Lucas v. Hertz Corp.
| Decision Date | 21 June 2012 |
| Docket Number | No. C 11-01581 LB,C 11-01581 LB |
| Parties | KATHLEEN M. LUCAS, et al., Plaintiffs, v. HERTZ CORPORATION, Defendant. |
| Court | U.S. District Court — Northern District of California |
[Re: ECF No. 37]
Kathleen Lucas and Dan Martin (collectively, "Plaintiffs") filed the instant action against car rental company Hertz Corporation ("Hertz") in San Francisco County Superior Court on November 29, 2010. Notice of Removal, ECF No. 1 at 5-12 ("Complaint").1 Hertz removed the action to this court on March 31, 2011. Notice of Removal, ECF No. 1. Hertz now moves, for the second time, for an order compelling Plaintiffs to arbitrate their claims pursuant to an arbitration agreement incorporated by reference into the car rental agreement that Mr. Martin signed. Motion to Compel ("MTC"), ECF No. 37. For the reasons explained below, the court GRANTS Hertz's motion.
Mr. Martin, who is a resident of the United States, rented a Daihatsu automobile from Costa RicaRent a Car, a Hertz licensee, in Alajuela, Costa Rica on February 28, 2010. Complaint, ECF No. 1 at 5-6, ¶¶ 3, 11; Motion to Compel, ECF No. 37 at 5; Opposition, ECF No. 44 at 7.2 The car rental agreement, which is roughly half a page long and which was submitted by both Mr. Martin and Hertz, sets forth the rental price and then states in relevant part:
I hereby state that I have read the conditions on this Contract as set forth in the FOLDER JACKET CR001 and its addendum DCLA001, DCL002, DCLA003, the contents of which I fully understand as explained to me, therefore, I accept the conditions and execute this document in full conformity.
Calderon Declaration, ECF No. 39, Ex. A; Martin Declaration, ECF No. 40, Ex. A. Mr. Martin's signature is directly under this clause. Calderon Declaration, ECF No. 39, Ex. A; Martin Declaration, ECF No. 40, Ex. A.3 Mr. Martin's signature also appears on two of the addenda mentioned in the clause (DCLA001 and DCLA002). Calderon Declaration, ECF No. 39, Ex. E.4
The "folder jacket" referred to above is the paper sleeve into which the rental agreement is placed. Calderon Declaration, ECF No. 39 at 3, ¶ 6. Hertz submitted a copy of the folder jacket that Costa Rica Rent a Car used in February 2010. Id., Ex. C. Unlike the rental agreement and the addenda, it does not require the customer's signature or contain any space for acknowledgment or initials. Id., Ex. C. Employees of the Costa Rica Rent a Car are supposed to give the folder jacketto the customer at the time a vehicle is rented. Id. at 3, ¶ 6. The folder jacket contains the following arbitration agreement at the bottom-end of the fifth of five columns containing numerous legal provisions typed in small, tightly-packed font:
Id. at 4, ¶ 7, Ex. D.5
On March 6, 2010, Mr. Martin was driving the car to the home of the United States Ambassador to Costa Rica for a social function. Complaint, ECF No. 1 at 7, ¶ 12. Ms. Lucas, who also is a resident of the United States, was a passenger in the car. Id. After passing through the gate at the home, Mr. Martin was driving down a steep driveway leading to the house when the car unexpectedly began to accelerate. Id., ¶ 13. He depressed the clutch and the brake pedal, but the car did not stop. Id. The car crashed into a wall of the house, and Mr. Martin and Ms. Lucas were injured. Id., ¶ 14.
On November 29, 2010, Plaintiffs filed suit against Hertz in San Francisco County Superior Court, alleging causes of actions for strict liability and negligence. Id. at 5-12. In essence, Plaintiffs claim that Hertz placed the defective car into the stream of commerce and failed to properly maintain its safe condition. See id.
Hertz now moves, for a second time, to compel Mr. Martin to arbitrate his claims. Motion toCompel, ECF No. 37.6 Hertz argues that the rental agreement that Mr. Martin signed when he rented the car on February 28, 2010 incorporated by reference an arbitration agreement that requires him to resolve his claims by conciliation and arbitration in accordance with the bylaws of the International Center for Conciliation and Arbitration of the Costa Rican-American Chamber of Commerce ("CICA"). See id. The conciliation and arbitration are to take place in San Jose, Costa Rica. Mr. Martin opposed Hertz's motion. Opposition, ECF No. 44. The court heard oral argument on Hertz's motion on June 21, 2012.
Under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation of a contract." 9 U.S.C. § 2; see AT&T Mobility, LLC v. Concepcion, 131 S.Ct. 1740, 1746 (2011). Section 4 of 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." 9 U.S.C. § 4. If the court is satisfied "that the making of the arbitration agreement or the failure to comply with the agreement is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. Id.
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 (2011) (). "In line with these principles, courts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms. Id. at 1745-46 (). Nonetheless, when a question arises as to whether "a particular party is bound by the arbitration agreement," "the liberal federal policy regarding the scope of arbitrable issues is inapposite." Comer v. Micor, Inc., 436 F.3d 1098, 1104 n.11 (9th Cir. 2006) (emphasis in original; citation omitted).
As an initial matter, Mr. Martin challenges the existence of a valid agreement to arbitrate. Opposition, ECF No. 44 at 8-14. As the party moving the court to compel arbitration, Hertz bears the burden of proving by a preponderance of the evidence the existence of a valid arbitration agreement. Olvera v. El. Pollo Loco, 173 Cal. App. 4th 447, 453 (2009).7
First, Mr. Martin argues that because, as he declares, he either was never given a copy of the folder jacket or was given it after he signed the rental agreement, he and Hertz never clearly agreed to the arbitration provision. Opposition, ECF No. 44 at 11-14.
"To evaluate the validity of an arbitration agreement, federal courts 'should apply ordinary state-law principles that govern the formation of contracts.'" Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). When considering a motion to compel arbitration, the court must initially determine whether the parties agreed to the arbitration clause. Bruni v. Didion, 160 Cal. App. 4th 1272, 1283 (2008). As stated above, there is no genuine dispute about whether Mr. Martin signed the car rental agreement that included language stating that he had read and accepted the terms and conditions asset forth in the folder jacket. The question, then, is whether the terms and conditions as set forth in the folder jacket were incorporated into the car rental agreement that Mr. Martin signed.
"Under California law, parties may validly incorporate by reference into their contract the terms of another document." Slaught v. Bencomo Roofing Co., 25 Cal. App. 4th 744, 748 (1994) (citing Baker v. Aubry, 216 Cal. App. 3d 1259, 1264 (1989)). "For the terms of another document to be incorporated into the document executed by the parties[, (1)] the reference must be clear and unequivocal, [(2)] the reference must be called to the attention of the other party and he must consent thereto, and [(3)] the terms of the incorporated document must be known or easily available to the contracting parties." Shaw v. Regents of University of California, 58 Cal. App. 4th 44, 54 (1997) (citations omitted); see also Koffler Elec. Mech. Apparatus Repair, Inc. v. Wartsila N.A., Inc. No. C-11-0052 EMC, ...
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