Chess et al v. CF Arcis IX LLC, No. 3:2020cv01625 - Document 35 (N.D. Cal. 2020)

Court Description: ORDER DENYING REMAND AND ATTORNEYS FEES, COMPELLING ARBITRATION. Signed by Judge Charles R. Breyer on 7/22/2020. (crblc1, COURT STAFF) (Filed on 7/22/2020)

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Chess et al v. CF Arcis IX LLC Doc. 35 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 JOHN CHESS, et al., Plaintiffs, 9 v. 10 11 United States District Court Northern District of California Case No. 20-cv-01625-CRB CF ARCIS IX LLC, ORDER DENYING REMAND AND ATTORNEYS’ FEES, COMPELLING ARBITRATION Defendant. 12 13 Two motions are pending in this dispute between a golf club and its members. Named 14 Plaintiffs John Chess and David Orenberg allege that Defendant CF Arcis has wrongfully 15 modified the membership contract for the club. Plaintiffs now move for remand and attorneys’ 16 fees. CF Acris moves to compel arbitration per the arbitration agreement in the membership 17 contract. For the reasons set forth below, the Court DENIES the Motion for Remand and 18 Attorneys’ Fees and GRANTS the Motion to Compel Arbitration. 19 I. BACKGROUND 20 Plaintiffs John Chess and David Orenberg have been members at The Ruby Hill Golf Club 21 in Pleasanton, California, since 1999 and 1996 respectively. Chess Decl. (dkt. 26-2) ¶ 2; Orenberg 22 Decl. (dkt 26-3) ¶ 2. Upon purchasing their refundable memberships, Chess and Orenberg 23 completed membership applications that incorporated the current club rules and regulations 24 (“Original Rules”). Compl. (dkt. 1-1) ¶ 9. This refundable membership required a deposit of tens 25 of thousands of dollars. Id. 26 Purchasing the refundable membership allowed Plaintiffs to use and access the club’s 27 facilities. Id. ¶ 8. The refundable membership also entitled Plaintiffs to receive their deposit back 28 upon resigning from the club. Id. ¶ 11. If there was a “Full Complement” of members at the club Dockets.Justia.com 1 when they resigned, they would receive the deposit back in 30 days. Id. If the club was not a 2 “Full Complement” when they resigned, then they could either sell their membership to a new 3 member or wait 15 years from their date of resignation to receive the returned deposit. Id. ¶ 13. 4 There was also a Waiting List that members who expected to resign could enter, allowing them to 5 keep their membership until a potential replacement buyer appeared. Id. In 2014, Defendant CF Arcis purchased The Ruby Hill Golf Club. Id. ¶ 15. After the 6 7 purchase, CF Arcis modified the Original Rules with amendments that created the Ruby Hill Golf 8 Club Membership Plan (“Membership Plan”). Id. The club had previously utilized the unilateral 9 modification clause in the Original Rules to make amendments in 1996, 1997 and 1998. Id. ¶ 9. The 2014 amendments resulted in three major changes. First, there were new requirements United States District Court Northern District of California 10 11 for a departing member to receive a refund of his or her membership deposit. Id. ¶ 15. Second, 12 the club began to sell non-refundable memberships at a lower price. Id. Third, the Membership 13 Plan contained an arbitration agreement. Mot. to Compel Arb. at 3. Plaintiffs allege that those 14 amendments made the club crowded with less experienced golfers, made it more difficult for 15 members who wanted to resign to receive their deposit refunds, and forced members who wanted 16 to resign to continue to pay monthly membership dues. Compl. ¶¶ 15–16. 17 Named plaintiffs Chess and Orenberg filed a class action suit against CF Arcis and Does 1 18 through 100 in California state court. See generally id. There are eight causes of action: violation 19 of the Consumer Legal Remedies Act (CLRA), Unfair Competition in violation of Business & 20 Professions Code § 17200 (UCL), fraud by misrepresentation, fraud by suppression of fact, 21 conversion, unjust enrichment, breach of written contract, and declaratory relief. See id. ¶¶ 30–75. 22 CF Arcis filed a timely notice of removal. See generally Notice of Removal (dkt. 1). Plaintiffs 23 now move for remand and for attorneys’ fees. See generally Pls.’ Mot. for Remand (dkt. 19). CF 24 Arcis moves to compel arbitration. See generally Mot. to Compel Arb. (dkt. 11). The Court held 25 a motion hearing in this case on July 17, 2020. See Motion Hearing (dkt. 34). 26 II. 27 28 MOTION FOR REMAND The first motion this order addresses is Plaintiffs’ Motion to Remand, in which Plaintiffs argue that the Court lacks subject matter jurisdiction. See generally Mot. for Remand. 2 1 A. Legal Standard for Subject Matter Jurisdiction A defendant who seeks to remove a case to federal court must file a notice of removal 2 3 “containing a short and plain statement of the grounds for removal.” 28 U.S.C. § 1446(a). This “short and plain statement” requirement mirrors the one found in Rule 8(a)(1) of the Federal Rules 4 of Civil Procedure, the general pleading rule for cases filed in federal court. The use of the same 5 6 7 language is “[b]y design,” the Supreme Court has explained: “Congress, by borrowing the familiar ‘short and plain statement’ standard from Rule 8(a), intended to ‘simplify the “pleading” requirements for removal’ and to clarify that courts should ‘apply the same liberal rules to removal 8 allegations that are applied to other matters of pleading.’” Dart Cherokee Basin Operating Co. v. 9 Owens, 135 S. Ct. 547, 553 (2014) (quoting H.R. Rep. No. 100–889, at 71 (1988)). 10 A federal court that is considering whether it has jurisdiction on the basis of diversity must United States District Court Northern District of California 11 evaluate “the state of things at the time of the action brought.” Rockwell Int’l Corp. v. United 12 States, 549 U.S. 457, 473 (2007) (quoting Mullan v. Torrance, 22 U.S. 537, 539 (1824)). This 13 means examining whether the parties’ citizenship was sufficiently diverse, and whether the 14 amount in controversy was satisfied at the time the case was originally filed. A federal court 15 considering jurisdiction on the basis of the Class Action Fairness Act (CAFA) must evaluate these 16 requirements both when the case is first filed and when the case is removed. See Strotek Corp. v. 17 18 Air Transp. Ass’n. of Am., 300 F.3d 1129, 1131 (9th Cir. 2002). “The burden is on the party removing the case from state court to show the exercise of federal jurisdiction is appropriate.” 19 Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 399 (9th Cir. 2010). 20 21 B. Discussion of Motion for Remand and Attorneys’ Fees The Court has subject matter jurisdiction over this case under both (1) traditional diversity 22 jurisdiction and (2) CAFA jurisdiction. The Court therefore DENIES both the Motion for Remand 23 and the Motion for Attorneys’ Fees. 24 25 26 27 1. Diversity Jurisdiction District courts have subject-matter jurisdiction over civil cases where (1) the matter “is between . . . citizens of different States,” and (2) the amount in controversy “exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a)(1). Consistent with the 28 3 1 framework outlined above, “[t]he party seeking to invoke the district court’s diversity jurisdiction 2 always bears the burden of both pleading and proving diversity jurisdiction.” NewGen LLC v. 3 Safe Cig, LLC, 840 F.3d 606, 613–14 (9th Cir. 2016). 4 United States District Court Northern District of California 5 a. Complete Diversity Diversity jurisdiction requires complete diversity: “each plaintiff must be of a different 6 citizenship from each defendant.” Grancare, LLC v. Mills ex rel. Thrower, 889 F.3d 543, 548 (9th 7 Cir. 2018). Both parties agree that complete diversity exists between named plaintiffs and named 8 defendants. Opp’n to Mot. for Remand (dkt. 26) at 2. But Plaintiffs argue that there is not 9 complete diversity due to the presence of unnamed Doe defendants. See Mot. for Remand at 8. 10 The question is therefore whether the existence of Doe defendants, described with some 11 specificity, defeats diversity in a case that has been removed from state court. 12 District courts within the Ninth Circuit have split on this issue. Some courts have 13 determined that a plain reading of the removal statute requires the court to completely ignore 14 unnamed parties when determining diversity. See, e.g., Goldsmith v. CVS Pharmacy, Inc., No. 15 CV 20-00750-AB (JCX), 2020 WL 1650750, at *4 (C.D. Cal. Apr. 3, 2020) (concluding that “the 16 clear language of 28 U.S.C. § 1441(b)(1) requires it to disregard the citizenship of the Doe 17 Defendants at this stage”); see also 28 U.S.C.A. § 1441 (“In determining whether a civil action is 18 removable on the basis of the jurisdiction under section 1332(a) of this title, the citizenship of 19 defendants sued under fictitious names shall be disregarded.”). Others, instead, examine the 20 specificity with which the plaintiff describes the unnamed parties to determine whether that detail 21 is enough to destroy diversity. See, e.g., Gardiner Family, LLC v. Crimson Res. Mgmt. Corp., 22 147 F. Supp. 3d 1029, 1036 (E.D. Cal. 2015) (weighing “whether the Plaintiffs’ description of 23 Doe defendants or their activities is specific enough as to suggest their identity, citizenship, or 24 relationship to the action”). 25 Using the test in Goldsmith, the analysis is straightforward. The Doe defendants are 26 unnamed. Compl. ¶ 5. The plain reading of the removal statute says to ignore unnamed 27 defendants. See Goldsmith, No. CV 20-00750-AB (JCX), 2020 WL 1650750, at *4. Therefore, 28 because the named parties are completely diverse, there is no issue of diversity in this case. 4 United States District Court Northern District of California 1 The test in Gardiner is more involved. There, the court examines the specificity of the 2 unnamed Doe defendants. “If . . . Plaintiff’s allegations that concern the Doe Defendants provide 3 a reasonable indication of their identity, the relationship to the action, and their diversity- 4 destroying citizenship, then the Court lacks diversity jurisdiction.” Robinson v. Lowe’s Home 5 Centers, LLC, 2015 WL 13236883, at *3 (E.D. Cal. Nov. 13, 2015) (citing Gardiner, 147 F. Supp. 6 3d at 1036). 7 In the instant case, the Doe defendants are described as an “individual, corporate, associate 8 or otherwise” that may be an “agent, employer, partner, joint venture, alter ego, affiliate and/or co- 9 conspirator” of the named defendants. Compl. ¶¶ 5–6. This broad, boilerplate language gives no 10 indication of the Doe defendants’ identities or relationships to the action. This vagueness stands 11 in contrast to the case law cited by Plaintiffs, where Doe defendants were described as the named 12 defendant’s customer services representatives in the state of Montana with whom the plaintiffs had 13 directly interacted regarding the action. See Fisher v. Direct TV, Inc., No. CV 13-68-M-DWM- 14 JCL, 2013 WL 2152668, at *5 (D. Mont. May 16, 2013). See also Barnes v. Costco Wholesale 15 Corp., No. CV197977DMGJPRX, 2019 WL 6608735, at *2 (C.D. Cal. Dec. 4, 2019) (holding 16 plaintiffs alleged enough information for Doe’s identity through details of county of residence, 17 specific employment and role in plaintiff’s action); Robinson, 2015 WL 13236883, at *3 (finding 18 a complaint that “provides no information about the Doe Defendants other than indicating they are 19 ‘the agents and employees of [Defendant] and acted within the scope of the agency’” insufficiently 20 specific to determine citizenship). 21 Plaintiffs here have not even described the unnamed Doe defendants with sufficient 22 specificity to determine their diversity-destroying citizenship. Plaintiffs describe Doe defendants 23 as a “resident of, or business entity doing business in, the State of California.” Compl. ¶ 5. This 24 description alone is not enough to establish citizenship for diversity purposes. A business’s 25 citizenship for diversity purposes is determined by its state of incorporation, and the state with the 26 company’s principle place of business or “nerve center.” Hertz Corp. v. Friend, 559 U.S. 77, 92– 27 93 (2010). A business entity doing business in California is therefore not necessarily even a 28 citizen of the state. 5 In sum, under either test, the Doe defendants do not defeat diversity in this case. 1 2 b. When removal is based on diversity jurisdiction under 28 U.S.C. § 1332(a), the defendant 3 United States District Court Northern District of California Amount in Controversy 4 bears the burden of establishing that the amount in controversy exceeds $75,000. See Gaus v. 5 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Consistent with the pleading requirements outlined 6 above, the Supreme Court has explained that “a defendant’s notice of removal need include only a 7 plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Dart 8 Cherokee, 135 S. Ct. at 554. When the plaintiff fails to plead a specific amount of damages, the 9 defendant seeking removal “must prove by a preponderance of the evidence that the amount in 10 controversy requirement has been met.” Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 11 683 (9th Cir. 2006). Plaintiffs argue that removal is not warranted because the amount in controversy is not 12 13 satisfied. See Mot. for Remand at 2–3. The Court disagrees. The amount in controversy exceeds 14 $75,000 when accounting for either (i) treble damages or (ii) claims for restitution of membership 15 deposits and dues. 16 i. Treble Damages 17 CF Arcis argues that Plaintiffs’ request for treble damages in their first cause of action will 18 bring the amount in controversy beyond the $75,000 threshold. See Opp’n to Mot. for Remand at 19 3. 20 When available by statute, treble damages can be included in the calculation for the 21 amount in controversy. See Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1046 (9th 22 Cir. 2000); Davenport v. Mutual Benefit Health and Accident Ass’n, 325 F.2d 785, 787 (9th 23 Cir.1963). Plaintiffs seek treble damages as authorized in CLRA claims. Compl. at 18. 24 Assuming Plaintiffs are only seeking recovery of the refundable deposit for their CLRA claim, see 25 Mot. for Remand at 6, tripling the both named plaintiffs’ deposit amounts gets them well over the 26 $75,000 threshold. Plaintiff Chess’s deposit was $33,600 and Plaintiff Orenberg’s deposit was 27 $29,600. Oliver Decl. ¶¶ 6–7. Tripling these amounts means that Chess is seeking $100,800 and 28 Orenberg is seeking $88,000 for the CLRA claims. 6 1 Plaintiffs insist that CF Arcis has not proven that Plaintiffs are likely to receive punitive 2 damages and have not met the preponderance standard needed for their burden of proof. Mot. for 3 Remand at 5. 4 5 6 7 In cases where a plaintiff’s state court complaint does not specify a particular amount of damages, the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds [the requirement]. Under this burden, the defendant must provide evidence establishing that it is “more likely than not” that the amount in controversy exceeds that amount. 8 Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). 9 However, a removing defendant need not meet a preponderance standard where, as here, 10 the amount in controversy can be determined on the face of the pleadings. See Crum v. Circus United States District Court Northern District of California 11 Circus Enterprises, 231 F.3d 1129, 1131 (9th Cir. 2000) (citations omitted) (“The amount in 12 controversy is determined from the face of the pleadings . . . . The sum claimed by the plaintiff 13 controls so long as the claim is made in good faith.”). Here Plaintiffs are making claims for treble 14 damages based on the value of their deposits. Mot. for Remand at 6. Both parties agree on the 15 amount of those deposits. See id. at 7; Oliver Decl. ¶¶ 6–7. Treble damages are easy to calculate 16 through multiplication. Therefore, due to the claims for treble damages in the first cause of action, 17 the amount in controversy is met. 18 The Court will be able to exercise supplemental jurisdiction over any other claims in the 19 complaint even if those are below the $75,000 threshold because they are part of the same 20 controversy. See 28 U.S.C. § 1367(a) (“[T]he district courts shall have supplemental jurisdiction 21 over all other claims that are so related to claims in the action within such original jurisdiction that 22 they form part of the same case or controversy.”). 23 24 ii. Deposit and Membership Dues CF Arcis also argues that Plaintiffs meet the amount in controversy requirement because 25 26 27 the complaint requests damages that account for both Plaintiffs’ membership deposit and for membership dues that Plaintiffs paid since June 6, 2014. See Opp’n to Mot. for Remand at 4. Specifically, the second cause of action, for unfair competition, calls “[f]or restitution to 28 7 United States District Court Northern District of California 1 Plaintiffs and each other member of the Class, as their interest may appear, of all sums unlawfully 2 collected, earned, or retained by Defendant from the Plaintiffs and other members of the Class 3 since June 6, 2014.” Compl. at 19. The third cause of action, for fraud by misrepresentation, 4 asserts: “[i]n reliance on these representations, Plaintiffs were induced to and did pay the 5 membership deposit and continue to pay membership dues while remaining on the Waiting List.” 6 Id. ¶ 46. The fourth cause of action, for fraud by suppression of fact, states, “[i]f Plaintiffs had 7 been aware of the existence of the facts not disclosed by Defendant, Plaintiffs would . . . not have . 8 . . pa[id] various obligatory membership dues and deposits.” Id. ¶ 52. And both the 9 misrepresentation and suppression of fact allegations assert that “[A]s a proximate result of the 10 fraudulent conduct of Defendant as herein alleged, Plaintiffs were induced to continue to pay 11 membership deposits and membership dues.” Id. ¶¶ 47, 53. Plaintiffs contend that although they 12 make claims for damages that include membership dues, the claims are “primarily” for the 13 deposits. Pls’ Reply to Mot. for Remand (dkt. 29) at 3. However, amount in controversy is not 14 calculated by the primary claims, but on the potential claims—the total amount put at issue in the 15 dispute. See Lewis, 627 F.3d at 397 (holding that a showing “that the potential damages could 16 exceed the jurisdictional amount” is satisfactory). 17 While these claims make facially apparent that Plaintiffs are requesting damages that could 18 include dues, CF Arcis submits further evidence to meet the preponderance standard that these 19 amounts are over $75,000. A club employee declaration states that Plaintiff Chess paid a 20 membership deposit of $33,600, and $42,215 in membership and pool dues. Oliver Decl. ¶¶ 6–7. 21 Combined, these amounts bring the damages requested for Chess’s unfair competition, 22 misrepresentation and suppression of fact claims to $75,815. Plaintiffs argue that this declaration 23 is not sufficient, and instead a “bold, optimistic prediction.” Reply to Mot. for Remand at 3. Not 24 so. These damages derive from a plain reading of the Plaintiffs’ complaint, and the amounts 25 derive from a declaration of an employee with personal knowledge of the club’s business records. 26 This type of evidence has been held to be sufficient for the preponderance standard. See e.g., 27 Lewis, 627 F.3d at 397 (holding an affidavit by defendant of its own business records sufficient 28 for preponderance standard). 8 In conclusion, Plaintiff Chess’s claims in the second, third and fourth causes of action also 1 2 meet the amount in controversy requirement. The Court can exercise supplemental jurisdiction 3 over any other claims in the complaint because they arise from the same transaction or occurrence. 4 See 28 U.S.C. § 1367(a); Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 549 (2005) 5 (holding so long as claims of one plaintiff meets the amount in controversy, the court may exercise 6 supplement jurisdiction over under-amount claims of other plaintiffs). 7 2. Plaintiffs additionally argue that there is not subject matter jurisdiction under CAFA. See 8 United States District Court Northern District of California 9 CAFA Jurisdiction Mot. for Remand at 7. While the Court need not reach the issue of CAFA jurisdiction because 10 there is traditional diversity jurisdiction, the Court concludes that there is federal jurisdiction 11 under CAFA as well. Section 4 of CAFA, 28 U.S.C. § 1332(d), provides federal district courts with 12 13 diversity jurisdiction over class actions when there are 100 or more putative class members, any 14 member of the proposed class is a citizen of a state different from any defendant, and the 15 aggregate amount in controversy exceeds $5 million. See 28 U.S.C. § 1332(d)(2)(A), (5)(B). The 16 parties do not dispute that there are at least 100 class members and that there is minimal diversity. 17 See Compl. ¶ 23; Opp’n to Mot. for Remand at 2. The question is only whether the CAFA 18 amount in controversy requirement is satisfied. 19 CAFA jurisdiction requires a $5 million amount in controversy. See 28 U.S.C. § 20 1332(d)(2)(A), (5)(B). Nowhere in the Complaint do Plaintiffs specifically allege that more than 21 $5 million is in controversy. See generally Compl. Therefore, CF Arcis must meet a 22 preponderance of the evidence standard in showing that the amount in controversy requirement 23 has been met. See Abrego, 443 F.3d at 683. For the CLRA claim, even if the class size is only 100, as alleged by Plaintiffs, see Mot. 24 25 for Remand at 7, taking into account the treble damages, see Compl. at 18, the amount in 26 controversy is over $8 million using the deposit figures.1 Oliver Decl. ¶¶ 6–7. 27 28 This figure is calculated by multiplying Orenberg’s deposit ($29,600), the assumed class size (100) and the treble figure (3). 9 1 Plaintiffs also request attorneys’ fees. Compl. at 19. Statutory attorneys’ fees are included 1 2 in determining the amount in controversy. See Makol v. Jaguar Land Rover N. Am., LLC, No. 3 18-CV-03414-NC, 2018 WL 3194424 (N.D. Cal. June 28, 2018) (citing Galt G/S v. JSS 4 Scandinavia, 142 F.3d 1150, 1155–56 (9th Cir. 1998). While there is disagreement among the 5 parties as to how to value those attorneys’ fees, see Opp’n to Mot. for Remand at 8; Reply to Mot. 6 for Remand at 5, the Court need not reach that issue as the amount in controversy is already 7 satisfied. Alternatively, taking into account Plaintiffs’ claims for deposits and membership dues in 8 United States District Court Northern District of California 9 the second, third and fourth causes of action, even if the class size is only 100, see Mot. for 10 Remand at 7, and using Plaintiff Orenberg’s smaller claims as damages as an average assumption, 11 see Oliver Decl. ¶ 7, the amount in controversy will still be over $6 million.2 Furthermore, CF 12 Arcis has submitted evidence to meet the preponderance standard that the class size is more likely 13 than not 237, see id. ¶ 8, while Plaintiffs only allege in their complaint that the class has “at least 14 100” members. Compl. ¶ 23. See Grant v. Capital Mgmt. Servs., L.P., 449 F. App’x 598, 600 15 (9th Cir. 2011) (allowing defendant to submit declaration by an employee based on its own 16 business records to establish amount in controversy). Under all these scenarios, even relying on Plaintiffs’ alleged smaller class size, using the 17 18 facial complaint and evidence from the Oliver Declaration, CF Arcis has shown that it is more 19 likely than not that the amount in controversy exceeds $5 million and that CAFA jurisdiction is 20 warranted. CF Arcis has met the preponderance standard for the amount in controversy, and 21 CAFA jurisdiction is warranted. Conclusion as to Motion for Remand and Attorneys’ Fees 22 C. 23 The Court has subject matter jurisdiction over this case based on diversity jurisdiction, or 24 alternatively based on CAFA jurisdiction. Therefore, the Court DENIES the Motion for Remand. 25 Plaintiffs also move for attorneys’ fees. Plaintiffs argue that because removal was 26 unwarranted, Plaintiffs are entitled to attorneys’ fees. See Mot. for Remand 9–10. Because the 27 28 This figure is calculated by adding Orenberg’s deposit ($29,600) and membership dues ($34,816) and multiplying by assumed class size (100). 10 2 1 Court holds that removal was warranted and denies the Motion for Remand, the Court also 2 DENIES the request for fees. 3 III. 4 The second motion this order addresses is Defendant’s Motion to Compel Arbitration, in 5 which CF Arcis argues that the parties are bound by the arbitration agreement in the Membership 6 Plan. See generally Mot. to Compel Arb. 7 A. 8 The Federal Arbitration Act (FAA) provides that an agreement to submit commercial 9 United States District Court Northern District of California MOTION TO COMPEL ARBITRATION Legal Standard for Compelling Arbitration disputes to arbitration shall be “valid, irrevocable, and enforceable, save upon such grounds as 10 exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Section 4 of the FAA 11 requires that “private agreements to arbitrate are enforced according to their terms.” Volt Info. 12 Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 579 (1989). A party may 13 therefore petition a United States District Court for an order directing that “arbitration proceed in 14 the manner provided for in such agreement.” 9 U.S.C. § 4. 15 Generally, “a party cannot be required to submit to arbitration any dispute which he has 16 not agreed so to submit.” AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 17 (1986). However, courts have developed a “liberal federal policy favoring arbitration 18 agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Co., 460 U.S. 1, 24–25 (1983). 19 Under this presumption in favor of arbitration, a court should not deny an order to arbitrate “unless 20 it may be said with positive assurance that the arbitration clause is not susceptible of an 21 interpretation that covers the asserted dispute.” AT&T Techs., 475 U.S. at 650. A district court’s 22 role under the FAA is limited to determining “(1) whether a valid agreement to arbitrate exists, 23 and if it does, (2) whether that agreement encompasses the dispute at issue. If the response is 24 affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in 25 accordance with its terms.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th 26 Cir. 2000). See also Howsam v. Dean Witter Reynolds, 537 U.S. 79, 84 (2002). 27 28 Arbitration agreements are “a matter of contract” and “may be invalidated by generally applicable contract defenses, such as fraud, duress or unconscionability.” Rent-A-Ctr., W., Inc. v. 11 United States District Court Northern District of California 1 Jackson, 561 U.S. 63, 67–68 (2010). Parties may “agree to limit the issues subject to arbitration” 2 and “to arbitrate according to specific rules.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 3 345 (2011). “[T]he party resisting arbitration bears the burden of proving that the claims at 4 issue are unsuitable for arbitration.” Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 81 5 (2000). 6 B. 7 CF Arcis argues that the parties are contractually bound to arbitrate because the 2014 8 amendments to the Membership Plan included a mandatory arbitration agreement. Plaintiffs argue 9 that the Court should not compel arbitration pursuant to the arbitration agreement in the Discussion of Motion to Compel Arbitration 10 Membership Plan because: (1) the contract itself is unenforceable, (2) equitable estoppel does not 11 apply, and (3) the conditions precedent for arbitration have not been fulfilled. The Court 12 concludes that the contract is enforceable, that equitable estoppel applies, and that Plaintiffs have 13 refused to comply with conditions precedent. Therefore, the Court GRANTS the Motion to 14 Compel Arbitration. 15 16 1. Contract Enforceability a. Unconscionability 17 Plaintiffs argue that the arbitration agreement cannot be enforced because the entire 18 Membership Plan contract is unconscionable. See Pls.’ Opp’n to Mot. to Compel Arb. (dkt. 26) at 19 11–12. Plaintiffs allege that the contract is unconscionable procedurally because it was a contract 20 of adhesion, and unconscionable substantively because the change in the refund structure breached 21 the covenant of good faith and frustrated the purpose of the contract. See Opp’n to Mot. to 22 Compel Arb. at 10–12. 23 Under California law, a contract “is unenforceable if it is both procedurally and 24 substantively unconscionable.” Circuit City, Inc. v. Adams, 279 F.3d 889, 893 (9th Cir. 2002). 25 “[T]he ‘prevailing view’ is that procedural unconscionability and substantive unconscionability 26 need not both be present to the same degree: ‘Essentially a sliding scale is invoked which 27 disregards the regularity of the procedural process of the contract formation . . . in proportion to 28 the greater harshness or unreasonableness of the substantive terms themselves.’” Nagrampa v. 12 1 MailCoups, Inc., 469 F.3d 1257, 1280 (9th Cir. 2006) (quoting Armendariz v. Found. Health 2 Psychcare Servs., Inc., 24 Cal.4th 83, 114 (2000)). 3 i. Procedural unconscionability analysis focuses on both oppression and surprise. Nagrampa, 4 United States District Court Northern District of California Procedural Unconscionability 5 469 F.3d at 1280. “‘Oppression arises from an inequality of bargaining power that results in no 6 real negotiation and an absence of meaningful choice,’ while ‘[s]urprise involves the extent to 7 which the supposedly agreed-upon terms are hidden in a prolix printed form drafted by the party 8 seeking to enforce them.’” Id. (quoting Flores v. Transamerica Home First, Inc., 93 Cal.App.4th 9 846, 853 (2001)). In California, courts consider all adhesive contracts procedurally 10 unconscionable to a degree due to lack of bargaining power. Bridge Fund Capital Corp. v. 11 Fastbucks Franchise Corp., 622 F.3d 996, 1004 (9th Cir. 2010). But in California, courts can only 12 refuse to enforce those adhesion contracts that are “unduly oppressive.” See Armendariz, 24 Cal. 13 4th at 113. While CF Arcis presented the 2014 contract amendments creating the Membership Plans 14 15 on what appears to be a take-it-or-leave-it basis, they are not unduly oppressive due to a number of 16 factors.3 First, the Court concludes that Plaintiffs had actual notice of the contract amendments. 17 18 Plaintiffs declare that they never received a full copy of the most recent amendments that created 19 the Membership Plan. See Chess Decl. ¶ 8; Orenberg Decl. ¶ 8. However, CF Arcis submits that 20 it mailed and emailed Plaintiffs notice of the changes and provided opportunities to review the 21 proposed amendments on the club website, via email upon request or through available physical 22 copies at the club itself. See Damer Decl. ¶¶ 8–9; Damer Ex. C (dkt. 8-5); Damer Ex. D (dkt. 8-6). 23 The former Director of Membership and Sales has also declared that he actually spoke with Chess 24 on the phone about the Membership Plan in 2014, with no mention of the arbitration agreement. 25 Id. at ¶ 11. 26 27 28 3 CF Arcis argued at the motion hearing that the club may have been receptive to negotiating amended contract terms with members, but this assertion does not alter the Court’s analysis. See Motion Hearing. 13 Additionally, the club had been able to make unilateral amendments to the membership 1 2 contract throughout Plaintiffs’ tenure as members. Id. ¶ 5. In fact, the club had used that power to 3 make unilateral amendments three times previously during Plaintiff Orenberg’s membership with 4 no complaints. See Reply to Mot. to Compel Arb. (dkt. 30) at 1. Further, the addition of the arbitration agreement is written in capitalized, bolded font, and United States District Court Northern District of California 5 6 explicitly named as a named section of the contract in the table of contents. Membership Plan, Ex. 7 A (dkt. 26-1) at iii, 27. How clearly an amendment is labeled can be a factor in determining 8 procedural unconscionability. See e.g., Kilgore v. KeyBank, Nat. Ass’n, 718 F.3d 1052, 1059 (9th 9 Cir. 2013) (refusing to find an arbitration agreement procedurally unconscionable because it was 10 not “buried in fine print in the Note, but was instead in its own section, clearly labeled, in 11 boldface”). Therefore, even if they were presented to club members as non-negotiable, the 12 amendments are not unduly oppressive procedurally. 13 ii. Substantive Unconscionability Plaintiffs argue that the contract is substantively unconscionable due to CF Arcis’s breach 14 15 of the implied covenant of good faith in the contract. See Pls.’ Opp’n to Mot. to Compel Arb. 16 (dkt. 26) at 11–12. 17 The implied covenant of good faith means that a party may not “unfairly frustrat[e] the 18 other party’s right to receive the benefits of the agreement actually made.” Serpa v. California 19 Sur. Investigations, Inc., 215 Cal. App. 4th 695, 706 (2013). A party never has the power to 20 unilaterally modify a contract “in such a manner as to frustrate the purpose of the contract.” Id. 21 See also Perdue v. Crocker Nat’l Bank, 38 Cal. 3d 913, 915 (1985) (“where a contract confers on 22 one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that 23 discretion in good faith and in accordance with fair dealing”). “The defense of frustration of 24 purpose arises when a change in circumstances makes one party’s performance virtually worthless 25 to the other, frustrating his purpose in making the contract.” LECG, LLC v. Unni, No. C-13-0639 26 EMC, 2014 WL 2186734, at *7 (N.D. Cal. May 23, 2014), aff’d, 667 F. App’x 614 (9th Cir. 27 2016). 28 Plaintiffs argue that by changing the Membership Plan such that it became more difficult 14 United States District Court Northern District of California 1 to find replacements for the refundable membership deposit, CF Arcis frustrated the purpose of the 2 contract. See Opp’n to Mot. to Compel Arb. at 12. Plaintiffs argued at the motion hearing that the 3 insertion of new rules renders the whole contract unenforceable. See Motion Hearing. They 4 allege that the change “makes it more difficult for members to receive refunds of their 5 membership deposit and adversely affects the rights of members” with a more crowded golf club. 6 Compl. ¶ 16. While surely inconvenient, this change does not rise to the level of frustration of 7 purpose such that the entire membership contract is worthless. As Plaintiffs themselves stated, 8 “[t]he Club membership agreement is a contract between Plaintiffs and the Club for the provision 9 of services by the Club that allows Plaintiffs to use the Club and related facilities in a manner 10 consistent with an exclusive championship quality Club,” and the Club still appears to be 11 delivering on this purpose. Id. ¶ 8. The contract is therefore not substantively unconscionable. 12 Using the sliding-scale analysis, because the contract is neither procedurally nor 13 substantively unconscionable to a sufficient degree, the Court concludes that the contract as a 14 whole is not unconscionable. 15 16 b. Illusory Plaintiffs also argue that the unilateral amendment provision of the membership contract 17 renders it illusory and unenforceable. See Opp’n to Mot. to Compel Arb. at 12. Plaintiffs contend 18 that CF Arcis “could avoid its promise to arbitrate by amending the provision or terminating it 19 altogether, which would conflict with the Plaintiff’s expressed rights in the Master Plan to 20 arbitrate.” Id. at 14. 21 In making this argument, Plaintiffs rely heavily on Peleg v. Neiman Marcus Group 204 22 Cal. App. 4th 1425 (2012). Id. at 13–14. In Peleg, the court found an employment arbitration 23 agreement illusory and unenforceable because it allowed for unilateral modifications, meaning that 24 the employer could retroactively apply contract changes to claims that were already known or 25 accrued, and deprive the employee of the rights of the existing contract. 204 Cal. App. 4th at 26 1433. The holding in Peleg is inapplicable. 27 28 Notably, the court in Peleg applied Texas, not California, law. Id. at 1466. “Under Texas law, an arbitration agreement containing a modification provision must expressly state that a 15 1 change in the agreement will not apply to a claim that has arisen or is known to the employer.” Id. 2 In contrast, “under California law, a court may imply such a restriction if an arbitration agreement 3 is silent on the issue.” Id. Unlike Texas’s more stringent requirement, 4 in applying the FAA under California contract law, the covenant of good faith and fair dealing may save an arbitration agreement from being illusory notwithstanding the absence of an express savings clause: A unilateral modification provision that is silent as to whether contract changes apply to claims, accrued or known, is impliedly restricted by the covenant so that changes do not apply to such claims. 5 6 7 8 Id. at 1465. See also Harris v. TAP Worldwide, LLC, 248 Cal. App. 4th 373, 390 (2016) (finding 9 an implied covenant of good faith in an employment contract with unilateral modification 10 provisions). 11 United States District Court Northern District of California The Membership Plan is silent on retroactive changes, meaning that the Court can read the 12 implied covenant of good faith into the contract. See generally Membership Plan. The validity of 13 the membership contract is underscored by the fact that all unilateral modifications must be 14 15 announced at least 30 days before coming into effect. Id. at 11 (“Members and Designees of the Club will be given at least thirty (30) calendar days’ notice prior to the effective date of any 16 alteration, amendment or change in this Membership Plan and/or the Rules and Regulations.”). 17 See Harris, 248 Cal. App. 4th at 379 (upholding an arbitration agreement that had a 30-day notice 18 period for modification). 19 For these reasons, the contract has valid consideration despite its unilateral modification 20 principles. 21 22 c. McGill Rule Plaintiffs next argue that the arbitration agreement is unenforceable because it prevents 23 class actions and public injunctive relief as allowed by the CLRA and UCL under the McGill rule. 24 See Opp’n to Mot. to Compel Arb. at 17–19. 25 The McGill rule provides that an agreement to waive the right to seek public injunctive 26 relief authorized by statute “is contrary to California public policy and is thus unenforceable under 27 California law.” McGill v. Citibank, N.A., 2 Cal. 5th 945, 952 (2017). The Ninth Circuit has held 28 16 1 that this rule is not preempted by the FAA. Blair v. Rent-A-Ctr., Inc., 928 F.3d 819, 831 (9th Cir. 2 2019). Plaintiffs here request a public injunction, as allowed by statute under their CLRA and United States District Court Northern District of California 3 4 UCL claims. See Compl. at 18–19. And the arbitration agreement mandates that “[a] Claimant 5 with any Dispute may only submit such Dispute in arbitration on such Claimant’s own behalf.” 6 Membership Plan at 29. But a waiver of class actions, such as that found in the CF Arcis 7 arbitration agreement, id., does not necessarily preclude the availability of public injunction as a 8 remedy. See Greenley v. Avis Budget Grp. Inc., No. 19-CV-00421-GPC-AHG, 2020 WL 9 1493618, at *8 (S.D. Cal. Mar. 27, 2020) (holding an agreement prohibiting representative actions 10 does not bar an award of injunctive relief). “While successful claims for public injunctive relief 11 result in benefits to people other than the plaintiff, they are not actions in which the plaintiff is 12 literally acting on someone else’s behalf (i.e., representing someone).” Id. This stands in contrast 13 to cases where courts have struck down arbitration agreements under the McGill rule, where the 14 agreement specifically prohibited remedies that benefitted anyone not a party to the arbitration. 15 See e.g., Blair, 928 F.3d 819; Eiess v. USAA Fed. Sav. Bank, 404 F. Supp. 3d 1240 (N.D. Cal. 16 2019). 17 Because the arbitration agreement in the Membership Plan contract does not preclude a 18 public injunction as a potential remedy, the McGill rule does not invalidate the arbitration 19 agreement. 20 21 2. Equitable Estoppel CF Arcis argues that Plaintiffs are bound to the arbitration agreement in the contract under 22 equitable estoppel because their claims are bound up in the contract itself. See Mot. to Compel 23 Arb. at 4–6. 24 The doctrine of equitable estoppel holds that “[w]hen a plaintiff brings a claim which relies 25 on contract terms against a defendant, the plaintiff may be equitably estopped from repudiating 26 the arbitration clause contained in that agreement.” JSM Tuscany, LLC v. Superior Court, 193 27 Cal. App. 4th 1222, 1239 (2011) (emphasis in the original). 28 Plaintiffs respond that equitable estoppel should not apply in the instant case because (a) 17 1 their status as non-signatories precludes the enforcement of equitable estoppel, and (b) their claims 2 do not rely on the contract terms. See Opp’n to Mot. to Compel Arb. at 14–17. The Court 3 disagrees as to both arguments and concludes that the doctrine of equitable estoppel compels 4 Plaintiffs to follow the arbitration agreement in the Membership Plan. 5 United States District Court Northern District of California 6 a. Non-Signatories Generally, one must be a party to an agreement in order to have an arbitration agreement 7 enforced. See Jensen v. U-Haul Co. of Cal., 18 Cal.App.5th 295, 300 (2017). Plaintiffs argue that 8 equitable estoppel is not applicable because they are non-signatories. See Opp’n to Mot. to 9 Compel Arb. at 16. CF Arcis offers two counter arguments: (1) Plaintiffs are indeed signatories to 10 the arbitration agreement, and (2) under ordinary contract principles, non-signatories can still be 11 compelled to arbitrate. Reply to Mot. to Compel Arb. at 2, 5. CF Arcis prevails on the first 12 argument, so the Court need not reach the second. 13 Plaintiffs’ contention that they are non-signatories to the arbitration agreement is 14 unfounded. As discussed in Part III.B.1.b, CF Arcis’s unilateral modifications of the Original 15 Rules to include an arbitration agreement were valid and enforceable. Therefore, the Membership 16 Plan with its new arbitration agreement is not a new contract, but a modification of the Original 17 Rules, which Plaintiffs signed when they became members. Consequently, because Plaintiffs are 18 signatories of the contract, equitable estoppel can apply. 19 20 21 22 b. Reliance on the Contract Plaintiffs also argue that their claims do not rely on the contract that contains the arbitration agreement. See Reply to Mot. to Compel Arb. at 5. “[E]ven if a plaintiff’s claims ‘touch matters’ relating to the arbitration agreement, ‘the 23 claims are not arbitrable unless the plaintiff relies on the agreement to establish its cause of 24 action.’” Goldman v. KPMG, LLP, 173 Cal. App. 4th 209, 230 (2009) (quoting Palmer Ventures 25 LLC v. Deutsche Bank AG 254 Fed. Appx. 426, 431–32 (5th Cir. 2007)). “The equitable estoppel 26 doctrine extends to claims that are dependent upon or inextricably intertwined with the obligations 27 imposed by the contract containing the arbitration clause.” JSM Tuscany, 193 Cal. App. 4th at 28 1241. Plaintiffs argue that their “claims are actually based on rights that Plaintiffs had prior to the 18 1 existence of the Membership Plan.” Opp’n to Mot. to Compel Arb. at 17. This misconstrues both 2 the Membership Plan as a contract and Plaintiffs’ claims. 3 4 mischaracterization. As discussed previously in Part III.B.1.b, the additions in the Membership 5 Plan were unilateral modifications as allowed per the Original Rules. Therefore, if Plaintiffs are 6 arguing that their claims rely on the Original Rules, those claims are relying on the same contract 7 that contains the arbitration agreement in the Membership Plan. 8 United States District Court Northern District of California Describing the Membership Plan as a separate contract from the Original Rules is a Furthermore, Plaintiffs’ claims are explicitly intertwined with terms from that contract. 9 Each of the Plaintiffs’ causes of action incorporates Paragraph 20 of the Complaint, which states 10 “[t]he Defendant continues to sell non-refundable memberships, continues to exclude Resigning 11 Members from Full Complement in violation of the Arcis Membership Plan, and continues failing 12 to provide refunds to Class members based on the procedure set forth in the Original Rules.” 13 Compl. ¶ 20. Therefore, each claim relies not just on the agreement with the Original Rules, but 14 also alleges a violation of the new Membership Plan. 15 Plaintiffs rely heavily on Jensen, 18 Cal. App. 5th at 306, in their briefing. See Opp’n to 16 Mot. to Compel Arb. at 14. In Jensen, the court did not compel arbitration for non-signatory 17 plaintiffs because their claims were not intertwined with the contract. 18 Cal. App. 5th at 306. 18 The instant case is distinguishable. First, as established above, Plaintiffs are signatories to the 19 contract. Secondly, the claims here explicitly reference the contract, whereas in Jensen, “the 20 complaint mentions that the truck that allegedly injured Mr. Jensen was rented from [defendant], 21 but the asserted claims of negligence and loss of consortium are ‘fully viable without reference to 22 the terms’ of the rental agreement.” 18 Cal. App. 5th at 306 (quoting Goldman, 173 Cal. App. 4th 23 at 230). 24 Plaintiffs’ claims are sufficiently intertwined with the Membership Plan for the doctrine of 25 equitable estoppel to apply, and for the Plaintiffs to be bound to the arbitration agreement in the 26 Membership Plan. 27 28 3. Conditions Precedent Finally, the arbitration agreement in the Membership Plan contains language about dispute 19 1 resolution steps to be taken before moving to arbitration. See Membership Plan at 27–28. 2 Plaintiffs argue that because the parties did not fulfill the conditions precedent in the Plan, the 3 Court cannot compel arbitration. See Opp’n to Mot. to Compel Arb. at 19. CF Arcis argues that 4 the language Plaintiffs cite to is not express conditions precedent at all, and, in any case, that it is 5 Plaintiffs who have refused to comply with it. See Reply to Mot. to Compel Arb. at 7. 6 United States District Court Northern District of California 7 a. Existence of Conditions Precedent “A condition precedent is one which is to be performed before some right dependent 8 thereon accrues, or some act dependent thereon is performed.” Cal. Civ. Code, § 1436. In 9 California, “[c]ourts will neither infer nor construe a condition precedent ‘absen[t] . . . language 10 plainly requiring such construction.’” Int’l Bhd. of Teamsters v. NASA Servs., Inc., 957 F.3d 11 1038, 1043 (9th Cir. 2020) (quoting Rubin v. Fuchs, 1 Cal. 3d 50, 53 (1969)). 12 The language of the Membership Plan does plainly indicate conditions precedent. In the 13 Reply, CF Arcis highlights the contract language: ““[a]ll parties . . . agree that all Disputes that 14 are not resolved by negotiation or mediation shall be resolved exclusively by arbitration . . . .” 15 Reply to Mot. to Compel Arb. at 8. However, this excerpt excludes other unambiguous language 16 in the contract. While not explicitly using the words “conditions precedent” in the mediation 17 section, the Membership Plan states that: 18 19 20 21 22 23 Should mediation not be successful in resolving any Dispute, then the Claimant who delivered the Dispute Notice shall have ninety (90) calendar days after the date of termination of the mediation to submit the Dispute to binding arbitration . . . If Claimant fails to timely submit the Dispute to mediation, then the Dispute of the Claimant shall be deemed waived and abandoned and all applicable parties shall be relieved and released from any and all liability relating to the Dispute. Membership Plan at 27–28. It also outlines that “[n]o litigation or other action shall be 24 commenced against the Notified Party or any applicable party without complying with the 25 procedures described herein . . . .” Id. at 28. 26 This unambiguous language sets up specific steps that must be taken before entering 27 arbitration, let alone litigation. See Mostowfi v. I2 Telecom Int’l, Inc., No. C 03-5784 VRW, 28 20 1 2004 WL 7338797, at *5 (N.D. Cal. May 27, 2004) (concluding that language “which provides 2 that arbitration becomes an option if mediation fails” means the “parties in this case clearly 3 intended that mediation be a condition precedent to arbitration”). 4 United States District Court Northern District of California 5 b. Breach of Conditions Precedent Because the arbitration agreement contains express conditions precedent, the Court looks 6 to whether those conditions have been fulfilled. When parties “have included mediation as a 7 condition precedent to arbitration, their failure to attempt to mediate the present dispute precludes 8 the court from compelling arbitration of the claims. Id. at *4. See also HIM Portland, LLC v. 9 DeVito Builders, Inc., 317 F.3d 41 (1st Cir. 2003) (denying a motion to compel arbitration when 10 “the parties intentionally conditioned arbitration upon either party’s request for mediation”); 11 Kemiron Atl., Inc. v. Aguakem Int’l, Inc., 290 F.3d 1287, 1291 (11th Cir. 2002) (denying a 12 motion to stay action pending arbitration “[b]ecause neither party requested mediation, the 13 arbitration provision has not been activated). 14 In this case, conditions precedent have not been fulfilled. The first step in the arbitration 15 agreement section of the Membership Plan states that, “[i]n the event that Owner or a Member or 16 Designee has a Dispute (the “Claimant”), the Claimant shall notify the applicable party (the 17 “Notified Party”) in writing of the claim, describing the nature of the claim and any proposed 18 remedy (the “Dispute Notice”).” Membership Plan at 27. Here, Plaintiffs deny ever giving the 19 Club notice, explicitly stating that the CLRA Letter sent by Chess on November 27, 2019 was not 20 notice of the dispute. See Opp’n to Mot. to Compel Arb. 19–20; CLRA Letter, Ex. 3 (dkt. 30-2). 21 Moreover, when CF Arcis responded in a timely manner to set up negotiations per the mandatory 22 dispute resolution process, Plaintiffs ignored the request, instead filing the present lawsuit. See 23 Singh Decl. (dkt. 8-7) ¶ 5. 24 25 However, because Plaintiffs are the party not complying with the conditions precedent and are also attempting to avoid arbitration, the analysis does not stop here. 26 27 28 Plaintiffs cannot avoid the effect of the arbitration clause simply by preventing the performance of the preceding contractual obligations to meet and confer and to mediate. . . [s]hould plaintiffs unequivocally refuse to meet and confer and to mediate this dispute, 21 then the court could fairly conclude that plaintiffs’ actions constitute a failure to resolve the matter through mediation. 1 2 Mostowfi, No. C 03-5784 VRW, 2004 WL 7338797, at *6. Unlike in Mostowfi, where 3 defendants had not clearly attempted to follow the conditions precedent of their own arbitration 4 agreement either, see id., in the instant case, CF Arcis did attempt to proceed through the dispute 5 resolution conditions, and Plaintiffs ignored those attempts. See Singh Decl. (dkt. 8-7) ¶ 5. 6 These Plaintiffs’ actions were an unequivocal refusal to give notice, negotiate or mediate 7 as required by the arbitration agreement. See Membership Plan at 27–28. Therefore, the Court 8 holds that mediation was unsuccessful and compels arbitration despite the existence of conditions 9 precedent. 10 C. 11 Conclusion as to Motion to Compel Arbitration United States District Court Northern District of California In conclusion, the Membership Plan is an enforceable contract, equitable estoppel binds 12 Plaintiffs’ dispute to the arbitration agreement, and Plaintiffs disregarded the conditions precedent. 13 The Court GRANTS the Motion to Compel Arbitration and stays this action pending the outcome 14 of the arbitration. 15 16 IV. CONCLUSION For the foregoing reasons, the Court DENIES the Motion for Remand and the Motion for 17 Attorneys’ Fees, GRANTS the Motion to Compel Arbitration, and stays this action pending the 18 outcome of the arbitration. 19 IT IS SO ORDERED. 20 Dated: July 22, 2020 21 CHARLES R. BREYER United States District Judge 22 23 24 25 26 27 28 22

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