Raebel v. Tesla, Inc.

• Decision Date: 03 April 2020
• Docket Number: Case No. 3:19-cv-00742-MMD-WGC
• Citation: 451 F.Supp.3d 1183
• Parties: Shelly Beth RAEBEL, et al., Plaintiffs, v. TESLA, INC., Defendant.
• Court: U.S. District Court — District of Nevada

451 F.Supp.3d 1183

Shelly Beth RAEBEL, et al., Plaintiffs,

v.TESLA, INC., Defendant.

Case No. 3:19-cv-00742-MMD-WGC

United States District Court, D. Nevada.

Signed April 3, 2020

Young Woon Jake Jung, Law Offices of Yohan Lee, Buena Park, CA, Daniel T. Hayward, Bradley, Drendel & Jeanney, Reno, NV, for Plaintiff.

Neil Matthew Kliebenstein, Pro Hac Vice, Lauren Miller, Pro Hac Vice, Bowman and Brooke LLP, San Jose, CA, Janice H. Jensen, Wayne A Shaffer, Laxalt & Nomura, Ltd, Reno, NV, for Defendant.

ORDER

MIRANDA M. DU, CHIEF UNITED STATES DISTRICT JUDGE

I. SUMMARY

This action stems from a dispute relating to the alleged defective design of a vehicle produced by Defendant Tesla, Inc. ("Tesla"). (ECF No. 16.)¹ Tesla moves to (1) compel arbitration or, in the alternative, (2) to dismiss Plaintiffs' claims ("Motion"). (ECF No. 18.)² For the reasons discussed below, Tesla's Motion is granted in part and denied in part.

II. BACKGROUND

The following facts are adapted primarily from the FAC (ECF No. 16) and the briefs relating to the Motion.

Tesla is a company that produces and sells electric vehicles including the Tesla Model 3 ("Model 3"). (ECF No 16 at 4–5.) In either June or July 2018, Raebel placed an online order to purchase a Model 3. (ECF No. 18-2 at 2, ECF No. 21-1 at 2–3.) To complete online orders on Tesla's website, customers click a button labeled "Place Order". (ECF No. 18-1 at 2.) At the time Raebel placed the order, the button was accompanied by language stating "[b]y placing this order you agree to the Model 3 Order Agreement ...." (Id. ) The text "Model 3 Order Agreement" ("Agreement") contained an underlined hyperlink to the Agreement. (Id. )

The Agreement included an "Agreement to Arbitrate" provision ("Arbitration Provision"). (Id. ) It states that "any dispute arising out of or relating to any aspect of the relationship between you and Tesla will not be decided by a judge or jury but instead by a single arbitrator ...." (ECF No. 16-1 at 2.) The Arbitration Provision also states that before submitting a dispute to arbitration, the customer agrees to send written notice to Tesla describing the issue and that Tesla will have 60 days to resolve it. (Id. )

In October 2018, Plaintiffs visited a Tesla service center to receive their Model 3. (ECF No. 21-1 at 3.) As a part of the process, Raebel signed a document titled "Delivery Declaration". (Id. ) This document states that by signing, "YOU AGREE WITH YOUR FINAL MOTOR VEHICLE PURCHASE AGREEMENT WHICH HAS BEEN UPLOADED TO AND IS AVAILABLE IN YOUR MYTESLA ACCOUNT." (ECF No. 18-2 at 16.)

On March 25, 2019, Raebel was involved in an accident while driving the Model 3. (ECF No. 16 at 12.) Raebel claims that the accident was caused by the vehicle's sudden unintended acceleration ("SUA"). (Id. )

In the FAC, Plaintiffs allege that defective design caused the Model 3 to experience SUA. (Id. at 13–15.) Plaintiffs assert the following claims: strict product liability, negligence, breach of express warranty, breach of implied warranty, violation of Nevada's Uniform Deceptive Trade Practices Act ("DTPA"), and breach of written warranty under the Magnuson-Moss Warranty Act ("MMWA"). (Id. at 13–24.) Plaintiffs seek injunctive relief for their DTPA and MMWA claims, including an order that Defendant repair, recall, and/or replace Model 3 vehicles and provide Plaintiffs with notice about the cause of the alleged SUA. (Id. at 22, 24.)

III. LEGAL STANDARDS

A. Federal Arbitration Act

"The [Federal Arbitration Act ("FAA") ], 9 U.S.C. § 1 et seq. , requires federal district courts to stay judicial proceedings and compel arbitration of claims covered by a written and enforceable arbitration agreement." Nguyen v. Barnes & Noble Inc. , 763 F.3d 1171, 1175 (9th Cir. 2014) (citing 9 U.S.C. § 3 ). The FAA limits the district court's role to determining whether a valid arbitration agreement exists, and whether the agreement encompasses the disputes at issue. Id. (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 (9th Cir. 2000)). "The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration ...." Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp. , 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Thus, "[t]he standard for demonstrating arbitrability is not a high one; in fact, a district court has little discretion to deny an arbitration motion, since the Act is phrased in mandatory terms." Republic of Nicar. v. Std. Fruit Co. , 937 F.2d 469, 475 (9th Cir. 1991). However, "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." AT&T Techs., Inc. v. Commc'ns Workers of Am. , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (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. 12(b)(1) Legal Standard

" Article III of the Constitution limits federal courts' jurisdiction to certain Cases and Controversies." Clapper v. Amnesty Intern. USA , 568 U.S. 398, 408, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013) (internal citations omitted). "A suit brought by a plaintiff without Article III standing is not a case or controversy, and an Article III federal court therefore lacks subject matter jurisdiction over the suit." Cetacean Cmty. v. Bush , 386 F.3d 1169, 1174 (9th Cir. 2004) (internal citations omitted); see also Fed. R. Civ. P. 12(b)(1). "[A] plaintiff must demonstrate standing separately for each form of relief sought." Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc. , 528 U.S. 167, 185, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000).

The "irreducible constitutional minimum" to establish Article III standing requires three elements. See Lujan v. Def. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). To survive a motion to dismiss, "the plaintiff must clearly allege facts demonstrating each element." Id. To establish standing for injunctive relief, "[t]he plaintiff must demonstrate that he has suffered or is threatened with a concrete and particularized legal harm, coupled with a sufficient likelihood that he will again be wronged in a similar way." Bates v. United Parcel Service, Inc. , 511 F.3d 974, 985 (9th Cir. 2007) (internal citations omitted). To demonstrate a likelihood of future harm, a plaintiff must establish "a real and immediate threat of repeated injury." Id. (internal quotation marks omitted.)

IV. DISCUSSION

Defendant's Motion seeks to compel arbitration under the Arbitration Provision and to sever Plaintiffs' injunctive relief claims, which they argue should be dismissed for lack of standing. (ECF No. 18 at 10, 18–20.) Defendant also argues in the alternative that many of the claims, whether subject to arbitration or not, are subject to dismissal under Rule 12(b)(6). ( Id. at 6, 103 S.Ct. 927.) Because the Court agrees with Defendant's primary argument, the Court declines to address the alternative argument for dismissal for failure to state a claim.

A. Arbitration

To enforce an arbitration agreement, the Court must determine (1) whether the parties agreed to arbitrate their disputes, and (2) if the claims in dispute are within the scope of the arbitration agreement. See Nguyen , 763 F.3d at 1175. In making these determinations, the Court applies "ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Under Nevada law³ a "contract will be enforced as written" where "the language of the contract is clear and unambiguous." Am. First Fed. Credit Union v. Soro , 131 Nev. 737, 359 P.3d 105, 106 (2015).

Here, Plaintiffs agreed to the Arbitration Provision at least twice. First, when Raebel completed the online order of the Model 3 and agreed to the Model 3 Order Agreement. (See ECF No. 18-1 at 3; ECF No. 21-1 at 3–4.) Second, when Raebel signed the Delivery Declaration at the Tesla sales center, thereby affirming Plaintiffs' assent to the Agreement. (ECF No. 21-1 at 3; ECF No. 18-2 at 16.) Moreover, the Arbitration Provision unambiguously states that it applies to "any dispute arising out of or relating to any aspect of the relationship between [Plaintiffs] and Tesla", exempting only unenforceable claims "such as [claims for] injunctive or declaratory relief." (ECF No. 16-1 at 2.)

Here, the majority of Plaintiffs' claims stem from the SUA and seek monetary damages—therefore, the claims fall within the scope of the Arbitration Provision.⁴ (ECF No. 16 at 13–24.) Because Plaintiffs agreed to arbitrate their claims and because Plaintiffs' strict product liability, negligence, and breach of express and implied warranty claims are within the scope of the Arbitration Provision, the Arbitration Provision is enforceable against Plaintiffs.

Plaintiffs' two primary arguments against the enforceability of the Arbitration Provision are unpersuasive. First, Plaintiffs argue that the Arbitration Provision is unenforceable in regard to Wagner because he never assented to the Agreement. (ECF No. 21 at 13–14.) However, Plaintiffs allege that "Tesla and Plaintiffs entered into the Motor Vehicle Purchase Agreement ... at the time of the sale." (ECF No. 16 at 11.) Having already admitted that both Plaintiffs entered into the Agreement with Tesla, Plaintiffs cannot now claim that Wagner never assented to the Agreement. See Hakopian v. Mukasey , 551 F.3d 843, 846 (9th Cir. 2008) ("Allegations in a complaint are considered judicial admissions."); In re Barker , 839 F.3d 1189, 1195 (9th...