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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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 10 WIENDI MORGAN, 11 2:17-cv-00869-JAM-KJN Plaintiff, 12 13 No. v. ORDER COMPELLING ARBITRATION AVIS BUDGET GROUP, INC., et al., 14 Defendants. 15 This matter involves a $103.15 transaction for a rental car 16 17 that Wiendi Morgan (“Plaintiff”) reserved and subsequently 18 cancelled. 19 System, Inc., (“Defendants”) now seek an order compelling 20 arbitration of this dispute and dismissing the action. 21 reasons set forth below, Defendants’ motion is granted. 1 I. 22 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 23 24 for a rental car with Defendants. 25 Marla Blume (“Blume Decl.”) at ¶ 7. Compl. at ¶ 9; Declaration of Plaintiff cancelled the 26 27 28 1 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. 1 1 rental car the next day, prior to the scheduled reservation, and 2 never picked up the car. 3 that Defendants still charged her card for the reservation even 4 though she never provided them with authorization to charge the 5 card. 6 ¶ 13. 7 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 8 after submitting an online application on July 23, 2014. 9 Decl. at ¶ 6. Blume The Fastbreak Program enables customers to bypass 10 the service counter when they rent vehicles from Defendants. 11 at ¶ 3. 12 that she had “read, understood, and agree[d] to the Budget 13 Fastbreak Global Master Rental Agreement Terms and Conditions.” 14 Id. at ¶ 5, Exh. A. 15 in 2014 contained a provision that Defendants have “the right to 16 change these Terms and Conditions . . . upon [Defendants] posting 17 such changes on the Budget Web site” and that “[s]uch changes 18 will apply to rentals that [one] reserve[s] after . . . the date 19 such changes are posted on the Budget Web site.” 20 Exh. C at ¶ 1.D. 21 were revised and posted on Budget’s website. 22 revised Terms and Conditions contained an arbitration provision 23 which states: 24 25 26 27 28 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. 2 The 1 Id., Exh. D at 11. 2 requires the customer and Budget to give the other party written 3 notice of a claim thirty days before initiating a proceeding 4 (i.e. arbitration) to assert that claim and make a reasonable 5 good faith effort to resolve the claim. 6 The “Pre-Dispute Resolution Procedure” Id., Exh. D at 10. Plaintiff alleges that she notified Defendants of her legal 7 claims through her counsel and by mail on January 6, 2017, and 8 February 10, 2017. 9 Defendants did not respond to either letter. Compl. at ¶¶ 23 & 24. She further alleges Id. Plaintiff 10 filed this action in April 2017 alleging breach of contract, 11 fraud, unfair business practices, and violations of the 12 California Consumer Legal Remedies Act. 13 II. OPINION 14 A. Subject Matter Jurisdiction 15 On July 14, 2017, the Court ordered the parties to show 16 cause why this matter should not be dismissed for lack of subject 17 matter jurisdiction. 18 excess of $75,000. 19 transaction in dispute involved a charge of $103.15 and that 20 “[e]ven accounting for plausible attorney’s fees, the amount in 21 controversy appears to be far below the required $75,000 figure.” 22 Id. ECF No. 15. Compl. at 7. Plaintiff alleges damages in The Court noted that the 23 In response to the Court’s order, Defendants argue that 24 Plaintiff failed to provide evidence establishing it is more 25 likely than not that the amount in controversy exceeds $75,000. 26 Def. Resp. at 2–3. 27 provide any evidence to support attorneys’ fees over that 28 threshold and that Plaintiff, in her Complaint, effectively Defendants point out that Plaintiff did not 3 1 admits that the $103.15 was returned to Plaintiff, which removes 2 that sum from Plaintiff’s damages claim. 3 (“Defendants charged Plaintiff’s credit card in the amount of 4 $103.15—funds that were not returned to Plaintiff for several 5 weeks.”). 6 See Compl. at ¶ 22 Defendants contend Plaintiff has not met her burden. However, Plaintiff correctly argues that this Court must 7 apply the “legal certainty” test to determine whether the 8 complaint meets the amount in controversy requirement. 9 at 2; see Naffe v. Frey, 789 F.3d 1030, 1039 (9th Cir. 2015). P. Resp. 10 “Under this test, the sum claimed by the plaintiff controls if 11 the claim is apparently made in good faith. 12 legal certainty that the claim is really for less than the 13 jurisdictional amount to justify dismissal.” Naffe, 789 F.3d at 14 1040 (citation and quotation marks omitted). “Only three 15 situations clearly meet the legal certainty standard: 1) when the 16 terms of a contract limit the plaintiff’s possible recovery; 17 2) when a specific rule of law or measure of damages limits the 18 amount of damages recoverable; and 3) when independent facts show 19 that the amount of damages was claimed merely to obtain federal 20 court jurisdiction.” 21 It must appear to a Id. (citation and quotation marks omitted). Plaintiff contends that the potential attorneys’ fees, 22 punitive damages, statutory damages, and the value of the 23 equitable relief she seeks under California’s Unfair Competition 24 Law may amount to over $75,000. 25 skeptical that the amount in controversy is met, the Court cannot 26 draw the contrary conclusion to a legal certainty based on the 27 briefs and record before it at this time. 28 dismissed on this basis. Although the Court remains 4 The action is not 1 B. 2 Under the Federal Arbitration Act, the Court must compel Arbitration 3 arbitration if (1) a valid agreement to arbitrate exists and 4 (2) the dispute falls within the scope of that agreement. 5 v. m-Qube Inc., 824 F.3d 797, 799 (9th Cir. 2016). 6 Geier Defendants argue that by enrolling in the Fastbreak Program, 7 Plaintiff accepted the Fastbreak Program’s Terms and Conditions 8 and agreed to be bound to those terms. 9 Plaintiff agreed to be bound to subsequent changes to those Terms Mot. at 5. Additionally, 10 and Conditions as posted on the Budget Web site. 11 Defendants argue, Plaintiff is bound by the arbitration clause 12 posted on the Budget website on April 22, 2016, with respect to 13 her reservation made on September 1, 2016. 14 Id. Therefore, Mot. at 6. Plaintiff does not contend that she was unaware of the 15 arbitration clause, that she did not agree to the arbitration 16 clause, that the clause is invalid, or that her claims fall 17 outside the scope of the arbitration clause. 18 argues that Defendants waived their right to compel arbitration 19 by failing to follow the informal dispute resolution procedure 20 outlined in the Terms and Conditions. 21 Plaintiff instead Opp. at 2–5. “Waiver of the right to arbitration is disfavored[;]” 22 therefore, “any party arguing waiver of arbitration bears a heavy 23 burden of proof.” 24 691, 694 (9th Cir. 1986) (citation and quotation marks omitted). 25 “A party seeking to prove waiver of a right to arbitration must 26 demonstrate: (1) knowledge of an existing right to compel 27 arbitration; (2) acts inconsistent with that existing right; and 28 (3) prejudice to the party opposing arbitration resulting from Fisher v. A.G. Becker Paribas Inc., 791 F.2d 5 1 2 such inconsistent acts.” Id. Plaintiff does not address this standard in her Opposition. 3 Instead, Plaintiff cites generally to the rule that “a party to a 4 contract may by conduct or representation waive the performance 5 of a condition thereof, or be held estopped by such conduct or 6 representations to deny that he has waived such performance.” 7 Opp. at 2 (quoting Panno v. Russo, 82 Cal. App. 2d 408, 412 8 (1947)). 9 Opposition involved waiver of an arbitration provision and Neither of the two cases cited in Plaintiff’s 10 Plaintiff provides no other authority for the proposition that 11 Defendants’ alleged failure to follow the informal dispute 12 resolution procedure constitutes a waiver of the arbitration 13 provision. 14 The Court rejects Plaintiff’s waiver argument for two 15 reasons. First, Plaintiff has not carried her “heavy burden” in 16 meeting the waiver elements outlined in Fisher. 17 shown that Defendants acted “inconsistently” with the right to 18 arbitrate. 19 presence of an arbitration provision would constitute such 20 inconsistent behavior. See, e.g., In re Toyota Motor Corp. Brake 21 Mktg., Sales, Practices & Prods. Liab. Litig., No. 8:10-ML-02172- 22 CJC(RNBx), 2011 WL 13160304 (C.D. Cal. Dec. 20, 2011) (finding 23 Toyota had acted inconsistently with its right to arbitrate by 24 vigorously litigating the federal court action for nearly two 25 years). 26 clause at the first opportunity. 27 shown prejudice. 28 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 6 1 inflicted” wound and does not demonstrate prejudice. 2 v. Yasuda, 829 F.3d 1118, 1126 (9th Cir. 2016) (“To prove 3 prejudice, plaintiffs must show more than ‘self-inflicted’ wounds 4 that they incurred as a direct result of suing in federal court 5 contrary to the provisions of an arbitration agreement.”) (citing 6 Fisher, 791 F.2d at 698). 7 preparing the complaint, serving notice, or engaging in limited 8 litigation regarding issues directly related to the complaint’s 9 filing, such as jurisdiction or venue.” See Martin “Such wounds include costs incurred in Id. Defendants did not 10 cause Plaintiff’s expenses. 11 drag on and forcing Plaintiff to expend considerable time and 12 funds in pursuit of her claims, Defendants moved to compel 13 arbitration in their first responsive filing in this case. 14 Martin, 829 F.3d at 1127 (finding prejudice after seventeen 15 months of litigation in which the district court had ruled in the 16 plaintiff’s favor on several legal issues); Gutierrez v. Wells 17 Fargo Bank, NA, 704 F.3d 712, 721 (9th Cir. 2012) (finding 18 prejudice where the defendant moved for arbitration five years 19 into litigation, once the case was already in appellate 20 proceedings). 21 Rather than allowing litigation to Cf. The requisite prejudice is not present. Second, the discussion of the facts of this case that 22 Plaintiff includes in her Opposition omits any mention of 23 Defendants’ response to Plaintiff’s initial letter to Defendants. 24 Plaintiff’s letter, titled “THIS IS AN OFFER OF COMPROMISE PRIOR 25 TO SUIT” and dated October 12, 2016, asked Defendants to pay 26 Plaintiff $75,000 in settlement. 27 (“Chin Decl.”), Exh. 1. 28 a letter, dated November 14, 2016, informing her that the charge Declaration of Maytak Chin Defendants responded to her demand with 7 1 would be credited to her MasterCard account in the amount of 2 $103.15, that three free rental day certificates would be issued 3 to her Fastbreak profile, and that Budget denied her request for 4 a financial settlement. 5 consistent with paragraph 22 of the Complaint, in which Plaintiff 6 states that the $103.15 was “not returned to Plaintiff for 7 several weeks.” 8 Plaintiff’s “pre-litigation communications” entirely, see Opp. at 9 5, Defendants unequivocally told Plaintiff they would not offer Chin Decl., Exh. 2. This letter is It appears, then, that rather than ignoring 10 her a financial settlement. 11 Plaintiff’s waiver argument. 12 Thus, the facts do not support The Court finds that Defendants did not waive their right to 13 arbitration and Plaintiff is bound to the arbitration clause. 14 While the Court is authorized to stay the action, 9 U.S.C. § 3, 15 there is no apparent reason to stay the case rather than 16 dismissing the action as Defendants request. 17 Starbucks Corp., No. 2:16-cv-02727-MCE-CKD, 2017 WL 2813170 (E.D. 18 Cal. June 29, 2017) (compelling arbitration and dismissing the 19 action). 20 21 III. See Horne v. ORDER For the reasons set forth above, the Court GRANTS 22 Defendants’ Motion to Compel Arbitration and dismisses the 23 action. 24 25 IT IS SO ORDERED. Dated: August 2, 2017 26 27 28 8

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