Duick v. Toyota Motor Sales, U.S.A., Inc.

• Decision Date: 31 August 2011
• Docket Number: No. B224839.,B224839.
• Citation: 11 Cal. Daily Op. Serv. 11277,131 Cal.Rptr.3d 514,2011 Daily Journal D.A.R. 13456,198 Cal.App.4th 1316
• Court: California Court of Appeals
• Parties: Amber DUICK, Plaintiff and Respondent, v. TOYOTA MOTOR SALES, U.S.A., INC., et al., Defendants and Appellants.

198 Cal.App.4th 1316

131 Cal.Rptr.3d 514

11 Cal. Daily Op. Serv. 11,277

2011 Daily Journal D.A.R. 13,456

Amber DUICK, Plaintiff and Respondent,

v.TOYOTA MOTOR SALES, U.S.A., INC., et al., Defendants and Appellants.

No. B224839.

Court of Appeal, Second District, Division 1, California.

Aug. 31, 2011.

Ogletree, Deakins, Nash, Smoak & Stewart, Vince M. Verde and Christopher J. Archibald, Costa Mesa, for Defendants and Appellants.

Tepper Law Firm, Nicholas Tepper and Heather A. Hickman for Plaintiff and Respondent.

ROTHSCHILD, J.

Defendants Toyota Motor Sales, U.S.A., Inc. (Toyota) and Saatchi & Saatchi North America, Inc. (Saatchi) appeal from the denial of their motion to compel arbitration of plaintiff Amber Duick's claims. We affirm because the putative contract is void on account of fraud in the inception.

BACKGROUND¹

Duick's claims arise from her apparently unwitting participation in an internet-based advertising campaign launched by defendants in connection with Toyota's Matrix automobile. The campaign, known as “Your Other You,” “consisted of sending an unwitting recipient emails from an unknown individual.” During the campaign, any visitor to the Toyota Matrix web site (“player 1”) could designate another person (“player 2”) for participation in the Your Other You “interactive experience.” Player 2 would then receive an email purportedly from player 1, inviting player 2 to click a hyperlink that was in some manner “identified with Toyota.” The link would direct player 2 to a web page entitled “Personality Evaluation,” which displayed a drawing of a door with the word “Begin” underneath. Clicking on the door would direct player 2 to a second web page entitled “Personality Evaluation Terms and Conditions.” In order to continue beyond that page, according to evidence introduced by defendants, player 2 was required to scroll through certain text (the “terms and conditions”) and, at the end of that text, click a box next to the following sentence: “I have read and agree to the terms and conditions.”

The first paragraph of the terms and conditions states, “You have been invited by someone who has indicated that he/she knows you to participate in Your Other You. Your Other You is a website provided by [Toyota] that offers you ... an interactive experience.” The second paragraph further states, “If you review and agree to the Terms and Conditions detailed below ... you may participate in a 5 day digital experience through Your Other You.... You may receive email messages, phone calls and/or text messages during the 5–day experience.” A subsequent paragraph also states, “You understand that by agreeing to these Terms, you are agreeing to receive emails, phone calls and text messages from Toyota during the 5–day experience of Your Other You.” The terms and conditions contain the following arbitration provision: “You agree that ... any and all disputes, claims, and causes of action arising out of, or connected with, Your Other You ... shall be resolved individually, without resort to any form of class action, and exclusively by arbitration to be held solely in Los Angeles, California under the auspices of the American Arbitration Association and pursuant to its Commercial Dispute Resolution Rules and Procedures.”

The record before us does not describe the further web pages (if any) to which player 2 would be directed after agreeing to the terms and conditions. Over the next several days, however, player 2 would receive emails of an unsettling nature from an “unknown individual” who appeared to have access to some personal information concerning player 2 (information that presumably was provided by player 1, without player 2's knowledge, at the initial stage).

Duick was apparently cast in the role of player 2. She received “an unsolicited email asking [her] to take a personality test.” She does not remember clicking the box signifying her agreement to the terms and conditions, and she claims that for various technical reasons the text of the terms and conditions was impossible to read in its entirety.

In any event, Duick later began to receive emails from an individual identifying himself as “Sebastian Bowler.” The text of the first email reads, “Amber mate! Coming 2 Los Angeles Gonna lay low at your place for a bit. Till it all blows over. Bringing Trigger.” Duick received another email from Bowler the following day, accurately stating her previous home address, describing it as a “Nice place to hide out,” and advising her that “Trigger don't throw up much anymore, but put some newspaper down in case.” The email also provided a link to Bowler's MySpace page, which portrayed him as a 25–year–old Englishman and “a fanatical English soccer fan who enjoyed drinking alcohol to excess”; the page also displayed photographs of a pit bull dog.

Additional emails from Bowler to Duick over the next few days purported to describe his cross-country journey by car to visit her, including photos and videos of his travels and references to his efforts to evade law enforcement (“I seem to have lost the coppers for now, so I'm all good, mate”; “Had a brush with the law last night. Anyway, hopefully I'll have lost them by the time I get to your place”). One message explained that Bowler “ran into a little problem at the hotel,” and Duick subsequently received an email from an individual identifying himself as “Jimmy Citro,” purporting to be the manager of a motel and billing Duick for the damage Bowler had done to the motel's property. The final email included a link to a video revealing that Bowler was a fictional character and that the entire sequence of emails was an elaborate prank, all part of an advertising campaign for the Toyota Matrix.

On September 28, 2009, Duick filed suit against Toyota and Saatchi, alleging eight causes of action including intentional infliction of emotional distress, negligence, and false advertising, and seeking “compensatory damages of not less than $10,000,000” as well as other forms of relief. After defendants demurred and Duick voluntarily filed a first amended complaint, defendants moved to compel arbitration on the basis of the arbitration provision in the terms and conditions.

The trial court denied defendants' motion. Defendants timely appealed.

STANDARD OF REVIEW

In reviewing an order denying a motion to compel arbitration, we review the trial court's factual determinations under the substantial evidence standard, and we review issues of law de novo. ( Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425, 34 Cal.Rptr.3d 547.)

DISCUSSION

Duick contends that the arbitration provision in the terms and conditions is unenforceable because, assuming that she did agree to the terms and conditions by clicking the appropriate box, the entire agreement is void because of fraud in the inception or execution. We agree.

“California law distinguishes between fraud in the ‘execution’ or ‘inception’ of a contract and fraud in the ‘inducement’ of a contract. In brief, in the former case ‘ “the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and [the contract] is void. In such a case it may be disregarded without the necessity of rescission.” ’ [Citation.] Fraud in the inducement, by contrast, occurs when ‘ “the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.In order to escape from its obligations the aggrieved party must rescind ....” ’ [Citation.]” ( Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415, 58 Cal.Rptr.2d 875, 926 P.2d 1061 [hereafter Rosenthal ].) “[C]laims of fraud in the execution of the entire agreement are not arbitrable under either state or federal law. If the entire contract is void ab initio because of fraud, the parties have not agreed to arbitrate any controversy....” ( Id. at p. 416, 58 Cal.Rptr.2d 875, 926 P.2d 1061.)

Fraud in the inception will render a contract “wholly void, despite the parties' apparent assent to it, when, ‘ “ without negligence on his part, a signer attaches his signature to a paper assuming it to be a paper of a different character.” ’ [Citations.]” ( Rosenthal, supra, 14 Cal.4th at p. 420, 58 Cal.Rptr.2d 875, 926 P.2d 1061.) Thus, “[i]f a misrepresentation as to the character or essential terms of a...