Morgan v. Avis Budget Group, Inc. et al

Filing 21

ORDER signed by District Judge John A. Mendez on 8/2/17 ORDERING for the reasons set forth above, the Court GRANTS Defendants' 7 Motion to Compel Arbitration and DISMISSES the action. CASE CLOSED(Becknal, R)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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WIENDI MORGAN,

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2:17-cv-00869-JAM-KJN

Plaintiff,

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No.

v.

ORDER COMPELLING ARBITRATION

AVIS BUDGET GROUP, INC., et
al.,

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Defendants.
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This matter involves a $103.15 transaction for a rental car

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that Wiendi Morgan (“Plaintiff”) reserved and subsequently

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cancelled.

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System, Inc., (“Defendants”) now seek an order compelling

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arbitration of this dispute and dismissing the action.

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reasons set forth below, Defendants’ motion is granted. 1
I.

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Avis Budget Group, Inc., and Budget Rent A Car

For the

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

On September 1, 2016, Plaintiff made a reservation online

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for a rental car with Defendants.

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Marla Blume (“Blume Decl.”) at ¶ 7.

Compl. at ¶ 9; Declaration of
Plaintiff cancelled the

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for July 25, 2017.
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rental car the next day, prior to the scheduled reservation, and

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never picked up the car.

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that Defendants still charged her card for the reservation even

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though she never provided them with authorization to charge the

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card.

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¶ 13.

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Id. at ¶¶ 10 & 13.

Id. at ¶¶ 11 & 13.

Plaintiff alleges

The charge was for $103.15.

Id. at

Plaintiff became a member of Defendants’ Fastbreak Program

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after submitting an online application on July 23, 2014.

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Decl. at ¶ 6.

Blume

The Fastbreak Program enables customers to bypass

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the service counter when they rent vehicles from Defendants.

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at ¶ 3.

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that she had “read, understood, and agree[d] to the Budget

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Fastbreak Global Master Rental Agreement Terms and Conditions.”

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Id. at ¶ 5, Exh. A.

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in 2014 contained a provision that Defendants have “the right to

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change these Terms and Conditions . . . upon [Defendants] posting

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such changes on the Budget Web site” and that “[s]uch changes

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will apply to rentals that [one] reserve[s] after . . . the date

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such changes are posted on the Budget Web site.”

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Exh. C at ¶ 1.D.

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were revised and posted on Budget’s website.

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revised Terms and Conditions contained an arbitration provision

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which states:

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Id.

When Plaintiff enrolled in the program, she acknowledged

The Terms and Conditions Plaintiff agreed to

Id. at ¶ 8,

On April 22, 2016, the Terms and Conditions
Id. at ¶ 9.

[I]n the event of a dispute that cannot be resolved
informally through the pre-dispute resolution
procedure, all disputes between you and Budget arising
out of or relating to or in connection with your
rental of a vehicle from Budget and these Rental Terms
and Conditions shall be exclusively settled through
binding arbitration through the American Arbitration
Association (“AAA”) pursuant to the AAA’s then-current
rules for commercial arbitration.
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The

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Id., Exh. D at 11.

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requires the customer and Budget to give the other party written

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notice of a claim thirty days before initiating a proceeding

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(i.e. arbitration) to assert that claim and make a reasonable

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good faith effort to resolve the claim.

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The “Pre-Dispute Resolution Procedure”

Id., Exh. D at 10.

Plaintiff alleges that she notified Defendants of her legal

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claims through her counsel and by mail on January 6, 2017, and

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February 10, 2017.

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Defendants did not respond to either letter.

Compl. at ¶¶ 23 & 24.

She further alleges
Id.

Plaintiff

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filed this action in April 2017 alleging breach of contract,

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fraud, unfair business practices, and violations of the

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California Consumer Legal Remedies Act.

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II.

OPINION

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A.

Subject Matter Jurisdiction

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On July 14, 2017, the Court ordered the parties to show

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cause why this matter should not be dismissed for lack of subject

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matter jurisdiction.

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excess of $75,000.

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transaction in dispute involved a charge of $103.15 and that

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“[e]ven accounting for plausible attorney’s fees, the amount in

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controversy appears to be far below the required $75,000 figure.”

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Id.

ECF No. 15.
Compl. at 7.

Plaintiff alleges damages in
The Court noted that the

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In response to the Court’s order, Defendants argue that

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Plaintiff failed to provide evidence establishing it is more

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likely than not that the amount in controversy exceeds $75,000.

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Def. Resp. at 2–3.

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provide any evidence to support attorneys’ fees over that

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threshold and that Plaintiff, in her Complaint, effectively

Defendants point out that Plaintiff did not

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admits that the $103.15 was returned to Plaintiff, which removes

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that sum from Plaintiff’s damages claim.

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(“Defendants charged Plaintiff’s credit card in the amount of

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$103.15—funds that were not returned to Plaintiff for several

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weeks.”).

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See Compl. at ¶ 22

Defendants contend Plaintiff has not met her burden.

However, Plaintiff correctly argues that this Court must

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apply the “legal certainty” test to determine whether the

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complaint meets the amount in controversy requirement.

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at 2; see Naffe v. Frey, 789 F.3d 1030, 1039 (9th Cir. 2015).

P. Resp.

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“Under this test, the sum claimed by the plaintiff controls if

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the claim is apparently made in good faith.

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legal certainty that the claim is really for less than the

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jurisdictional amount to justify dismissal.”

Naffe, 789 F.3d at

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1040 (citation and quotation marks omitted).

“Only three

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situations clearly meet the legal certainty standard: 1) when the

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terms of a contract limit the plaintiff’s possible recovery;

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2) when a specific rule of law or measure of damages limits the

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amount of damages recoverable; and 3) when independent facts show

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that the amount of damages was claimed merely to obtain federal

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court jurisdiction.”

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It must appear to a

Id. (citation and quotation marks omitted).

Plaintiff contends that the potential attorneys’ fees,

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punitive damages, statutory damages, and the value of the

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equitable relief she seeks under California’s Unfair Competition

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Law may amount to over $75,000.

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skeptical that the amount in controversy is met, the Court cannot

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draw the contrary conclusion to a legal certainty based on the

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briefs and record before it at this time.

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dismissed on this basis.

Although the Court remains

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The action is not

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B.

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Under the Federal Arbitration Act, the Court must compel

Arbitration

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arbitration if (1) a valid agreement to arbitrate exists and

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(2) the dispute falls within the scope of that agreement.

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v. m-Qube Inc., 824 F.3d 797, 799 (9th Cir. 2016).

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Geier

Defendants argue that by enrolling in the Fastbreak Program,

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Plaintiff accepted the Fastbreak Program’s Terms and Conditions

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and agreed to be bound to those terms.

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Plaintiff agreed to be bound to subsequent changes to those Terms

Mot. at 5.

Additionally,

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and Conditions as posted on the Budget Web site.

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Defendants argue, Plaintiff is bound by the arbitration clause

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posted on the Budget website on April 22, 2016, with respect to

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her reservation made on September 1, 2016.

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Id.

Therefore,

Mot. at 6.

Plaintiff does not contend that she was unaware of the

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arbitration clause, that she did not agree to the arbitration

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clause, that the clause is invalid, or that her claims fall

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outside the scope of the arbitration clause.

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argues that Defendants waived their right to compel arbitration

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by failing to follow the informal dispute resolution procedure

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outlined in the Terms and Conditions.

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Plaintiff instead

Opp. at 2–5.

“Waiver of the right to arbitration is disfavored[;]”

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therefore, “any party arguing waiver of arbitration bears a heavy

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burden of proof.”

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691, 694 (9th Cir. 1986) (citation and quotation marks omitted).

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“A party seeking to prove waiver of a right to arbitration must

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demonstrate: (1) knowledge of an existing right to compel

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arbitration; (2) acts inconsistent with that existing right; and

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(3) prejudice to the party opposing arbitration resulting from

Fisher v. A.G. Becker Paribas Inc., 791 F.2d

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such inconsistent acts.”

Id.

Plaintiff does not address this standard in her Opposition.

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Instead, Plaintiff cites generally to the rule that “a party to a

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contract may by conduct or representation waive the performance

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of a condition thereof, or be held estopped by such conduct or

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representations to deny that he has waived such performance.”

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Opp. at 2 (quoting Panno v. Russo, 82 Cal. App. 2d 408, 412

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(1947)).

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Opposition involved waiver of an arbitration provision and

Neither of the two cases cited in Plaintiff’s

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Plaintiff provides no other authority for the proposition that

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Defendants’ alleged failure to follow the informal dispute

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resolution procedure constitutes a waiver of the arbitration

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provision.

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The Court rejects Plaintiff’s waiver argument for two

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reasons.

First, Plaintiff has not carried her “heavy burden” in

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meeting the waiver elements outlined in Fisher.

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shown that Defendants acted “inconsistently” with the right to

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arbitrate.

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presence of an arbitration provision would constitute such

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inconsistent behavior. See, e.g., In re Toyota Motor Corp. Brake

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Mktg., Sales, Practices & Prods. Liab. Litig., No. 8:10-ML-02172-

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CJC(RNBx), 2011 WL 13160304 (C.D. Cal. Dec. 20, 2011) (finding

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Toyota had acted inconsistently with its right to arbitrate by

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vigorously litigating the federal court action for nearly two

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years).

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clause at the first opportunity.

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shown prejudice.

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court when one is party to an arbitration agreement is a “self-

She has not

Extended engagement in litigation despite the

Here, in contrast, Defendants invoked the arbitration
Furthermore, Plaintiff has not

The expense incurred in filing a lawsuit in

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inflicted” wound and does not demonstrate prejudice.

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v. Yasuda, 829 F.3d 1118, 1126 (9th Cir. 2016) (“To prove

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prejudice, plaintiffs must show more than ‘self-inflicted’ wounds

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that they incurred as a direct result of suing in federal court

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contrary to the provisions of an arbitration agreement.”) (citing

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Fisher, 791 F.2d at 698).

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preparing the complaint, serving notice, or engaging in limited

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litigation regarding issues directly related to the complaint’s

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filing, such as jurisdiction or venue.”

See Martin

“Such wounds include costs incurred in

Id.

Defendants did not

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cause Plaintiff’s expenses.

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drag on and forcing Plaintiff to expend considerable time and

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funds in pursuit of her claims, Defendants moved to compel

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arbitration in their first responsive filing in this case.

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Martin, 829 F.3d at 1127 (finding prejudice after seventeen

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months of litigation in which the district court had ruled in the

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plaintiff’s favor on several legal issues); Gutierrez v. Wells

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Fargo Bank, NA, 704 F.3d 712, 721 (9th Cir. 2012) (finding

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prejudice where the defendant moved for arbitration five years

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into litigation, once the case was already in appellate

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proceedings).

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Rather than allowing litigation to

Cf.

The requisite prejudice is not present.

Second, the discussion of the facts of this case that

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Plaintiff includes in her Opposition omits any mention of

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Defendants’ response to Plaintiff’s initial letter to Defendants.

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Plaintiff’s letter, titled “THIS IS AN OFFER OF COMPROMISE PRIOR

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TO SUIT” and dated October 12, 2016, asked Defendants to pay

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Plaintiff $75,000 in settlement.

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(“Chin Decl.”), Exh. 1.

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a letter, dated November 14, 2016, informing her that the charge

Declaration of Maytak Chin

Defendants responded to her demand with

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would be credited to her MasterCard account in the amount of

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$103.15, that three free rental day certificates would be issued

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to her Fastbreak profile, and that Budget denied her request for

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a financial settlement.

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consistent with paragraph 22 of the Complaint, in which Plaintiff

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states that the $103.15 was “not returned to Plaintiff for

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several weeks.”

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Plaintiff’s “pre-litigation communications” entirely, see Opp. at

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5, Defendants unequivocally told Plaintiff they would not offer

Chin Decl., Exh. 2.

This letter is

It appears, then, that rather than ignoring

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her a financial settlement.

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Plaintiff’s waiver argument.

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Thus, the facts do not support

The Court finds that Defendants did not waive their right to

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arbitration and Plaintiff is bound to the arbitration clause.

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While the Court is authorized to stay the action, 9 U.S.C. § 3,

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there is no apparent reason to stay the case rather than

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dismissing the action as Defendants request.

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Starbucks Corp., No. 2:16-cv-02727-MCE-CKD, 2017 WL 2813170 (E.D.

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Cal. June 29, 2017) (compelling arbitration and dismissing the

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action).

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III.

See Horne v.

ORDER

For the reasons set forth above, the Court GRANTS

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Defendants’ Motion to Compel Arbitration and dismisses the

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action.

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IT IS SO ORDERED.
Dated: August 2, 2017

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