denying defendant’s Motion to Compel Arbitration in the matter of Safley v. BMW of North America, No 20-cv-00366-BAS-MDD, 2021 WL 409722 (S.D. Cal. Feb. 5, 2021), a true and correct copy attached hereto as Exhibit B • Order denying defendant’s Motion to Compel Arbitration in the matter of Nation v. BMW of North America, No. 220CV02709JWHMAAX, 2020 WL 7868103 (C.D. Cal. Dec. 28, 2020), a true and correct copy attached hereto as Exhibit C • Order denying defendant’s Motion to Compel Arbitration in the matter of Ruderman v. Rolls Royce Motor Cars, LLC, No. 220CV04529JWHRAOX, __.F.Supp.3d___, 2021 WL 141179 (C.D. Cal. Jan. 7, 2021), a true and correct copy attached hereto as Exhibit D • Order denying defendant’s Motion to Compel Arbitration in the matter of In re Ford Motor Co. DPS6 Powershift Transmission Products Liab. Litig, 2020 WL 3637631 (C.D. Cal. 2020), a true and correct copy attached hereto as Exhibit E • Order denying defendant’s Motion to Compel Arbitration in the matter of In re Toyota Motor Corp. Hybrid Brake Mktg., Sales, Practices & Products Liab. Litig., 2011 WL 13160304 (C.D. Cal. 2011), a true and correct copy attached hereto as Exhibit F • Jarboe v. Hanlees Auto Group (2020) 53 Cal.App.5th 539, a copy of which is attached hereto as Exhibit G • Fuentes v. TMCSF, Inc., 26 Cal. App. 5th 541 (2018), a copy of which is attached hereto as Exhibit H 3 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S OPPOSITION TO MOTION TO COMPEL ARBITRATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 • Order denying defendant’s Motion to Compel Arbitration in the matter of Chen v. BMW of North America, 21-cv-03531-DMR, 2021 WL 3604691, at *5 (N.D. Cal., Aug. 13, 2021), a true and correct copy is attached hereto as Exhibit I Respectfully submitted, Dated: November 15, 2021 STRATEGIC LEGAL PRACTICES, APC By: Daniel Law, Attorneys for Plaintiff MARIA SOLEDAD CAMPOS EXHIBIT A Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 1 2021 WL 2588977 Only the Westlaw citation is currently available. United States District Court, N.D. California. Gamil MESSIH, Plaintiff, v. MERCEDES-BENZ USA, LLC, Defendant. Case No. 21-cv-03032-WHO | Signed 06/24/2021 Attorneys and Law Firms Richard Michael Wirtz, Amy Rebecca Rotman, Daniel Z. Inscore, Wirtz Law APC, San Diego, CA, for Plaintiff. Soheyl Tahsildoost, Theta Law Firm, LLP, Lawndale, CA, for Defendant. ORDER DENYING MOTION TO REMAND AND DENYING MOTION TO COMPEL ARBITRATION Re: Dkt. Nos. 6, 15 William H. Orrick, United States District Judge *1 Plaintiff Gamil Messih filed this action against defendant Mercedes-Benz USA, LLC (“MBUSA”) for breach of warranty claims arising out of a car he purchased from a dealership in Walnut Creek, California. Before me are two motions: Messih's motion to remand for failure to meet the amount in controversy requirement for diversity jurisdiction and MBUSA's motion to compel arbitration based on a provision in the purchase agreement between Messih and the dealership. Diversity jurisdiction is proper because MBUSA has sufficiently established, by a preponderance of evidence, that the amount of controversy exceeds $75,000 given Messih's alleged actual damages and civil penalties. MBUSA has failed, however, to establish that it has standing to enforce the arbitration provision between Messih and the dealership as a third-party beneficiary and under the equitable estoppel doctrine. Numerous courts have denied similar motions to compel brought by non-signatory vehicle manufacturers seeking to enforce largely identical arbitration provisions. MBUSA's attempt to distinguish those cases is unpersuasive. For these reasons, Messih's motion to remand and MBUSA's motion to compel arbitration are DENIED. BACKGROUND On July 20, 2013, Messih purchased a 2014 Mercedes-Benz E350 from dealership Mercedes-Benz of Walnut Creek (“MBWC”). Complaint (“Compl.”) [Dkt. No. 1-1] ¶ 8.1MBUSA manufactured Messih's vehicle and issued a written warranty. Id. ¶¶ 4, 15. Messih alleges that he brought his vehicle to MBUSA's authorized repair facility, MBWC, multiple times between 2013 and 2019 due to a range of malfunctions and defects, including problems with the steering wheel, hood seal, auxiliary battery, and software issues. Id. ¶¶ 17-33; Id., Ex. 1 (copy of Mercedes-Benz “Service and Warranty Information 2014”). He contends that MBUSA and its authorized repair facility have failed to repair his vehicle despite multiple opportunities to do so. Id. ¶ 34. Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 2 On March 24, 2021, Messih filed this action in Contra Costa County Superior Court, asserting the following three causes of action pursuant to the Song-Beverly Consumer Warranty Act, Cal. Civ. Code § 1790 et seq.: (i) “Breach of Express Warranty,” (ii) “Breach of Implied Warranty,” and (iii) “Violation of the Song-Beverly Act - Section 1793.2.” Id. ¶¶ 36-76. MBUSA subsequently removed the action to this court. Notice of Removal (“NOR”) [Dkt. No. 1]. MBUSA contends that the arbitration provision contained in the contract between the dealership MBWC and Messih governs this dispute and moves to compel arbitration and stay this action. Defendant Mercedes-Benz USA, LLC's Motion to Compel Arbitration [Dkt. No. 6]. Messih opposes the motion to compel arbitration and separately moves to remand the action to state court. Motion to Remand to Contra Costa County Superior Court [Dkt. No. 15]. LEGAL STANDARD I. MOTION TO REMAND *2 A defendant may remove a class action from state to federal court by filing a notice of removal that lays out the grounds for removal. 28 U.S.C. § 1453(b); 28 U.S.C. § 1446(a). The district court must remand the case to state court if it lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). The removal statutes are construed restrictively, and the district court must remand the case if it appears before final judgment that the court lacks subject matter jurisdiction. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); 28 U.S.C. § 1447(c). The burden of establishing federal jurisdiction is on the removing party. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). II. MOTION TO COMPEL ARBITRATION The Federal Arbitration Act (“FAA”) governs motions to compel arbitration. 9 U.S.C. §§ 1 et seq. The FAA “reflect[s] both a ‘liberal federal policy favoring arbitration,’ and the ‘fundamental principle that arbitration is a matter of contract.’ ” AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). The court's role is to decide: “(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). The party seeking to compel arbitration must prove both counts by a preponderance of the evidence. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014). The scope of an arbitration agreement is governed by federal substantive law. Tracer Research Corp. v. Nat'l Envtl. Servs. Co., 42 F.3d 1292, 1294 (9th Cir. 1994). “If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). “[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Id. at 1131. DISCUSSION I. EVIDENTIARY ISSUES As a preliminary matter, I address Messih's challenge to MBUSA's introduction of the purchase agreement that Messih and MBWC, the dealership, signed at the time of purchase-the “Retail Installment Sale Contract - Simple Finance Charge (With Arbitration Provision)” (“RISC”). The RISC is pertinent to both motions before me. It contains the arbitration provision that MBUSA seeks to enforce and the monetary amounts it uses to establish amount in controversy for diversity jurisdiction. MBUSA originally submitted the RISC with a declaration from its attorney. Declaration of Soheyl Tahsildoost in Support of Motion to Compel Arbitration (“Tahsildoost Decl.”) [Dkt. No. 6-1], Ex. 2. Messih objected for lack of personal knowledge and foundation. Plaintiff's Evidentiary Objections [Dkt. No. 16-1].2 MBUSA then submitted the same exhibit with a declaration from Taryn T. Dillon. Declaration of Taryn T. Dillon in Support of Motion to Compel Arbitration (“Dillon Decl.”) [Dkt. No. 18-1], Ex. 3. Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 3 *3 Dillon testifies that he is “the Controller at Mercedes Benz Walnut Creek” and is “familiar with [the] sales of Mercedes- Benz vehicles, including the related processes, procedures, record-creation and record-keeping procedures.” Id. ¶¶ 1-2. He contends that the RISC “is stored by Mercedes Benz Walnut Creek in an electronic file containing all of the documents related to the subject transaction. The [RISC] was made at or near the time of the sale of the Subject Vehicle; it was made by or from information transmitted to or from sales personnel with knowledge of the sales transaction; it has been kept in the ordinary course of business; and it is the regular practice of Mercedes Benz Walnut Creek to make such records.” Id. ¶ 3. Messih objects again, this time on grounds that the RISC appears to be unsigned or have only the trace of a signature that could not possibly be identified. Plaintiff's Evidentiary Objections to Defendants’ Reply Evidence [Dkt. No 19]. He also argues that I should decline to consider new evidence or arguments raised in reply. Id. The RISC is not new evidence because MBUSA submitted it with its motion and only re-submitted with its reply after Messih raised evidentiary objections to its authenticity. While the signatures on the RISC are not completely clear, that is not enough to defeat authenticity. “To satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.” Fed. R. Evid. 901(a). “The burden to authenticate under Rule 901 is not high.” Safley v. BMW of N. Am., LLC, No. 20-CV-00366-BAS-MDD, 2021 WL 409722, at *3 (S.D. Cal. Feb. 5, 2021) (quoting United States v. Recio, 884 F.3d 230, 236 (4th Cir. 2018)). For example, the defendant in Safley authenticated a purchase agreement with a declaration from an employee of BMW Financial Services, NA, LLC, (“BMW FS”), who “worked for BMW for four years, where he is able to access BMW FS’ documents, including files related to retail installment contracts to BMW FS by dealers.” Id. (internal quotation marks omitted). Based on his experience working for BMW FS, he testified that he was familiar with BMW FS’ record keeping, document preparation, and record retention policies and practices. Id. He also declared until penalty of perjury that the purchase agreement attached to his declaration is a true and correct copy of the agreement. Id. The court overruled the plaintiffs’ evidentiary objection, finding the defendant met “its low burden to authenticate the Sale Contract, and because Plaintiffs [did] not submit any evidence challenging the document's authenticity.” Id. Similarly here, Dillon testifies that he is an employee at the dealership who is familiar with the recordkeeping policies and declares under penalty of perjury that the RISC attached to his declaration is “a true and correct copy” of the RISC “signed by Plaintiff and a representative of Mercedes Benz Walnut Creek for the purchase of the Subject Vehicle.” Dillon Decl. ¶ 3. The RISC also contains “sufficient indicia that, taken in conjunction with the circumstances of its production from [the declarant's] employer, support Defendant's claim that the agreement is what it purports to be.” Safley, 2021 WL 409722, at *3. That is enough for MBUSA to meet is “low” burden to authenticate the RISC. Id. Messih's objection is OVERRULED. II. MOTION TO REMAND Messih moves to remand on grounds that MBUSA failed to establish the amount in controversy requirement for removal based on diversity jurisdiction. The amount in controversy is the only dispute between the parties. The parties do not dispute that complete diversity exists. A. Amount in Controversy If a defendant removes a case from state court to federal court, the defendant bears the burden of proving that the amount in controversy is satisfied. See Chajon v. Ford Motor Co., No. 18-10533 RGK, 2019 WL 994019, at *1 (C.D. Cal. Jan. 8, 2019). The allegations in the complaint dictate the defendant's burden. When a complaint filed in state court alleges on its face an amount in controversy sufficient to meet the federal jurisdictional threshold, the amount in controversy requirement is presumptively satisfied unless it appears to a “legal certainty” that the plaintiff cannot actually recover that amount. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 402 (9th Cir. 1996). On the other hand, if a plaintiff's state-court complaint does not specify a particular amount of damages, the removing defendant bears the burden of establishing by a “preponderance of the evidence” that it is “more likely than not” that the amount in controversy exceeds $75,000. Id. at 404; Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 *4 There is only one paragraph in the Complaint that contains monetary amounts relevant to the amount in controversy calculation: On July 20, 2013, Plaintiff purchased a new 2014 Mercedes-Benz E350, VIN: WDDHF5KB3EA803096 ("Vehicle”) from Mercedes-Benz of Walnut Creek (“MBWC”) in Walnut Creek, California. The Vehicle's odometer at purchase read 19 miles. Plaintiff paid $20,000.00 as a down payment on the Vehicle. Plaintiff purchased three optional MBUSA service contracts when he purchased the Vehicle: a $3,2900.00 “MB Service Contract” plan with a duration of 84 months or 75,000 miles, a $1,094.00 “MB PPM” prepaid maintenance plan with a duration of 36 months or 30,000 miles, and a $654.00 “Ding/Dent Shield” plan with a duration of 60 months. The total amount that Plaintiff financed was $46,646.42. Including interest over the maturity of the loan through August 2018, Plaintiff paid $49,662.70. The total sales price of the Vehicle, including the down payment, was $69,662.70. The cash price of the Vehicle was $56,146.50. Compl. ¶ 8. The Prayer for Relief lists various requests for damages without specifying estimated amounts of damages sought. See id., Prayer for Relief (seeking, among other things, “special and actual damages according to proof at trial,” “incidental and consequential damages according to proof at trial,” “civil penalty in the amount of two times Plaintiff's actual, incidental, and consequential damages,” and “attorneys’ fees”). Because the amount in controversy is unclear from the face of the Complaint, MBUSA must show by a preponderance of the evidence that the amount in controversy exceeds $75,000. I find that it has based on Messih's alleged actual damages and civil penalties alone. 1. Actual Damages California Civil Code section1793.2(d)(2)(B) provides that the measure of damages in an action such as this one includes restitution in “an amount equal to the actual price paid or payable by the buyer,...including any collateral charges such as sales or use tax, license fees, registration fees, and other official fees[.]” Cal. Civ. Code § 1793.2(d)(2)(B). Section 1793.2(d)(2)(C) permits the manufacturer to reduce the amount payable to the buyer “by that amount directly attributable to use by the buyer prior to the time the buyer first delivered the vehicle to the manufacturer or distributor, or its authorized service and repair facility for correction of the problem that gave rise to the nonconformity.” Cal. Civ. Code § 1793.2(d)(2)(C). MBUSA contends that the total cash price listed in the RISC, $56,146.50 (and as restated in the Complaint), demonstrates “the price paid or payable” for the subject vehicle. See Compl. ¶ 8; RISC at 1. Messih challenges MBUSA's method of measuring his actual damages based on total cash price. Courts, however, have found total cash price appropriate in calculating actual damages sought under the Song-Beverly Act. See, e.g., Alvarado v. FCA US, LLC, No. EDCV17505JGBDTBX, 2017 WL 2495495, at *4 (C.D. Cal. Jun. 8, 2017) (finding amount in controversy requirement met where defendants used total cash price from the purchase agreement to calculate actual damages); Gerber v. FCA US LLC, No. 17-CV-0518-AJB-BGS, 2017 WL 2705428, at *2 (S.D. Cal. Jun. 23, 2017) (“Given that the statute permits Gerber to recover collateral charges, which FCA did not use in its amount-in-controversy calculation, the Court finds FCA's use of the total cash price conservatively estimates ‘the actual price paid or payable by’ Gerber.”).3 *5 As noted above, the restitution awardable under section 1793.2(d)(2)(B) must also be reduced by the amount directly attributable to Messih's use of the vehicle prior to the first repair or attempted repair. This set-off amount is determined by multiplying the “actual price of the new motor vehicle paid or payable by the buyer...by a fraction having as its denominator 120,000 and having as its numerator the number of miles traveled by the new motor vehicle prior to the time the buyer delivered the vehicle” for correction of the problem. Cal. Civ. Code § 1793.2(d)(2)(C). Although MBUSA did not calculate a mileage offset reduction in its NOR, the calculation it provides in opposition to Messih's motion to remand is sufficient. MBUSA calculates a mileage offset of $5,673.14 as follows: 12,125/120,000 x $56,146.50. The 12,125 mileage figure is based on Messih's allegation that he took his vehicle for a steering wheel repair on August 2, 2014, with 12,144 miles on the odometer at the time of presentation, minus the 19 miles on the odometer when Messih purchased the vehicle. Compl. ¶¶ 8, 19. In addition to the $5,673.14 mileage offset, MBUSA also deducts the three optional service contracts included in Messih's purchase of the vehicle (i) the “MB Service Contract” in the amount of $3,290; (ii) the “MB Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 5 PPM Agreement” in the amount of $1,094; and (iii) the “Ding/Dent Shield Agreement” in the amount of $654. Id. ¶ 8. The sum of all deductions and offsets totals $10,711.14. Subtracting $10,711.14 from $56,146.50 (total cash price) yields $45,435.36, which MBUSA contends would be Messih's actual damages should every statutory offset and deduction be taken into account. Messih does not rebut this evidence or indicate what the appropriate mileage offset should be. He only faults MBUSA for failing to calculate milage offset earlier in its NOR, but raises no argument that would undermine the mileage offset calculation MBUSA eventually provided in its briefing. The cases Messih relies on are inapposite because defendants in those cases either failed to provide a mileage offset calculation altogether (in either the NOR or briefing) or failed to provide a proper milage offset calculation. See Mullin v. FCA US, LLC, No. CV 20-2061-RSWL-PJW, 2020 WL 2509081, at *3 (C.D. Cal. May 14, 2020) (remanding case because defendants failed to take into account the mileage offset, where they “could have submitted their own evidence in order to calculate the mileage offset” but failed to do so); Chavez v. FCA US LLC, No. 219CV06003ODWGJSX, 2020 WL 468909, at *2 (C.D. Cal. Jan. 27, 2020) (finding defendant's mileage offset calculation was flawed); see also Cox v. Kia Motors Am., Inc., No. 20-CV-02380-BLF, 2020 WL 5814518, at *4 (N.D. Cal. Sept. 30, 2020) (“Because Kia has failed to account for the mileage offset, it has failed to establish either the amount of actual damages or the maximum recoverable civil penalties, calculated as twice actual damages.”); Young Lee v. Mercedes-Benz USA, LLC, No. CV210641FMOJEMX, 2021 WL 274731, at *2 (C.D. Cal. Jan. 27, 2021) (finding defendants failed to meet its burden with respect to amount in controversy “based on the amount of the subject vehicle and plaintiff's request for civil penalties” because “defendant fail[ed] to take into account any reduction for the use of the vehicle”) (citing cases). In this case, MBUSA's submissions are sufficient to establish by a preponderance of evidence that Messih's Song-Beverly Act actual damages are, after taking mileage offset and other deductions into account, at least $45,435.36. 2. Civil Penalties *6 Messih seeks civil penalties “in the amount of two times Plaintiff's actual, incidental, and consequential damages.” Compl., Prayer for Relief ¶ 5. Without taking into account the claimed incidental and consequential damages, MBUSA calculates that a maximum civil penalty award would be $90,906.72 (2 x $45,435.36). As the Hon. Beth L. Freeman recognized in Verastegui v. Ford Motor Co., No. 19-CV-04806-BLF, 2020 WL 598516, at *3 (N.D. Cal. Feb. 7, 2020), “courts in this district have varying views as to whether the maximum civil penalties should be considered when deciding the amount in controversy.” Compare Makol v. Jaguar Land Rover N. Am., LLC, No. 18-CV-03414-NC, 2018 WL 3194424, at *3 (N.D. Cal. Jun. 28, 2018) (“Simply assuming a civil penalty award is inconsistent with the principle that the defendants must provide evidence that it is more likely than not that the amount in controversy requirement is satisfied.”) (citation omitted) with Neville v. W. Recreational Vehicles, Inc., No. C-07-3757-MMC, 2007 WL 4197414, at *2 (N.D. Cal. Nov. 21, 2007) (“The Song-Beverly penalty of twice the actual damages therefore pushes the amount in controversy to well over the [statutory minimum].”); Covarrubias v. Ford Motor Co., No. 19-CV-01832-EMC, 2019 WL 2866046, at *6 (N.D. Cal. Jul. 3, 2019); Bernstein v. BMW of N. Am., LLC, No. 18-CV-01801-JSC, 2018 WL 2210683, at *2 (N.D. Cal. May 15, 2018) (“Two times Plaintiff's $25,000 valuation is $50,000 which totals $75,000 exclusive of attorney's fees.”). Like Judge Freeman, I am “persuaded by the decisions in which courts have considered the maximum recoverable civil penalties because that is what Plaintiff put in controversy.” Cox v. FCA US LLC, No. 20-CV-03808-WHO, 2020 WL 5046103, at *2 (N.D. Cal. Aug. 24, 2020) (quoting Verastegui, 2020 WL 598516, at *3) (denying motion to remand where defendant established that the amount in controversy exceeds $75,000 by a preponderance of evidence based on the invoice price of the vehicle, less mileage offset, and adding maximum recoverable civil penalties). MBUSA has sufficiently established that the actual damages at issue here is $45,435.36 based on the total cash price and with the mileage offset and other deductions. MBUSA has thus sufficiently established the total civil penalties amount, $90,906.72, to include in the amount in controversy 3. Attorneys’ Fees Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 6 Messih seeks attorneys’ fees pursuant to Civil Code section 1794, subdivision (d). Compl., Prayer ¶ 7. The Ninth Circuit recently explained that “when a statute or contract provides for the recovery of attorneys’ fees, prospective attorneys’ fees must be included in the assessment of the amount in controversy.” Arias v. Residence Inn by Marriott, 936 F.3d 920, 922 (9th Cir. 2019) (citing Fritsch v. Swift Transp. Co. of Ariz., LLC, 899 F.3d 785, 794 (9th Cir. 2018)). Thus, attorneys’ fees may be included in the amount in controversy if, as here, they are recoverable by statute. Notwithstanding the Ninth Circuit's guidance, Messih argues that attorneys’ fees should not be considered in determining the amount in controversy for jurisdictional purposes. The series of decisions that he relies on for this proposition, mostly out of the Central District of California, are unpersuasive. See Cox v. Kia Motors Am., Inc., No. 20-CV-02380-BLF, 2020 WL 5814518, at *4 (N.D. Cal. Sept. 30, 2020) (finding Yegan v. Ford Motor Co., 2019 WL 7374627 (C.D. Cal. Apr. 18, 2019) and Nevarez v. FCA US LLC, 2020 WL 2394935 (C.D. Cal. May 12, 2020) “are contrary to Fritsch, in which the Ninth Circuit expressly rejected arguments ‘that future attorneys’ fees should not be included in the amount in controversy because they are inherently speculative and can be avoided by the defendant's decision to settle an action quickly’ ”) (quoting Fritsch, 889 F.3d at 795); see also id. (finding Chavez, 2020 WL 468909, at *2 and other cases “are contrary to numerous Ninth Circuit and district court cases holding that attorneys’ fees are included in the amount in controversy in MMWA and Song-Beverly suits”) (citing cases). I, along with other judges in this District, consider attorneys’ fees in the amount of controversy analysis. See Cox v. FCA US LLC, 2020 WL 5046103, at *2. *7 That said, I need not consider MBUSA's $36,000 estimate of attorneys’ fees, to which Messih objects, “because once actual damages and civil penalties are added (as well as attorneys’ fees in any amount) the total amount in controversy exceeds $75,000.” Verastegui, 2020 WL 598516, at *4.4 Because MBUSA has established both the diversity and amount in controversy prerequisites to invoking subject matter jurisdiction under 28 U.S.C. § 1332(a), Messih's motion to remand is DENIED. III. MOTION TO COMPEL ARBITRATION MBUSA contends that Messih's claims are governed by an arbitration clause contained in the RISC between Messih and MBWC, which states, in relevant part: 1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL. [omitted] Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. RISC at 6. A. Arbitrability Before addressing whether MBUSA has standing to enforce the arbitration agreement as a non-signatory, I address the threshold arbitrability argument raised by MBUSA for the first time at the end of its reply brief. MBUSA argues that the question of whether it can compel arbitration must be answered by an arbitrator, not a court, because the arbitration clause states that questions of arbitrability shall be decided by an arbitrator. Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 7 The issue of arbitrability is for the court to decide unless the parties’ agreement clearly and unmistakably provides otherwise. See Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 530 (2019). In Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126-27 (9th Cir. 2013), cert. denied, 571 U.S. 818 (2013), the Ninth Circuit addressed whether a defendant manufacturer could compel a group of buyer plaintiffs to arbitrate based on purchase agreements that were signed by the plaintiffs and their respective dealerships, but not the manufacturer. Like here, the dealerships were not parties to the lawsuit. Id. at 1127. The manufacturer argued that because the purchase agreements provided that arbitrators shall decide issues of interpretation, scope, and applicability of the arbitration clauses, the arbitrators should decide the issue of arbitrability. Id. The Ninth Circuit held that the district court could decide issues of arbitrability because the “you and us” language in the arbitration clauses evidenced the plaintiffs’ intent to arbitrate disputes with the dealerships, but not the manufacturer. Id. at 1128. The court reasoned, “[i]n the absence of a disagreement between Plaintiffs and the Dealerships, the agreement to arbitrate arbitrability does not apply.” Id. It also stated, “[g]iven the absence of clear and unmistakable evidence that Plaintiffs agreed to arbitrate arbitrability with nonsignatories, the district court had the authority to decide whether the instant dispute [was] arbitrable.” Id. at 1127. *8 Qi Ling Guan v. BMW of N. Am., LLC, No. 20-CV-05025-MMC, 2021 WL 148202, at *1 (N.D. Cal. Jan. 15, 2021), similarly found no “clear and unmistakable evidence” that the provision delegated the threshold question of whether a party is entitled to enforce to the arbitrator given that the provision contained “language limiting its terms to claims or disputes between Guan and the Dealer or the Dealer's ‘employees, agents, successors or assigns.’ ” See also Kim v. BMW of N. Am., LLC, 408 F. Supp. 3d 1155, 1158 (C.D. Cal. 2019) (finding that whether BMW, as a nonsignatory, can be bound by an arbitration clause “is not a question for the arbitrator”); Jurosky v. BMW of N. Am., LLC, 441 F. Supp. 3d 963, 969 (S.D. Cal. 2020) (arbitration clause of purchase agreement into which purchaser entered with dealership did not require that question of whether manufacturer could compel arbitration be answered by arbitrator). The RISC here contains the same limiting “you and us” language as in Qi Ling Guan, Kim, and Jurosky. See RISC at 6 (limiting “any claim or dispute” to those “between you and us or our employees, agents, successors or assigns”). “Because no dispute currently exists between [Messih] and the dealership, and because there is no clear and unmistakable evidence indicating otherwise, the issue of whether the instant dispute is arbitrable given [MBUSA's] status as a nonsignatory need not be decided by an arbitrator.” Jurosky, 441 F. Supp. 3d at 968. B. Enforcement by Non-Signatory MBUSA argues that it has standing to compel arbitration as a third-party beneficiary and under a theory of equitable estoppel. See Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009) (holding a litigant who is not a party to an arbitration agreement may invoke arbitration under the FAA if the relevant state contract law allows the litigant to enforce the agreement). This is not the first case of its kind. Car manufacturers routinely seek to enforce the arbitration clause in a purchase agreement with the dealership. Courts have reached different outcomes depending on the language of those clauses. I join the weight of authority, including from this District, that have denied motions to compel based on virtually identical arbitration provisions as the one at issue in this case and that have rejected the same arguments MBUSA raises here. See, e.g., Qi Ling Guan, 2021 WL 148202, at *2 (acknowledging “a split of authority as to whether a vehicle manufacturer can enforce such an arbitration provision on the basis of equitable estoppel or as a third-party beneficiary,” but “find[ing] more persuasive the reasoning of the decisions addressing essentially the same arguments raised here by BMW and finding the manufacturer cannot enforce the provision”); Pestarino v. Ford Motor Co., No. 19-CV-07890-BLF, 2020 WL 3187370, at *1 (N.D. Cal. Jun. 15, 2020) (holding manufacturer could not enforce arbitration provision on the basis of equitable estoppel); Schulz v. BMW of N. Am., LLC, 472 F. Supp. 3d 632, 641 (N.D. Cal. 2020) (finding manufacturer lacked standing to enforce the arbitration agreement between purchaser and the dealership because equitable estoppel and third-party beneficiary doctrines did not apply); Safley, 2021 WL 409722, at *8 (same); Jurosky, 441 F. Supp. 3d at 969-75 (same); Kim, 408 F. Supp. 3d at 1158 -60 (same).5 Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 8 1. Third-Party Beneficiary California law allows a third party to enforce a contract made “expressly for the benefit” of that third party. Cal. Civ. Code § 1559. A third party need not be named in the contract, but needs to be “more than incidentally benefitted by the contract” to qualify as a third-party beneficiary. Vincent v. BMW of N. Am., LLC, No. 19-6439 AS, 2019 WL 8013093, at *5 (C.D. Cal. Nov. 26, 2019) (citing Gilbert Fin. Corp. v. Steelform Contracting Co., 82 Cal. App. 3d 65, 69 (1978)). The contract has to be formed with the intent to benefit the third party specifically. Norcia v. Samsung Telecommunications Am., LLC, 845 F.3d 1279, 1291 (9th Cir. 2017). *9 Messih cites Safley, 2021 WL 409722, at *5, as an example of a recent case that rejected the very arguments made by MBUSA and that involved an identical arbitration provision. The Safley court focused on the “you and us” language (“between you and us or our employees, agents, successors or assigns”), distinguishing it from the broader arbitration language at issue in Saponjic v. BMW of N. Am., LLC, No. 20-cv-703-BAS-RBB, 2020 WL 4015671, at *2 (S.D. Cal. Jul. 16, 2020), which covered claims against the dealership's “officers, directors, affiliates, successors, or assigns.” Id. (emphasis added). “Defendant could enforce the Saponjic arbitration provision as a third-party beneficiary because the agreement encompassed claims against the lessor's assignee's ‘affiliates.’ ” Id. By contrast, the arbitration provision in Safley, like the arbitration provision here, did not mention “affiliates” and only covered claims “between you [the Safleys] and us [BMW Encinitas] or our employees, agents, successors, or assigns.” Id. The Safley court was “unconvinced that this narrower contract covers Defendant as a third-party beneficiary,” because “Defendant does not demonstrate that it falls under one of the categories of third parties identified in the arbitration provision's claim coverage: the dealership's ‘employees, agents, successors, or assigns.’ ” Id. at *6. Messih similarly argues that MBUSA does not and cannot assert that it is MBWC's employee, agent, successor or assign. MBUSA distinguishes Safley on grounds that it only dealt with the question of assignment and affiliates and did not speak to the other language in the arbitration provision. It cites to the latter part of the arbitration provision, which states that the provision encompasses any claim or dispute “which arises out of or relates to...condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract).” RISC at 6 (emphasis added). Other courts have considered the same language and still found that the third-party beneficiary doctrine does not apply. The Hon. Nathanael M. Cousins’ opinion in Schulz v. BMW of N. Am., LLC, 472 F. Supp. 3d 632 (N.D. Cal. 2020) explains why. With respect to the “condition of the vehicle” language, Magistrate Judge Cousins found that the signatories expressly limited their agreement to arbitrate disputes “between you and us or employees, agents, successors, or assigns” and “[w]hile the provision encompasses disputes that arise out of or relate to the condition of the vehicle,” “it did not extend to disputes against third parties, especially because the signatories had to elect to exercise the right.” Id. at 640. With respect to the “relationship with third parties” language, he found that the “clause refers to the subject matter of the dispute, not to the parties involved in the dispute.” Id. at 640-41; see also Jurosky, 441 F. Supp. 3d at 975 (“The only language cited by BMW in support of its third party beneficiary status is the language concerning the condition of the vehicle and relationships with third parties. (Doc. No. 16 at 17.) As discussed above, this language refers to types of disputes between Plaintiff and the dealership that may be arbitrated, and does not demonstrate an intent to confer some direct benefit on BMW.”). Schulz and Jurosky are on point and MBUSA makes no attempt to undermine the persuasive reasoning in those cases. The “condition of this vehicle” and “relationship with third parties” language in the arbitration provision here defines arbitrable disputes, but regardless of the matter of dispute, the arbitration provision expressly limits, in the preceding sentence, application to disputes between Messih and the dealership or its “employees, agents, successors, or assigns.” RISC at 6. Accordingly, I find that MBUSA may not enforce the arbitration provision as a third-party beneficiary because it fails to show that the RISC was made expressly for its benefit and that it was more than incidentally benefitted by the RISC. 2. Equitable Estoppel Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 9 “Where a nonsignatory seeks to enforce an arbitration clause, the doctrine of equitable estoppel applies in two circumstances: (1) when a signatory must rely on the terms of the written agreement in asserting its claims against the nonsignatory or the claims are intimately founded in and intertwined with the underlying contract, and (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and another signatory and the allegations of interdependent misconduct are founded in or intimately connected with the obligations of the underlying agreement.” Kramer, 705 F.3d at 1128-29 (internal citations, alternations, and quotation marks omitted). The first circumstance, which MBUSA invokes here, “applies only if the plaintiffs’ claims against the nonsignatory are dependent upon, or inextricably bound up with, the obligations imposed by the contract plaintiff has signed with the signatory defendant.” Id. at 1129; see also Jones v. Jacobson, 195 Cal. App. 4th 1, 20 (2011), as modified (Jun. 1, 2011). “[M]erely ‘mak[ing] reference to’ an agreement with an arbitration clause is not enough. Equitable estoppel applies ‘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.’ ” Kramer, 705 F.3d at 1129 (quoting Goldman v. KPMG, LLP, 173 Cal. App. 4th 209, 218 (2009)). *10 The car manufacturer in Kramer, like MBUSA, argued that the plaintiffs’ claims are intertwined with the purchase agreements “because they rely upon the existence of Plaintiff's vehicle purchase transactions.” 703 F.3d at 1129. The Ninth Circuit rejected that argument and affirmed the district court's holding that the equitable estoppel doctrine did not apply. Id. None of the plaintiffs’ claims were intertwined with their purchase agreements with the dealers, nor did they reference or rely upon them. Id. at 1129-31. MBUSA distinguishes Kramer on grounds that it involved different claims premised on California consumer law, unfair competition, false advertising, breach of the implied warranty of merchantability, and breach of contract instead of the Song- Beverly Act. It also points out the that the contracts in Kramer did not contain language that could be construed as extending the scope of arbitration to third parties, such as arbitrating “claims related to the condition of the vehicle,” including claims or disputes “which arise out of...relationships with third parties.” RISC at 6. MBUSA argues that I should instead consider the reasoning in Felisilda v. FCA US LLC, 53 Cal. App. 5th 486 (2020), review denied (Nov. 24, 2020). There, the plaintiffs purchased a used vehicle from a dealer, and when the vehicle turned out to be defective, they sued both the dealer and the manufacturer. 53 Cal. App. 5th at 489. The dealer moved to compel arbitration under an arbitration provision that is virtually identical to the one in this case and the manufacturer filed a notice of non-opposition. The trial court compelled the plaintiffs to arbitrate their claims against both the dealer and the manufacturer. Id.at 491. The California Court of Appeal affirmed, finding, in relevant part, that the plaintiffs were compelled to arbitrate their claims against the manufacturer “because the [plaintiffs] expressly agreed to arbitrate claims arising out of the condition of the vehicle-even against third party nonsignatories to the sales contract.” Id. at 497. At least two California district courts have since analyzed Felisilda in cases like this one and found it inapplicable in light of the Ninth Circuit's ruling in Kramer. In Ruderman v. Rolls Royce Motor Cars, LLC, No. 220CV04529JWHRAOX, 2021 WL 141179, at *4 (C.D. Cal. Jan. 7, 2021), the court found “Felisilda is not directly on point, because the Felisildas sued both the manufacturer and the dealer,” whereas the plaintiff before it, like Messih, sued only the manufacturer. Id. (emphasis in original). The court concluded: “Felisilda, therefore, does not change state law that directly controls this case. Kramer remains the controlling precedent for this case. Under the Kramer line of cases, Rolls-Royce cannot compel Ruderman to arbitrate his claims against it under the doctrine of equitable estoppel.” Id. Safley, which involved a virtually identical arbitration clause as the one at issue here, followed Ruderman’s analysis and found Felisilda inapplicable in light of the Ninth Circuit's ruling in Kramer: As the Felisilda court highlighted, the arbitration provision mentions claims regarding the “condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract).” (Sales Contract 2.) But that language is only one part of the definition of a covered claim. Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 10 The arbitration provision first defines claims as those “between you and us or our employees, agents, successors or assigns.” (Sale Contract at 2.) Neither the dealership nor one of its “employees, agents, successors, or assigns” is named in this lawsuit or seeking to enforce the arbitration provision. See supra Part III.A. Thus, the Court similarly finds Felisilda to be distinguishable. The reasoning in Kramer and Jurosky convincingly addresses these circumstances. Consequently, the Court finds Defendant is not entitled to enforce the Sale Contract's arbitration provision under the equitable estoppel doctrine. *11 Safley, 2021 WL 409722, at *8. The reasoning in Ruderman and Safley holds here. While Felisilda had a similar arbitration clause, it involved both the manufacturer and the signatory dealer that had standing to enforce the arbitration clause. Felisilda also brushed over the restrictive “you and us” language at the beginning of the arbitration clause, which limits the scope of the subsequent “condition” and “third-party” language. As the law stands now, Kramer remains the controlling precedent for this case.6 The Complaint here only references the RISC in describing when the subject vehicle was purchased and for how much. See Compl. ¶ 8. This “mere[ ] reference” to the RISC is not enough for the equitable estoppel doctrine to apply. Kramer, 705 F.3d at 1129. The Complaint does not allege any duty, obligation, term, or condition imposed by the RISC that MBUSA breached such that the claims can be considered “intimately founded” with the RISC. Id. at 1130. Rather, the claims arise from the warranties issued separately by MBUSA. See Compl. ¶ 9 & Ex. 1 (copy of Mercedes-Benz “Service and Warranty Information 2014”). The RISC itself expressly differentiates MBUSA's warranty from the dealership's warranties in a section titled “Warranties Seller Disclaims,” stating: If you do not get a written warranty, and the Seller does not enter into a service contract within 90 days from the date of this contract, the Seller makes no warranties, express or implied, on the vehicle, and there will be no implied warranties of merchantability or of fitness for a particular purpose. This provision does not affect any warranties covering the vehicle that the vehicle manufacturer may provide. If the Seller has sold you a certified used vehicle, the warranty of merchantability is not disclaimed. RISC at 5 (emphasis added). “This differentiation does not support the interrelatedness of the dealership's purchase agreement and [MBUSA's] warranties. Instead, it demonstrates an intent to distinguish and distance the dealership's purchase agreement from any warranty that [MBUSA] ‘may’ provide.” Jurosky, 441 F. Supp. 3d at 970 (citing Kramer, 705 F.3d at 1131); see also Schulz, 472 F. Supp. 3d at 640 (finding identical purchase agreement “does not impose any warranty obligations on either the dealership or [the manufacturer]” because “[l]ike the agreement in Kramer, the purchase agreement here merely disclaims, ‘the seller makes no warranties,’ and that ‘[t]his provision does not affect any warranties covering the vehicle the manufacturer may provide’.”). Thus, the warranties necessary for Messih's claims originate from MBUSA with the purchase of the car, not from the terms contained in the RISC. See Soto v. Am. Honda Motor Co., 946 F. Supp. 2d 949, 956 (N.D. Cal. 2012) (“[T]he plaintiffs’ [breach of warranty] claims cannot rely on the Installment Sale Contract, but must rely on warranties issued by [the manufacturer].”). *12 MBUSA's argument that Messih would have no claims under the Song-Beverly Act “but for” the existence of the sale transaction, which was created by and through the RISC, fails. MBUSA raised a similar “but for” argument in another case, Friedman v. Mercedes Benz USA LLC, No. CV 12-7204 GAF (CWX), 2013 WL 12086785, at *13 (C.D. Cal. Jan. 31, 2013), where it sought to enforce an arbitration provision in a lease agreement between the plaintiff and the dealership. The court denied MBUSA's motion to compel arbitration, finding that “those cases that apply a ‘but for’ test have failed to appreciate [the Ninth Circuit's] admonition that the two situations giving rise to arbitration through ‘equitable estoppel’ establish very narrow circumstances in which claims of nonsignatories can be arbitrated.” Id. (citing Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1045-46 (9th Cir. 2009)); See id. at *12 n.7 (noting that the Ninth Circuit in Kramer “reiterated its commitment to Mundi’s holding”). The court concluded that “[w]hile it is true that, but for the fact that they leased a Mercedes vehicle Plaintiffs would not have standing to pursue a claim against Mercedes, Mundi suggests that such a ‘benefit’ derived from the lease falls short of the kind of conduct giving rise to equitable estoppel.” Id. at *13.7 Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 11 MBUSA's reliance on Mance v. Mercedes-Benz USA, 901 F. Supp. 2d 1147 (N.D. Cal. 2012) fares no better. The Mance court granted MBUSA's motion to compel arbitration under the equitable estoppel doctrine, finding MBUSA's “duty to comply with its warranty arose only when Mance bought the car,” and that “[h]ad he not signed the contract, he would not have received the warranty from Mercedes-Benz.” Id. at 1157. Mance was decided before the Ninth Circuit's decision in Kramer and “it is contrary to the weight of district court decisions after Kramer” that have “found the doctrine of equitable estoppel inapplicable to the circumstances presented in this case.” Pestarino v. Ford Motor Co., No. 19- CV-07890-BLF, 2020 WL 3187370, at *4 (N.D. Cal. Jun. 15, 2020); see also Jurosky, 441 F. Supp. 3d at 974 (finding “the Ninth Circuit's decision in Kramer rejected the district court's reasoning in Mance, and even if it did not, Mance is not sufficiently persuasive”) (citing cases). In sum, Messih's claims do not rely on the RISC and are not intimately founded in and intertwined with the RISC. The inequities that the doctrine of equitable estoppel is designed to address are not present here because Messih does not “seek to simultaneously invoke the duties and obligations of [MBUSA] under the [RISC], as it has none, while seeking to avoid arbitration.” Kramer, 705 F.3d at 1134. MBUSA lacks standing to enforce the arbitration agreement between Messih and the dealership because equitable estoppel and third-party beneficiary doctrines do not apply. For these reasons, MBUSA's motion to compel is DENIED.8 CONCLUSION Messih's motion to remand is DENIED and MBUSA's motion to compel arbitration is DENIED. A Case Management Conference is set for August 17, 2021 at 2:00 p.m. IT IS SO ORDERED. All Citations Slip Copy, 2021 WL 2588977 Footnotes 1 MBUSA's request for judicial notice of the Complaint, although unnecessary given that the Complaint it part of case docket, is GRANTED. See Request for Judicial Notice in Support of Defendant's Motion to Compel Binding Arbitration [Dkt. No. 7]. 2 Messih argues that MBUSA should be collaterally estopped from disputing that an attorney declaration is sufficient to authenticate a purchase agreement because it lost the same issue in Hervey v. MBUSA, Los Angeles Superior Court, Case No. 20STCV03490. His request for judicial notice of the Hervey decision, which MBUSA does not oppose, is GRANTED. See Plaintiff's Request for Judicial Notice in Opposition to Motion to Compel Arbitration (“Pls. RJN”) [Dkt. No. 17], Ex. 5. But the doctrine of collateral estoppel does not apply here because this case does not involve the same claims or same arbitration agreement as in Hervey. And, as discussed above, MBUSA has provided another non-attorney declaration that suffices for authentication purposes. 3 Messih relies on D'Amico v. Ford Motor Co., No. CV 20-2985-CJC (JCX), 2020 WL 2614610, at *3 (C.D. Cal. May 21, 2020) to undermine MBUSA's use of the total cash price as the total amount “paid or payable.” D'Amico involved restitution for a vehicle that was leased, which made the “ ‘price paid’ under the statute [ ] not the [Manufacturer Suggested Retail Price], but only what Plaintiff has paid under her lease.” D'Amico, 2020 WL 2614610, at *2 (finding Brady v. Mercedes-Benz USA, Inc., 243 F. Supp. 2d 1004, 1008 (N.D. Cal. 2002) “squarely concludes that in the context of a lease, the Act's phrase ‘actual price paid or payable by the buyer’ is ‘limit[ed] ...to payments actually made’ ”). Unlike D'Amico, Messih purchased the subject vehicle, which makes the amount paid or payable the damages he will be seeking. Messih's reliance on Ghayaisi v. Subaru of Am., Inc., No. 2:20-CV-00467- RGK-SK, 2020 WL 1140451, at *1 (C.D. Cal. Mar. 6, 2020) is misplaced for the same reason because that case involved a lease Messih v. Mercedes-Benz USA, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 12 agreement and the court applied Brady to conclude that defendant “present[ed] no facts regarding how many payments were actually made on the installment contract.” 4 MBUSA's request for judicial notice of the attorney fee awards Messih's counsel has been awarded in other cases is DENIED given that I need not consider the estimated attorneys’ fees to find that the amount in controversy requirement is met. See Defendant's Request for Judicial Notice in Support of Opposition to Plaintiff's Motion to Remand [Dkt. No. 21]. 5 Messih requests judicial notice of the Safley opinion, the underlying arbitration agreement at issue in Safley, and the underlying arbitration agreements at issue in the Kramer. See Pls. RJN, Exs. 1-4. Messih's request, which MBUSA does not oppose, is GRANTED. 6 The Safley court recognized that “this area of law is uncertain” as “[t]here are at least several appeals pending before the Ninth Circuit involving the applicability of Kramer to comparable arbitration provisions,” and offered to revisit the issue if there is an intervening change in controlling law. 2021 WL 409722, at *8 n.5; See Ruderman v. Rolls Royce Motor Cars NA, LLC, No. 21-55068 (9th Cir. filed Jan. 26, 2021); Ellington v. Eclipse Recreational Vehicles, No. 21- 55022 (9th Cir. filed Jan. 8, 2021); In re: liaison Counsel for Plaintiffs v. Ford Motor Co., No. 55780 (9th Cir. filed Jul. 31, 2020). 7 Messih argues that MBUSA should be collaterally estopped from arguing that it is entitled to invoke the equitable estoppel doctrine because it lost the argument in Friedman. While the issue raised in this case is similar to the one raised in Friedman, they are not so “identical” that collateral estoppel applies. Friedman involved an arbitration provision in a lease agreement that differs from the provision at issue here. That said, Friedman remains persuasive authority to the extent discussed above. 8 In his opposition, Messih alternatively argues that the arbitration provision in the RISC is unenforceable because it violates public policy. Because I find MBUSA does not have standing to enforce the arbitration provision, I need not determine whether the arbitration provision itself is valid and enforceable. End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT B Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 1 2021 WL 409722 Only the Westlaw citation is currently available. United States District Court, S.D. California. Clarence F. SAFLEY, Jr.; Deborah S. Safley, Plaintiffs, v. BMW OF NORTH AMERICA, LLC, Defendant. Case No. 20-cv-00366-BAS-MDD | Signed 02/05/2021 Attorneys and Law Firms Deanna M. Wallace, William R. McGee, Law Offices of William R. McGee, Carlsbad, CA, Hallen D. Rosner, Rosner, Barry & Babbitt, LLP, Kevin Andrew Alexander, II, Law Offices of William R. McGee, APLC, San Diego, CA, for Plaintiffs. Robert Kenneth Dixon, Vickie E. Turner, Olivia J.W. Miner, Wilson Turner Kosmo LLP, San Diego, CA, for Defendant. ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION (ECF No. 16) Cynthia Bashant, United States District Judge *1 Presently before the Court is Defendant BMW of North America, LLC's Motion to Compel Arbitration and Stay This Action. (ECF No. 16.) Plaintiffs Clarence and Deborah Safley oppose. (ECF No. 19.) The Court finds this motion suitable for determination on the papers submitted and without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7.1(d)(1). For the following reasons, the Court DENIES Defendant's motion. I. BACKGROUND On October 30, 2017, Plaintiffs acquired a 2017 BMW 540I sedan for a total sale price of $75,756.80 (“Vehicle”). (Retail Installment Sale Contract (“Sale Contract”), Fritter Decl. ¶ 3, Ex. 1, ECF No. 24-21; see also Compl. ¶ 4, ECF No. 1-2.) Plaintiffs allege the Vehicle suffers from serious defects, and they delivered it to Defendant's repair facility “on numerous occasions.” (Compl. ¶ 11.) However, Defendant has not fixed the Vehicle's problems. (Id. ¶ 12.) Therefore, Plaintiffs filed this action in San Diego County Superior Court under California's Song-Beverly Consumer Warranty Act. (Id. 1, ¶ 5.) Plaintiffs seek relief that includes reimbursement for the purchase price of the Vehicle-less the value of their use-and “a civil penalty of up to two times the amount of actual damages.” (Id. ¶¶ 16-19.) Defendant removed this action based on diversity jurisdiction and filed an answer.2 (Notice of Removal ¶¶ 7-14, ECF No. 1; Answer, ECF No. 3.) The Sale Contract contains an arbitration provision. It provides: Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 2 (Sale Contract 2.) Based on this arbitration provision, Defendant moves to compel arbitration of Plaintiffs’ Song-Beverly Complaint and stay this action until the arbitration is complete. (Mot., ECF No. 16-1.) The motion is fully briefed, including a sur-reply. (ECF Nos. 19, 24, 31.) II. LEGAL STANDARD *2 The Federal Arbitration Act (“FAA”) makes agreements to arbitrate “valid, irrevocable, and enforceable.” 9 U.S.C. § 2. The 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.” Id. § 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. “A party seeking to compel arbitration has the burden under the FAA to show (1) the existence of a valid, written agreement to arbitrate; and if it exists, (2) that the agreement to arbitrate encompasses the dispute at issue.” Ashbey v. Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015). III. ANALYSIS As one court aptly observed: “This type of case is not new.” Ruderman v. Rolls Royce Motor Cars, LLC, --- F. Supp. 3d ----, 2021 WL 141179, at *3 (C.D. Cal. Jan. 7, 2021). It is but one of many where a car manufacturer or distributor seeks to enforce the arbitration clause in a dealership's contract. Courts, including this one, have reached different outcomes depending on the language of the dealerships’ agreements and the parties’ arguments. See, e.g., Nation v. BMW of N. Am., LLC, No. 2:20- cv-02709-JWH (MAAx), 2020 WL 7868103, at *4 (C.D. Cal. Dec. 28, 2020) (declining to compel arbitration); Saponjic v. BMW of N. Am., LLC, No. 20-cv-703-BAS-RBB, 2020 WL 4015671, at *2 (S.D. Cal. July 16, 2020) (compelling arbitration). Before considering those items here, the Court first addresses Plaintiffs’ evidentiary challenges to the Sale Contract. A. Authenticated Agreement Plaintiffs challenge Defendant's introduction of the Sale Contract that contains the arbitration provision. (Opp'n 3:4-27; Sur- Reply 1:11-2:4.) To introduce the Sale Contract, Defendant relies on a declaration from Ryan Fritter, who is an “Open Collections Team Leader for BMW Financial Services NA, LLC (‘BMW FS’).”3 (Fritter Decl. ¶ 1, ECF No. 24-2.) Mr. Fritter has worked for BMW FS for four years, where he is “able to access BMW FS’ documents, including files related to retail installment contracts assigned to BMW FS by dealers.” (Id. ¶ 2.) Based on his experience working for BMW FS, he is “familiar with BMW FS’ retail installment account procedures, retail installment account record keeping, document preparation, and record retention policies and practices.” (Id.) Thus, Mr. Fritter declares under penalty of perjury that the Sale Contract attached to his declaration is a true and correct copy of an agreement that “BMW Encinitas assigned ... to BMW Bank of North America, which is a wholly owned subsidiary of [BMW FS].” (Id. ¶ 3.) Plaintiffs object to Mr. Fritter's declaration on hearsay and other grounds. (ECF No. 32.) They also argue that Mr. Fritter cannot possibly authenticate the Sale Contract because he was not “present at the time of the transaction” and does not show he has personal knowledge of the “chain of custody of the document.” (Sur-Reply 2:5-2:23.) *3 The Court starts with authentication. “To satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.” Fed. R. Evid. 901(a). “The burden to authenticate under Rule 901 is not high.” United States v. Recio, 884 F.3d 230, 236 (4th Cir. 2018); see also United States v. Ceballos, 789 F.3d 607, 618 (5th Cir. 2015) (characterizing the proponent's burden as “low”). In the trial context, the court “must merely conclude that the jury could reasonably find that the evidence is authentic, not that the jury necessarily would so find.” Id. A document can be authenticated through a witness with personal knowledge- someone who “wrote it, signed it, used it or saw others do so.” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 774 (9th Cir. 2002). A document can also be authenticated Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 3 by the “[a]ppearance, contents, substance, internal patterns, or other distinctive characteristics, taken in conjunction with circumstances.” Fed. R. Evid. 901(4). The Court is satisfied that Defendant meets its burden to authenticate the Sale Contract. Mr. Fritter declares that he is familiar with his employer's recordkeeping policies and that the document before the Court is an accurate copy of the Sale Contract assigned to BMW FS's subsidiary. The Sale Contract itself also bears sufficient indicia that, taken in conjunction with the circumstances of its production from Mr. Fritter's employer, support Defendant's claim that the agreement is what it purports to be. See Fed. R. Evid. 901(4); see also Lopez v. Delta Int'l Mach. Corp., 312 F. Supp. 3d 1115, 1154 (D.N.M. 2018) (rejecting authentication challenge to a purchase agreement where the document appeared to be what it purported to be, a corporate entity successor produced the document, and the plaintiff gave the court “no evidence to question” the contract's genuineness). Finally, the Court underscores that Plaintiffs do not submit evidence contesting the authenticity of the document before the Court. Plaintiff Clarence Safley states that he “did not prepare this contract” and “was not given an option to sign a contract without miscellaneous provisions,” but he does not claim the signature on the Sale Contract is not his. (See Safley Decl. ¶ 2, ECF No. 21.) Accordingly, because Defendant meets its low burden to authenticate the Sale Contract, and because Plaintiffs do not submit any evidence challenging the document's authenticity, the Court overrules Plaintiffs’ authentication objection. As for hearsay, this objection misses the mark. Defendant is relying on the Sale Contract-a written agreement-to enforce one of its terms. The Sale Contract has independent legal significance; it defines the rights and obligations of the parties to the agreement, regardless of the truth of any assertions made in the document. Consequently, the Sale Contract is not hearsay. See, e.g., Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 1145, 1154 (9th Cir. 2000) (“The Policy is, therefore, excluded from the definition of hearsay and is admissible evidence because it is a legally operative document that defines the rights and liabilities of the parties in this case.”); see also David F. Binder, Hearsay Handbook § 2.6. Assertion with Direct Legal Significance (4th Ed. 2000). Overall, having considered Plaintiffs’ objections to the Sale Contract and Mr. Fritter's declaration, the Court overrules them. The Court accepts the Sale Contract and turns to whether compelling arbitration is warranted. B. Enforcement by Nonsignatory *4 Moving beyond the evidentiary issues, Plaintiffs raise a recurring argument in this type of case: Defendant cannot enforce the arbitration provision because Defendant is not a signatory to the Sale Contract. (Opp'n 6:17-21:24.) Indeed, BMW Encinitas, the car dealership, signed the Sale Contract-not Defendant, which is the Vehicle's distributor. The car dealership then assigned the Sale Contract to BMW Bank of North America. This assignee is purportedly a subsidiary of BMW FS, which in turn is either managed by or is a subsidiary of Defendant. (See Fritter Decl. ¶ 3.)4 The Court includes its understanding of the different relationships below. Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 Although Defendant is not a party to the Sale Contract, Defendant offers several arguments for why compelling arbitration in these circumstances is appropriate. 1. Delegation to the Arbitrator Preliminarily, Defendant argues an arbitrator, not the Court, should decide whether Defendant can enforce the Sale Contract as a nonsignatory. (Mot. 12:8-13:17.) The issue of arbitrability “is left to the court unless the parties clearly and unmistakably provide otherwise.” Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011); see also Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1072 (9th Cir. 2013). “Clear and unmistakable evidence of an agreement to arbitrate arbitrability ‘might include ... an express agreement to do so.’ ” Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) (quoting Momot, 652 F.3d at 988). If the parties unmistakably agree to arbitrate the “gateway issue” of arbitrability, then this agreement is “simply an additional, antecedent agreement” that is subject to the FAA. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70. (2010). Defendant correctly notes that the Sale Contract delegates arbitrability concerns to the arbitrator. It provides that a dispute regarding “the interpretation and scope of [the] Arbitration Provision, and the arbitrability of the claim or dispute,” shall be arbitrated. (Sale Contract 2.) Defendant, however, still must have the right to enforce this “additional, antecedent agreement” under the FAA. See Jackson, 561 U.S. at 70; see also Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 530 (2019) (“To be sure, before referring a dispute to an arbitrator, the court determines whether a valid arbitration agreement exists.”). Defendant did not sign the Sale Contract, and Defendant is not plainly included in the arbitration clause's terms. Rather, the arbitration provision states any such dispute “shall, at your or our election, be resolved by neutral, binding arbitration.” (Sale Contract 2.) See Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1127 (9th Cir. 2013) (rejecting a delegation argument in comparable circumstances). Consequently, the Court must decide whether Defendant can enforce the arbitration agreement, including the contract's agreement to delegate arbitrability issues to the arbitrator. See Kramer, 705 F.3d at 1127 (“Given the absence of clear and unmistakable evidence that Plaintiffs agreed to arbitrate arbitrability with nonsignatories, the district court had the authority to decide whether the instant dispute is arbitrable.”). Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 5 2. Third-Party Beneficiary *5 Defendant argues it can enforce the arbitration provision because it is a third-party beneficiary of the Sale Contract. (Mot. 22:24-24:14.) “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Kramer, 705 F.3d at 1126 (quoting United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)). But “a litigant who is not a party to an arbitration agreement may invoke arbitration under the FAA if the relevant state contract law allows the litigant to enforce the agreement.” Id. at 1128 (citing Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009)); see also Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1045 (9th Cir. 2009) (“General contract and agency principles apply in determining the enforcement of an arbitration agreement by or against nonsignatories.”). Under California law, a “contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” Cal. Civ. Code § 1559. “It is well established that a nonsignatory beneficiary of an arbitration clause is entitled to require arbitration.” Harris v. Superior Court, 188 Cal. App. 3d 475, 478 (1986). To compel arbitration as a third-party beneficiary, the third party must show the contract reflects the express or implied intention of the parties to the contract to benefit the third party. Comer v. Micor, Inc., 436 F.3d 1098, 1102 (9th Cir. 2006). The third party must be “more than incidentally benefitted by the contract.” Gilbert Fin. Corp. v. Steelform Contracting Co., 82 Cal. App. 3d 65, 70 (1978). The Court considered this third-party beneficiary argument in an analogous case, Saponjic v. BMW of North America, LLC, No. 20-cv-703-BAS-RBB, 2020 WL 4015671 (S.D. Cal. July 16, 2020). There, the same defendant sought to compel arbitration of a consumer breach of warranty action. But the relevant dealership used a lease agreement with different language. The lease agreement defined the lessor as including the “lessor's assignee.” Id. at *1. The arbitration provision then extended to cover claims against the lessor's (or the lessor's assignee's) “officers, directors, affiliates, successors, or assigns.” Id. at *2 (emphasis added). And in a slight variation from this case, the lease agreement in Saponjic was assigned to BMW FS-instead of BMW Bank of North America. Id. “An affiliate is normally understood as ‘a company effectively controlled by another or associated with others under common ownership or control.’ ” Revitch v. DIRECTV, LLC, 977 F.3d 713, 717 (9th Cir. 2020). In Saponjic, the Court determined Defendant is the manager of BMW FS, which had stepped into the shoes of the dealership as the lessor's assignee. Hence, Defendant and BMW FS are “affiliates,” and Defendant could enforce the Saponjic arbitration provision as a third-party beneficiary because the agreement encompassed claims against the lessor's assignee's “affiliates.” 2020 WL 4015671, at *2; see also, e.g., Collins v. BMW of N. Am., LLC, No. 20-cv-1635-GPC(AGS), 2021 WL 242938, at *4 (S.D. Cal. Jan. 25, 2021) (reasoning Defendant could enforce the arbitration agreement because it included disputes with “affiliates”); accord Phillips- Harris v. BMW of N. Am., LLC, No. CV 20-2466-MWF (AGRx), 2020 WL 2556346, at *10 (C.D. Cal. May 20, 2020) (relying on “affiliates” language to compel arbitration). The Sale Contract here defines the “Seller-Creditor” as simply “BMW Encinitas.” It also notes that the dealership is sometimes referred to as “we” or “us,” but this definition does not mention the dealership's assignee. (Sale Contract 1.) Further, there is no mention of “affiliates” in the Sales Contract's arbitration provision. The provision covers claims “between you [the Safleys] and us [BMW Encinitas] or our employees, agents, successors, or assigns....” (Sale Contract 2.) The provision also states that a covered dispute “shall, at your [the Safleys’] or our [BMW Encinitas's] election, be resolved by neutral, binding arbitration.” (Id.) *6 The Court is unconvinced that this narrower contract covers Defendant as a third-party beneficiary. Defendant does not demonstrate that it falls under one of the categories of third parties identified in the arbitration provision's claim coverage: the dealership's “employees, agents, successors, or assigns.” BMW Bank of North America-not Defendant-is the assignee and successor to the dealership's rights and responsibilities under the Sale Contract. And although Defendant may be the parent company of BMW FS, which in turn is apparently the parent company of BMW Bank of North America, these are all separate legal entities. “[C]orporation law is largely built on the idea that the separate legal existence of corporate entities should be Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 6 respected-even when those separate corporate entities are under common ownership and control.” Allied Capital Corp. v. GC- Sun Holdings, L.P., 910 A.2d 1020, 1038 (Del. Ch. 2006) (Strine, V.C.). Therefore, without broader language like “parents” or “affiliates” in the arbitration clause, Defendant's argument that it “falls within the class of persons (i.e., assigns) whom the Arbitration Provision was intended to benefit” is unpersuasive. (Mot. 24:1- 8.) Cf. Silva v. Butori Corp., No. CV-19-04904-PHX-MTL, 2020 WL 2308528, at *4 (D. Ariz. May 8, 2020) (interpreting employment arbitration provision that covered “parent, subsidiary, and affiliated entities”); Johnson v. CACH, LLC, No. 1:16- cv-00383-BLW, 2016 WL 7330571, at *3 (D. Idaho Dec. 16, 2016) (construing arbitration provision that included a bank's “parent, subsidiaries, affiliates, licensees, predecessors, successors, [and] assigns”); see also Adams v. AT & T Mobility, LLC, 524 F. App'x 322, 324 (9th Cir. 2013) (reasoning arbitration clause reached not only a company's successor, but also its parent company where the contract defined “the subject pronoun ‘we’ to include various additional parties, such as assignees, parent companies, successors, subsidiaries, and affiliates”). Nor does Defendant show other language in the Sale Contract establishes the contracting parties expressly or impliedly intended to more than incidentally benefit Defendant. Other courts have been similarly unpersuaded on this point. See Jurosky v. BMW of N. Am., LLC, 441 F. Supp. 3d 963, 975 (S.D. Cal. 2020) (determining that although Defendant “is an incidental beneficiary of an agreement between a dealership and buyer to purchase a BMW vehicle,” the agreement did “not reflect the express or implied intent of the parties to benefit BMW”); Kim v. BMW of N. Am., LLC, 408 F. Supp. 3d 1155, 1159 (C.D. Cal. 2019) (concluding Defendant was not more than incidentally benefitted by a vehicle purchase agreement). Accordingly, the Court finds Defendant cannot enforce the Sale Contract's arbitration provision under a third-party beneficiary theory. 3. Equitable Estoppel Defendant alternatively argues that it can compel arbitration under the doctrine of equitable estoppel. (Mot. 18:16-22:23.) As mentioned, the Court looks to “the relevant state contract law” to determine if Defendant can enforce the arbitration provision under this theory. See Kramer, 705 F.3d at 1130 n.5. In California, the doctrine of equitable estoppel allows a nonsignatory to enforce an arbitration agreement in two circumstances: (1) when a signatory must rely on the terms of the written agreement in asserting its claims against the nonsignatory or the claims are “intimately founded in and intertwined with” the underlying contract, and (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and another signatory and “the allegations of interdependent misconduct [are] founded in or intimately connected with the obligations of the underlying agreement.” Id. at 1128-29 (citations omitted) (quoting Goldman v. KPMG LLP, 173 Cal. App. 4th 209, 221 (2009)). *7 The Ninth Circuit applied the equitable estoppel doctrine in Kramer, which involved whether “Toyota, a nonsignatory to several agreements with arbitration provisions between Plaintiffs and various Toyota dealerships,” could compel arbitration. 705 F.3d at 1124. Like here, those agreements’ arbitration provisions used language like “ ‘you’ and ‘we’ or ‘buyer’ and ‘dealer’ to identify who may elect arbitration.” Id. at 1125. The district court declined to compel arbitration. Id. at 1128. On appeal, Toyota-like Defendant-advanced an equitable estoppel argument. The Ninth Circuit rejected it. Id. at 1128-1134. The court explained that the plaintiffs’ consumer and implied warranty claims did not “not seek to enforce or challenge the terms, duties, or obligations of the Purchase Agreements” containing the arbitration provisions. Id. at 1132. Hence, the first equitable estoppel circumstance, which involves reliance on the contract's terms and asserting intertwined claims, was inapplicable. The Ninth Circuit similarly concluded the second circumstance involving “interdependent and concerted misconduct by the nonsignatory and another signatory” did not apply; therefore, it affirmed the district court. Id. at 1132-34. Beyond the analogous decision in Kramer, Judge Miller applied the equitable estoppel analysis in a similar case in Jurosky v. BMW of North America, LLC, 441 F. Supp. 3d 963 (S.D. Cal. 2020). Like here, Defendant in Jurosky sought to enforce one of Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 7 its dealerships’ arbitration provisions, which appears indistinguishable from the one in this case. In a thorough and convincing analysis, Judge Miller addressed Defendant's equitable estoppel theory. Id. 969-974. He explained that although the Jurosky plaintiff's claims depended on Defendant's warranties, “the purchase agreement expressly differentiates BMW's warranty from the dealership's warranties” and “demonstrates an intent to distinguish and distance the dealership's purchase agreement from any warranty that BMW ‘may’ provide.” Id. at 970 (citing Kramer, 705 F.3d at 1131). Hence, Judge Miller found the plaintiff's Song-Beverly claims “do not rely on the purchase agreement, and they are not intimately found in or intertwined with, the purchase agreement containing the arbitration clause.” Id. The same holds true here. Plaintiffs are not suing based on any obligations found in the text of the Sale Contract. The contract also similarly demonstrates an intent to distance the agreement from any warranty that Defendant “may provide.” (Sale Contract 2.) Moreover, Judge Miller rejected many of the other arguments that Defendant asserts in this case. (See Mot. 21:23-22:23; Reply 11:9-14:12.) See Jurosky, 441 F. Supp. 3d at 969-74. The Court incorporates and adopts his analysis here. The Court also finds Defendant's attempts to distinguish Jurosky are unconvincing. (See Reply 13:22-14:12, see supra Part III.A (addressing the assignment issue based on this arbitration clause's text).) That said, there is one last wrinkle concerning equitable estoppel. While this motion was pending, the California Court of Appeal issued a decision that appears to shift the relevant state law. In Felisilda v. FCA US LLC, 53 Cal. App. 5th 486 (2020), the Felisildas purchased a used vehicle from a dealer, and when the vehicle turned out to be defective, they sued both the dealer and the manufacturer. Id. at 489. The dealer moved to compel arbitration under an arbitration provision that is virtually identical to the one in this case, the manufacturer filed a notice of non-opposition, and the trial court compelled the Felisildas to arbitrate their claims against both the dealer and the manufacturer. Id. at 491. The Court of Appeal affirmed the decision compelling the Felisildas to arbitrate their claims against the manufacturer “because the Felisildas expressly agreed to arbitrate claims arising out of the condition of the vehicle-even against third party nonsignatories to the sales contract.” Id. at 497. *8 A district court has since analyzed Felisilda in a case like this one. Ruderman v. Rolls Royce Motor Cars, LLC, --- F. Supp. 3d ----, 2021 WL 141179, at *4 (C.D. Cal. Jan. 7, 2021). In Ruderman, the court distinguished Felisilda, explaining: But Felisilda is not directly on point, because the Felisildas sued both the manufacturer and the dealer. Ruderman, on the other hand, sued only Rolls-Royce. Felisilda, therefore, does not change state law that directly controls this case. Kramer remains the controlling precedent for this case. Under the Kramer line of cases, Rolls-Royce cannot compel Ruderman to arbitrate his claims against it under the doctrine of equitable estoppel. Id.; accord Ellington v. Eclipse Recreational Vehicles, Inc., No. 5:20-cv-00800-JWH (SPx), 2020 WL 8073607, at *4 (C.D. Cal. Dec. 14, 2020); Nation v. BMW of N. Am., LLC, No. 2:20-cv-02709-JWH (MAAx), 2020 WL 7868103, at *4 (C.D. Cal. Dec. 28, 2020). The Court agrees. As the Felisilda court highlighted, the arbitration provision mentions claims regarding the “condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract).” (Sales Contract 2.) But that language is only one part of the definition of a covered claim. The arbitration provision first defines claims as those “between you and us or our employees, agents, successors or assigns.” (Sale Contract at 2.) Neither the dealership nor one of its “employees, agents, successors, or assigns” is named in this lawsuit or seeking to enforce the arbitration provision. See supra Part III.A. Thus, the Court similarly finds Felisilda to be distinguishable. The reasoning in Kramer and Jurosky convincingly addresses these circumstances. Consequently, the Court finds Defendant is not entitled to enforce the Sale Contract's arbitration provision under the equitable estoppel doctrine.5 IV. CONCLUSION Defendant is not a party to the contract containing the arbitration provision, and Defendant has not shown that it can enforce the contract as a nonsignatory. The Court therefore DENIES Defendant's motion to compel arbitration. (ECF No. 16.) IT IS SO ORDERED. Safley v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 8 All Citations Slip Copy, 2021 WL 409722 Footnotes 1 The Court addresses Plaintiffs’ evidentiary objections to the Sale Contract below. 2 Whereas Plaintiffs are citizens of California, Defendant is a citizen of Delaware and New Jersey. (Notice of Removal ¶¶ 8, 11-14.) See Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (explaining the citizenship rule for limited liability companies). And Defendant sets forth “a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” (See Notice of Removal ¶¶ 15-22.) See Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81, 84, 89 (2014); see also Park v. Jaguar Land Rover N. Am., LLC, No. 20-cv-00242-BAS-MSB, 2020 WL 3567275, at *2-4 (S.D. Cal. July 1, 2020) (analyzing the amount in controversy for a Song-Beverly claim). Thus, the Court confirms it has diversity jurisdiction. 3 As explained in the Court's prior order (ECF No. 30), Defendant did not provide Mr. Fritter's declaration with its moving papers. Rather, to introduce the Sale Contract, Defendant invoked the doctrines of judicial notice and incorporation by reference and cited to a declaration by its outside counsel. When Plaintiffs challenged these efforts, Defendant filed Mr. Fritter's declaration with its reply. After explaining why Defendant's initial efforts were inadequate, the Court informed the parties it would consider the new evidence submitted with the reply in the interest of judicial efficiency. Thus, the Court also permitted Plaintiffs to file a sur-reply to address this evidence, and they have. (ECF No. 31; see also ECF No. 32.) 4 Another declarant, Mr. Weight, states that BMW FS is a wholly-owned subsidiary of Defendant. (Weight Decl. ¶ 3, ECF No. 23.) This Court and others have recognized that Defendant is the managing entity of BMW FS. See Saponjic v. BMW of N. Am., LLC, No. 20-CV-703-BAS-RBB, 2020 WL 4015671, at *2 (S.D. Cal. July 16, 2020) (citing cases). Whether Defendant is merely the managing entity of BMW FS, its owner, or both does not change the Court's analysis. 5 The Court recognizes this area of the law is uncertain. There are at least several appeals pending before the Ninth Circuit involving the applicability of Kramer to comparable arbitration provisions. See Ruderman v. Rolls Royce Motor Cars NA, LLC, No. 21-55068 (9th Cir. filed Jan. 26, 2021); Ellington v. Eclipse Recreational Vehicles, No. 21-55022 (9th Cir. filed Jan. 8, 2021); In re: liaison Counsel for Plaintiffs v. Ford Motor Co., No. 55780 (9th Cir. filed July 31, 2020). If there is an intervening change in controlling law, the Court can revisit the issue. End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT C © 2021 Thomson Reuters. No claim to original U.S. Government Works. REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH AMERICA, LLC, a Delaware Limited Liability Company, and DOES 1 through 10, inclusive, Defendants. United States District Court, C.D. California. | December 28, 2020 | Slip Copy | 2020 WL 7868103 Document Details standard Citation: REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH AMERICA, LLC, a Delaware Ltd. Liab. Co., & DOES 1 through 10, inclusive, Defendants., No. 220CV02709JWHMAAX, 2020 WL 7868103 (C.D. Cal. Dec. 28, 2020) All Citations: Slip Copy, 2020 WL 7868103 Search Details Search Query: BMW and Arbitration Jurisdiction: California Delivery Details Date: January 5, 2021 at 2:52 PM Delivered By: payam shahian Client ID: CIKELOWSKI Status Icons: Outline ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION [16] (p.1) All Citations (p.5) REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH..., Slip Copy (2020) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 1 2020 WL 7868103 Only the Westlaw citation is currently available. United States District Court, C.D. California. REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH AMERICA, LLC, a Delaware Limited Liability Company, and DOES 1 through 10, inclusive, Defendants. Case No. 2:20-cv-02709-JWH (MAAx) | Filed 12/28/2020 ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION [16] John W. Holcomb UNITED STATES DISTRICT JUDGE I. INTRODUCTION *1 Before the Court is the motion of Defendant BMW of North America, LLC (“BMW NA”) to compel arbitration.1 After considering the papers filed in support and in opposition, the Court DENIES the Motion. 1 Mot. of Def. BMW of North America, LLC to Compel Arbitration and Stay Action (the “Motion”) [ECF No. 16]. II. BACKGROUND Plaintiff Rebecca Nation filed this action in the Superior Court of California for the County of Ventura on February 11, 2020, asserting four causes of action: (1) Violation of the Song- Beverly Act-Breach of Express Warranty; (2) Violation of the Song-Beverly Act-Breach of Implied Warranty; (3) Violation of the Song- Beverly Act § 1793.2(b); and (4) Violation of the Song-Beverly Act § 1793.22.2 BMW NA removed this case to federal court on 2 Pl.'s Compl. (the “Complaint”) [ECF No. 1-2]. March 23, 2020.3 Nation did not move to remand. BMW NA filed its instant Motion on June 5, 2020.4 Nation opposed on July 10, 2020.5 On November 4, 2020, this Court entered an order accepting Nation's late Opposition, allowing BMW NA to file a substantive reply, and ordering supplemental briefing on the applicability of a recent California appellate court opinion, Felisilda v. FCA US LLC, 53 Cal. App. 5th 486, review denied (Nov. 24, 2020).6 On November 20, 2020, both parties provided supplemental briefing, and BMW NA filed its reply in support of its Motion.7 3 Def.'s Notice of Removal [ECF No. 1]. 4 See Motion. 5 Pl.'s Opp'n to Motion (the “Opposition”) [ECF No. 22]. 6 Order Re: Suppl. Br. [ECF No. 28]. 7 Pl.'s Suppl. Br. [ECF No. 33]; Def.'s Suppl. Br. [ECF No. 36]; Def.'s Reply in Suppl. of Mot. to Compel Arbitration (the “Reply”) [ECF No. 34]. REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH..., Slip Copy (2020) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 2 III. FACTUAL BACKGROUND Nation is a California resident, and BMW NA is a Delaware company.8 On June 18, 2019, Nation purchased a used 2016 BMW 428i; this purchase included express warranties from BMW NA.9 The 2016 BMW was plagued with “serious defects and nonconformities.”10 Nation delivered the automobile to an authorized BMW repair facility, but BMW NA was unable to repair the vehicle successfully.11 8 Complaint ¶¶ 1 & 2. 9 Id. at ¶ 8. 10 Id. at ¶ 9. 11 Id. at ¶¶ 23 & 24. IV. LEGAL BACKGROUND The Federal Arbitration Act (the “FAA”) provides that contractual arbitration agreements “shall be 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. The FAA establishes a general policy favoring arbitration agreements. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011); Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (“Section 2 of the FAA creates a policy favoring enforcement of agreements to arbitrate.”). This statute's principal purpose is to “ensure that private arbitration agreements are enforced according to their terms.” Concepcion, 563 U.S. at 347 n.6. “Arbitration is a matter of contract, and the FAA requires courts to honor parties' expectations.” Id. at 351. Under the FAA, “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such an 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. If such a showing is made, the district court shall also stay the proceedings pending resolution of the arbitration at the request of one of the parties bound to arbitrate. Id. § 3. V. DISCUSSION *2 BMW NA moves to compel Nation to arbitrate this claim, based upon the following language in the arbitration clause of the contract that Nation signed with her seller:12 Either you or I may choose to have any dispute between us decided by arbitration and not in a court or by jury trial. If a dispute is arbitrated, I will give up my right to participate as a class representative or class member on any Claim I may have against you including any right to class arbitration or any consolidation of individual arbitrations. Discovery and rights to appeal in arbitration are generally more limited than in a lawsuit, and other rights you and I would have in court may not be available in arbitration .... “Claim” broadly means any claim, dispute, or controversy, whether in contract, tort, statute or otherwise, whether REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH..., Slip Copy (2020) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 3 preexisting, present or future, between me and you or your employees, officers, directors, affiliates, successors or assigns, or between me and any third parties if I assert a Claim against such third parties in connection with a Claim I assert against you, which arises out of or relates to my credit application, purchase or condition of this Vehicle, this Contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this Contract).13 BMW NA is not a signatory to this contract. Its arguments for enforcing this arbitration clause against Nation are considered in turn below. 12 Nation does not identify the entity from which she purchased the vehicle. 13 Motion 1-2. A. Third Party Beneficiary BMW NA alleges that it has a right to enforce the arbitration agreement because it is an intended third-party beneficiary of the contract.14 “To sue as a third-party beneficiary of a contract, the third party must show that the contract reflects the express or implied intention of the parties to the contract to benefit the third party.” Comer v. Micor, Inc., 436 F.3d 1098, 1102 (9th Cir. 2006) (citing Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1211 (9th Cir.2000)). Courts generally decline to find intended third-party beneficiaries where sophisticated signatories of a contract could have named the party as a beneficiary and did not. See Murphy v. DirecTV, Inc., 724 F.3d 1218, 1234 (9th Cir. 2013) (“To the extent the Customer Agreement is ambiguous with respect to the parties' intent to benefit Best Buy, that rule of construction militates against concluding that Best Buy is a third-party beneficiary, in light of the fact that DirecTV clearly knew how to provide for a third-party beneficiary if it wished to do so.”). 14 Motion 5. As excerpted more fully above, the contract provides that “you or I” (Nation or the seller) may compel arbitration of any claim “between me and you or your employees, officers, directors, affiliates, successors or assigns.” BMW NA alleges that because it is an “assign” or “affiliate” of the auto seller, it is a third-party beneficiary of this contract and can compel arbitration. Nation counters that there is no evidence that either she or the auto seller intended BMW NA as a third-party beneficiary. This is not the first time that BMW NA has sought to compel arbitration as a third-party beneficiary based upon this exact contractual language. Federal district courts in California have decided the issue both ways. Compare Tseng v. BMW of N. Am., LLC, No. 2:20- cv-00256-VAP-AFMx, 2020 WL 4032305, at *4 (C.D. Cal. Apr. 15, 2020) (BMW was an affiliate and therefore an intended beneficiary); Phillips-Harris v. BMW of N. Am., LLC, No. CV 20-2466-MWF (AGRx), 2020 WL 2556346, at *10 (C.D. Cal. May 20, 2020) (BMW's provision of the warranty makes it an intended third-party beneficiary) with Schulz v. BMW of N. Am., LLC, No. 5:20-CV-01697- NC, 2020 WL 4012745, at *5 (N.D. Cal. July 15, 2020) (BMW NA was not a third-party beneficiary because the clause at issue “refers to the subject matter of the dispute, not to the parties involved in the dispute”). REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH..., Slip Copy (2020) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 *3 The Court finds the reasoning of Nation and the Schulz court more persuasive. The reference to “assigns” upon which BMW NA hangs its hat is in the definition of Claim: “ ‘Claim’ broadly means any claim, dispute, or controversy ... between me and you or your employees, officers, directors, affiliates, successors or assigns.” So far, so good, for BMW NA; the drafter of the contract evidently intended to include BMW NA in identifying which claims could be arbitrated. But BMW NA is not included in the class of litigants who may compel arbitration: “Either you or I may choose to have any dispute between us decided by arbitration and not in a court or by jury trial” (emphasis added). BMW NA proffers no evidence to suggest that the signatories of the contract intended to include BMW NA in the “you or I” who may compel arbitration. As the Schulz court found, BMW NA is therefore not an intended beneficiary of the contract, and it may not compel arbitration on this argument. B. Equitable Estoppel “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (citing United Steelworkers v. Warrior & Gulf Navigation Co., 63 U.S. 574, 582 (1960)). However, a litigant who is not a signatory to an arbitration agreement may enforce that arbitration agreement against a signatory if the relevant state law so allows. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009). In California, a nonsignatory can enforce an arbitration agreement under the doctrine of equitable estoppel in two circumstances: (1) [W]hen a signatory must rely on the terms of the written agreement in asserting its claims against the nonsignatory or the claims are intimately founded in and intertwined with the underlying contract, and (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and another signatory and the allegations of interdependent misconduct are founded in or intimately connected with the obligations of the underlying agreement.” Kramer, 705 F.3d at 1128-29 (internal citations and quotations omitted). This type of case is not new. The Ninth Circuit has long held that car manufacturers like BMW NA cannot enforce similar arbitration provisions in contracts between consumers and car dealers against plaintiff consumers where the plaintiff is not seeking to enforce a term of the contract. Id. at 1134 (arbitration could not be compelled where “Plaintiffs do not seek to simultaneously invoke the duties and obligations of Toyota under the Purchase Agreement, as it has none, while seeking to avoid arbitration”); see, e.g., Vincent v. BMW of N. Am., LLC, No. CV 19-6439 AS, 2019 WL 8013093, at *8 (C.D. Cal. Nov. 26, 2019) (arbitration could not be compelled where “Plaintiff's claims do not rely on any of the terms in the Purchase Agreement, only the fact that he purchased the vehicle”) (arbitration provision at issue was identical to the instant Arbitration Provision); Jurosky v. BMW of N. Am., LLC, 441 F. Supp. 3d 963, 970 (S.D. Cal. 2020) (arbitration could not be compelled where “all of Plaintiff's claims expressly reference BMW's warranties, REBECCA NATION, an individual, Plaintiff, v. BMW OF NORTH..., Slip Copy (2020) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 5 [but] none of them reference the purchase agreement”). Kramer, however, is not directly on point. The arbitration agreement in Kramer read as follows: “If either you or we elect, any claims or disputes arising out of this transaction, or relating to it, will be determined by binding arbitration and not by court action. This includes all claims and disputes arising out of, or relating to: the vehicle, your credit application, this contract, the sale or financing of the vehicle, and any collection activities.” Kramer, 705 F.3d at 1124-25. Crucially, the Kramer agreement does not include the third- party language at issue in the arbitration provision of the contract that Nation signed. The absence of that language leaves a gap for other courts to fill. Neither the Ninth Circuit nor the California Supreme Court has yet ruled on whether an arbitration agreement identical to the one that Nation signed can be enforced by a nonsignatory under the doctrine of equitable estoppel. *4 However, a California appeals court recently ruled on an arbitration provision identical to the one Nation signed. Felisilda had similar facts: the Felisildas purchased a used vehicle from a dealer, and, when the vehicle turned out to be a lemon, they sued both the dealer and the manufacturer. Felisilda, 53 Cal. App. 5th at 489. The dealer moved to compel arbitration based upon an arbitration contract virtually identical to the one that Nation signed, the manufacturer filed a notice of non- opposition, and the trial court compelled the Felisildas to arbitrate their claims against both the dealer and the manufacturer. The appeals court upheld the decision compelling the Felisildas to arbitrate their claims against the manufacturer “because the Felisildas expressly agreed to arbitrate claims arising out of the condition of the vehicle-even against third party nonsignatories to the sales contract.” Id. at 497. But Felisilda is not directly on point, because the Felisildas sued both the manufacturer and the dealer. Nation, on the other hand, sued only BMW NA. : Felisilda, therefore, does not change state law that directly controls this case. Kramer remains the controlling precedent for this case. Under the Kramer line of cases, BMW NA cannot compel Nation to arbitrate her claims against it under the doctrine of equitable estoppel. Because the Court finds neither of BMW NA's affirmative arguments for compelling arbitration meritorious, it need not reach the other issues raised in the Opposition. VI. CONCLUSION For the foregoing reasons, the Court DENIES Defendant BMW NA's Motion to Compel Arbitration. IT IS SO ORDERED. All Citations Slip Copy, 2020 WL 7868103 End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT D Ruderman v. Rolls Royce Motor Cars, LLC, --- F.Supp.3d ---- (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 1 2021 WL 141179 Only the Westlaw citation is currently available. United States District Court, C.D. California. Daniel RUDERMAN, an individual, Plaintiff, v. ROLLS ROYCE MOTOR CARS, LLC, a Delaware Corporation, and Does 1 through 10, inclusive, Defendants. Case No. 2:20-cv-04529-JWH (RAOx) | Signed 01/07/2021 Attorneys and Law Firms Kevin Y. Jacobson, Quill and Arrow LLP, Brian Tate Shippen-Murray, Law Offices of Michael H Rosenstein LC, Michael H. Rosenstein, Law Offices of Michael H. Rosenstein LC, Sepehr Daghighian, California Consumer Attorneys PC, Los Angeles, CA, for Plaintiff. Andrew K. Stefatos, Jacqueline Bruce Chinery, Kate S. Lehrman, Lehrman Law Group, Los Angeles, CA, for Defendants. ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION [ECF No. 22] John W. Holcomb, UNITED STATES DISTRICT JUDGE I. INTRODUCTION *1 Before the Court is the motion of Defendant Rolls Royce Motor Cars NA, LLC to compel arbitration.1 The Court finds this matter appropriate for resolution without a hearing. See Fed. R. Civ. P. 78; L.R. 7-15. After considering the papers filed in support and in opposition, the Court DENIES the Motion. 1 Mot. of Def. Rolls Royce Motor Cars NA, LLC to Compel Arbitration and Stay Action (the “Motion”) [ECF No. 22]. II. BACKGROUND Plaintiff Daniel Ruderman filed this action in Los Angeles County Superior Court on April 17, 2019. In his Complaint, Ruderman asserts three causes of action: (1) Violation of the Song-Beverly Act-Breach of Express Warranty; (2) Violation of the Song-Beverly Act-Breach of Implied Warranty; and (3) Violation of the Song-Beverly Act § 1793.2.2 Rolls-Royce removed the action to federal court on May 20, 2020. The Court found removal proper on August 21, 2020.3 2 Compl. [ECF No. 1]. 3 See Minute Order Discharging OSC [ECF No. 19]. On September 23, 2020, Rolls-Royce moved to compel arbitration.4 Ruderman opposed on October 26, 2020,5 and Rolls-Royce replied on November 6, 2020.6 On November 12, 2020, the Court ordered the parties to submit supplemental briefing regarding the applicability of a recent California appellate court opinion, Felisilda v. FCA US LLC, 53 Cal. App. 5th 486, review denied (Nov. 24, 2020).7 Ruderman v. Rolls Royce Motor Cars, LLC, --- F.Supp.3d ---- (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 2 On November 30, 2020, both parties provided their respective supplemental briefs.8 4 See Motion. 5 Pl.’s Opp'n to Motion (the “Opposition”) [ECF No. 27]. 6 Def.’s Reply in Supp. of Motion [ECF No. 28]. 7 Order Re: Suppl. Br. [ECF No. 29]. 8 Pl.’s Suppl. Br. [ECF No. 32]; Def.’s Suppl. Br. [ECF No. 31]. III. FACTUAL BACKGROUND Ruderman's allegations in his Complaint are simple: On June 30, 2016, Ruderman leased a new 2016 Rolls Royce Ghost at an “authorized dealership.”9 The 2016 Ghost was defective.10 Rolls-Royce was unable to repair the defects successfully.11 9 Compl. ¶¶ 8 & 31. Ruderman names this dealership as “Westlake Coach Company” in his Opposition. Opposition at 1. 10 Compl. ¶ 9. 11 Id. ¶¶ 22 & 23. IV. LEGAL BACKGROUND The Federal Arbitration Act (the “FAA”) provides that contractual arbitration agreements “shall be 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. The FAA establishes a general policy favoring arbitration agreements. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011); Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (“Section 2 of the FAA creates a policy favoring enforcement of agreements to arbitrate.”). This statute's principal purpose is to “ensure that private arbitration agreements are enforced according to their terms.” Concepcion, 563 U.S. at 347 n.6. “Arbitration is a matter of contract, and the FAA requires courts to honor parties’ expectations.” Id. at 351. Under the FAA, “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such an 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. If such a showing is made, the district court shall also stay the proceedings, pending the resolution of the arbitration, at the request of one of the parties bound to arbitrate. Id. § 3. V. DISCUSSION *2 Rolls-Royce moves to compel Ruderman to arbitrate this claim, based upon the following language in the arbitration clause of the contract that Ruderman signed with the dealership that leased him the vehicle: Either you or I may choose to have any dispute between us decided by arbitration and not in a court or by jury trial. If a dispute is arbitrated, I will give up my right to participate as a class representative or class member on any Claim I may have Ruderman v. Rolls Royce Motor Cars, LLC, --- F.Supp.3d ---- (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 3 against you including any right to class arbitration or any consolidation of individual arbitrations. Discovery and rights to appeal in arbitration are generally more limited than in a lawsuit, and other rights you and I would have in court may not be available in arbitration .... “Claim” broadly means any claim, dispute, or controversy, whether in contract, tort, statute or otherwise, whether preexisting, present or future, between me and you or your employees, officers, directors, affiliates, successors or assigns, or between me and any third parties if I assert a Claim against such third parties in connection with a Claim I assert against you, which arises out of or relates to my credit application, purchase or condition of this Vehicle, this Lease or any resulting transaction or relationship (including any such relationship with third parties who do not sign this Lease).12 Rolls-Royce is not a signatory to this contract. Its arguments for enforcing this arbitration clause against Ruderman are considered in turn below. 12 Motion 1-2. A. Third-Party Beneficiary Rolls-Royce alleges that it has a right to enforce the arbitration agreement because it is an intended third-party beneficiary of the contract.13 “To sue as a third-party beneficiary of a contract, the third party must show that the contract reflects the express or implied intention of the parties to the contract to benefit the third party.” Comer v. Micor, Inc., 436 F.3d 1098, 1102 (9th Cir. 2006) (citing Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 2000)). Courts generally decline to find intended third-party beneficiaries where sophisticated signatories of a contract could have named the party as a beneficiary and did not. See Murphy v. DirecTV, Inc., 724 F.3d 1218, 1234 (9th Cir. 2013) (“To the extent the Customer Agreement is ambiguous with respect to the parties’ intent to benefit Best Buy, that rule of construction militates against concluding that Best Buy is a third-party beneficiary, in light of the fact that DirecTV clearly knew how to provide for a third-party beneficiary if it wished to do so.”). 13 Id. at 5. As excerpted more fully above, the contract provides that “you or I” (i.e., Ruderman or the seller) may compel arbitration of any claim “between me and you or your employees, officers, directors, affiliates, successors or assigns.” Rolls-Royce alleges that because it is an affiliate of the auto seller, it is a third-party beneficiary of this contract and can compel arbitration. Ruderman counters that the leasing contract does not make Rolls-Royce an affiliate and, in fact, the contract disclaims association with the manufacturer's express warranties over which Ruderman now sues. Furthermore, Ruderman argues that there is no evidence that the signatories intended Rolls-Royce to be a third-party beneficiary of the leasing contract. *3 Automotive companies routinely seek to compel arbitration as third-party beneficiaries based upon this exact contractual language. Federal district courts in California have decided the issue both ways. Compare Tseng v. BMW of N. Am., LLC, No. 2:20-cv-00256- VAP-AFMx, 2020 WL 4032305, at *4 (C.D. Cal. Apr. 15, 2020) (car company was an affiliate and therefore an intended beneficiary); Ruderman v. Rolls Royce Motor Cars, LLC, --- F.Supp.3d ---- (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 Phillips-Harris v. BMW of N. Am., LLC, No. CV 20-2466-MWF (AGRx), 2020 WL 2556346, at *10 (C.D. Cal. May 20, 2020) (car company's provision of the warranty makes it an intended third-party beneficiary) with Schulz v. BMW of N. Am., LLC, No. 5:20-CV-01697- NC, 2020 WL 4012745, at *5 (N.D. Cal. July 15, 2020) (car company not a third-party beneficiary because the clause at issue “refers to the subject matter of the dispute, not to the parties involved in the dispute”). The Court finds the reasoning of Ruderman and the Schulz court more persuasive. The reference to “affiliates” upon which Rolls- Royce hangs its hat is in the definition of Claim: “ ‘Claim’ broadly means any claim, dispute, or controversy ... between me and you or your employees, officers, directors, affiliates, successors or assigns.”14 So far, so good, for Rolls-Royce; the drafter of the contract clearly intended to include Rolls-Royce in identifying which claims could be arbitrated. But Rolls- Royce is clearly not included in the class of litigants who may compel arbitration: “Either you or I may choose to have any dispute between us decided by arbitration and not in a court or by jury trial.”15 Rolls-Royce does not establish that the signatories of the contract intended to include Rolls-Royce in the “you or I” who may compel arbitration. As the Schulz court found, Rolls-Royce is therefore not an intended beneficiary of the contract, and it may not compel arbitration on this argument. 14 Id. at 2. 15 Id. (emphasis added). B. Equitable Estoppel “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (citing United Steelworkers v. Warrior & Gulf Navigation Co., 63 U.S. 574, 582 (1960)). However, a litigant who is not a signatory to an arbitration agreement may enforce that arbitration agreement against a signatory if the relevant state law so allows. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009). In California, a nonsignatory can enforce an arbitration agreement under the doctrine of equitable estoppel in two circumstances: (1) [W]hen a signatory must rely on the terms of the written agreement in asserting its claims against the nonsignatory or the claims are intimately founded in and intertwined with the underlying contract, and (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and another signatory and the allegations of interdependent misconduct are founded in or intimately connected with the obligations of the underlying agreement. Kramer, 705 F.3d at 1128-29 (internal citations and quotations omitted). This type of case is not new. The Ninth Circuit has long held that car manufacturers like Rolls-Royce cannot enforce similar arbitration provisions in contracts between consumers and car dealers against plaintiff consumers where the plaintiff is not seeking to enforce a term of the contract. Id. at 1134 (arbitration could not be compelled where “Plaintiffs do not seek to simultaneously invoke the duties and obligations of Toyota under the Purchase Agreement, as it has none, while seeking to Ruderman v. Rolls Royce Motor Cars, LLC, --- F.Supp.3d ---- (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 5 avoid arbitration”); see, e.g., Vincent v. BMW of N. Am., LLC, No. CV 19-6439 AS, 2019 WL 8013093, at *8 (C.D. Cal. Nov. 26, 2019) (arbitration could not be compelled where “Plaintiff's claims do not rely on any of the terms in the Purchase Agreement, only the fact that he purchased the vehicle” (arbitration provision at issue was identical to the instant Arbitration Provision)); Jurosky v. BMW of N. Am., LLC, 441 F. Supp. 3d 963, 970 (S.D. Cal. 2020) (arbitration could not be compelled where “all of Plaintiff's claims expressly reference BMW's warranties, [but] none of them reference the purchase agreement”). *4 Kramer, however, is not directly on point. The arbitration agreement in Kramer read as follows: “If either you or we elect, any claims or disputes arising out of this transaction, or relating to it, will be determined by binding arbitration and not by court action. This includes all claims and disputes arising out of, or relating to: the vehicle, your credit application, this contract, the sale or financing of the vehicle, and any collection activities.” Kramer, 705 F.3d at 1124-25. Crucially, the Kramer agreement does not include the third- party language at issue in the arbitration provision of the contract that Ruderman signed. The absence of that language leaves a gap for other courts to fill. Neither the Ninth Circuit nor the California Supreme Court has yet ruled on whether an arbitration agreement identical to the one that Ruderman signed can be enforced by a nonsignatory under the doctrine of equitable estoppel. However, a California appeals court recently ruled on an arbitration provision identical to the one Ruderman signed. Felisilda had similar facts: the Felisildas purchased a used vehicle from a dealer, and, when the vehicle turned out to be a lemon, they sued both the dealer and the manufacturer. Felisilda, 53 Cal. App. 5th at 489. The dealer moved to compel arbitration based upon an arbitration contract virtually identical to the one that Ruderman signed, the manufacturer filed a notice of non-opposition, and the trial court compelled the Felisildas to arbitrate their claims against both the dealer and the manufacturer. The California appellate court upheld the decision compelling the Felisildas to arbitrate their claims against the manufacturer “because the Felisildas expressly agreed to arbitrate claims arising out of the condition of the vehicle- even against third party nonsignatories to the sales contract.” Id. at 497. But Felisilda is not directly on point, because the Felisildas sued both the manufacturer and the dealer. Ruderman, on the other hand, sued only Rolls-Royce. Felisilda, therefore, does not change state law that directly controls this case. Kramer remains the controlling precedent for this case. Under the Kramer line of cases, Rolls-Royce cannot compel Ruderman to arbitrate his claims against it under the doctrine of equitable estoppel. VI. CONCLUSION For the foregoing reasons, the Court DENIES Defendant Rolls-Royce's Motion to Compel Arbitration. IT IS SO ORDERED. Ruderman v. Rolls Royce Motor Cars, LLC, --- F.Supp.3d ---- (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 6 All Citations --- F.Supp.3d ----, 2021 WL 141179 End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT E © 2020 Thomson Reuters. No claim to original U.S. Government Works. In re Ford Motor Co. DPS6 Powershift Transmission Products Liability Litigation United States District Court, C.D. California. | July 2, 2020 | --- F.Supp.3d ---- | 2020 WL 3637631 Document Details standard Citation: In re Ford Motor Co. DPS6 Powershift Transmission Prod. Liab. Litig., No. 18ML02814ABFFMX, 2020 WL 3637631 (C.D. Cal. July 2, 2020) All Citations: --- F.Supp.3d ----, 2020 WL 3637631 Search Details Search Query: adv: Motion /s compel /s arbitration and agent Jurisdiction: California Delivery Details Date: July 10, 2020 at 8:11 PM Delivered By: payam shahian Client ID: FERNANDEZ Status Icons: Outline ORDER DENYING MOTION TO COMPEL ARBITRATION (p.1) All Citations (p.9) In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 1 2020 WL 3637631 Only the Westlaw citation is currently available. United States District Court, C.D. California. IN RE: FORD MOTOR CO. DPS6 POWERSHIFT TRANSMISSION PRODUCTS LIABILITY LITIGATION This Document Relates to: Darice A.Wirth, et al. v. Ford Motor Company, et al. Case No. 18-ML-02814 AB (FFMx), Case No. CV 18-00463 AB (FFMx) | Signed 07/02/2020 ORDER DENYING MOTION TO COMPEL ARBITRATION HONORABLE ANDRÉ BIROTTE JR., UNITED STATES DISTRICT COURT JUDGE *1 Before the Court is Ford Motor Company's (“Ford”) Motion to Compel Arbitration (“Motion,” MDL Dkt. No. 747). Plaintiffs Darice and Edward Wirth (“Plaintiffs”) filed an opposition and Ford filed a reply. The Court heard oral argument on May 13, 2020. The Motion is DENIED. I. BACKGROUND This case is a member of the multi-district litigation (“MDL”) entitled In re: Ford Motor Co. DPS6 Powershift Transmission Products Liability Litigation, Case No. ML-18-02814 AB (FFMx). The MDL concerns Ford's installation of an allegedly defective DPS6 PowerShift transmission in certain model year Ford Fiesta and Ford Focus vehicles. Plaintiffs herein sue Ford and Fiesta Ford, Inc. (“Dealership”) in connection with their leased 2014 Ford Fiesta. Plaintiffs assert claims against Ford under the Song-Beverly Act and for fraudulent inducement, and a single claim against the Dealership for fraudulent repair. Ford now moves to compel arbitration. Ford argues that the lease that Plaintiffs signed included a broad arbitration provision that permits Plaintiffs, the dealership/Lessor (Fiesta Ford), Finance Company (Ford Motor Credit Company), or the Holder of the Lease (CAB West LLC) to elect to resolve by arbitration any disputes related to the Lease or any resulting relationship with third parties. Ford acknowledges that it is not a party to the Lease, but nevertheless argues that “California law and the weight of equitable doctrines permit Ford to compel [Plaintiffs] to arbitrate their claims against it.” See Mot. 1:5-10. Plaintiffs oppose. II. LEGAL STANDARD The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq., applies to a written arbitration agreement in “a contract evidencing a transaction involving commerce.” 9 U.S.C. § 2. “The principal purpose of the FAA is to ensure that private arbitration agreements are enforced according to their terms.” AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 344, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal quotations and citation omitted). A party “aggrieved by the alleged failure, neglect, or refusal of another to arbitrate” may bring a motion to compel arbitration in a federal In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 2 district court. 9 U.S.C. § 4. The 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) (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002)); see also Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). If a valid arbitration agreement exists covering the dispute, the district court must compel arbitration. Lifescan, Inc., v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004); see also Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (“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”). *2 Section 2 of the FAA reflects both “a liberal federal policy favoring arbitration, and the fundamental principle that arbitration is a matter of contract[.]” Concepcion, 563 U.S. at 339, 131 S.Ct. 1740 (internal quotations and citations omitted). Consistent with these principles, “courts must place arbitration agreements on equal footing with other contracts, and enforce them according to their terms.” Id. (internal quotations and citations omitted). However, Section 2 provides that written agreements to arbitrate disputes arising out of transactions involving interstate commerce “shall be 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. Thus, “generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening [Section] 2.” Ticknor v. Choice Hotels Int'l, Inc., 265 F.3d 931, 937 (9th Cir. 2001) (quoting Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)); see also Concepcion, 563 U.S. at 339, 131 S.Ct. 1740. “[W]here a party specifically challenges arbitration provisions as unconscionable and hence invalid, whether the arbitration provisions are unconscionable is an issue for the court to determine, applying the relevant state contract law principles. This rule applies even where the agreement's express terms delegate that determination to the arbitrator.” Jackson v. Rent-A-Center, West, Inc., 581 F.3d 912, 918- 19 (9th Cir. 2009), rev'd on other grounds by Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). Courts may consider evidence beyond the complaint when determining a motion to compel arbitration. Guadagno v. E*Trade Bank, 592 F. Supp. 2d 1263, 1266-69 (C.D. Cal. Dec. 29, 2008) (examining declarations and exhibits in determining a motion to compel arbitration under the FAA). The party seeking to compel arbitration must prove the existence of an agreement to arbitrate by a preponderance of the evidence. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014). In these proceedings, “the trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 3 testimony received at the court's discretion to reach a final determination.” Bruni v. Didion, 160 Cal.App.4th 1272, 1282, 73 Cal.Rptr.3d 395 (2008). III. DISCUSSION The Arbitration Provision is contained in the Lease Agreement (“Lease,” Chang Decl. Ex. B) Plaintiffs signed for their 2014 Fiesta. The Arbitration Provision states: Arbitration is a method of resolving any claim, dispute, or controversy (collectively, a “Claim”) without filing a lawsuit in court. Either You or Lessor/Finance Company/Holder (“us” or “we”) (each, a “Party”) may choose at any time, including after a lawsuit is filed, to have any Claim related to this contract decided by arbitration.... Claims include but are not limited to the following: 1) Claims in contract, tort, regulatory, or otherwise; 2) Claims regarding the interpretation, scope or validity of this provision, or arbitrability of any issue; 3) Claims between You and us, your/our employees, agents, successors, assigns, subsidiaries, or affiliates; 4) Claims arising out of or relating to your application for credit, this contract, or any resulting transaction or relationship, including that with the dealer, or any such relationship with third parties who do not sign this contract. Lease, p. 6 (emphasis added). The Lease defines “You,” as the Plaintiffs, the “Lessor” as Fiesta Ford, the “Finance Company” as Ford Motor Credit Company, and “Holder” as CAB West LLC as “Holder.” Id. The Lease refers to Fiesta Ford, Ford Motor Credit Company, and CAB West LLC as “us” and “we.” Id. at p. 6. Defendant Ford is not identified as a party to the Lease, nor is it specifically named in any capacity in the Arbitration Provision. Because the right to compel arbitration is a contractual right generally it may not be invoked by a non-party to the 4. agreement. Mance v. Mercedes-Benz USA, 901 F. Supp. 2d 1147, 1155 (N.D. Cal. 2012) (quoting Britton v. Co- op Banking Group, 4 F.3d 742, 744 (9th Cir. 1993)) (citation omitted). Nevertheless, Ford claims it has standing to invoke the Arbitration Provision for three reasons. First, Ford argues that it is a third-party beneficiary of the Arbitration Provision because it is an “affiliate” of the Lessor, Finance Company, or Holder, and because it is an “intended beneficiary” of the Arbitration Provision. Second, Ford argues that it can enforce the arbitration provision as an alleged principal of the signatory Dealership. Finally, Ford argues that equitable estoppel bars Plaintiffs from resisting arbitration because all of their claims are inevitably connected with In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 4 the Lease, especially the fraudulent inducement claims. Plaintiffs argue that Ford waived its claimed right to arbitrate, and that Ford has no standing to invoke the Arbitration Provision, that is, that Plaintiffs did not agree to arbitrate their dispute with Ford. The Court first addresses the threshold question of waiver, then each of Ford's asserted bases for standing. A. Ford Has Waived Its Claimed Right To Arbitrate. *3 Plaintiffs argue that Ford waived its claimed right to attempt to compel arbitration. Where, as here, the FAA governs, the FAA rather than state law “supplies the standard for waiver” of the right to compel arbitration. Sovak v. Chugai Pharm. Co., 280 F.3d 1266, 1270 (9th Cir. 2002). Under the FAA, the “party arguing waiver of arbitration bears a heavy burden of proof” and “must show: (1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting from such inconsistent acts.” U.S. v. Park Place Assoc., Ltd., 563 F.3d 907, 921 (9th Cir. 2009) (citations omitted). A determination of whether “the right to compel arbitration has been waived must be conducted in light of the strong federal policy favoring enforcement of arbitration agreements.” Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986). Plaintiffs point to several acts by Ford that they say establish waiver. First, Ford knew of an existing right to compel arbitration no later than its March 6, 2018 Answer, which poses as its thirty-fifth affirmative defense that this case should be decided through arbitration. And, Ford acted inconsistent with that right by establishing this MDL, transferring this case into it on March 7, 2018, and otherwise using judicial process to litigate this and other cases in the MDL. Finally, these tactics prejudiced Plaintiff because more than two years have passed since this case was forced into the MDL, and now Ford wants to switch forums. (The Court notes that Ford first told the Court and the parties of its intention to move to compel arbitration in two cases in October 2019. See Mot. 4:19-21.) Ford argues that it didn't know of an existing right to arbitrate. Ford argues that it has standing to invoke the Arbitration Provision based in part on an alleged agency relationship between Plaintiffs and the dealership-retailers. Ford contends that it did not believe such an agency theory was viable until this Court entered its September 5, 2019 Order resolving motions to dismiss in other cases in the MDL. See Order (Dkt. No. 452). In that Order, the Court ruled that those plaintiffs pled facts sufficient to support, at the pleading stage, their theory seeking to hold Ford liable for fraudulent inducement for the dealership- retailer's misleading statements. This theory is premised on an alleged agency relationship between the dealerships and Ford relative to the dealership's representations. Ford contends that the Court's ruling was contrary to most authority, so Ford could not have known that Plaintiff's agency theory was viable, and that therefore Ford had recourse to the arbitration provision, until the Court accepted that theory at the pleading stage. This is Ford's sole argument that it did not have knowledge of an existing right to compel arbitration. In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 5 Plaintiffs have established that Ford waived its right to arbitration, and Ford's arguments to the contrary are not persuasive. First, Ford's position that it didn't know of an existing right to arbitrate until the Court's September 2019 order is unpersuasive. Ford poses three separate grounds for invoking the Arbitration Provision-its claimed status as a third-party beneficiary, its alleged agency relationship with the Dealership, and equitable estoppel-and only the second of these grounds turns on an agency relationship with the Dealership. Ford's third-party beneficiary argument and its equitable estoppel argument have always been available regardless of this Court's ruling on the agency issue at the pleading stage. Accordingly, Ford's assertion that it did not know of an existing right to arbitrate until the Court's September 2019 order rings hollow. Furthermore, the mere fact that other district court have held in other cases that the allegations therein were insufficient to support an agency theory between a manufacturer and a dealership does not equate to “precedent” or “existing law” establishing the same in this case. Indeed, the only cases Ford cites in its present motion for the proposition that dealerships are not agents of manufacturers are a mix of district court cases, three of which dealt with motions to dismiss and the fourth dealt with a motion to certify class. See Mot. 18:10-16. It does not follow from these cases that a plaintiff can never plead facts sufficient to move forward on an agency theory. Notably, this Court did not decide that the agency relationship was established, just that it was sufficiently alleged at the pleading stage. In sum, Ford does not dispute that it long ago had knowledge of at least two of its three bases for seeking to compel arbitration, and its argument for why it newly learned of its third basis is simply unavailing. *4 Ford has also taken acts inconsistent with its right to arbitrate. First, the fact that Ford invoked this Court's authority to adjudicate the supposedly key agency issue referenced above, instead of seeking to arbitrate it along with the rest of the case, is conduct inconsistent with its right to arbitrate. Furthermore, at oral argument on this motion, the Court asked the parties to approximate how many cases in the MDL could have a similar arbitration issue. The parties represented to the effect that they believed that many cases in the MDL involved form lease agreements or purchase contracts that included arbitration provisions similar to the one in issue here. 1 Ford nevertheless removed all of those cases from state court to federal court and secured their further transfer into this MDL. Nearly all of these cases (including the instant case) have been stayed for more than 2 years now, while litigation proceeded on only 30 of them. Although there has not been litigation in this specific case, the parties have vigorously litigated “common issues” that are understood as a practical matter to impact nearly every case in this MDL. Given Ford's conduct in channeling all of these cases into the MDL, resulting in most cases including this one being stayed the entire time, and litigating putative common issues-including the “agency” issue -in this forum, Ford has acted inconsistent with its right to arbitrate. Finally, these acts have prejudiced Plaintiffs because they resulted -predictably-in the case being stayed the whole time. If Ford wanted to arbitrate this case, it should have sought that relief promptly instead of taking the course it did in federal court. In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 6 1 The Court got the distinct impression that this issue is most likely present in, conservatively, at least half of the member cases of the MDL. All things considered, the Court concludes that Ford has waived its claimed right to arbitrate this case, and on that basis the Motion is DENIED. The Court next addresses, in the alternative, the substance of the Motion. B. Ford Cannot Invoke the Arbitration Provision. Framed either as a question of whether Ford has standing to invoke the Arbitration Provision, or as a question of whether Plaintiffs agreed to arbitrate their dispute with Ford, the answer is the same: no. The Court addresses in turn each of Ford's three claimed bases for having standing to invoke the Arbitration Provision. 1. Ford Cannot Invoke the Arbitration Provision under “Third- Party Beneficiary Theories.” Under California law, third-party beneficiaries can enforce arbitration clauses even if they are not named in the agreement. Ronay Family Ltd. P'ship v. Tweed, 216 Cal. App. 4th 830, 836, 157 Cal.Rptr.3d 680 (2013); Macaulay v. Norlander, 12 Cal. App. 4th 1, 6-8, 15 Cal.Rptr.2d 204 (1992). Ford contends that it can invoke the Arbitration Provision as a third- party beneficiary because it is an “affiliate” of the Lessor, Finance Company, or Holder, and because it is an “intended beneficiary” of the Arbitration Provision. Neither argument prevails. Ford argues that it is an “affiliate” of Ford Credit and CAB West because Ford Credit is a wholly-owned subsidiary of Ford, and CAB West is a wholly-owned subsidiary of Ford Credit. 2 See Ford's Request for Judicial Notice, Exs. B and C. But Ford does nothing in its moving papers to define the term “affiliate.” Instead, Ford relies primarily on two district court cases-Katz v. BMW of N. Am., LLC, No. 4:19-cv-01553-KAW, 2019 WL 4451014, * 3 (C.D. Cal. Sep. 17, 2019), and Lanning v. BMW of N. Am., LLC, No. 3:19-cv-00773-BEN-LL, 2019 WL 5748518, at *3-5 (S.D. Cal. Nov. 5, 2019)-but these cases concluded the dealer therein was an affiliate without defining that term. Therefore, with respect, these cases are not persuasive on this point. Only in reply does Ford provide dictionary definitions of the term affiliate but fails to establish that such definitions are accepted in California under the circumstances of this case. 2 In true shot-gun fashion, Ford also argues that it is “entitled to enforce the Arbitration Provision since assignment of the Lease to CAB West places Ford within the class of persons (i.e., assigns) whom the arbitration provision was intended to benefit,” because “Fiesta Ford assigned the Lease to CAB West, which is a wholly-owned subsidiary of Ford Credit, itself a wholly-owned subsidiary of Ford.” Mot. 9:18-22. In other words, Ford claims that it itself is an “assign” of the Lease because its wholly-owned subsidiary's wholly- owned subsidiary is an “assign” of the Lease. But it is axiomatic that, in the absence of corporate veil-piercing -an equitable remedy to prevent injustice-parent and subsidiary corporations are distinct entities, with distinct obligations and liabilities. See, e.g., Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523, 538, 99 Cal.Rptr.2d 824 (2000). Thus, in seeking to enforce the Arbitration Provision as an “assign” based on its subsidiary's subsidiary being an “assign,” Ford implicitly takes the bizarre position that its own corporate veil should be pierced, thereby also implying that there is some abuse of the corporate form in its own chain of ownership, from which, incidentally, it should benefit. In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 7 This is nonsensical and the Court rejects this argument without further discussion. *5 In Goonewardene v. ADP, LLC, 6 Cal. 5th 817, 243 Cal.Rptr.3d 299, 434 P.3d 124 (2019), the California Supreme Court held that all three of the following elements must be satisfied to permit a third party to enforce a contract: “(1) [ ] the third party would in fact benefit from the contract, [ ] (2) [ ] a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) [ ] permitting a third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.” Goonewardene v. ADP, LLC, 6 Cal. 5th 817, 830, 243 Cal.Rptr.3d 299, 434 P.3d 124 (2019). Here, Ford does not expressly address these elements, and therefore fails to carry its burden to establish that it is a third-party beneficiary. And, on its own, the Court does not find these elements satisfied. For example, the Arbitration Provision is contained in a form Lease, and the Court cannot find that “a motivating purposes of the contracting parties” was to benefit Ford as either the manufacturer or parent corporation of one of the signatories. Nor, given the vagueness of the term “affiliate,” can the Court find that Plaintiffs could have reasonably expected the term to encompass the manufacturer of the vehicle, an entity whose identity was plainly known when the Lease was entered into, or one of the signatories' parent corporations merely based on it being a parent corporation. Furthermore, although Ford insists it is an “affiliate” because it is the parent of two parties to the contract, the Arbitration Provision does not specifically encompass claims involving signatories' parent corporations, yet it does specifically encompass claims involving the signatories' “subsidiaries.” In light of the Arbitration Provision's omission of parent corporations, but it inclusion of subsidiaries, the Court cannot find that the parties were motivated to benefit parent corporations like Ford, or that the Plaintiffs reasonably expected Ford to be within the class of third-party beneficiaries identified in the Provision. 2. Ford Cannot Enforce the Arbitration Provision as the Alleged Principal of the Signatory Dealership. Ford argues that because Plaintiffs allege that the Dealership was its “agent” in connection with alleged misrepresentations the Dealership made about the qualities of the vehicle, Ford can enforce the Arbitration Provision as the principal of the Dealership. But this argument fails because there are no allegations or evidence that the alleged agent-the Dealership-entered into the Lease on behalf of the alleged principal-Ford. See Cal. Civ. Code § 2330 (“An agent represents his principal for all purposes within the scope of his actual or ostensible authority, and all the rights and liabilities which would accrue to the agent from transactions within such limit, if they had been entered into on his own account, accrue to the principal.”) (emphasis added). Thus, because there is no allegation or evidence that the Dealership was acting as Ford's agency when it entered into the Lease, it follows that Ford has no standing to invoke the rights set forth in the Lease's Arbitration Provision. In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 8 3. Equitable Estoppel Does Not Prevent Plaintiffs From Resisting Arbitration. Finally, Ford argues that, given that Plaintiffs' “claims against Ford rely upon or are intimately founded in and intertwined with the Lease, and they allege interdependent and concerted misconduct by Ford and Fiesta Ford,” equity bars Plaintiffs from avoiding the Arbitration Provision contained in that Lease. See Mot. 12:12-13:6. This argument fails under the reasoning set forth in Kramer v. Toyota Motor Corp., 705 F.3d 1122 (9th Cir. 2013). Kramer observed that under California law, “the doctrine of equitable estoppel applies in two circumstances: (1) when a signatory must rely on the terms of the written agreement in asserting its claims against the nonsignatory or the claims are ‘intimately founded in and intertwined with’ the underlying contract [citations omitted], and (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and another signatory and ‘the allegations of interdependent misconduct [are] founded in or intimately connected with the obligations of the underlying agreement.’ [citations omitted].” Kramer, 705 F.3d at 1128-29. Ford argues that the first circumstances applies because all of Plaintiffs' claims are intertwined with the Lease because Plaintiff would not have the vehicle or its corresponding warranty but for the Lease. But none of Plaintiffs' warranty or misrepresentation claims against Ford are not “founded in” the Lease, as they are not breach of contract claims or tied to any promise in the Lease. See Kramer, 705 F.3d at 1130-1131 (holding that none of plaintiffs' consumer protection or warranty claims were founded in or intertwined with the purchase contract because defendant's obligations did not arise out of the contract but were independent of them). Even the fraudulent inducement claim, which is premised on Plaintiffs having transacted with the Dealership to obtain the vehicle, does not trigger equitable estoppel. This is, again, because the actionable conduct alleged in the Complaint does not arise out of any obligations of the Lease. The Lease and its terms are incidental to Plaintiffs' claims. Ford argues that the second circumstances applies because of Plaintiffs' allegations of collusion between Ford and the Dealership. But again, Plaintiffs' allegations of collusion or agency do not pertain to any obligation created by the Lease. And the Court rejects Ford's arguments that additional terms in the Lease here, or Plaintiffs' arguably more extensive agency allegations, distinguish this case from Kramer. *6 As the Kramer Court concluded, “in this case, Plaintiffs do not seek to simultaneously invoke the duties and obligations of [Ford] under the [Lease] Agreement, as it has none, while seeking to avoid arbitration. Thus, the inequities that the doctrine of equitable estoppel is designed to address are not present.” Id. at 1134. IV. CONCLUSION For the foregoing reasons, Ford's Motion to Compel Arbitration is DENIED. IT IS SO ORDERED. In re Ford Motor Co. DPS6 Powershift Transmission..., --- F.Supp.3d ---- (2020) © 2020 Thomson Reuters. No claim to original U.S. Government Works. 9 All Citations --- F.Supp.3d ----, 2020 WL 3637631 End of Document © 2020 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT F In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 1 KeyCite Yellow Flag - Negative Treatment Distinguished by Robinson v. Delicious Vinyl Records Inc., C.D.Cal., October 20, 2014 828 F.Supp.2d 1150 United States District Court, C.D. California, Southern Division. In re TOYOTA MOTOR CORP. HYBRID BRAKE MARKETING, SALES, PRACTICES and PRODUCTS LIABILITY LITIGATION. Case No. 8:10-ml-02172-CJC(RNBx). | Dec. 13, 2011. Synopsis Background: Purchasers and lessees of hybrid motor vehicles brought putative class action against automobile manufacturer and its affiliate alleging that vehicles had defective anti-lock braking system (ABS). Manufacturer moved to compel arbitration. Holdings: The District Court, Cormac J. Carney, J., held that: manufacturer could not invoke arbitration clause in purchase agreements between dealerships and purchasers; purchasers were not equitably estopped from denying applicability of arbitration clause; and manufacturer waived its right to arbitrate. Motion denied. Attorneys and Law Firms *1152 Jeremy Nash, Jill S. Abrams, Orin Kurtz, Abbey Spanier Rodd & Abrams LLP, Edith M. Kallas, Joe R. Whatley, Jr., Shujah A. Awan, Whatley Drake & Kallas LLC, Alexandra L. Sims, Gina M. Tufaro, Justin B. Shane, Michael A. Schwartz, Paul O. Paradis, Horwitz Horwitz & Paradis Attorneys at Law, Michael A. London, Douglas & London, Carl Lesueur, Joel A. Klarreich, Tannenbaum Helpern Syracuse and Hirschtritt, Christopher A. Seeger, Seeger Weiss LLP, New York, NY, Michael Marc Goldberg, Lionel Zevi Glancy, Marc L. Godino, Michael Marc Goldberg, Glancy Binkow & Goldberg LLP, Vahn Alexander, Faruqi and Faruqui LLP, Howard B. Miller, Keith David Griffin, Thomas Vincent Girardi, Girardi & Keese LLP, Alyson Amerson, Doyle Lowther LLP, Los Angeles, CA, Robert J. Stein, III, William Michael Hensley, AlvaradoSmith APC, Santa Ana, CA, Jennifer Weber Johnson, R. Dean Gresham, Gresham PC, Joel M. Fineberg, Joel M. Fineberg PC, Dallas, TX, Charles T. Lester, Jr., Eric C. Deters, Eric C. Deters & Associates PSC, Independence, KY, Brian William Smith, Smith & Vanture LLP, Howard Weil Rubinstein, Law Office of Howard W. Rubinstein, West Palm Beach, FL, Chad E. Stewart, W. Daniel Miles, III, William Elvin Hopkins, Jr., Beasley Allen Crow Methvin Portis and Miles PC, Montgomery, AL, Patrick J. Sheehan, Whatley Drake & Kallas LLC, Boston, MA, Paul R. Kiesel, Kiesel Boucher Larson LLP, Beverly Hills, CA, Philip B. Zipin, The Zipin Law Firm LLC, Silver Spring, MD, John R. Climaco, Climaco Wilcox Peca Tarantino and Garofoli Co LPA, Daniel Scott Kalish, Cleveland, OH, Frank E. Piscitelli, Jr., Piscitelli Law Firm, Highland Heights, OH, Patrick G. Warner, Climaco Wilcox Peca Taranito and Garofoli Co LPA, Columbus, OH, Stephen L. Swann, Law Offices of Stephen L. Swann, Arlington, VA, Donald A. Ecklund, G. Glennon Troublefield, James E. Cecchi, Lindsey H. Taylor, *1153 Melissa E. Flax, Carella, Byrne, Checchi, Olstein, Brody & Agnello, PC, Roseland, NJ, Eric D. Freed, Paul M. Weiss, Freed & Weiss LLC, Chicago, IL, Jonathan Shub, Seeger Weiss LLP, Philadelphia, PA, Robert Silverman, Kimmel & Silverman PC, Cherry Hill, NJ, Stephen Gerard Larson, Upland, CA, William James Doyle, II, Doyle Lowther LLP, San Diego, CA, for Plaintiffs. Cary A. Slobin, Kurt C. Kern, Bowman and Brooke LLP, Giovanna C. Tarantino Bingham, Hartline Dacus Barger Dreyer & Kern LLP, Dallas, TX, Darlene M. Cho, Denise A. Smith-Mars, Derek K. Ishikawa, Karen R. Thorland, Michael L. Mallow, Patrick N. Downes, Rachel Aleeza Rappaport, Michael Brian Shortnacy, Loeb and Loeb, Los Angeles, CA, Donald Alan Thomas, Gregory Lee Schuck, Jennifer Hadrick Reid, Huie Fernambucq Stewart LLP, Birmingham, AL, Gregory A. Harrison, Dinsmore & Shohl, Cincinnati, OH, Joel Allen Dewey, DLA Piper LLP, Baltimore, MD, Karl Geercken, Kristin Ann Meister, Alston & Bird LLP, New York, NY, Keith Bryan Rose, The Rose Law Firm, Albany, NY, Nicholas Thomas Moraites, William Dean Ledoux, Jr., Eckert Seamans Cherin & Mellott LLC, Washington, DC, for Defendants. In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 2 ORDER DENYING DEFENDANTS' MOTION TO COMPEL ARBITRATION OF THE NASH AND RAMIREZ PLAINTIFFS' CLAIMS CORMAC J. CARNEY, District Judge. I. INTRODUCTION AND BACKGROUND Plaintiffs Marciano and Miriam Ramirez, Amelia Nash, Lisa Creighton, Leora Kahn and Nathan Kravis, and Brooke and Timothy Whitlock brought this putative class action against Defendants Toyota Motor Corporation and Toyota Motor Sales, USA, Inc. (collectively, “Toyota” or “Defendants”) on behalf of themselves and others similarly situated who purchased or leased certain 2004 to 2010 model Toyota or Lexus hybrid vehicles that were not subject to recall (collectively, “Toyota Hybrid Class Vehicles”). 1 Plaintiffs allege that the anti-lock braking system (“ABS”) in the Toyota Hybrid Class Vehicles are defective in that the system extends the stopping time and distance, resulting in numerous vehicle accidents and creating unreasonable safety risks. In the operative First Amended Complaint, Plaintiffs assert fourteen causes of action under the California Legal Remedies Act (“CLRA”), Cal. Civ.Code § 1750, et seq.; the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code § 17200, et seq.; breach of implied warranty under the Song- Beverly Consumer Warranty Act, Cal. Civ.Code § 1792, et seq., as well as under Maryland and other states' laws; unjust enrichment under California law; and claims for unjust enrichment under Utah, Georgia, and other states' laws. (Dkt. No. 75.) Plaintiffs request, inter alia, a common fund for the repairs to the braking system for the Toyota Hybrid Vehicles, damages, and restitution in connection with their claims. (FAC, Prayer.) Toyota now moves to compel arbitration of the claims of Plaintiffs Amelia Nash and Marciano and Miriam Ramirez pursuant to an arbitration provision contained in the *1154 purchase agreements executed by them and two of Toyota's authorized dealerships. The Court DENIES Toyota's motion. Toyota has no standing to compel arbitration because it is not a signatory or party to the arbitration agreements, and even if Toyota had any right to arbitrate any of Plaintiffs' claims, Toyota waived that right by actively litigating and defending against those claims in federal court for almost two years. A. Purchase Agreements On June 8, 2005, Plaintiff Nash entered into a Retail Installment Sale Contract with Melody Toyota, located at 750 El Camino Real in San Bruno, California, to purchase a 2006 Toyota Highlander Hybrid. (Mallow Decl. in Supp. Defs.' Mot. to Compel [“Mallow Decl.”], Exh. A [“Nash Agreement”].) On February 12, 2007, the Ramirez Plaintiffs entered into a Retail Installment Sale Contract with Toyota of Alameda, located at 2424 Clement Avenue in Alameda, California, to purchase a 2007 Toyota Prius. (Mallow Decl., Exh. B [“Ramirez Agreement”].) The Nash Agreement and Ramirez Agreement (collectively, “the Purchase Agreements”) were produced by Plaintiffs in discovery and redacted copies were submitted as exhibits. (Mallow Decl. ¶¶ 2-3.) The Purchase Agreements set forth the terms of the sale of Plaintiffs' vehicles, including information regarding the purchase price, financing, insurance, warranties disclaimed by the Seller, the warranties of buyer, and rescission rights. (Nash Agrmt.; Ramirez Agrmt.) They also provide that “[f]ederal law and California law apply to th[e] contract.” (Mallow Decl., Exh. A, at 4; id., Exh. B, at 4.) The Purchase Agreements further include an arbitration clause with the following provisions: 1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN U.S. DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL. 2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST U.S. INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS. ... Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this clause, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successor or assigns, which arise out of or relate to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action. In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 3 You expressly waive any right you may have to arbitrate a class action. (Nash Agrmt., at 6; Ramirez Agrmt., at 6.) The Purchase Agreements were signed by the Nash and Ramirez Plaintiffs and representatives of Toyota dealerships. (Nash Agrmt., at 3; Ramirez Agrmt., at 3.) Toyota was not a signatory to either agreement. B. Procedural History On February 8, 2010, Plaintiffs filed their initial Complaint. (Dkt. No. 1.) On September 27, 2010, Plaintiffs filed their First Amended Complaint, which, among *1155 other things, included additional plaintiffs. (Dkt. No. 75.) On July 26, 2010, the parties filed their first Joint Case Management Stipulation, which the Court adopted. (Dkt. No. 70 [“CMC No. 1”]; Ct. Order, Dkt. No. 71, July 28, 2010.) In the first CMC stipulation, Toyota asserted broad defenses that included, inter alia, that Plaintiffs have not and cannot identify any defect with the ABS in the non-recall Toyota Hybrid Class Vehicles; that even if an alleged defect existed, the alleged defect is a drivability or feel good issue that does not render the vehicles unsafe; and that the unique circumstances of a particular driver foreclose a class action. (CMC No. 1, at 3.) On October 28, 2010, Toyota moved to dismiss all the claims in the FAC. (Dkt. No. 3.) 2 On January 20, 2011, the Court granted Toyota's motion to dismiss with respect to the Whitlock Plaintiffs' claims under the CLRA and dismissed all the Plaintiffs' claims for unjust enrichment under California law. (Ct. Order, Dkt. No. 27, Jan. 20, 2011.) 3 The Court denied the remainder of Toyota's motion to dismiss. (Id.) On February 23, 2011, Toyota answered the FAC, asserting arbitration as its tenth affirmative to all or some of the claims in the FAC, including Plaintiffs' putative class action claims. (Dkt. No. 44 [Answer to FAC] ¶ 408.) 4 On January 27, 2011, the parties filed a second Joint Case Management Stipulation, detailing the nature, scope, and deadlines related to a two-phase discovery, consisting of a class discovery and merits discovery phase. (Dkt. No. 82.) On January 28, 2011, the parties participated in their first discovery conference before Magistrate Judge Robert N. Block. (Tufaro Decl. in Supp. Pls.' Opp. [“Tufaro Decl.”] ¶ 5.) The parties appeared before Judge Block for seven subsequent discovery conferences in 2011 on March 8 and 10; April 6, 7, and 26; June 27; and October 14. (Id. ¶ 7.) In the midst of the parties' discovery conferences before Judge Block, on April 27, 2011, the Supreme Court issued AT & T Mobility LLC v. Concepcion, --- U.S. ----, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), which interpreted class actions waivers in certain arbitration agreements to be enforceable. In doing so, the Supreme Court overturned Discover Bank v. Superior Court, 36 Cal.4th 148, 162-63, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005), holding class action arbitration waivers in contracts of adhesion involving disputes over small amounts of money to be unconscionable, on the basis that it was inconsistent with the purpose of the Federal Arbitration Act (“FAA”). Concepcion, 131 S.Ct. at 1748, 1750-51. The Supreme Court reasoned that requiring class arbitration is inconsistent with the FAA because (1) class arbitration sacrifices the informality characteristic of arbitral proceedings, thereby rending arbitration slower and more costly; (2) class arbitration requires procedural formality to the extent not envisioned by Congress when it passed the FAA, and (3) class arbitration greatly increases risks to defendants in high-stakes class proceedings because errors would not be subject to appellate review. Id. at 1751-52. Between July and October 2011, the parties continued to engage in extensive meet and confer discussions and mediation discussions *1156 before Judge Tevrizian (Ret.), during which the parties considered (i) possible resolution of the case and (ii) alternatives to Toyota's production of the ABS source code information for Plaintiffs' anticipated motion for class certification. (Id. ¶ 8.) On June 24, 2011, Toyota served amended notices of deposition on the Nash and Ramirez Plaintiffs. (Id. ¶ 10.) Toyota deposed Plaintiff Nash on July 6, 2011 for approximately seven hours. (Id. ¶ 11.) On July 8, 2011, the parties submitted a third Joint Case Management Stipulation that revised the terms and schedule of discovery, which the Court adopted on July 15, 2011. (Dkt. No. 121; Ct. Order, Dkt. No. 122, July 15, 2011.) On October 14, 2011, Judge Block issued a discovery order setting deadlines for Toyota's production of specifications for the Toyota Highlander and Lexus Hybrid; setting the deadline for the production of source code information for January 23, 2011; setting alternative venues for Toyota's production of source code information; and requiring Toyota to bear all costs associated with implementing the security measures it desired if Toyota elected not to produce the source code information at an existing secured facility in Japan, with the exception of those costs Plaintiffs previously agreed to share. (Ct. Order, Dkt. No. 136, Oct. 14, 2011.) On October 18, 2011, the parties filed under seal a proposed protective order In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 4 governing the exchange and handling of source code and source code related material, (Dkt. No. 141), which the Court approved on October 24, 2011. (Dkt. No. 148.) On November 1, 2011, pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(a), Toyota moved for reconsideration of Block's October 14, 2011 Order requiring Toyota to bear costs for implementing security measures related to its production of the ABS's source code and source related information. (Dkt. No. 154.) On December 2, 2011, the Court denied the motion because it was procedurally defective and because the Judge's Block's Order was not clearly erroneous or contrary to law. (Ct. Order, Dkt. No. 169, Dec. 2, 2011.) C. Motion to Compel Arbitration On October 10, 2011, Toyota moved to compel arbitration of Plaintiffs' claims. (Dkt. No. 132.) Plaintiffs filed their opposition on November 14, 2011. (Dkt. No. 159.) Toyota submitted reply papers on November 21, 2011. (Dkt. No. 165.) Counsel for the parties presented oral arguments on December 5, 2011. (Dkt. No. 172.) Toyota argues that it is now asserting its right to compel Plaintiffs to arbitrate their individual claims under the Purchase Agreements following the April 2011 Supreme Court decision in AT & T Mobility LLC v. Concepcion. (Defs.' Mem. in Supp. Mot. to Compel, at 1, 20-22.) Although Toyota acknowledges that it is not a signatory to the Purchase Agreements, Toyota nevertheless argues that it has the right to compel Plaintiffs to arbitrate their claims based on the principle of equitable estoppel, as Plaintiffs' claims presume the existence of and therefore arise out of the Purchase Agreements and because Plaintiffs raise allegations of substantially interdependent and concerted misconduct by Toyota and its authorized dealers. (Id. at 9-19.) Toyota further argues that it did not waive arbitration because before Concepcion, class action waivers-as contained in the arbitration provisions under the Purchase Agreements-were deemed unconscionable. (Id. at 20-22.) Toyota argues that it has asserted its right to arbitration at the first available opportunity after Concepcion and thus it has not acted inconsistently with a known existing right to arbitration. (Id. at 22-23.) Plaintiffs argue that Toyota's motion to compel should be denied because the language *1157 of the arbitration provision in the Purchase Agreements is both procedurally and substantively unconscionable and therefore unenforceable. (Pls.' Opp. to Mot. to Compel, at 5-15.) Plaintiffs further argue that, as a nonsignatory to the Purchase Agreements, Toyota does not have a right to enforce the arbitration provision, and the principle of equitable estoppel does not apply because none of the claims in the FAC arise out of or relate to the terms or conditions in the Purchase Agreements. (Id. at 15-21.) Finally, Plaintiffs argue that Toyota cannot compel arbitration of their individual claims because Toyota has waived that right, as it knew of any right that it might have had long before Concepcion, and even since the Supreme Court issued the decision, Toyota continued to engage in discovery inconsistent with any intention to compel arbitration. (Id. at 21-25.) Plaintiffs argue that enabling Toyota to compel arbitration at this stage of the proceeding will prejudice them because they have expended considerable time, money, and effort in litigating the action and participating in discovery. (Id. at 24-25.) II. LEGAL STANDARD A. Motion to Compel Arbitration Generally The Federal Arbitration Act governs the enforceability of arbitration agreements in contracts involving interstate commerce. See 9 U.S.C. § 1, et seq.; Gilmer v. Interstate/ Johnson Lane Corp., 500 U.S. 20, 24-26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). The FAA provides that “[a] written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of the contract.” 9 U.S.C. § 2. The FAA reflects both a “liberal federal policy favoring arbitration” and the “fundamental principle that arbitration is a matter of contract.” Concepcion, 131 S.Ct. at 1745; see also Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir.2002) (holding that the FAA not only places arbitration agreements on equal footing with other contracts, but also establishes a federal policy in favor of arbitration). District courts shall stay further proceedings and order arbitration if: (1) a valid agreement to arbitrate exists, and the (2) the agreement encompasses the dispute at issue. Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir.2008); Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir.2000); see also 9 U.S.C. § 2. The first issue of determining the validity of an arbitration agreement is a question of contract interpretation and thus governed by state law. Circuit City Stores, 279 F.3d at 892. The FAA only “permits arbitration agreements to be declared unenforceable ‘upon such grounds as exist at law or in equity for the revocation of any contract.’ ” AT & T, 131 S.Ct. at 1746 (quoting 9 U.S.C. § 2). “When state law prohibits outright the arbitration of a particular type In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 5 of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.” Id. at 1747. But “when a doctrine normally thought to be generally applicable, such as duress or ... unconscionability, is alleged to have been applied in a fashion that disfavors arbitration,” the inquiry becomes more complex. Id. Under California law, courts may refuse to enforce a contract where, at the time of its formation, it was unconscionable, or may limit the application of any unconscionable clause. Cal. Civ.Code § 1670.5(a). A finding of unconscionability has both a procedural and substantive component. See Armendariz v. *1158 Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 114, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000). While procedural unconscionability focuses on the element of “ ‘oppression’ or ‘surprise’ due to unequal bargaining power,” substantive unconscionability centers on an “ ‘overly harsh,’ or ‘one- sided’ results.' ” Id. The second issue as to the scope of an arbitration agreement is governed by federal substantive law. Tracer Research Corp. v. Nat'l Envtl. Servs. Co., 42 F.3d 1292, 1294 (9th Cir.1994); Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir.1999). 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, delay, or a like defense to arbitrability.” Chiron Corp., 207 F.3d at 1131 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Nevertheless, “arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Tracer Research Corp., 42 F.3d at 1294 (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). B. Nonsignatories to Arbitration Agreement Generally, the right to compel arbitration derives from a contractual right, and “[t]hat contractual right may not be invoked by one who is not a party to the agreement and does not otherwise possess the right to compel arbitration.” Britton v. Co-op Banking Group, 4 F.3d 742, 744 (9th Cir.1993); see also Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1287 (9th Cir.2009) (“The strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement ....” (citation and quotes omitted)). However, as an exception to this general rule, a nonparty to an arbitration agreement may compel a signatory to an arbitration agreement to arbitrate claims under certain legal principles governed by federal substantive law, including under the theory of equitable estoppel. See Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir.2006); Ticknor v. Choice Hotels Int'l, Inc., 265 F.3d 931, 936 (9th Cir.2001) (“The FAA creates a body of federal substantive law of arbitrability, enforceable in both state and federal courts and pre-empting any state laws or policies to the contrary.” (citations and quotes omitted)); Int'l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 417 n. 4 (4th Cir.2000) (explaining that federal substantive law governs the question of whether a nonsignatory to an arbitration agreement can compel a signatory to arbitration). A nonsignatory may apply the principle of equitable estoppel to compel arbitration of claims asserted by a party to an arbitration agreement in two types of contexts. First, “a signatory may be required to arbitrate a claim brought by a nonsignatory because of the close relationship between the entities involved, as well as the relationship of the alleged wrongs to the non-signatory's obligations and duties in the contract and the fact that the claims were intertwined with the underlying contractual obligations.” Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1045-46 (9th Cir.2009) (citations and quotes omitted); see also Comer, 436 F.3d at 1101. Second, equitable estoppel applies when the signatory of an arbitration agreement raises allegations of “substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the *1159 signatories to the contract.” Hawkins v. KPMG LLP, 423 F.Supp.2d 1038, 1050 (N.D.Cal.2006) (citation and quotes omitted); see also Mundi, 555 F.3d at 1047 (holding that equitable estoppel did not apply because the plaintiffs' claims were not intertwined with the contract providing for arbitration and because “there were no allegations of collusion or misconduct” between the nonsignatory and signatory). The purpose of equitable estoppel is to “preclude a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that contract imposes.” Mundi, 555 F.3d at 1045. III. DISCUSSION A. Nonsignatories to Arbitration Agreement 5 Toyota argues that Plaintiffs must arbitrate their claims against Toyota because all of their claims fall within the scope of the broadly-worded arbitration provision. (Defs.' Mem. in Supp. Mot. to Compel, at 8-9.) Toyota ignores the plain and clear wording of the arbitration provision in the Purchase Agreements. The arbitration provision states: In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 6 Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this clause, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successor or assigns, which arise out of or relate to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. (Nash Agrmt., at 6; Ramirez Agrmt, at 6 (emphasis added).) Here, the plain language of the provision is clear that the signatories-the Nash and Ramirez Plaintiffs and the Toyota dealerships-may invoke their right to arbitrate any claims arising under the Purchase Agreements. But the provision does not state that nonsignatory third parties, such as Toyota, may arbitrate claims under the Purchase Agreements. The Toyota dealerships have never been parties to this action. Thus, Toyota cannot compel arbitration of Plaintiffs' claims under the arbitration provision in the Purchase Agreements. Contrary to Toyota's presentation of the issue, the proper question for the Court is not whether Plaintiffs' claims fall within the scope of the Purchase Agreements, but whether the parties here are subject to the arbitration provision contained in the agreements. On this issue, Toyota contends that the principle of equitable estoppel applies to enable Toyota to move to compel arbitration of Plaintiffs' claims (1) *1160 because each of the claims presumes the purchase of a Toyota vehicle and existence of a retail contract and thus arise out of and relate directly to the Purchase Agreements, and (2) because Plaintiffs have raised allegations of substantially interdependent and concerted misconduct by Toyota and its authorized dealerships. (Defs.' Mem. in Supp. Mot. to Compel, at 10-19.) 1. Claims Not Intertwined with the Purchase Agreements Toyota argues that Plaintiffs' claims for violation of the CLRA, UCL, and breach of the implied warranty of merchantability depend on the purchase of Toyota vehicles and presume the existence of the Purchase Agreements. (Defs.' Mem. in Supp. Mot. to Compel, at 14-17.) Toyota suggests that this somehow shows that the claims “arise out of” or “relate directly to” the terms and conditions in the Purchase Agreements. (Id. at 17.) Toyota, however, misses the essential element of the test articulated by the Ninth Circuit and other courts of appeal. Under the theory of equitable estoppel, a nonsignatory may be bound to an arbitration agreement where (i) there is a close relationship between the entities involved and (ii) the claims are intertwined with the underlying contractual obligation. Mundi, 555 F.3d at 1045-46. At issue here is not whether there is a close relationship between Toyota and its dealerships, but whether Plaintiffs' claims are intertwined with the terms and conditions in the Purchase Agreements. “When each of a signatory's claims against a nonsignatory makes reference to or presumes the existence of the written agreement [and] the signatory's claims arise out of and relate directly to the written agreement ... arbitration is appropriate.” Hawkins, 423 F.Supp.2d at 1050; see also Thomson-CSF, S.A. v. Am. Arbitration Ass'n, 64 F.3d 773, 779 (2d Cir.1995) (recognizing that several courts of appeal have applied the principle of equitable estoppel to bind a nonsignatory to an arbitration agreement because of “the close relationship between the entities involved, as well as the relationship of the alleged wrongs to the nonsignatory's obligations and duties in the contract ... and [the fact that] the claims were intimately founded in and intertwined with the underlying contract obligations” (citation and quotes omitted)). While it is true that Plaintiffs purchased a Toyota vehicle and executed purchase agreements-and the existence of these facts are relevant to the application of the estoppel principle -the core test of estoppel is whether the plaintiffs' claims are “intertwined” with the contractual obligations contained in the underlying agreement. See Mundi, 555 F.3d at 1046 (citing Sokol Holdings, Inc. v. BMB Munai, Inc., 542 F.3d 354, 361 (2d. Cir.2008) (examining cases in which nonsignatories were permitted to compel a signatory to arbitrate based on estoppel and reasoning that it was “essential in all of these cases that the subject matter of the dispute was intertwined with the contract providing for arbitration”)). Even in Agnew v. Honda In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 7 Motor Co., Ltd.-the case to which Toyota heavily analogies this action-applies the rule from the Seventh Circuit that equitable estoppel applies if the plaintiff's claims “rely on the terms of her purchase agreement with the dealership,” rather than the mere purchase of the vehicles. No. 1:08-cv-01433, 2009 WL 1813783, *4 (S.D.Ind. May 20, 2009) (granting nonsignatories' motion to compel arbitration of plaintiff's claims where, inter alia, plaintiff alleged wrongdoings uniformly against defendants, including against the signatory car dealer, and the nonsignatories' duties arose out of the plaintiff's purchase agreement with the dealer). *1161 Toyota here mistakenly equates the mere purchase of the vehicles and the mere fact that Plaintiffs executed a purchase agreement with the interrelatedness between Plaintiffs' claims and the obligations in the Purchase Agreements. The extent of the obligations in the Purchase Agreements concern Plaintiffs' financing and insurance obligations. The Purchase Agreements also include provisions regarding the parties' right to rescission and the Toyota dealerships' disclaimer of warranties, which state that “the Seller will make no warranties, express or implied, on the vehicles, and there will be no implied warranties of merchantability or of fitness for a particular purpose.” (Nash Agrmt, at 4; Ramirez Agrmt, at 4.) Plaintiffs do not seek to enforce or challenge these terms in the Purchase Agreements or any duty owed by the Toyota dealerships. The operative document at issue is not the Purchase Agreements, but Toyota's marketing materials containing the purported false representations regarding the safety of its braking system. Simply put, Plaintiffs' claims do not rely on the content of the Purchase Agreements for their success. Nor does Toyota cite to any portion of the Purchase Agreements that are related to Plaintiffs' claims. Instead, Plaintiffs' claims are premised on allegations that Toyota's braking system is defective, resulting in numerous vehicle accidents and unreasonable safety risk; that Toyota knew about these brake defects; that Toyota had a duty to disclose the existence of this defect but failed to this information; that Plaintiffs would not have purchased their vehicles had they known about the defect; that Toyota promulgating misleading statements and made false representations regarding the safety of its braking system in their marketing materials; and that Toyota affirmatively took steps to conceal the braking defect and prevent Plaintiffs from discovering the existence of the defect. (FAC, passim.) Based on these allegations, Plaintiffs assert individual and class claims against Toyota for violations of the CLRA, the UCL, breach of implied warranty under the Song-Beverly Consumer Warranty Act, and breach of implied warranty of merchantability, among others. These claims and allegations are independent of any term or condition stated in the Purchase Agreements. And the resolution of Plaintiffs' claims does not require the examination of any provision in the Purchase Agreements. In fact, the FAC does not mention the Purchase Agreements at all. The only claim that may possibly be somehow entangled with the Purchase Agreements is the claim for breach of implied warranty pursuant to the Song-Beverly Consumer Warranty Act, which provides that every sale of consumer goods in California is accompanied by both a manufacturer's and retail seller's implied warranty that the goods are merchantable. (FAC ¶¶ 261, 264.) However, in the FAC, Plaintiffs clearly assert a breach of the manufacturer's implied warranty against Toyota, not against the dealerships that sold the car. Nor could Plaintiffs bring such a claim against the dealerships under the Purchase Agreements, given the disclaimer that “the Seller makes no warranties, express or implied, on the vehicle, and there will be no implied warranties of merchantability or of fitness for a particular purpose.” (Nash Agrmt., at 4; Ramirez Agrmt., at 6.) The Purchase Agreements also state that the seller's disclaimer “does not affect any warranties covering the vehicle that the vehicle manufacturer may provide” (id. (emphasis added)); thus, explicitly recognizing that Plaintiffs may have an independent claim against the manufacturer -i.e., Toyota-for a breach of implied warranties. Toyota analogizes to Agnew, but in that case the court found *1162 that “the claims for breach of express and implied warranties necessarily assume that the warranties were provided as part of the [dealer's] sale” to the plaintiff. 2009 WL 1813783, at *4. In contrast, the breach of implied warranty claim asserted in the FAC do not rely on the terms in the Purchase Agreements; in fact, the Purchase Agreements expressly distinguish a warranty claim against Toyota from a claim against the dealerships. 2. Not Substantially Interdependent and Concerted Misconduct Under the second prong of the equitable estoppel test, the estoppel principle may also apply to permit a nonsignatory to enforce an arbitration agreement against a signatory where the signatory alleges “substantially interdependent and concerted misconduct,” Hawkins, 423 F.Supp.2d at 1050, or “collusion” between the opposing nonsignatory and a In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 8 party to the arbitration agreement. Mundi, 555 F.3d at 1047. Toyota argues that test is satisfied because portions of the FAC allege that Toyota and its authorized dealerships were engaged in interdependent and concerted misconduct. (Defs.' Mem. in Supp. Mot. to Compel, at 17-18, citing FAC ¶¶ 17- 18, 20, 26-27, 29, 140-45, 158-63.) Toyota's argument is simply unsupported by the FAC. None of the cited portions of the FAC concern substantially interdependent and concerted misconduct or collusion between Toyota and its dealerships. In fact, there are only four paragraphs out of 397 alleged in the FAC that even mention the dealerships. Plaintiffs allege that Plaintiff Ramirez took her Toyota Prius to her authorized Toyota dealership after experiencing braking problems, but that the dealership “denied any knowledge of other Toyota Prius drivers experiencing or complaining of similar problems with their brakes,” and instead requested that she leave her vehicle for inspection. (FAC ¶¶ 17, 158.) Plaintiffs further allege that Plaintiff Nash experienced braking problems with her 2006 Highlander Hybrid and took the car into Putnam Toyota, an authorized Toyota dealership, but that “Putnam Toyota said there was no problem with the brakes” and that “her April 2008 accident was caused by worn tires and recommended [that she] put new tires on her vehicle.” (FAC ¶¶ 26, 161.) These allegations do not hint of any collusion between Toyota and its authorized dealerships to conceal information from the Nash and Ramirez Plaintiffs, let alone substantial interrelated and concerted misconduct. Second, as a discussed above, none of the claims in the FAC depend on allegations of an interdependent and concerted misconduct by Toyota and its dealerships; rather, they rely on purported wrongdoings by Toyota. Consequently, Toyota has no basis under the second prong of the estoppel test to compel arbitration. B. Waiver Even if the principle of equitable estoppel applied here, Toyota may not compel arbitration of Plaintiffs' claims on the independent ground that it waived its right to do so. Although the FAA favors the enforcement of private arbitration agreements, 9 U.S.C. § 2, the court may refuse to enforce an arbitration agreement on the ground that the party seeking enforcement has waived such right. Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754, 758- 59 (9th Cir.1988). “A party seeking to prove waiver of a right to arbitration must demonstrate: (1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting from such inconsistent acts.” Hoffman Const. Co. of Or. v. Active Erectors & Installers, Inc., 969 F.2d 796, 798 (9th Cir.1992) (quoting *1163 Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir.1986)); see also Britton, 916 F.2d at 1412. Plaintiffs have satisfied all three requirements for waiver. First, Toyota had knowledge of its right to compel arbitration. Toyota suggests that any attempt to compel arbitration prior to Concepcion would have been futile given that class action waivers were generally unenforceable under California law. (Defs.' Mem. in Supp. Mot. to Compel, at 20-22.) However, Toyota's skepticism of its right to arbitrate before Concepcion is belied by Toyota's assertion of arbitration as the tenth affirmative defense in its February 23, 2011 answer to the FAC, (Defs.' Answer ¶ 408), two months before the Supreme Court issued its decision in Concepcion on April 27, 2011. 6 Toyota surely would not have asserted arbitration as an affirmative defense unless it truly believed that it had some legal basis to arbitrate Plaintiffs' claims. In any event, while Concepcion may have strengthened Toyota's chances for compelling arbitration, it does not mean that Toyota lacked knowledge of its potential right to pursue arbitration prior to that decision. And contrary to Toyota's suggestion, it does not have a right to reset the clock for arbitration based on changing subsequent law, as no party has a right to unfairly play a game of “wait and see” and not assert its legal rights until and unless the law becomes more favorable to its position. 7 Second, Toyota has acted inconsistently with any right it might have had to arbitrate Plaintiffs' claims. Toyota argues that it has not acted inconsistently with a known existing right to compel arbitration because “[a]t its first opportunity to do so, Toyota raised arbitration as an affirmative defense in its Answer, thereby preserving its argument as it awaited the United States Supreme Court's decision in Concepcion.” (Defs.' Mem. in Supp. Mot. to Compel, at 22.) As discussed above, however, Toyota's assertion of arbitration as an affirmative defense undercuts its first argument that it did not have a known existing right to arbitration before Concepcion. Furthermore, the record is inconsistent with Toyota's assertion that it acted “[a]t the first opportunity” to move to compel arbitration. Toyota has vigorously litigated this action for nearly two years, engaged in extensive discovery and meet and confer conferences with Plaintiffs, filed motions with this Court, and negotiated and sought protective orders. Even after the Concepcion opinion was issued in April 2011, Toyota continued to litigate the action for six months and gave In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 9 no indication to this Court, to Magistrate Judge Block, or to Plaintiffs that it intended to assert any *1164 right to arbitrate Plaintiffs' claims. Specifically, Toyota participated in several discovery conferences before Judge Block after the Concepcion decision on April 26, June 27, and October 14, 2011, regarding, among other things, issues connected with source code protection and the protocol of review. (Tufaro Decl. ¶ 7.) Instead of moving to compel arbitration promptly after Concepcion, Toyota even served amended notices of deposition on the Nash and Ramirez Plaintiffs on June 24, 2011 and deposed Plaintiff Nash on July 6, 2011 for approximately seven hours. (Id. ¶¶ 10-11.) On July 8, 2011, Toyota also submitted a third Joint Case Management Stipulation detailing the terms and schedule for discovery. (Dkt. No. 121.) Toyota recently appeared before Judge Block on October 14, 2011 regarding outstanding discovery issues in the case. On the same day, Judge Block issued a discovery order, setting, among other things, the deadline for the production of source code information for January 23, 2011. (Ct. order, Dkt. No. 136, Oct. 14, 2011.) Most recently, Toyota moved for reconsideration of portions of Judge Block's October 14, 2011 Order. (Dkt. No. 154.) In its moving papers, Toyota represented that it has been working diligently to comply with the January 23, 2012 deadline to produce its ABS source code information. (Defs.' Mem. in Supp. Mot. for Reconsid., at 7-8.) On October 18, 2011, Toyota also submitted under seal-after several months of negotiations with Plaintiffs and redrafting-a detailed proposed protective order governing the exchange and handling of source code and source code related material. (Dkt. No. 141.) The Court adopted the proposed protective order on October 24, 2011. (Dkt. No. 148.) The record abundantly shows that Toyota has acted inconsistently with its intention to seek arbitration of Plaintiffs' claims. Toyota's suggestion to the contrary is simply not credible. Toyota's actions before and after Concepcion further distinguish the instant action from the facts in Fisher v. A.G. Becker Paribas Inc., to which Toyota analogizes this case. (See Defs.' Mem. in Supp. Mot. to Compel, at 22-23.) In Fisher, the Ninth Circuit determined that the defendant stock brokerage firm did not act inconsistently with its right to arbitrate claims under an arbitration agreement involving alleged federal securities law violations and common law because it was entitled to rely on the intertwining doctrine and Ninth Circuit precedent holding that arbitration should be denied where common law claims are intertwined with securities law violations. Fisher, 791 F.2d at 693, 694-97. The Supreme Court later rejected the intertwining doctrine in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), after the parties in Fisher had been litigating the action for three and a half years and engaging in extensive discovery. Id. at 693, 697. Toyota argues that, as in Fisher, the Supreme Court's decision in Concepcion constitutes changing intervening law that shows that it did not act inconsistently with an existing right to arbitrate its claims. (Defs.' Mem. in Supp. Mot. to Compel, at 22-23.) However, in Fisher, the defendant's actions before and after Byrd were consistent with its position. The defendant in that case, unlike Toyota here, did not assert arbitration as an affirmative defense, thereby suggesting that it had a known right to compel arbitration. Nor is there any suggestion that the Fisher defendant continued to vigorously litigate the action by participating in discovery conferences, deposing witnesses, negotiating and drafting protective orders, and challenging discovery *1165 orders after the intervening Supreme Court decision was issued. 8 Third, Plaintiffs will suffer prejudice if the Court grants Toyota's belated motion to compel arbitration of their claims. For nearly two years, Plaintiffs expended substantial resources, time, and effort in litigating this action and being committed to a litigation strategy in federal court. Plaintiffs undoubtedly would have utilized a different strategy had they known that the case would proceed to arbitration. See Hoffman Constr. Co., 969 F.2d at 799 (finding that the “the subjection of [plaintiff] to the litigation process ... the discovery process, the expense of litigation” resulted in apparent prejudice); Plows v. Rockwell Collins, Inc., Case No. SACV 10-01936, 2011 WL 3501872, *3-4, 2011 U.S. Dist. LEXIS 88781, *9 (C.D.Cal. Aug. 9, 2011) (concluding that defendant waived right to arbitration because, inter alia, plaintiff “presumably ... made different choices concerning the litigation strategy of the case than he would have made if he had known that the case was going to proceed in arbitration”). 9 Nor is it the case that, unlike the plaintiffs in Fisher, the Plaintiffs here will be able to utilize discovery for the litigation of nonarbitrable claims in federal court, as Toyota argues that all of Plaintiffs' individual claims should be submitted to arbitration. See Fisher, 791 F.2d at 697 (finding no prejudice resulting from extensive discovery because, inter alia, discovery would be available for trial in federal court of the nonarbitrable claim). Rather, Toyota has specifically benefited from discovery-such as from the deposition of Plaintiff Nash-that it would not have been entitled to in arbitration. It is simply too late for Toyota now to tell Plaintiffs that it is putting an end to litigation in federal court, switching to another forum, and starting the case over In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 10 again in arbitration after being unable to dismiss Plaintiffs' claims in large part and now facing a January 2011 deadline to produce the ABS source code information essential to Plaintiffs' claims. IV. CONCLUSION For the foregoing reasons, Toyota's motion to compel arbitration of the Nash and Ramirez Plaintiffs' claims is DENIED. All Citations 828 F.Supp.2d 1150 Footnotes 1 Specifically, the Toyota Hybrid Class Vehicles consist of model year 2004 to 2009 Prius vehicles, the model year 2006 to 2010 Toyota Highlander Hybrid vehicles, the model year 2006 through 2008 Lexus RX 400h vehicles, and model year 2010 Lexus RX 450h vehicles. (First Amended Complaint [“FAC”] ¶¶ 4-8.) On February 8, 2010, Toyota announced that it would conduct a voluntary recall for the 2010 model year Prius and the 2010 Lexus HS 250h to update the ABS software in response to consumer complaints. (Id. ¶ 151.) 2 Toyota's motion to dismiss the FAC is docketed under Case No. 8:10-ml-02172-CJC(RNBx). 3 The January 20, 2011 Order is docketed under Case No. 8:10-ml-02172-CJC(RNBx). 4 Toyota's answer to the FAC is docketed under Case No. 8:10-ml-02172-CJC(RNBx). 5 As a threshold matter, Toyota argues that the arbitrator, rather than this Court, should decide the issue of whether a nonsignatory such as Toyota may compel Plaintiffs to arbitrate their claims because the Purchase Agreements expressly provide that the arbitrator should decide issues of interpretation, scope, and applicability of the arbitration provision. (Defs.' Mem. in Supp. Mot. to Compel, at 7.) The Court disagrees. While parties may agree to explicit provisions enabling the arbitrator to decide issues of the applicability and scope of an arbitration agreement, these provisions are part of the agreement and only apply to signatories. Toyota cannot invoke the right to the benefits of the Purchase Agreement because it was not a party to the agreement; thus, the threshold issue of whether Toyota, as a nonsignatory, may compel Plaintiffs to submit to arbitration under the Purchase Agreements must be decided by this Court. Britton, 4 F.3d at 744; Comedy Club, 553 F.3d at 1287. None of the cases cited by Toyota in support of its position, (Defs.' Mem. in Supp. Mot. to Compel, at 7-8), counsels otherwise, as they are inapposite to nonsignatories. 6 Toyota in fact points to its assertion of arbitration as an affirmative defense in its answer to argue that it did not act inconsistently with a known existing right to arbitrate Plaintiffs' claims. (Defs.' Mem. in Supp. Mot. to Compel, at 22.) 7 The Court further finds that it is uncertain whether Concepcion would even apply to this instant action to render the class action waivers in the Purchase Agreements enforceable. Concepcion specifically overturned Discover Bank v. Superior Court, 36 Cal.4th 148, 162-63, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005), holding class action arbitration waivers in contracts of adhesion involving disputes over small amounts of money to be unconscionable. Concepcion, 131 S.Ct. at 1748, 1750-51. The Supreme Court held that the Discover Bank rule, to the extent that it allowed for and mandated the availability of class arbitration, was inconsistent with the FAA, which was designed to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings. Id. As Plaintiffs point out, however, the instant action does not concern a dispute involving small sums of money, but involve damages related to expensive cars worth thousands of dollars. (Pls.' Opp. to Mot. to Compel, at 23.) 8 Toyota also relies on Villegas v. U.S. Bancorp, No. C 10-1762, 2011 WL 2679610 (N.D.Cal. June 20, 2011) and Estrella v. Freedom Fin., No. C 09-03156, 2011 WL 2633643 (N.D.Cal. July 5, 2011) in support of the proposition that before Concepcion, the failure to move to compel arbitration cannot be deemed to be inconsistent with an existing right to compel arbitration under an arbitration agreement containing a class-action waiver clause. (See Defs.' Mem. in Supp. Mot. to Compel, at 23.) However, there was no question in those cases that Concepcion would apply, and there was no indication in either of those cases that the defendants asserted arbitration as an affirmative defense. Further, there is no indication that the Villegas and Estrella defendants, even after Concepcion, continued to diligently litigate the action, meet and confer regarding discovery, and negotiate protective orders. Rather, both the defendants in Villegas and Estrella promptly moved to compel arbitration shortly after Concepcion was issued. 9 Because the Court finds that the principle of equitable estoppel does not apply to permit Toyota to arbitrate claims against Plaintiffs and because Toyota has also waived its right to arbitration, the Court does not reach Plaintiffs' argument that the arbitration provision in the Purchase Agreements are procedurally and substantively unconscionable. In re Toyota Motor Corp. Hybrid Brake Marketing, Sales,..., 828 F.Supp.2d 1150... © 2020 Thomson Reuters. No claim to original U.S. Government Works. 11 End of Document © 2020 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT G Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 1 53 Cal.App.5th 539 Court of Appeal, First District, Division 3, California. Thomas JARBOE, Plaintiff and Respondent, v. HANLEES AUTO GROUP et al., Defendants and Appellants. A156411 | Filed 8/14/2020 Synopsis Background: Employee brought action against auto dealership group, its 12 affiliated dealerships, and three individuals who owned the group, asserting wage and hour claims under the Private Attorneys General Act (PAGA). Defendants moved to compel arbitration based on employment agreement between employee and one of the affiliated dealerships. The Superior Court, Alameda County, No. RG17887089, Winifred Smith, J., denied the motion as to all defendants except the signatory dealership and refused to stay causes of action allowed to proceed in litigation pending arbitration of employee's claims against signatory dealership. Defendants appealed. Holdings: On rehearing, the Court of Appeal, Siggins, Presiding Justice, held that: [1] any standing that individual owners had to compel arbitration was in limited context of their ownership of signatory dealership; [2] arbitration was not enforceable under third-party beneficiary theory by nonsignatory affiliated dealerships; and [3] arbitration was not through equitable estoppel by nonsignatory affiliate dealerships. Affirmed. Opinion, 262 Cal. Rptr. 3d 906, vacated. West Headnotes (21) [1] Alternative Dispute Resolution Scope and standards of review On appeal from an order denying a petition to compel arbitration, Court of Appeal reviews the trial court's factual determinations under the substantial evidence standard, and it reviews the legal issues independently. [2] Alternative Dispute Resolution Scope and standards of review On appeal from order denying a nonsignatory's petition to compel arbitration, Court of Appeal independently considers the question of whether and to what extent a nonsignatory may enforce an arbitration agreement. [3] Alternative Dispute Resolution Decisions reviewable; finality Although an order denying a stay of proceedings is not generally appealable, it is reviewable on appeal from an order denying arbitration because the denial of stay affects the order appealed from and substantially affects the rights of the appellant. [4] Alternative Dispute Resolution Scope and standards of review A trial court's decision whether to stay an action at law when a controversy has been ordered to arbitration is reviewed for an abuse of discretion. [5] Alternative Dispute Resolution Contractual or consensual basis Alternative Dispute Resolution Arbitration favored; public policy Under federal and state law, a strong public policy favors arbitration and seeks to ensure private agreements to arbitrate are enforced Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 2 according to their terms; however, there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate. [6] Alternative Dispute Resolution Contractual or consensual basis Arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he or she has not agreed so to submit. [7] Alternative Dispute Resolution Arbitrability of dispute It is possible for parties to agree that arbitrator may determine scope of his authority but it is for court to determine, by examination of contract, whether parties have so provided. [8] Alternative Dispute Resolution Arbitrability of dispute Contractual language empowering the arbitrator to determine arbitrability must be clear and unmistakable. [9] Alternative Dispute Resolution Persons entitled to enforce An entity seeking to compel arbitration must generally establish it was a party to an arbitration agreement. [10] Alternative Dispute Resolution Persons entitled to enforce Only in limited circumstances may an arbitration agreement be enforced by nonsignatories; one such circumstance is where a benefit is conferred on the nonsignatory as a result of the agreement, making the nonsignatory a third party beneficiary of the arbitration agreement. [11] Alternative Dispute Resolution Persons entitled to enforce Employee was not required to arbitrate his claims against individual owners of auto dealership group, which was comprised of separate dealerships that functioned as separate corporate entities, pursuant to arbitration provision in employment agreement with signatory dealership, related to his termination from a nonsignatory affiliated dealership to which he was transferred after working for one month at signatory dealership, where any standing that owners had to compel arbitration was in the limited context of their ownership of signatory dealership, due to language in the agreement stating that agreement was between employee and the “Company,” meaning specifically, the signatory dealership. [12] Alternative Dispute Resolution Persons entitled to enforce Arbitration provision contained in employment agreement with auto dealership that was part of group of dealerships owned by three individuals was not enforceable by the nonsignatory affiliated dealerships under third- party beneficiary theory, in employee's Private Attorneys General Act (PAGA) action arising from his termination from an affiliated dealership to which he was transferred after working one month at signatory dealership, where affiliated dealerships failed to show that agreements were made expressly for their benefit. Cal. Civ. Code § 1559; Cal. Lab. Code § 2698 et seq. [13] Alternative Dispute Resolution Waiver or Estoppel Under the equitable estoppel doctrine, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are intimately founded in and intertwined with the underlying contract obligations. Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 3 [14] Alternative Dispute Resolution Waiver or Estoppel Equitable estoppel doctrine applies to allow nonsignatory defendants to enforce an arbitration agreement where the claims are based on the same facts and are inherently inseparable from arbitrable claims against signatory defendants. [15] Alternative Dispute Resolution Waiver or Estoppel Fundamental point of equitable estoppel doctrine's application to allow nonsignatory defendants to enforce an arbitration agreement is that a party may not make use of a contract containing an arbitration clause and then attempt to avoid the duty to arbitrate by defining the forum in which the dispute will be resolved. [16] Alternative Dispute Resolution Waiver or Estoppel Arbitration provision in employment with auto dealership that was part of group of dealerships owned by three individuals was not enforceable by nonsignatory affiliated dealerships through equitable estoppel, in employee's Private Attorneys General Act (PAGA) action arising from his termination from an affiliated dealership to which he was transferred after working one month at signatory dealership, where there was no indication of an integral relationship between signatory dealership and the nonsignatory affiliated dealerships, and employee was not seeking to obtain benefits under his employment agreement from nonsignatory affiliated dealerships. Cal. Lab. Code § 2698 et seq. [17] Estoppel Nature and Application of Estoppel in Pais Equitable estoppel precludes a party from asserting rights he otherwise would have had against another when his own conduct renders assertion of those rights contrary to equity. [18] Labor and Employment Actions A Private Attorneys General Act (PAGA) claim is not a dispute between an employer and an employee arising out of their contractual relationship; instead, it is a dispute between an employer and the state, which alleges or through its agents-either the Labor and Workforce Development Agency or aggrieved employees- that the employer has violated the Labor Code. Cal. Lab. Code § 2698 et seq. [19] Labor and Employment Actions Because a Private Attorneys General Act (PAGA) claim is representative and does not belong to an employee individually, an employer should not be able dictate how and where the representative action proceeds. Cal. Lab. Code § 2698 et seq. 3 Cases that cite this headnote [20] Alternative Dispute Resolution Decisions reviewable; finality An order compelling arbitration is not appealable. [21] Appeal and Error Necessity of separate or cross-appeal in general Generally, a respondent who has not appealed from the judgment may not urge error on appeal. Witkin Library Reference: 6 Witkin, Cal. Procedure (5th ed. 2008) Proceedings Without Trial, § 533 [Petitioner or Respondent Is Not Party to Arbitration Agreement; In General.] **642 Trial Court: Alameda County Superior Court, Trial Judge: Hon. Winifred Y. Smith (Alameda County Super. Ct. No. RG17887089) Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 Attorneys and Law Firms John P. Boggs, Roman Zhuk, Fine, Boggs, & Perkins, LLP, Half Moon Bay, for Appellants. Nicholas A. Carlin, Brian S. Conlon, Phillips, Erlewine, Given, & Carlin, LLP, San Fransicos for Respondent. Siggins, P.J. **643 *543 I. INTRODUCTION Plaintiff Thomas Jarboe1 was hired by DKD of Davis, Inc., doing business as Hanlees Davis Toyota (DKD of Davis). Shortly after he began working, *544 Jarboe was transferred to Leehan of Davis, Inc., doing business as Hanlees Chrysler Dodge Jeep Ram Kia (Leehan of Davis). Following his termination at Leehan of Davis, Jarboe brought this wage and hour action individually and on behalf of a putative class against the Hanlees Auto Group (Hanlees), its 12 affiliated dealerships, including DKD of Davis and Leehan of Davis, and three individual defendants, Dong K. Lee, Kyong S. Han, and Dong I. Lee (collectively defendants). Defendants moved to compel arbitration based on an employment agreement between Jarboe and DKD of Davis. The trial court granted the motion as to 11 of the 12 causes of action against DKD of Davis, but denied the motion as to the other defendants. The trial court also allowed Jarboe's claim under the Private Attorneys General Act of 2004 (PAGA), Labor Code section 2698 et seq. to proceed in court against all defendants. The trial court refused to stay the causes of action allowed to proceed in litigation pending arbitration of Jarboe's claims against DKD of Davis. (See Code Civ. Proc., § 1281.4). Hanlees, its affiliated dealerships, and the individual defendants contend they are entitled to enforce the agreement to arbitrate between Jarboe and DKD of Davis as third party beneficiaries of Jarboe's employment agreement or under the doctrine of equitable estoppel. The record fails to support either theory. Neither did the trial court err in failing to stay the litigation under Labor Code section 1281.4. Accordingly, we affirm. II. BACKGROUND Hanlees is a group of automobile dealerships in Northern California. The dealerships function as separate corporate entities.2 Three individual defendants own the Hanlees group (individual owners). As part of the hiring process, Jarboe was required to sign two separate agreements, each containing an arbitration provision (Arbitration Agreements).3 Both agreements were form contracts offered on a non-negotiable, take-it or leave it basis, with little or no time for Jarboe to review them. *545 The first agreement, electronically signed by Jarboe on August 4, 2017, is entitled “Applicant Statement and Agreement” (Application). The Application is one page, and consists of six paragraphs, all in identical and small- nearly impossible to read-font. None of the six paragraphs **644 is labeled or titled, in boldface or otherwise. The last sentence of the first paragraph provides: “I hereby authorize the Company with which I have applied for employment to share my Application for Employment with other affiliated companies/employers, and hereby agree that all terms, conditions and/or agreements contained in this Applicant's Statement and Agreement ... shall be enforceable by me and by such other companies/employers ..., even though I have not signed a separate Applicant's Statement and Agreement for those other companies/employers.” Nowhere in the Application are the terms “Company,” “companies,” “affiliated companies” or “employers” defined. The fourth paragraph of the Application refers to arbitration. This paragraph is almost 35 lines and ends with these three sentences: “If CCP § 1284.2 conflicts with other substantive statutory provisions or controlling case law, the allocation of costs and arbitrator fees shall be governed by said statutory provisions or controlling case law instead of CCP § 1284.2. Both the Company and I agree that any arbitration proceeding must move forward under the Federal Arbitration Act (9 U.S.C. §§ 3-4) even though the claims may also involve or relate to parties who are not parties to the arbitration agreement and/or claims that are not subject to arbitration; thus, the court may not refuse to enforce this arbitration agreement and may not stay the arbitration proceeding despite the provisions of California Code of Civil Procedure § 1281.2(c). I UNDERSTAND BY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH I AND THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY JURY.” The second agreement, which Jarboe signed in ink on August 10, 2017, is entitled “Agreements” and is between DKD of Davis, as the named “Company” and Jarboe as the named Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 5 “Employee” (Employment Agreement). The Employment Agreement contains two boldfaced paragraphs, the first of which is entitled “At Will Employment Agreement.” This first paragraph concludes with the following advisement: “This agreement is the entire agreement between the Company and the employee regarding the rights of the Company or employee to terminate employment with or without good cause and this agreement takes the place of all prior and contemporaneous agreements, representations, and understandings of the employee and the Company.” The *546 second paragraph is entitled “Binding Arbitration Agreement.” It is 43 lines, without indentation, included within which is a sentence that is alone 11 lines.4 **645 Jarboe worked at Hanlees Toyota for approximately one month before he was transferred to Hanlees Kia in September 2017, where he worked until his termination in January 2018. The compensation reports Jarboe received while working at Hanlees Kia referred to his employer as “Leehan of Davis, Inc dba Hanlees [Chrysler Dodge Jeep Ram Kia].” After he was terminated in 2018, Jarboe filed this putative class action against Hanlees, its 12 affiliated dealerships, and the three individual owners, alleging numerous Labor Code violations, including: failure to provide meal and rest periods; failure to pay overtime compensation; failure to pay for all hours worked; and failure to pay for waiting time compensation. In addition to various tort claims, including fraud and conversion, the complaint alleges an unfair competition claim, as well as a PAGA claim. All but one cause of action are asserted against “All Defendants” without differentiation. The fifth cause of action (failure to timely pay all earned wages in violation of Lab. Code, § 204) is alleged solely against the Hanlees group. The complaint seeks damages and injunctive relief, as well as civil penalties under the PAGA. Defendants moved to stay the action and compel arbitration. The court determined that there was an enforceable arbitration agreement, finding evidence that Jarboe electronically signed the Application and ink signed the Employment Agreement. While the Employment Agreement was procedurally unconscionable it was not substantively unconscionable. Except for Jarboe's individual claims against DKD of Davis, the court denied the motion to compel. The court determined that the defendants failed to establish that the *547 Employment Agreement applied to entities other than the named “Company”: DKD of Davis. The court also determined that Jarboe's PAGA cause of action could proceed in court because an employee “bringing a PAGA action ... is not acting on his or her own behalf, but on behalf of the state and the state is not bound by the employee's prior agreement, including any waiver of his right to bring a representative action.” The court denied defendants’ motion to stay the PAGA claim pending completion of the arbitration of Jarboe's private claims. III. DISCUSSION A. Standards of Review [1] [2] On appeal from an order denying a petition to compel arbitration, we review the trial court's factual determinations under the substantial evidence standard, and we review the legal issues independently. (Duick v. Toyota Motor Sales, U.S.A., Inc. (2011) 198 Cal.App.4th 1316, 1320, 131 Cal.Rptr.3d 514; Provencio v. WMA Securities, Inc. (2005) 125 Cal.App.4th 1028, 1031, 23 Cal.Rptr.3d 524.) Specifically, we independently consider the question of whether and to what extent a nonsignatory may enforce an arbitration agreement. (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 708, 111 Cal.Rptr.3d 876; DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352, 140 Cal.Rptr.3d 896 (DMS Services).) [3] [4] Although an order denying a stay of proceedings is not generally appealable, it is reviewable on appeal from an order denying arbitration because the denial of stay affects the order appealed from and substantially affects the rights of the appellant. (J.H. Boyd Enterprises, Inc. v. Boyd (2019) 39 Cal.App.5th 802, 811-812, 252 Cal.Rptr.3d 360.) A trial court's decision **646 whether to stay an action at law when a controversy has been ordered to arbitration is reviewed for an abuse of discretion. (See Cardiff Equities, Inc. v. Superior Court (2008) 166 Cal.App.4th 1541, 1548, 83 Cal.Rptr.3d 699.) B. The Trial Court Correctly Refused to Compel Arbitration Defendants contend that the trial court erred by concluding the arbitration provision in the Employment Agreement was limited to its signatories. Defendants argue that Hanlees, its affiliated dealerships, and the individual owners were entitled to compel arbitration either under the terms of the agreement, as third party beneficiaries or under the theory of equitable estoppel. Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 6 *548 1. Legal Principles [5] [6] Under federal and state law, a strong public policy favors arbitration and seeks to ensure “ ‘private agreements to arbitrate are enforced according to their terms.’ ” (Stolt- Nielsen S.A. v. AnimalFeeds Internat. Corp. (2010) 559 U.S. 662, 664, 130 S.Ct. 1758, 176 L.Ed.2d 605; see Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9, 10 Cal.Rptr.2d 183, 832 P.2d 899.) However, “ ‘ “there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate ....” ’ ” (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744, 222 Cal.Rptr. 1, 710 P.2d 833; accord, Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 858-859, 243 Cal.Rptr.3d 340 (Cohen); Jones v. Jacobson (2011) 195 Cal.App.4th 1, 17, 125 Cal.Rptr.3d 522 (Jones).) “ ‘[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he [or she] has not agreed so to submit.’ ” (AT&T Technologies. v. Communications Workers (1986) 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648; Cohen, at pp. 855, 857-858, 243 Cal.Rptr.3d 340.) [7] [8] “The United States Supreme Court has stated that ‘... the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute.’ (Mitsubishi Motors v. Soler Chrysler- Plymouth (1985) 473 U.S. 614, 626 [105 S.Ct. 3346, 87 L.Ed.2d 444].)” (Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683, 57 Cal.Rptr.2d 867.) “The performance of this duty necessarily requires the court to examine and, to a limited extent, construe the underlying agreement.” (Freeman v. State Farm Mutual Auto. Ins. Co. (1975) 14 Cal.3d 473, 480, 121 Cal.Rptr. 477, 535 P.2d 341.) “It is, of course, possible for the parties to agree that the arbitrator may determine the scope of his authority. ‘The arbitrability of a dispute may itself be subject to arbitration if the parties have so provided in their contract.’ [Citation.] Even then, it is necessary for the court to examine the contract to ascertain whether the parties ‘have so provided.’ [Citations.]” (Ibid.) Contractual language empowering the arbitrator to determine arbitrability must be clear and unmistakable. (Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444, 452, 123 S.Ct. 2402, 156 L.Ed.2d 414 (Green Tree); AT & T Technologies, Inc. v. Communications Workers (1986) 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648; United Public Employees v. City and County of San Francisco (1997) 53 Cal.App.4th 1021, 1026, 62 Cal.Rptr.2d 440.) Here, there is no clear and unmistakable language that empowers the arbitrator to determine whether a valid agreement to arbitrate exists. Accordingly, as the reviewing court, we will make this determination. Hanlees’ citation to Green Tree does not change our conclusion. In **647 Green Tree, an arbitration clause in a contract between a lender and its customer provided *549 that “[a]ll disputes, claims, or controversies arising from or relating to this contract or the relationships which result[ed] from this contract ... [would] be resolved by binding arbitration by one arbitrator selected by us with consent of you.” (Id. at p. 448, 123 S.Ct. 2402, italics omitted.) A plurality of the court ruled that the question of whether the agreement was silent on class arbitration was for the arbitrator to decide. The parties agreed to submit all disputes arising from or related to the contract to the arbitrator, and the dispute related to the contract and the resulting relationships. (Id. at pp. 451-452, 123 S.Ct. 2402.) The plurality decision in Green Tree, however, has nothing to do with the issue in this case - whether the arbitration agreement applies to nonsignatories. [9] [10] An entity seeking to compel arbitration must generally establish it was a party to an arbitration agreement. (DMS Services, supra, 205 Cal.App.4th at pp. 1352-1353, 140 Cal.Rptr.3d 896; JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1236, 123 Cal.Rptr.3d 429.) Only in limited circumstances may an arbitration agreement be enforced by nonsignatories. One such circumstance is where a benefit is conferred on the nonsignatory as a result of the agreement, making the nonsignatory a third party beneficiary of the arbitration agreement. (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 301, 226 Cal.Rptr.3d 797.) Another is when the equitable estoppel doctrine applies and a nonsignatory is allowed to enforce an arbitration clause because the claims against the nonsignatory are dependent on, or inextricably intertwined with, the contractual obligations of the agreement containing the arbitration clause. (See Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 229-230, 92 Cal.Rptr.3d 534; Jensen, at p. 306, 226 Cal.Rptr.3d 797; Jones, supra, 195 Cal.App.4th at p. 20, 125 Cal.Rptr.3d 522; Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271-272, 25 Cal.Rptr.3d 440 (Boucher); see also JSM Tuscany, at pp. 1237-1239, 123 Cal.Rptr.3d 429.) 2. Standing of the Individual Owners Defendants argue that express language of both the Application and the Employment Agreement requires Jarboe to arbitrate his employment-related claims against the Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 7 individual owners. In support of their position, defendants cite the following language from the Application: “I and the company both agree that any claim ... that either party may have against one another ... which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company ... shall be submitted to and determined exclusively by binding arbitration.” (Italics *550 added.) In isolation, this reference in the Application to “owners” would appear to support defendants’ position that Jarboe is required to arbitrate his claims against the individual defendants. [11] Although defendants contend the Employment Agreement contains the same operative language, there is an important difference. Unlike the Application, the Employment Agreement defines the “Company.” It is DKD of Davis. Thus, even if the individual defendants have standing to **648 compel arbitration as “owners” of the company, it is in the limited context of their ownership of DKD of Davis, the “Company” named in the Employment Agreement. Jarboe's claims against DKD of Davis were ordered to arbitration. 3. Third Party Beneficiary Status To enforce the Employment Agreement as third party beneficiaries, defendants had to show that the Arbitration Agreements between Jarboe and DKD of Davis were made expressly for their benefit. (Civ. Code, § 1559; Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838, 157 Cal.Rptr.3d 680.) It is not enough that a literal interpretation of the agreements would benefit Hanlees and the other dealerships. (Vahle v. Barwick (2001) 93 Cal.App.4th 1323, 1328, 113 Cal.Rptr.2d 793.) It was defendants’ burden to prove that the agreements were intended to benefit them. (City of Hope v. Bryan Cave, L.L.P. (2002) 102 Cal.App.4th 1356, 1370, 126 Cal.Rptr.2d 283 (City of Hope).) They failed to do so. To the extent defendants are suggesting that the so-called “common employment application” is evidence that the arbitration provisions were intended for their collective benefit, they did not make this argument to the trial court. It is forfeited on appeal for their failing to do so. (See Vikco Ins. Services, Inc. v. Ohio Indemnity Co. (1999) 70 Cal.App.4th 55, 66-67, 82 Cal.Rptr.2d 442 [issues or theories not properly raised before trial court will not be considered on appeal].) This argument also fails on the merits.5 Defendants argue that the Application was used to apply to all dealerships within the Hanlees auto group and, as such, the Application did not limit the definition of “Company” to one specific named dealership. Defendants support this contention with Jarboe's declaration wherein he states that he *551 “applied for work at Hanlees through an online employment application.” Jarboe further states that he “understood that in order to apply for employment and ultimately be employed by Hanlees [he] had to fill out the entire application or else it would not process.” According to defendants, the significance of the common employment application is that its definition of “Company” necessarily meant the Hanlees group, and, as such, all of its affiliated dealerships were intended third party beneficiaries of the arbitration provisions in the Application and the Employment Agreement. We disagree. [12] Even assuming for the sake of argument that defendants’ construction of the August 4, 2017 Application is correct, the Application was superseded by the August 10, 2017 Employment Agreement. As noted, the Employment Agreement, which defines “Company” as DKD of Davis, contains an integration clause that states, in part: “This agreement is the entire agreement between the Company and the employee ... and this agreement takes the place of all prior and contemporaneous agreements ....” At oral argument, Hanlees, relying on Jenks v. DLA Piper Rudnick Gray Cary US LLP (2015) 243 Cal.App.4th 1, 196 Cal.Rptr.3d 237 (Jenks) argued that the **649 integration clause was limited to the terms of Jarboe's at-will employment set forth in the Employment Agreement. Jenks is distinguishable. In Jenks, the plaintiff received an offer of employment in a letter containing an arbitration provision. (Jenks, supra, 243 Cal.App.4th at p. 5, 196 Cal.Rptr.3d 237.) Although the parties subsequently entered into a termination agreement regarding the plaintiff's employment (ibid.), the court found the agreement did not supercede or nullify the arbitration provision. (Id. at p. 20, 196 Cal.Rptr.3d 237.) The termination agreement included an integration clause stating: “ ‘This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations and agreements, whether written or oral [with the exception of the prior confidentiality agreements].’ ” (Id. at p. 15, 196 Cal.Rptr.3d 237.) Based on Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 8 this language, the Jenks court reasoned: “[T]he integration clause is explicitly limited to ‘the subject matter hereof,’ namely, the terms of plaintiff's resignation. The [t]ermination [a]greement does not mention arbitration at all, and contains no provisions regarding dispute resolution. Consequently, the identified forum for dispute resolution remains arbitration based on the original Offer Letter.” (Id. at pp. 15-16, 196 Cal.Rptr.3d 237.) There are fundamental differences between the Employment Agreement in this case and the Jenks agreement. Unlike the agreement in Jenks, the Employment Agreement here includes a broad integration clause stating: “This agreement is the entire agreement between the Company and the employee regarding the rights of the Company or employee to terminate employment with or without good cause and this agreement takes the place of *552 all prior and contemporaneous agreements, representations, and understandings of the employee and the Company.” (Italics added.) Moreover, the Employment Agreement itself contains an exhaustive arbitration provision. The integration clause in the Employment Agreement is not expressly limited to the terms of Jarboe's at will employment. By its terms, the Employment Agreement expressly superseded the prior Application. (See Grey v. American Management Services (2012) 204 Cal.App.4th 803, 805, 807, 139 Cal.Rptr.3d 210 [plain language of integration clause contained in subsequent employment agreement reflected intent to supersede earlier job application].) Accordingly, any attempt by defendants to vary the terms of the Employment Agreement is barred by the parole evidence rule. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 344, 9 Cal.Rptr.3d 97, 83 P.3d 497 [“terms contained in an integrated written agreement may not be contradicted by prior or contemporaneous agreements”].) There is no basis to conclude that Jarboe intended the arbitration provision in the Employment Agreement would apply to all the defendants. 4. Equitable Estoppel [13] [14] [15] Defendants also argue that Jarboe should be equitably estopped from proceeding in court against nonsignatories to the Employment Agreement. Under the equitable estoppel doctrine, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (Boucher, supra, 127 Cal.App.4th at p. 271, 25 Cal.Rptr.3d 440.) The doctrine applies where the claims are “ ‘ “based on the same facts and are inherently inseparable” ’ from arbitrable claims against signatory defendants.” ( **650 Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713, 1 Cal.Rptr.3d 328 (Metalclad).) “The fundamental point is that a party may not make use of a contract containing an arbitration clause and then attempt to avoid the duty to arbitrate by defining the forum in which the dispute will be resolved.” (Boucher, at p. 272, 25 Cal.Rptr.3d 440; see also Metalclad, at p. 1714, 1 Cal.Rptr.3d 328 [estoppel “prevents a party from playing fast and loose with its commitment to arbitrate, honoring it when advantageous and circumventing it to gain undue advantage”]; Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 787, 217 Cal.Rptr.3d 793 (Garcia) [party could not avoid arbitration by framing claims as statutory].) Defendants rely on Metalclad, Boucher, and Garcia, to argue equitable estoppel applies here. It's true that this case concerns the efforts of nonsignatories to compel a signatory to arbitrate. But that is where the similarities end. Significant differences between the situations in each of *553 those cases and this one command a different result. The first difference is that the integral nature of the relationships between the parties in Metalclad, Boucher, and Garcia was demonstrated by evidence in the record in each of those cases. In Metalclad, the plaintiff had a written stock purchase agreement, that included an arbitration clause, with Geologic, a subsidiary of defendant Ventana. (Metalclad, supra, 109 Cal.App.4th at pp. 1709-1710, 1 Cal.Rptr.3d 328.) Metalclad sued Ventana, Geologic and others for breach of contract, fraud and other claims, and later dropped Geologic from the suit. (Id. at p. 1710, 1 Cal.Rptr.3d 328.) Ventana successfully compelled arbitration under Geologic's contract with Metalclad, even though not a signatory. (Id. at pp. 1717- 1719, 1 Cal.Rptr.3d 328) The court based its decision on the “nexus” between Metalclad's claims against Ventana and the underlying contract between Metalclad and Geologic, as well as the “integral relationship” between Geologic and Ventana as subsidiary and parent. (Id. at pp. 1717-1718, 1 Cal.Rptr.3d 328.) In Boucher, the plaintiff entered into a written three-year employment contract, containing an arbitration clause, with Financial Title Company (Financial). (Boucher, supra, 127 Cal.App.4th at p. 265, 25 Cal.Rptr.3d 440.) Shortly thereafter, Financial's assets were transferred to Alliance Title Company, Inc. (Alliance). (Ibid.) Alliance refused to honor Boucher's Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 9 contract with Financial. (Ibid.) Boucher sued both Financial and Alliance. Both moved to compel arbitration. (Id. at pp. 265-266, 25 Cal.Rptr.3d 440.) Alliance demonstrated that its majority shareholder owned all of Financial's stock and that Financial transferred all its assets to Alliance. (Id. at p. 266, 25 Cal.Rptr.3d 440.) The court said that a nonsignatory may invoke an arbitration clause to compel a signatory plaintiff to arbitrate claims when the causes of action against the nonsignatory are intimately founded in and intertwined with the underlying contract obligations. (Id. at p. 271, 25 Cal.Rptr.3d 440.) Because Boucher's claims relied on and assumed the existence of the employment agreement with Financial and there was a close relationship between Financial and Alliance, its corporate successor, Boucher was required to arbitrate against the nonsignatory. (Id. at pp. 272-273, 25 Cal.Rptr.3d 440.) Similarly, in Garcia, the plaintiff asserted Labor Code violations against his employer, Real Time, a staffing company, and Pexco, the company for which Real Time assigned Garcia to work. (Garcia, supra, 11 Cal.App.5th at pp. 784-785, 217 Cal.Rptr.3d 793.) Garcia's employment application **651 had a provision that required him to arbitrate “ ‘any dispute’ ” with Real Time, but not with Pexco. (Id. at p. 784, 217 Cal.Rptr.3d 793.) The court held Pexco, even though a nonsignatory, could compel arbitration based on equitable estoppel because Garcia's “claims against Pexco are rooted in his employment relationship with Real Time.” (Id. at p. 787, 217 Cal.Rptr.3d 793.) In so holding, the court explained that Garcia “cannot attempt to link Pexco to Real Time to hold it liable for alleged wage and hour claims, while *554 at the same time arguing the arbitration provision only applies to Real Time and not Pexco.” (Id. at p. 788, 217 Cal.Rptr.3d 793.) Here, unlike in Garcia, the court ordered Jarboe's claims against DKD of Davis to arbitration, but declined to order the claims against other defendants because there was no showing they were either rooted in his employment with DKD of Davis or within the scope of Jarboe's agreement to arbitrate any claims against the “company.” (See, ante, B.2. & 3.) In contrast to the proven close relationships between the signatories and the nonsignatories in Metalclad, Boucher, and Garcia, the precise nature of the relationship between Hanlees and its affiliated dealerships is unproven in this record. While the record shows that the dealerships are subject to “common ownership,” there is no evidence showing the relationship among the separate corporate entities or how they operated with respect to each other's employees. Nothing indicates that being hired by DKD of Davis, meant that Jarboe concurrently worked for all the other dealerships. Rather, the record suggests that each dealership maintained separate relationships with that dealership's employees. For example, before Jarboe began working for Leehan of Davis he needed to be “moved” from DKD of Davis. Following this move, Jarboe's payroll records reflect Leehan of Davis as his only employer. Defendants rely on Jarboe's allegations in the operative complaint that the defendants were “joint employer[s].” Defendants also claim Jarboe's complaint treats all defendants as a single enterprise because all of the causes of action except for one are alleged against “All Defendants” without distinction. These boilerplate allegations are not sufficient to support defendants’ equitable estoppel claim. (See Barsegian v. Kessler & Kessler (2013) 215 Cal.App.4th 446, 452-453, 155 Cal.Rptr.3d 567.) The defendants have not admitted that they are “joint employer[s]” nor have they provided any evidence that shows a joint employment relationship with Jarboe. The only conclusion that can be drawn on this record is that there is some relationship between Hanlees and its affiliated dealerships. But it is unclear what that relationship may be and it has not been shown to be integral to support the application for equitable estoppel. (See, e.g., Thomson-CSF, S.A. v. American Arbitration Assn. (2d Cir.1995) 64 F.3d 773, 777 [“As a general matter, ... a corporate relationship alone is not sufficient to bind a nonsignatory to an arbitration agreement”].) Nor is there a basis to conclude that Jarboe's claims are “ ‘ “intimately founded in and intertwined with” ’ ” the Arbitration Agreements. (Metalclad, supra, 109 Cal.App.4th at p. 1717, 1 Cal.Rptr.3d 328.) Because Jarboe “treats all defendants as a *555 single enterprise” defendants assert that it would be inequitable to allow him to link Leehan of Davis with the other defendants for purposes of wage and hour claims, while at the same time arguing that the arbitration provisions only apply to DKD of Davis. **652 [16] [17] Jarboe's claims against the company, DKD of Davis, arising from his employment agreement will proceed to arbitration. The claims against other defendants for which there is no agreement to arbitrate will not. The mere fact that the claims against Leehan of Davis and the other defendants may be related to the claims DKD Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 10 of Davis is arbitrating against Jarboe does not compel application of equitable estoppel. Rather, the linchpin of the estoppel doctrine is fairness: “ ‘Equitable estoppel precludes a party from asserting rights “he otherwise would have had against another” when his own conduct renders assertion of those rights contrary to equity.’ ” (Metalclad, supra, 109 Cal.App.4th at p. 1713, 1 Cal.Rptr.3d 328; see also City of Hope, supra, 102 Cal.App.4th at pp. 1370-1371, 126 Cal.Rptr.2d 283.) In Metalclad, Boucher, and Garcia, it was equitable to compel the signatories into arbitration against nonsignatories because each of the signatories raised claims that were founded on the underlying contracts; the signatories sought to enforce a benefit under the nonsignatories while seeking to avoid arbitration. By contrast, in this case, Jarboe is not seeking to obtain benefits under his employment agreement with DKD of Davis against Hanlees and the other dealerships under the Employment Agreement, as there are none, and he is arbitrating the claims against his employing company. Simply put, the inequities that the doctrine of equitable estoppel is designed to address are not present. C. The Trial Court Correctly Refused to Stay the Proceedings Defendants argue that the trial court erred in refusing to stay both Jarboe's PAGA claim and his remaining wage and hour claims against the nonsignatory defendants, while his individual claims against DKD of Davis are being arbitrated. Code of Civil Procedure section 1281.4 provides: “If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies. [¶]... [¶] If the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only.” *556 Citing Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 184 Cal.Rptr.3d 501, defendants argue that a stay was required to prevent inconsistent determinations that could arise from overlapping issues and possible res judicata/collateral estoppel implications that could affect the arbitrator's jurisdiction. In Franco, the court stated that a stay was required “[b]ecause the issues subject to litigation under the PAGA might overlap those that are subject to arbitration of Franco's individual claims ....” (Id. at p. 966, 184 Cal.Rptr.3d 501.) While the court directed entry of a stay in Franco, the final paragraph of Code of Civil Procedure section 1281.4 “specifically vests the trial court with authority to sever issues.” (Cook v. Superior Court of Los Angeles County (1966) 240 Cal.App.2d 880, 887, 50 Cal.Rptr. 81.) “[W]hen there is a severance of arbitrable from inarbitrable claims, the trial court has the discretion to stay proceedings on the inarbitrable claims pending resolution of the arbitration. (Code. Civ. Proc., § 1281.4; Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 714 [131 Cal.Rptr. 882, 552 P.2d 1178].)” ( **653 Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 320, 133 Cal.Rptr.2d 58, 66 P.3d 1157.) Nothing in Franco can be interpreted as restricting a court's discretion under these circumstances. [18] Nevertheless, defendants insist that a stay is necessary because Jarboe's PAGA claim and his individual claims arise out of the same nucleus of facts alleged to violate the Labor Code. While there may be similarities between the claims, a PAGA claim “is not a dispute between an employer and an employee arising out of their contractual relationship.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 386, 173 Cal.Rptr.3d 289, 327 P.3d 129 (Iskanian).) Instead, it is “a dispute between an employer and the state, which alleges directly or through its agents-either the [Labor and Workforce Development] Agency or aggrieved employees-that the employer has violated the Labor Code.” (Iskanian, at pp. 386-387, 173 Cal.Rptr.3d 289, 327 P.3d 129, italics omitted.) Requiring an employee to litigate a portion of a PAGA claim in a forum selected by the employer interferes with “the state's interests in enforcing the Labor Code.” (Iskanian, at p. 383, 173 Cal.Rptr.3d 289, 327 P.3d 129.) In Williams v. Superior Court (2015) 237 Cal.App.4th 642, 188 Cal.Rptr.3d 83 (Williams) a trial court ordered that in order to give effect to the employee's written agreement to waive representative claims but arbitrate individual claims, an employee's “aggrieved employee” standing under PAGA was to be submitted to an arbitrator. (Id. at p. 645, 188 Cal.Rptr.3d 83.) The appellate court reversed, concluding that under Iskanian the representative action waiver was ineffective and contrary to public policy and the PAGA cause of action was not divisible into separate individual and representative claims. (Ibid.) Citing our decision in Reyes v. Macy's, Inc. (2011) 202 Cal.App.4th 1119, 135 Cal.Rptr.3d 832, the court observed that “case law suggests that a single representative Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 11 PAGA claim cannot be split into an arbitrable individual claim and a nonarbitrable representative claim.” *557 (Williams, at p. 649, 188 Cal.Rptr.3d 83, italics omitted.) Although Jarboe alleges, in conformity with the statutory language,6 that he is “an aggrieved employee” seeking recovery of civil penalties “on behalf of himself or herself and other current and former aggrieved employees,” the claim is not an individual one. (Lab. Code, § 2699, subd. (a); Reyes v. Macy's, at p. 1123, 135 Cal.Rptr.3d 832.) Rather, Jarboe brings the PAGA claim “as the proxy or agent of the state's labor law enforcement agencies.” (Arias v. Superior Court (2009) 46 Cal.4th 969, 986, 95 Cal.Rptr.3d 588, 209 P.3d 923 (Arias).) Recently, our Supreme Court, in ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 252 Cal.Rptr.3d 228, 448 P.3d 239, confirmed that “[a]ll PAGA claims are ‘representative’ actions in the sense that they are brought on the state's behalf.” (Id. at p. 185, 252 Cal.Rptr.3d 228, 448 P.3d 239.) [19] Because a PAGA claim is representative and does not belong to an employee individually, an employer should not be able dictate how and where the representative action proceeds. (See **654 Perez v. U-Haul Co. of California (2016) 3 Cal.App.5th 408, 421, 207 Cal.Rptr.3d 605; Williams, supra, 237 Cal.App.4th at p. 649, 188 Cal.Rptr.3d 83.) At oral argument, Hanlees contested the inherent unfairness in allowing the PAGA claim to proceed, because a successful employee would benefit from a judgment that has no reciprocal preclusive effect for a successful employer. However, as our Supreme Court explained in Arias, “The potential for nonparty aggrieved employees to benefit from a favorable judgment under the act without being bound by an adverse judgment, however, is not unique to the Labor Code Private Attorneys General Act of 2004. It also exists when an action seeking civil penalties for Labor Code violations is brought by a government agency rather than by an aggrieved employee suing under the Labor Code Private Attorneys General Act of 2004. Because an action under the act is designed to protect the public, and the potential impact on remedies other than civil penalties is ancillary to the action's primary objective, the one-way operation of collateral estoppel in this limited situation does not violate the employer's right to due process of law.” (Arias, supra, 46 Cal.4th at p. 987, 95 Cal.Rptr.3d 588, 209 P.3d 923.) Accordingly, we conclude the trial court did not abuse its discretion in declining to stay the PAGA action pending the arbitration of Jarboe's individual claims. Finally, defendants contend that they requested a stay of all non-arbitrable claims not just the PAGA claim. But the trial court's order does not *558 address the wage and hour claims. We cannot review the propriety of a non-existent ruling. The proper vehicle for raising this claim of error was a motion for reconsideration. (Code Civ. Proc., § 1008). As defendants’ time to seek reconsideration has long since passed, we deem this issue forfeited on appeal. D. Unconscionability [20] [21] Jarboe argues the trial court should have ruled that the Arbitration Agreements were unenforceable in their entirety due to both procedural and substantive unconscionability. Jarboe, however, has not appealed from the trial court's order compelling arbitration of his individual claims against DKD of Davis. Nor could he, because an order compelling arbitration is not appealable. (Ashburn v. AIG Financial Advisors, Inc. (2015) 234 Cal.App.4th 79, 94, 183 Cal.Rptr.3d 679.) Moreover, the general rule is that a respondent who has not appealed from a judgment may not assert error on appeal. (Hutchinson v. City of Sacramento (1993) 17 Cal.App.4th 791, 798, 21 Cal.Rptr.2d 779.) Accordingly, we do not address Jarboe's claim that the Arbitration Agreements were unenforceable due to unconscionability. IV. DISPOSITION The trial court's order granting in part and denying in part defendants’ motion to compel Jarboe to arbitrate claims and declining to stay the PAGA claim is affirmed. Jarboe shall recover his costs on appeal. We concur: Fujisaki, J. Jackson, J. All Citations 53 Cal.App.5th 539, 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 Jarboe v. Hanlees Auto Group, 53 Cal.App.5th 539 (2020) 267 Cal.Rptr.3d 640, 20 Cal. Daily Op. Serv. 8527, 2020 Daily Journal D.A.R. 8910 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 12 Footnotes 1 Following various amendments and dismissals, Jarboe replaced Richard Parr as the named plaintiff in the second amended complaint, which is operative complaint on appeal. 2 The individual dealerships are: Hanlees Davis, Inc., doing business as (dba) Hanlees Davis Toyota; Hanlees Freemont, Inc., dba Hanlees Freemont Hyundai; Hanlees Hilltop, Inc., dba Hanlees Hilltop Toyota; Hanlees Napa, Inc., dba Hanlees Napa Subaru and Volkswagen; Hanlees Seven, Inc., dba Hanlees Hilltop Hyundai; DKD of Napa, Inc., dba Hanlees Chrysler Dodge Jeep Ram of Napa; DKD of Hilltop, Inc., dba Hilltop Buick GMC; Dohan, Inc., dba Hanlees Chevrolet; Leehan, Inc., dba Hanlees Hilltop Nissan; LHN, Inc., dba Hanlees Hilltop Volkswagen; Leehan of Davis, Inc., dba Hanlees Chrysler Dodge Jeep Ram Kia; and DKD of Davis, Inc., dba Hanlees Davis Toyota. 3 We refer to the Arbitration Agreements collectively. Where necessary to our analysis, we will differentiate among the agreements as the “Application” and “Employment Agreement.” 4 The sentence reads as follows: “Because of the mutual benefits (such as possible reduced expense and possible increased efficiency) which private binding arbitration can provide both the Company and myself, I and the Company both agree that any claim, dispute, and/or controversy that either party may have against one another (including, but not limited to, any claims of discrimination and harassment, whether they be based on the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, as amended, as well as all other applicable state or federal laws or regulations) which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise[ ] (with the sole exception of claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical and disability benefits under the California Workers’ Compensation Act, and Employment Development Department claims)[,] shall be submitted to and determined exclusively by binding arbitration.” 5 At oral argument, Hanlees argued that it had in fact raised the issue of the common employment application in the trial court. Our review of the record, specifically the pages cited by appellate counsel at argument, does not support this contention. Hanlees did argue the dealerships had “common ownership,” but it did not argue, as defendants contend on appeal, that Jarboe was bound by the arbitration clause because he signed a “common employment application.” 6 Labor Code section 2699, subdivision (a) provides: “Notwithstanding any other provision of law, any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.” End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT H Fuentes v. TMCSF, Inc., 26 Cal.App.5th 541 (2018) 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 1 KeyCite Yellow Flag - Negative Treatment Distinguished by Kolodny v. Wondries, Cal.App. 2 Dist., November 25, 2019 26 Cal.App.5th 541 Court of Appeal, Fourth District, Division 2, California. Alfredo FUENTES, Plaintiff and Respondent, v. TMCSF, INC., Defendant and Appellant. E066242 | Filed 8/23/2018 Synopsis Background: Motorcycle buyer brought putative class action against dealership, alleging negligence, false advertising, unfair competition, and violations of the Consumers Legal Remedies Act in connection with dealership's advertised prices and its fees and charges. Dealership filed petition to compel arbitration based on provision in security agreement between buyer and lender. The Superior Court, Riverside County, No. RIC1515384, Craig Riemer, J., denied the petition, and dealership appealed. Holdings: The Court of Appeal, Ramirez, P.J., held that: dealership lacked standing as a party to enforce arbitration provision; dealership could not enforce arbitration provision on agency grounds; dealership was not third party beneficiary of arbitration provision; and borrower was not equitably estopped from denying applicability of arbitration provision. Affirmed. **259 APPEAL from the Superior Court of Riverside County. Craig Riemer, Judge. Affirmed. (Super.Ct.No. RIC1515384) Attorneys and Law Firms Arent Fox, Halbert B. Rasmussen, and George N. Koumbis, Los Angeles, for Defendant and Appellant. Pestotnik and Ross H. Hyslop, San Diego, for Plaintiff and Respondent. OPINION RAMIREZ, P. J. *544 Plaintiff Alfredo Fuentes entered into a written agreement with defendant TMCSF, Inc., doing business as Riverside Harley-Davidson (Riverside), to buy a motorcycle. At the same time, he entered into a written *545 agreement with Eaglemark Fuentes v. TMCSF, Inc., 26 Cal.App.5th 541 (2018) 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 2 Savings Bank (Eaglemark) to finance the purchase. The latter agreement included an arbitration clause; the former agreement did not. Fuentes then filed this action against Riverside, alleging that Riverside made various misrepresentations and violated various statutes in connection with the sale of the motorcycle. Riverside petitioned to compel arbitration. The trial court denied the petition. We will hold that Riverside was not entitled to compel arbitration because it was not a party to the arbitration clause, it was not acting in the capacity of an agent of a party to the arbitration clause, and it was not a third party beneficiary of the arbitration clause. Moreover, Fuentes was not equitably estopped to deny Riverside's claimed right to compel arbitration. Hence, we will affirm. I FACTUAL BACKGROUND The following facts are taken from the evidence submitted in connection with Riverside's petition to compel arbitration. On April 19, 2015, Fuentes entered into a written agreement to buy a new motorcycle from Riverside (Purchase Agreement). The stated parties to the Purchase Agreement were Fuentes and Riverside. The Purchase Agreement provided, “Federal law and California law apply to this ... Purchase Agreement.” The Purchase **260 Agreement did not include an arbitration clause. At the same time, Fuentes also entered into a written agreement to finance the purchase (Security Agreement). The stated parties to the Security Agreement were Fuentes and Eaglemark. Eaglemark identified itself as “a subsidiary of Harley-Davidson Credit Corp.” “ESB” was defined as Eaglemark and its successors and assigns. The Security Agreement was signed only by Fuentes; no one signed it on Eaglemark's behalf. The Security Agreement included an “Itemization of Amount Financed” (capitalization altered), which specified that, aside from sales taxes and license fees payable to the government, Eaglemark was to pay the loan proceeds to Riverside. The Security Agreement also included an arbitration clause, which, as relevant here, provided: “The parties acknowledge and agree that this clause and the Federal Arbitration Act (9 U.S.C. § 1 et seq.) shall govern any and all *546 Claims (defined below) between You ... on the one hand, and ESB and/or any of ESB's successors, assigns, parents, subsidiaries, or affiliates and/or any employees, officers, directors, agents, of the aforementioned on the other hand. The parties agree to arbitrate any and all claims, controversies, or disputes including but not limited to those arising out of or relating in any way to Your loan or account, this [Security Agreement], advertising or claims relating to this [Security Agreement] or the sale of this [Security Agreement], ... as well as recovery of any claim under this [Security Agreement] (collectively ‘Claims’). Any Claims, including but not limited to the applicability of this arbitration clause, shall be resolved by neutral binding arbitration ....” It also provided, “[T]his [Security Agreement] ... will be governed by the laws of the State of Nevada and applicable Federal law.” Finally, it included a provision, required by federal law (16 C.F.R. § 433.2), stating: “Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained with the proceeds hereof.” Fuentes v. TMCSF, Inc., 26 Cal.App.5th 541 (2018) 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 3 II PROCEDURAL BACKGROUND Fuentes brings this action as a putative class action. The operative complaint alleges that Riverside and other defendants “routinely advertise new, assembled motorcycles to consumers in a misleading manner .... As a consequence ... , consumers are routinely misled about the true prices of buying new, assembled motorcycles, and end up paying fees and charges which are: (a) misrepresented, inflated, or double-billed; (b) false and fraudulent; (c) illusory; and/or (d) improperly disclosed, itemized, and/ or summed.” It asserts causes of action for negligence, false advertising, unfair competition, and violations of the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.). Riverside filed a petition to compel arbitration. After hearing argument, the trial court denied the petition. The trial court explained: “The arbitration provision is solely in the agreement between [Fuentes] and Eaglemark ... , to which [Riverside] was not a party. The agreement expressly identifies the scope of the obligation to arbitrate as being limited to those ‘between’ plaintiff ‘on the one hand, and ESB and/or any of ESB's successors, assigns, parents, subsidiaries, or affiliates ... on the other hand.’ In light of that language, there is no intent *547 that the arbitration provision extend to claims between the plaintiff and a third party like [Riverside]. **261 Nor is the [court] persuaded that [Fuentes] is equitably estopped from denying the application of the arbitration provision to this lawsuit.” III RIVERSIDE HAS NO STANDING TO INVOKE THE ARBITRATION CLAUSE A. General Legal Principles. “ ‘Code of Civil Procedure section 1281.2 allows a party to an arbitration agreement to petition to compel arbitration. By stating that a party to an arbitration agreement may petition to compel arbitration, the statute assumes that a proceeding to compel arbitration will be between the signatories to the agreement.’ [Citation.] “ ‘Nonsignatory defendants may enforce arbitration agreements “where there is sufficient identity of parties.” [Citation.] Enforcement is permitted where the nonsignatory is the agent for a party to the arbitration agreement [citation], or the nonsignatory is a third party beneficiary of the agreement [citation]. In addition, a nonsignatory may enforce an arbitration agreement under the doctrine of equitable estoppel.” (Jenks v. DLA Piper Rudnick Gray Cary U.S. LLP (2015) 243 Cal.App.4th 1, 8-9, 196 Cal.Rptr.3d 237, fn. omitted.) “Where, as here, the evidence is not in conflict, we review the trial court's denial of arbitration de novo. [Citation.]” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US ), LLC (2012) 55 Cal.4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217.) We face a preliminary question regarding choice of law. The Security Agreement, which contains the arbitration clause, provides that Nevada law applies. In their briefs, however, the parties do not discuss Nevada law; the only state law on which they rely is that of California.1 “ ‘ “[G]enerally speaking the forum will apply its own rule of decision unless a party litigant timely invokes the law of a foreign state ....” ’ [Citations.]” (Washington Mutual Bank, FA v. Superior Court (2001) 24 Cal.4th 906, 919, 103 Cal.Rptr.2d 320, 15 P.3d 1071.) Because “[t]he parties and the trial court assumed that California law applies ... we may apply California law ....” (Brown v. Grimes (2011) 192 Cal.App.4th 265, 275, 120 Cal.Rptr.3d 893.) Fuentes v. TMCSF, Inc., 26 Cal.App.5th 541 (2018) 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 *548 B. Standing as a Party. Riverside contends that the Purchase Agreement and the Security Agreement constitute a single contract, and hence it is a party to the arbitration clause. Under Civil Code section 1642, “[s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.” Here, the Purchase Agreement and the Security Agreement, by their terms, were not between the same parties; thus, Civil Code section 1642 does not apply. More generally, however, “where two or more written instruments are executed contemporaneously, with reference to each other, for the purpose of attaining a preconceived objective, they must all be construed together and effect given if possible to the purpose intended to be accomplished; and this principle controls whether each of the several instruments was signed **262 by all or only some of the parties to the transaction. [Citation.]” (Goodman v. Severin (1969) 274 Cal.App.2d 885, 895, 79 Cal.Rptr. 555.) “ ‘While it is the rule that several contracts relating to the same matters are to be construed together [citation], it does not follow that for all purposes they constitute one contract.’ ” (Hartford Accident & Indemnity Co. v. Sequoia Ins. Co. (1989) 211 Cal.App.3d 1285, 1300, 260 Cal.Rptr. 190.) The rule is simply a particular application of the more general principle that “[w]e construe [a] contract in light of the circumstances under which it was made .... [Citation.]” (Medical Staff of Doctors Medical Center in Modesto v. Kamil (2005) 132 Cal.App.4th 679, 683, 33 Cal.Rptr.3d 853.) For example, in Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 71 Cal.Rptr.3d 361, two corporations entered into an agreement to merge (Merger Agreement), which included an attorney fees clause. (Id. at pp. 1588, 1591, 1605-1606, 71 Cal.Rptr.3d 361.) At the same time, the president of one of the corporations (see id. at p. 1587, 71 Cal.Rptr.3d 361) entered into an agreement with the other corporation regarding the stock that he acquired in the merger (Affiliate Agreement); it did not include an attorney fees clause. (Id. at pp. 1588, 1591, 1606, 71 Cal.Rptr.3d 361.) Ultimately, the president sued the other corporation, asserting causes of action based on the Affiliate Agreement, but lost. (Id. at pp. 1590-1591, 1605, 71 Cal.Rptr.3d 361.) The prevailing corporation argued that it was entitled to attorney fees because (among other things) “the Affiliate and Merger [A]greements were interdependent components of the same transaction and, therefore, should be construed together.” (Amtower v. Photon Dynamics, Inc., supra, 158 Cal.App.4th at p. 1609, 71 Cal.Rptr.3d 361.) The appellate court held that the attorney fees clause did not *549 apply. It acknowledged the general principal that separate contracts, entered into as part of a single transaction, even if by different parties, must be construed together. (Id. at pp. 1609-1610, 71 Cal.Rptr.3d 361, citing Harm v. Frasher (1960) 181 Cal.App.2d 405, 5 Cal.Rptr. 367.) Nevertheless, it concluded that “nothing in Frasher, or the general rule as stated in Civil Code section 1642, supports the conclusion that, where the contracts form part of a single integrated transaction, a discrete term contained in one agreement is necessarily applicable to the parties to one of the other agreements.” (Id. at p. 1610, 71 Cal.Rptr.3d 361.) In sum, then, the fact that the Purchase Agreement and the Security Agreement could be considered one transaction is not dispositive. Rather, just as when any issue turns on contractual interpretation, we must look to the mutual intent of the parties. (Civ. Code, § 1636; Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1378, 118 Cal.Rptr.3d 95, 242 P.3d 1020.) “ ‘Such intent is to be inferred, if possible, solely from the written provisions of the contract.’ [Citations.] ‘If contractual language is clear and explicit, it governs.’ [Citation.]” (State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195, 145 Cal.Rptr.3d 1, 281 P.3d 1000.) The arbitration clause itself specified the entities to which it applied. It applied to “Claims ... between You ... on the one hand, and ESB and/or any of ESB's successors, assigns, parents, subsidiaries, or affiliates and/or any employees, officers, directors, agents, of the aforementioned on the other hand.” To state the obvious, Riverside is not Eaglemark. Also, as far as the record shows, Riverside is not **263 a successor, assign, parent, subsidiary,2 affiliate,3 employee, officer, or director of Eaglemark. Fuentes v. TMCSF, Inc., 26 Cal.App.5th 541 (2018) 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 5 In sum, then-leaving aside Riverside's claim that it was an agent of Eaglemark, which we discuss in part III.C, post-Riverside was not a party to the arbitration clause and was not a nonparty expressly specified as able to invoke the arbitration clause. C. Standing as an Agent. Riverside contends that it is entitled to compel arbitration because it is an agent of Eaglemark. As mentioned, the arbitration clause required *550 arbitration of claims between Fuentes's and Eaglemark's agents. And even when an arbitration clause does not expressly extend to agents, an agent for a party may be able to enforce an arbitration clause. Riverside asserts that it was Eaglemark's agent because it could bind Eaglemark as the lender in any given motorcycle sale transaction. (See Rental Housing Owners Assn. of Southern Alameda County, Inc. v. City of Hayward (2011) 200 Cal.App.4th 81, 91, 133 Cal.Rptr.3d 155 [agency is a relationship in which “one party, the agent, ‘represents another, called the principal, in dealings with third persons.’ ”].) We disagree, for three reasons. First, there was no evidence that Riverside actually had this power. “Because the existence of agency is generally a question of fact, it logically follows that agency must be established with evidence.” (Zimmerman v. Superior Court (2013) 220 Cal.App.4th 389, 401, 163 Cal.Rptr.3d 135.) Here, all the evidence showed was that Fuentes entered into a financing agreement on Riverside's premises on the same day as he purchased a motorcycle from Riverside. For all we know, Riverside had to contact Eaglemark and obtain its approval for each and every financing agreement. Riverside asserts a number of facts which, in its view, prove agency. These include that: (1) “A typical motor vehicle sale is conditioned upon the sale being financed after a purchase.” (2) “Harley-Davidson purchases” are “unique” in that “the motorcycle sale and financing occur at the same time.” (3) “[T]he purchase price is paid specifically to the dealer simultaneously with the lender obtaining a security interest in the motorcycle.” However, there was no evidence of any of these facts. Again, all the evidence showed was that the customer entered into the two agreements at the same time. Riverside also points to the boilerplate allegation of Fuentes's complaint that all of the defendants were agents of each other. The named defendants included Riverside, Harley-Davidson, Inc., and Harley-Davidson Motor Company, Inc., but they did not include Eaglemark. To fill this logical gap, Riverside notes that the Security Agreement identified Eaglemark as “[a] subsidiary of Harley-Davidson Credit Corp.” However, the named defendants also did not include Harley-Davidson Credit Corp. There is no evidence regarding the relationship, if any, between Harley-Davidson Credit Corp. and the named defendants. **264 Second, as a general rule, a dealer does not act as the agent of the financing agency simply because the dealer used forms supplied by the financing agency. (Bescos v. Bank of America (2003) 105 Cal.App.4th 378, 396, 129 Cal.Rptr.2d 423; LaChapelle v. Toyota Motor Credit Corp. (2002) 102 Cal.App.4th 977, 992, 126 Cal.Rptr.2d 32; see also *551 Luck v. Primus Automotive Financial Services, Inc. (Ala. 2000) 763 So.2d 243, 246-247 [lender provided dealer with forms and with a handbook containing guidelines for leases that it would accept].) Riverside may be aware of these cases; it appears to be trying to get around them by arguing that Harley-Davidson financing is “unique.” As already discussed, however, they have not shown that it is unique in any way that would prove agency. Third, even assuming that Riverside was Eaglemark's agent, Fuentes's claims are made against Riverside in its own capacity, not in its (supposed) capacity as Eaglemark's agent. This precludes Riverside from invoking the arbitration clause. (McCarthy v. Azure (1st Cir. 1994) 22 F.3d 351, 359-361 [where plaintiff and corporation, but not corporation's agent, were parties to arbitration clause, agent could not compel arbitration of plaintiff's claims against him in his individual capacity].) Eaglemark had no reason to give its agents a right to compel arbitration of their own disputes with its borrowers. “However broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract.” (Civ. Code, § 1648.) Fuentes v. TMCSF, Inc., 26 Cal.App.5th 541 (2018) 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 6 “Most courts have held that a nonsignatory who is the agent of a party to a contract containing an arbitration clause may compel the other parties to the contract to arbitrate their claims against him or her for liability arising under the contract ... but not other claims. [Citations.]” (Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2017) ¶ 5.266.5, p. 5-274,.) Riverside's asserted liability arises out of the Purchase Agreement, not out of the Security Agreement. D. Standing as a Third Party Beneficiary. Next, Riverside contends that it was entitled to enforce the arbitration clause as a third party beneficiary of the Security Agreement. It points out that it was the intended recipient of the loan proceeds. “A third party beneficiary may enforce a contract expressly made for his benefit. [Citation.] And although the contract may not have been made to benefit him alone, he may enforce those promises directly made for him. [Citations.]” (Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 943, 132 Cal.Rptr. 424, 553 P.2d 584.) But “a third party beneficiary ... can only enforce those promises made directly for his benefit. [Citation.]” (Clark v. California Ins. Guarantee Assn. (2011) 200 Cal.App.4th 391, 398, 133 Cal.Rptr.3d 1.) “A third party should not be permitted to enforce covenants made not for his benefit, but rather for others. He is not a contracting party; his right to performance is predicated on *552 the contracting parties’ intent to benefit him. [Citations.] As to any provision made not for his benefit but for the benefit of the contracting parties or for other third parties, he becomes an intermeddler.” (Murphy v. Allstate Ins. Co., supra, 17 Cal.3d at p. 944, 132 Cal.Rptr. 424, 553 P.2d 584 [judgment creditor of insured tortfeasor is a third party beneficiary of the insurance policy but cannot enforce the policy's covenant of good faith].) **265 Turning to the specific topic of arbitration, “a third party beneficiary of an arbitration agreement may enforce it. [Citations.]” (Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838, 157 Cal.Rptr.3d 680.) But “[t]o invoke the third party beneficiary exception, [a third party beneficiary] ha[s] to show that the arbitration clause ... was ‘made expressly for [its] benefit.’ [Citation.]” (Ibid., italics added.) We accept, for the sake of argument, that Riverside was the third party beneficiary of Eaglemark's promise to pay the loan proceeds to it. The arbitration clause, however, had its own list of intended third party beneficiaries; as we have already discussed, Riverside was not among them. Thus, the contract affirmatively disproves any intent that the arbitration clause should benefit Riverside. What is particularly overreaching about Riverside's third party beneficiary argument is that it is trying to enforce the arbitration clause against Fuentes. However, it was Fuentes who-by making a promise to repay, a promise to pay interest, and other promises-conferred on Riverside its right to the loan proceeds. If Riverside has any rights as a third party beneficiary, they should run against Eaglemark, not Fuentes. E. Standing as a Result of Equitable Estoppel. Finally, Riverside contends that Fuentes is equitably estopped to deny the applicability of the arbitration clause. “A nonsignatory plaintiff may be estopped from refusing to arbitrate when he or she asserts claims that are ‘dependent upon, or inextricably intertwined with,’ the underlying contractual obligations of the agreement containing the arbitration clause. [Citation.] ‘The focus is on the nature of the claims asserted ....’ [Citations.] ... ‘ “[T]he plaintiff's actual dependence on the underlying contract in making out the claim against the nonsignatory ... is ... always the sine qua non of an appropriate situation for applying equitable estoppel.’ ” [Citation.] ‘[E]ven if a plaintiff's claims “touch matters” relating to the arbitration agreement, “the claims are not arbitrable unless the plaintiff relies on the agreement to establish its cause of action.’ ” [Citation.] ‘The fundamental point’ is that a party is ‘not entitled to *553 make use of [a contract containing an arbitration clause] as long as it worked to [his or] her advantage, then attempt to avoid its application in defining the forum in which [his or] her dispute ... Fuentes v. TMCSF, Inc., 26 Cal.App.5th 541 (2018) 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 © 2021 Thomson Reuters. No claim to original U.S. Government Works. 7 should be resolved.’ [Citation.]” (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306, 226 Cal.Rptr.3d 797, italics in original italics.) We do not perceive any way in which Fuentes is relying on the Security Agreement to establish his own causes of action. Riverside argues: “Th[e] allegedly false price and costs were advertised at the time of sale contemporaneously with [Fuentes]’s acquiring the loan to finance his motorcycle purchase. [Riverside] then inputted those allegedly false costs in the [Security Agreement], which [Fuentes] signed at [Riverside].” As we understand this, it reduces to an argument that the loan includes the amount of the improper charges and fees. That merely means that Fuentes may have a defense to paying the full amount of the loan to Eaglemark. Arguably, he would be relying on the Purchase Agreement in any action attacking the Security Agreement. But this is not a two-way street. He is not relying on the Security Agreement in this action attacking the Purchase Agreement. Even if he had paid cash for the motorcycle, his complaint would be identical. **266 Riverside points out that its counsel argued that “without this [Security Agreement], [Fuentes] would not have a case,” and the trial court responded, “That may be true.” However, it immediately went on to rule that Fuentes was not estopped to dispute that. In context, it appears to have been merely accepting counsel's position for the sake of argument. In any event, as our review is de novo, we are not bound by any findings (much less comments) by the trial court. We therefore conclude that equitable estoppel does not apply. IV DISPOSITION The order appealed from is affirmed. Fuentes is awarded costs on appeal against Riverside. All Citations 26 Cal.App.5th 541, 237 Cal.Rptr.3d 256, 18 Cal. Daily Op. Serv. 8506, 2018 Daily Journal D.A.R. 8533 Footnotes 1 Indeed, Riverside concedes that “Nevada substantive law [does not] apply in this context.” 2 Riverside repeatedly refers to Eaglemark as “the subsidiary lender” or simply “the subsidiary.” From the context, this seems to mean merely that Eaglemark was subject to all claims and defenses that the buyer could assert against Riverside. However, it is an odd and potentially misleading term to use to describe this concept. 3 In the trial court, counsel for Riverside conceded that there was “not sufficient evidence before the Court” to show that Riverside was an affiliate of Eaglemark. End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works. EXHIBIT I Lap-ping Chen v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 1 2021 WL 3604691 Only the Westlaw citation is currently available. United States District Court, N.D. California. LAP-PING CHEN, Plaintiff, v. BMW OF NORTH AMERICA, LLC, Defendant. Case No. 21-cv-03531-DMR | Signed 08/13/2021 Attorneys and Law Firms Mark Peter Romano, Aliaksandra Valitskaya, Timothy Michael Whelan, Romano Stancroff PC, El Segundo, CA, for Plaintiff. Molly Moriarty Lane, Mark William Allen, Morgan Lewis & Bockius LLP, San Francisco, CA, for Defendant. ORDER ON MOTION TO COMPEL ARBITRATION Re: Dkt. No. 13 Donna M. Ryu, United States Magistrate Judge *1 On March 23, 2021, Plaintiff Lap-ping Chen filed this case in the San Francisco County Superior Court, alleging claims for breach of warranty against Defendant BMW of North American, LLC (“BMW NA”). [Docket No. 1-1 (“Compl.”).] BMW NA removed the case to this court on May 11, 2021. [Docket No. 1.] BMW NA now moves to compel arbitration of all claims. [Docket Nos. 13 (“Mot.”), 17 (“Reply”).] Chen opposes. [Docket No. 16 (“Opp.”).] This motion is suitable for determination without oral argument pursuant to Civil L.R. 7-1(b). For the reasons stated below, the motion is denied. I. BACKGROUND A. Allegations Chen is an individual residing in San Francisco, California. Compl. ¶ 1. On November 4, 2020, Chen leased a new 2021 BMW X5 cDrive 40i from non-party Stevens Creek BMW. Id. ¶ 8; id., Ex. 1 (“Lease Agreement”); Docket No. 13-1, Declaration of Jennifer Shum (“Shum Decl.”) ¶ 3; id., Ex. A. He alleges that the vehicle was subject to both express and implied warranties. Compl. ¶¶ 9, 15, 18, 31-32. Chen claims that the vehicle came with “serious defects and nonconformities to warranty and developed other serious defects and nonconformities to warranty including, but not limited to various electrical and structural defects.” Compl. ¶ 10. He brought the vehicle to BMW repair facilities on several occasions, but BMW NA was “unable to conform Plaintiff's vehicle to the applicable express and implied warranties after a reasonable number of attempts.” Id. ¶ 18. According to Chen, BMW NA failed to replace the vehicle or refund his money. Id. ¶¶ 20-21. Lap-ping Chen v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 2 Chen brings claims for breach of warranty under the federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., and California's Song-Beverly Consumer Warranty Act, Cal. Civil Code § 1790 et seq. Among other remedies, he seeks rescission of the lease contract, restitution, and civil penalties. B. Lease Agreement The Lease Agreement between Chen and Stevens Creek BMW identifies the parties to the agreement as follows: Agreement to Lease. This Motor Vehicle Lease Agreement (“Lease”) is entered into between the lessee and co-lessee (“Lessee”) and the lessor (“Lessor”) named above [Stevens Creek BMW]. Unless otherwise specified, “I,” “me,” and “my” refer to the Lessee and “you” and “your” refer to the Lessor or the Lessor's assignee.... “Assignee” refers to BMW Financial Services, NA, LLC (“BMW FS”) or, if this box is checked [x] to Financial Services Vehicle Trust [“FSVT”]. BMW FS will administer this Lease on behalf of itself or any assignee. Lease Agreement § 2. According to BMW NA, FSVT is a subsidiary of BMW FS, which is in turn a wholly-owned subsidiary of BMW NA. See Docket No. 13-1, Declaration of Tyler Weight (“Weight Decl.”) ¶¶ 2-3.1 The Lease Agreement contains an arbitration provision, which in relevant part provides: NOTICE: Either you or I may choose to have any dispute between us decided by arbitration and not in a court or by jury trial. ... “Claim” broadly means any claim, dispute or controversy... between me and you or your employees, officers, directors, affiliates, successors, or assigns, or between me and any third parties if I assert a Claim against such third parties in connection with a Claim I assert against you, which arises out of or relates to my credit application, lease, purchase or condition of this Vehicle, this Lease or any resulting transaction or relationship (including any such relationship with third parties who do not sign this Lease). Any Claim shall, at your or my election, be resolved by neutral, binding arbitration and not by a court action. *2 Id. BMW NA moves to compel arbitration of Chen's claims under the arbitration agreement. II. LEGAL STANDARDS GOVERNING ENFORCEMENT OF ARBITRATION AGREEMENTS The Federal Arbitration Act (“FAA”) governs written arbitration agreements affecting interstate commerce.2 See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 111-12 (2001). Under the FAA, arbitration agreements “shall be 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. Enacted for the purpose of enforcing written arbitration agreements according to their own terms, the FAA embodies “the basic precept that arbitration ‘is a matter of consent, not coercion.’ ” Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 681 (2010) (quoting Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). “Whether enforcing an agreement to arbitrate or construing an arbitration clause, courts and arbitrators must ‘give effect to the contractual rights and expectations of the parties.’ ” Id. at 682 (quoting Volt, 489 U.S. at 479). Section 4 of the FAA ensures that “private agreements to arbitrate are enforced according to their terms,” Stolt-Nielsen, 559 U.S. at 682 (quoting Volt, 489 U.S. at 479), by expressly authorizing a party to an arbitration agreement to petition a United States district court for an order directing that “arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. Courts apply ordinary state law principles governing the formation of contracts to evaluate such claims. Davis v. O'Melveny & Myers, 485 F.3d 1066, 1072 (9th Cir. 2007), overruling on other grounds recognized by Ferguson v. Corinthian Coll., Inc., 733 F.3d 928, 937 (9th Cir. 2013). Like other contracts, arbitration agreements “may be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 66 (2010) (quotation omitted). “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 Lap-ping Chen v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 3 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)) (emphasis in original). Therefore, 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.” Chiron Corp., 207 F.3d at 1130 (citations omitted). III. DISCUSSION *3 Chen does not dispute that the arbitration provision in the Lease Agreement is valid and he does not argue that the subject matter of his claim falls outside the scope of the arbitration clause. Instead, he argues that BMW NA cannot enforce the arbitration provision because it is not a signatory to the Lease Agreement. BMW NA contends that it can enforce the arbitration clause as a third-party beneficiary to the Lease Agreement or, in the alternative, under the doctrine of equitable estoppel. Both arguments are analyzed under California law since “a litigant who is not a party to an arbitration agreement may invoke arbitration under the FAA if the relevant state contract law allows the litigant to enforce the agreement.” Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1128 (9th Cir. 2013). A. Third-Party Beneficiary Generally, the right to compel arbitration “may not be invoked by one who is not a party to the agreement and does not otherwise possess the right to compel arbitration.” Britton v. Co-op Banking Grp., 4 F.3d 742, 744 (9th Cir. 1993); see also United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960) (“[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”). In some circumstances, however, “nonsignatories can enforce arbitration agreements as third party beneficiaries.” Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006); see Cal. Civ. Code § 1559 (“A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.”). In order to compel arbitration as an intended third-party beneficiary, the nonsignatory must show that “the contract reflects the express or implied intention of the parties to the contract to benefit the third party.” Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 1999), opinion amended on denial of reh'g, 203 F.3d 1175 (9th Cir. 2000). By contrast, an incidental beneficiary of an agreement “acquires no right” against the parties to that agreement. Id. at n. 2 (internal quotation marks omitted) (quoting Restatement (Second) of Contracts § 315). The nonsignatory bears the burden of proving that it is an intended third-party beneficiary. Murphy v. DirecTV, Inc., 724 F.3d 1218, 1234 (9th Cir. 2013). BMW NA points out that the arbitration clause broadly defines “Claim” to mean “any claim, dispute or controversy ... between me and you or your employees, officers, directors, affiliates, successors, or assigns ....” Lease Agreement § 38 (emphasis added). “You,” as defined in the Lease Agreement, refers to Stevens Creek BMW or FSVT. Id. § 2. BMW NA contends that it is an “affiliate” of FSVT because FSVT is a subsidiary of BMW FS, which is in turn a wholly-owned subsidiary of BMW NA. See Lease Agreement § 2; see also Weight Decl. ¶¶ 2-3. Thus, BMW NA argues, the arbitration provision encompasses Chen's claims against BMW NA as an affiliate of FSVT. Chen responds that BMW NA cannot invoke the arbitration agreement because that provision explicitly states that only “you or I” (i.e., Stevens Creek BMW/FSVT or Chen), can choose to send any disputes to arbitration. See Lease Agreement § 38 (“Either you or I may choose to have any dispute between us decided by arbitration and not in a court or by jury trial.” (emphasis added)); id. (“Any Claim shall, at your or my election, be resolved by neutral, binding arbitration and not by a court action.” (emphasis added)). There are cases supporting both parties' construction of the Lease Agreement. Some courts have adopted BMW NA's position in cases involving nearly identical arbitration provisions. See, e.g., Rizvi v. BMW of N. Am. LLC, No. 20-cv-00229-EJD, 2020 WL 2992859 (N.D. Cal. June 4, 2020) (holding that “BMW NA, as an affiliate of assignee FSVT, is entitled to enforce the arbitration provision”); Fikhman v. BMW of N. Am. LLC, 2019 WL 6721626 (C.D. Cal. Oct. 15, 2019) (“The plain language of the lease shows that Defendant is an intended beneficiary.”); Katz v. BMW of N. Am., LLC, No. 19-cv-01553-KAW, 2019 WL 4451014 (N.D. Cal. Sept. 17, 2019) (“[BMW NA] has standing to enforce the arbitration clause as an affiliate of the Lessor's assignee.”); Reykhel v. BMW of N. Am. LLC, No. 19-cv-01900-SK, 2019 WL 10056984 (N.D. Cal. Aug. 12, 2019) (“[BMW NA] is a third party beneficiary of the Lease Agreement with clear standing to enforce its arbitration clause.”). Other courts have Lap-ping Chen v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 found that similar arbitration clauses do not evince the parties' intent to benefit third parties. See, e.g., Almada v. BMW of N. Am., LLC, No. 2021 WL 1156850, at *4 (C.D. Cal. Feb. 11, 2021) (“[T]here is no evidence that either Plaintiff or the Dealership intended BMW NA to be third-party beneficiary to the Contract.”); Nation v. BMW of N. Am., LLC, 2020 WL 7868103 (C.D. Cal. Dec. 28, 2020) (“BMW NA proffers no evidence to suggest that the signatories of the contract intended to include BMW NA in the ‘you or I’ who may compel arbitration.”); Zamora v. BMW of N. Am., LLC, 2020 WL 5219565 (C.D. Cal. July 8, 2020) (“The terms of the Lease Agreement do not show an intent to benefit BMW NA.”). *4 Chen's authority is more persuasive. As an initial matter, the Lease Agreement never mentions BMW NA. See Murphy, 724 F.3d at 1234; see also Cal. Civ. Code § 1639 (“When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible ....”). While “a third party need not be expressly named or identified in a contract,” a nonsignatory only qualifies as an intended beneficiary “if the [signatories] intended to benefit the third party and the terms of the contract make that intent evident.” Balsam v. Tucows Inc., 627 F.3d 1158, 1161 (9th Cir. 2010) (cleaned up). In this case, the only evidence BMW NA offers of such intent is the Lease Agreement's reference to “affiliates.” It is not convincing that this broad term, standing alone, evinces an intent to benefit BMW NA.3 See Zamora, 2020 WL 5219565, at *4 (“The Court is simply unpersuaded that the Agreement's vague reference to ‘affiliates’ reveals the signatories' intent to benefit BMW NA.”). Further, the term “affiliate” appears within the definition of “Claims” rather than the clause explaining who can enforce the arbitration provision. See Lease Agreement § 38. The Lease Agreement only states that “you” (defined earlier in contract to mean Stevens Creek BMW or its assignee FSVT) or “I” (Chen) can opt to arbitrate disputes. See id. §§ 2, 38. Thus, the language identified by BMW NA “refers to types of disputes between Plaintiff and the dealership that may be arbitrated, and does not demonstrate an intent to confer some direct benefit on BMW.” Jurosky v. BMW of N. Am., LLC, 441 F. Supp. 3d 963, 975 (S.D. Cal. 2020); see also Almada, 2021 WL 1156850, at *4 (stating that the “Claims” definition “only identifies which claims may be arbitrated and what the subject matter of those claims may be. It does not define who may compel arbitration.”); Nation, 2020 WL 7868103, at *3 (“BMW NA proffers no evidence to suggest that the signatories of the contract intended to include BMW NA in the ‘you or I’ who may compel arbitration.”). Finally, if the signatories intended to benefit BMW NA, they could have stated so directly.4 Stevens Creek BMW explicitly defined “you” to mean both itself and FSVT, which shows that it knew how to confer the benefits of the Lease Agreement on nonsignatories. One rule of construction states that the “mention of one matter implies the exclusion of all others.” Steven v. Fid. & Cas. Co. of New York, 58 Cal. 2d 862, 871 (1962). Since Stevens Creek BMW included FSVT in its definition of the parties, but did not mention BMW NA at all, that rule of construction leans against finding that BMW NA is a third-party beneficiary of the Lease Agreement. See Murphy, 724 F.3d at 1234 (concluding that a nonsignatory was not an intended third- party beneficiary where the contract at issue explicitly identified other third-party beneficiaries). In sum, the court finds that BMW NA has not met its burden to show that it is an intended third-party beneficiary of the Lease Agreement. B. Equitable Estoppel In the alternative, BMW NA seeks to compel under the doctrine of equitable estoppel, which “precludes a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that contract imposes.” Comer, 436 F.3d at 1101 (internal quotation marks and citation omitted). The doctrine reflects the principle that a signatory “cannot, on the one hand, seek to hold the non-signatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny arbitration's applicability because the defendant is a non-signatory.” Goldman v. KPMG, LLP, 173 Cal. App. 4th 209, 220 (2009) (internal quotation marks and citation omitted). Relevant here, a nonsignatory may invoke equitable estoppel to enforce an arbitration clause when “a signatory must rely on the terms of the written agreement in asserting its claims against the nonsignatory or the claims are intimately founded in and intertwined with the underlying contract.” Kramer, 705 F.3d at 1128. “Because generally only signatories to an arbitration agreement are obligated to submit to binding arbitration, equitable estoppel of third parties in this context is narrowly confined.” Murphy, 724 F.3d at 1229. Lap-ping Chen v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 5 *5 BMW NA argues that the court should apply the doctrine of equitable estoppel to compel Chen to arbitrate his claims. It asserts that Chen must rely on the Lease Agreement in order to assert his claims because the Lease Agreement “satisfies” Chen's standing to sue as a “buyer of consumer goods” under the Song-Beverly Act and the Magnuson-Moss Act. Mot. at 11-12; see Cal. Civ. Code § 1794(a) (“Any buyer of consumer goods ... may bring an action ....”). In other words, the Lease Agreement proves that Chen purchased a consumer good, which is one element of a breach of warranty claim. This argument is tenuous at best. Although the Lease Agreement is proof that a consumer purchase occurred, Chen's standing to sue for breach of warranty does not inherently rely on the existence of the Lease Agreement. Thus, while the Lease Agreement is sufficient to show standing, it is not necessary. See Kramer, 705 F.3d at 1132 (“[While] Plaintiffs' claims presume a transaction involving a purchase of a Class Vehicle .... [they] do not ... rely upon the existence of a Purchase Agreement.”); Soto v. Am. Honda Motor Co., 946 F. Supp. 2d 949, 956 (N.D. Cal. 2012) (rejecting a defendant manufacturer's equitable estoppel argument because “[the plaintiff] need not rely on the Installment Sale Contract to prove his purchase of the vehicle, or for the ultimate success of his claims”). Since Chen could bring breach of warranty claims against BMW NA even if the Lease Agreement did not exist, his claims arise independently of that agreement. See Kramer, 705 F.3d at 1131 (“[T]he correct analysis is whether Plaintiffs would have a claim independent of the existence of the Purchase Agreement ....” (emphasis in original)). BMW NA also points out that the Lease Agreement references the express warranty underlying Chen's claims. See Lease Agreement § 16 (“If the Vehicle is new, the Vehicle is subject to the standard manufacturer's new vehicle warranty.”). BMW NA contends that the express warranty is a term of the contract, and that Chen should not be permitted to sue for breach of that term while avoiding his own obligations under the Lease Agreement. See Reply at 8-10. BMW NA's argument is not convincing. While the Lease Agreement mentions BMW NA's new vehicle warranty, it explicitly provides that the lessor “MAKES NO WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VEHICLE OR ANY OF ITS PARTS OR ACCESSORIES” and “MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS OF THE VEHICLE FOR ANY PARTICULAR PURPOSE.” Lease Agreement § 16 (emphasis in original). The fact that the Lease Agreement “expressly differentiate[s] dealer warranties from manufacturer warranties” only serves as evidence that Chen's warranty claims against BMW NA arise independently of the Lease Agreement. See Kramer, 705 F.3d at 1131. Additionally, “many of the California cases permitting non-signatories to compel arbitration under an equitable estoppel theory involve contract-based causes of action, such as tortious interference or breach of contract.” Murphy, 724 F.3d at 1231 n. 7. Applying the doctrine of equitable estoppel is “particularly inappropriate where plaintiffs seek the protection of consumer protection laws against misconduct that is unrelated to any contract except to the extent that a customer service agreement is an artifact of the consumer-provider relationship itself.” Id.; see also Nation, 2020 WL 7868103, at *3 (“The Ninth Circuit has long held that car manufacturers like BMW NA cannot enforce similar arbitration provisions in contracts between consumers and car dealers against plaintiff consumers where the plaintiff is not seeking to enforce a term of the contract.” (citing cases)). Here, Chen is asserting breach of warranty claims under federal and California consumer protection laws. He is not alleging breach of the Lease Agreement against either BMW NA or Stevens Creek BMW. Thus, the Lease Agreement is at most tangentially connected with Chen's claims. See Kramer, 705 F.3d at 1132 (“In order for [the manufacturer's] equitable estoppel argument to succeed, Plaintiffs' claims themselves must intimately rely on the existence of the Purchase Agreements, not merely reference them.”); see also Zamora, 2020 WL 5219565, at *3 (“The mere fact that Plaintiff took possession of her vehicle through the Lease Agreement does not make her warranty claims ‘intimately founded in and intertwined with’ the Lease Agreement.”). Finally, BMW NA's reliance on Felisilda v. FCA US LLC is unavailing. See 53 Cal. App. 5th 486, 490 (Nov. 24, 2020). The plaintiffs in that case brought claims against both the dealership and the automobile manufacturer, and the court found that they had “expressly agreed to arbitrate claims arising out of the condition of the vehicle - even against third party nonsignatories to the sales contract ....” Id. at 497. Here, by contrast, the court has already found that Chen did not expressly agree to arbitrate his claims against BMW NA as a nonsignatory. *6 For all of the above reasons, the court rejects BMW NA's argument that it can compel arbitration through equitable estoppel. Lap-ping Chen v. BMW of North America, LLC, Slip Copy (2021) © 2021 Thomson Reuters. No claim to original U.S. Government Works. 6 IV. CONCLUSION For the reasons stated above, BMW NA's motion to compel arbitration is denied. IT IS SO ORDERED. All Citations Slip Copy, 2021 WL 3604691 Footnotes 1 Tyler Weight identifies himself as the Finance Systems Manager for BMW FS. Weight Decl. ¶ 1. 2 The parties do not dispute that the FAA is the relevant authority for this dispute. See Lease Agreement § 28 (“[T]his Arbitration Clause and any arbitration hereunder shall be governed by the Federal Arbitration Act ....”). 3 Relatedly, BMW NA does not offer any authority as to the meaning of “affiliate” or any argument as to how that definition applies to the various parent/subsidiary relationships at issue in this case. 4 This is particularly true given the extent of litigation about this exact issue. BMW NA is clearly on notice that some courts have not adopted its position with respect to enforcing arbitration agreements between dealerships and customers. If the dealerships intended to benefit BMW NA, they have had ample opportunity to clarify any ambiguities in their agreements. End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works. 4 REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF PLAINTIFF’S OPPOSITION TO MOTION TO COMPEL ARBITRATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is Strategic Legal Practices, 1840 Century Park East, Suite 430, Los Angeles, California 90067. On November 15, 2021, I caused to be served the document(s) described as: REQUEST FOR JUDICIAL NOTICE ISO PLAINTIFF’S OPPOSITION TO DEFENDANT’S MOTIO TO COMPEL ARBITRATION AND STAY ACTION on the interested parties in this action by sending [ ] the original [or] [] a true copy thereof [] to interested parties as follows [or] [ ] as stated on the attached service list: Julian G. Senior, Esq. Rachel Weatherly, Esq. mail@sjllegal.com SJL Law, P.C. 841 Apollo Street, Suite 300 El Segundo, CA 90245 Attorneys for Defendant, HYUNDAI MOTOR AMERICA [ ] BY MAIL (ENCLOSED IN A SEALED ENVELOPE): I deposited the envelope(s) for mailing in the ordinary course of business at Los Angeles, California. I am “readily familiar” with this firm’s practice of collection and processing correspondence for mailing. Under that practice, sealed envelopes are deposited with the U.S. Postal Service that same day in the ordinary course of business with postage thereon fully prepaid at Los Angeles, California. [] BY E-MAIL: I hereby certify that this document was served from Los Angeles, California, by e-mail delivery, pursuant to the parties’ agreement, on the parties listed herein at their most recent known e-mail address or e-mail of record in this action. [ ] BY OVERNIGHT DELIVERY: I am “readily familiar” with this firm’s practice of collection and processing correspondence for overnight delivery. Under that practice, overnight packages are enclosed in a sealed envelope with a packing slip attached thereto fully prepaid. The packages are picked up by the carrier at our offices or delivered by our office to a designated collection site. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this November 15, 2021, at Los Angeles, California. Daniel Law dlaw@slpattorney.com