Rodriguez v. Equifax Information Services, LLC

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 JOSHUA RODRIGUEZ, an individual, ) Case No.: 3:21-cv-01421-BEN-KSC ) Plaintiff, 12 ) ORDER GRANTING DEFENDANT 13 v. ) HARLEY-DAVIDSON FINANCIAL ) SERVICES, INC.’S MOTION TO 14 EQUIFAX INFORMATION SERVICES, ) COMPEL ARBITRATION AND LLC, a Georgia limited liability company; 15 HARLEY-DAVIDSON FINANCIAL ) GRANTING-IN-PART THE ) REQUEST TO STAY 16 SERVICES, INC., a Delaware ) corporation, 17 ) Defendants. ) [ECF No. 13] 18 ) 19 ) [22] 23 I. INTRODUCTION 24 Plaintiff Joshua Rodriguez brings this action against Defendants Equifax 25 Information Services, LLC (“Equifax”) and Harley-Davidson Financial Services, Inc. 26 (“Harley”) for violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the 27 “FCRA”) as well as the California Consumer Credit Reporting Agencies Act, CAL. CIV. 28 CODE §§ 1785.1 et seq. (the “CCRAA”). ECF No. 1 at 1–2, ¶ 1. 1 Before the Court is Harley’s Motion to Compel Arbitration. The Motion was 2 submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and 3 Rule 78(b) of the Federal Rules of Civil Procedure. See ECF No. 19. After considering 4 the papers submitted, supporting documentation, and applicable law, the Court GRANTS 5 Harley’s Motion to Compel Arbitration and GRANTS-IN-PART the request to stay. 6 II. BACKGROUND 7 Plaintiff’s claims against Defendants arise from the alleged furnishing of inaccurate, 8 false, and misleading information that resulted in Plaintiff suffering economic harm, 9 including a significantly lower consumer credit score. 10 A. Statement of Facts1 11 In April 2017, Plaintiff financed a Harley-Davidson motorcycle with Jack Powell 12 Chrysler Dodge Jeep Ram (“the Dealership”) in Escondido, California. ECF No. 1 13 (“Compl.”) at 3,2 ¶ 10. Plaintiff signed a Promissory Note and Security Agreement (the 14 “Contract”) with Eaglemark Savings Bank (“Eaglemark”).3 Ex. A to Declaration of 15 Hemlata Mistry, ECF No. 20 (“Mistry Decl.”) at 4–8. The Contract includes among other 16 things, information regarding the financing of the motorcycle and a provision governing 17 dispute resolution and arbitration (the “Arbitration Provision”). Id. 18 In June 2018, Plaintiff “traded in the motorcycle for another vehicle.” Id. at 3, ¶ 11. 19 Plaintiff alleges that when he made the trade-in, the Dealership (acting as Harley’s agent) 20 offered to make final payments on the motorcycle to Harley, in exchange for Plaintiff’s 21 agreement to finance another vehicle. Id. at 3, ¶ 12. Plaintiff’s account was eventually 22 paid in full and closed on August 1, 2018, but the Dealership failed to make the final [23] 1 The majority of the facts set forth herein are taken from Plaintiff’s Complaint. 24 However, certain facts were supplied by the parties’ briefing. 25 2 Unless otherwise indicated, all page number references are to the ECF generated page number contained in the header of each ECF-filed document. 26 3 The Contract attached to Harley’s Motion briefing includes only Plaintiff’s signature 27 and not Eaglemark’s. See generally Ex. A to Mistry Decl. at 4–8. However, the Court will disregard this issue, because Plaintiff concedes that he entered into the Contract with [28] 1 payments to Harley in a timely manner. Id. at 4, ¶¶ 14, 19. The Dealership’s failure to 2 timely pay resulted in Harley furnishing false and inaccurate information to credit reporting 3 agencies claiming Plaintiff had failed to make payments under the lease. Id. at 4, ¶¶ 20. 4 In March 2021, Plaintiff submitted a written dispute to Equifax challenging the late 5 marks on his credit report. Id. at 6, ¶ 31. On April 16, 2021, Equifax responded that Harley 6 had verified that Plaintiff’s payment history had been correctly reported. Id. at 6, ¶ 32. 7 Plaintiff alleges Harley knew or should have known the information furnished was false 8 and inaccurate because it “had in its possession records and documentation” proving such. 9 Id. at 4, ¶¶ 21–22. 10 B. Procedural History 11 On August 9, 2021, Plaintiff filed suit against Defendants, bringing six claims for 12 relief. Compl. at 1. As to Harley, Plaintiff alleges violations of the: (1) CCRAA by 13 reporting information it knew or reasonably should have known was false, CAL. CIV. CODE 14 § 1785.25(a); and (2) FCRA by failing to properly investigate Plaintiff’s dispute, 15 U.S.C. 15 § 1681s-2(b). See Compl. at 12–15. As to Equifax, Plaintiff alleges violations of the: (1) 16 FCRA by failing to conduct a reasonable re-investigation, 15 U.S.C. § 1681i; (2) FCRA 17 by failing to maintain reasonable procedures to ensure maximum possible accuracy, 15 18 U.S.C. § 1681e; (3) CCRAA by failing to conduct a reasonable re-investigation, CAL. CIV. 19 CODE § 1785.16; and (4) CCRAA by failing to maintain reasonable procedures to ensure 20 maximum possible accuracy, CAL. CIV. CODE § 1785.14. See Compl. at 15–23. 21 On November 9, 2021, Harley filed the instant Motion to Compel Arbitration,4 22 which Plaintiff timely opposed, and Harley timely replied. ECF Nos. 13, 17, 18. Plaintiff [23] 24 4 Attached to its Motion, Harley filed a Declaration containing references to Exhibit 25 A, the Contract at issue here. ECF No. 13-1. However, the Contract was not attached to the briefing. See id. On December 13, 2021, Harley re-filed the Declaration but included 26 the attached Contract as Exhibit A. See Ex. A to Mistry Decl. Plaintiff does not dispute 27 the accuracy of the document, nor does he take issue with its late submission. Because the Contract contains the applicable Arbitration Provision, the Court will consider it in [28] 1 also filed supplemental briefing and attached a recent California Appellate Court decision5 2 to which Harley replied. ECF No. 24, 25. 3 III. DISCUSSION 4 Harley argues there is a valid Arbitration Provision that governs Plaintiff’s claims 5 against it. See generally ECF No. 13 (“Motion”). Harley contends that the Court should 6 not decide the threshold issue of arbitrability, because determination of arbitrability was 7 delegated to the arbitrator. Id. at 11–13. Harley further argues that the governing law in 8 this matter is federal arbitration law, including the Federal Arbitration Act, and Nevada 9 contract law. Id. at 5–10. Plaintiff counters that he never consented to the Arbitration 10 Provision with Harley and therefore, Harley cannot compel arbitration against him. ECF 11 No. 17 (“Oppo.”) at 9–11. Plaintiff also argues that the Arbitration Provision is invalid 12 because it is both procedurally and substantively unconscionable, and those 13 unconscionable terms cannot be severed from the Provision. Id. at 11–23. The Court 14 disagrees and finds that Plaintiff agreed to arbitrate arbitrability with Harley. 15 A. Jurisdiction 16 The FAA allows a party aggrieved by another party’s failure to arbitrate to bring 17 either an original petition to arbitrate, or where an action has already been filed, a motion 18 to compel arbitration “in any United States district court which, save for such agreement, 19 would have jurisdiction under title 28, in a civil action ... of the subject matter arising out 20 of the controversy between the parties.” 9 U.S.C. § 4 . Under 28 U.S.C. § 1331 , “[t]he 21 district courts ... have original jurisdiction of all civil actions arising under the Constitution, 22 laws, or treaties of the United States.” 23 Plaintiff filed suit for violations of the FCRA and CCRAA. See Compl. at 1. 24 Plaintiff’s claims under the FCRA give the Court original subject matter jurisdiction 25 pursuant to 28 U.S.C. § 1331 . The Court has supplemental jurisdiction over Plaintiff’s [26] 27 5 The Court does not find the decision submitted by Plaintiff relevant, because it analyzes the unconscionability of an entire arbitration provision and not a delegation clause [28] 1 CCRAA claims pursuant to 28 U.S.C § 1367. Accordingly, the Court has jurisdiction to 2 hear Harley’s Motion to Compel Arbitration. 3 B. Governing Law 4 As a preliminary matter, federal substantive law governs the scope of an arbitration 5 agreement. Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013). “[A]s a 6 matter of federal law, any doubts concerning the scope of arbitrable issues should be 7 resolved in favor of arbitration, whether the problem at hand is the construction of the 8 contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” 9 Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1131 (9th Cir. 2000). State 10 contract law, on the other hand, governs issues pertaining to the validity, revocability, and 11 enforceability of an agreement to arbitrate. See, e.g., Revitch v. DIRECTV, LLC, 977 F.3d 12 713, 716–17 (9th Cir. 2020) (applying California contract law to a wireless services 13 agreement because the agreement’s choice-of-law provision states that the contract is 14 governed by the law of the state in which the customer’s billing address is located, and the 15 customer resided in California). 16 Harley argues the Contract “contains a choice of law provision providing that 17 applicable federal and Nevada law apply . . . .” Motion at 5. Harley contends that Plaintiff 18 willingly agreed to the Nevada choice of law provision when he executed the Contract, and 19 that Nevada and California have no fundamental conflicts regarding the law for the claims 20 at issue. Id. at 6 . Harley further argues that “Nevada has a substantial relationship to the 21 parties or their transaction,” because Plaintiff contracted with Eaglemark, which is located 22 in Nevada and regulated by the Nevada Department of Business and Industry, Financial 23 Institutions Division. Id. As such, Harley requests that the Court “apply substantive 24 federal law and Nevada contract law to Plaintiff’s claims and . . . the Motion to Compel 25 Arbitration.” Id. To resolve Harley’s Motion, the Court will apply relevant federal law 26 and Nevada contract law for two reasons. 27 First, the Court finds Harley’s choice of law argument compelling. The Contract 28 provides that “[e]xcept to the extent specified elsewhere in this Contract, this Contract and 1 Your account will be governed by the laws of the State of Nevada and applicable Federal 2 law.” Ex. A to Mistry Decl. at 7. Plaintiff agreed to the choice of law provision by signing 3 the Contract and advances no challenge to its validity—Plaintiff only challenges the 4 Arbitration Provision. See id. at 5, 7 ; see generally Oppo. 5 Second, where a non-moving party fails to address an argument raised by the moving 6 party in his opposition brief, the Court may consider any arguments unaddressed by the 7 non-moving party as waived. See Pac. Dawn LLC v. Pritzker, 831 F.3d 1166 , 1178 n.7 8 (9th Cir. 2016) (noting that “the plaintiffs did not raise that argument to the district court 9 in their ... opposition to the defendants’ motion for summary judgment, so the argument 10 was waived.”); see also S.D. Cal. Civ. R. 7.1. Here, Plaintiff does not dispute that 11 substantive federal law and Nevada contract law apply to the Contract at issue and uses 12 some Nevada law in arguing that the Arbitration Provision is unconscionable. Oppo. at 11. 13 However, Plaintiff also relies on Ninth Circuit and California case law (without specifying 14 the law being applied) throughout his Opposition and supplemented his briefing with a 15 recently decided California appellate decision. See generally Oppo.; ECF No. 24. 16 Because Plaintiff fails to challenge the choice of law provision and Harley’s arguments— 17 and relies to some extent on Nevada case law—the Court finds Plaintiff waived any 18 argument that California law should govern. Accordingly, federal arbitration law and 19 Nevada contract law will govern the resolution of Harley’s Motion. 20 C. Federal Arbitration Act 21 Under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., arbitration 22 agreements “shall be valid, irrevocable, and enforceable, save upon such grounds that exist 23 at law or in equity for the revocation of a contract,” 9 U.S.C. § 2 . The FAA provides that 24 once a defendant files a motion to compel arbitration, a district court must “hear the parties, 25 and upon being satisfied that the making of the agreement for arbitration or the failure to 26 comply therewith is not” at issue, must “make an order directing the parties to proceed to 27 arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4 . It “reflects both 28 a ‘liberal federal policy favoring arbitration’ ... and the ‘fundamental principle that 1 arbitration is a matter of contract.’” Kramer, 705 F.3d at 1126 (quoting AT&T Mobility 2 LLC v. Concepcion, 563 U.S. 333 , 339 (2011)). 3 The district court’s role in ruling on a motion to compel arbitration is “limited to 4 determining (1) whether a valid agreement to arbitrate exists[,] and if it does, (2) whether 5 the agreement encompasses the dispute at issue.” Revitch, 977 F.3d at 716. Only if the 6 court answers both questions in the affirmative will the FAA require the Court “to enforce 7 the terms of the arbitration agreement in accordance with its terms.” Id. The Supreme 8 Court has instructed that “courts should order arbitration of a dispute only where the court 9 is satisfied that neither [1] the formation of the parties’ arbitration agreement nor [2] 10 (absent a valid provision specifically committing such disputes to an arbitrator) its 11 enforceability or applicability to the dispute is in issue.” Granite Rock Co. v. Int’l Bhd. of 12 Teamsters, 561 U.S. 287 , 299 (2010) (emphasis in original). 13 As an initial matter, for the Court to compel arbitration under the FAA, Plaintiff’s 14 FCRA claim must pertain to interstate commerce. Subject to certain exceptions, the FAA 15 “governs arbitration agreements in contracts involving interstate commerce.” Shivkov v. 16 Artex Risk Sols., Inc., 974 F.3d 1051 , 1058–60 (9th Cir. 2020) (applying Arizona contract 17 law). Section 1 of the FAA defines “commerce” as “commerce among the several States.” [18] 9 U.S.C. § 1 . The Court finds the Contract here involves interstate commerce for two 19 reasons. 20 First, the Arbitration Provision explicitly states that the transaction involves 21 interstate commerce and that any claims will be governed by the FAA. Ex. A to Mistry 22 Decl. at 8. Plaintiff makes no challenge to this portion of the Arbitration Provision or to 23 Harley’s argument that the Contract involves interstate commerce. See Oppo. at 9 (citing 24 the FAA as authority in one instance). Second, this Court and at least one other court in 25 this district have held that similar automobile purchase and finance contracts affect 26 interstate commerce for purposes of ruling on a motion to compel arbitration. See Hamby 27 v. Power Toyota Irvine, No. 11-cv-0544-BTM-BGS, 2012 WL 13036860 , *1–2 (S.D. Cal. 28 Mar. 22 , 2012) (Moskowitz, J.) (holding a sales contract to purchase and finance an 1 automobile affected interstate commerce for purposes of compelling arbitration, when the 2 plaintiff’s claims arose out of a credit extension from the dealership in connection with the 3 sale of the vehicle); Camarillo v. Balboa Thrift & Loan Ass’n, No. 20-cv-00913-BEN4 BLM, 2021 WL 409726 , at *10 (S.D. Cal. Feb. 4, 2021) (citing Hamby, No. 11-cv-05445 BTM-BGS, 2012 WL 13036860 , *1–2) (finding a retail installment sales contract for an 6 automobile that resulted in claims under the FCRA affected interstate commerce under the 7 FAA). Accordingly, this case involves interstate commerce as required by the FAA. 8 D. Delegation of the Issue of Arbitrability 9 “[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as 10 whether the parties have agreed to arbitrate or whether their agreement covers a particular 11 controversy.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 , 68–69 (2010). Where the 12 parties to an arbitration agreement “clearly and unmistakably” agree that an arbitrator will 13 decide gateway issues, the arbitrator, rather than the Court, will decide those issues. AT & 14 T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986). “Such [c]lear and 15 unmistakable evidence of agreement to arbitrate arbitrability might include ... a course of 16 conduct demonstrating assent ... or ... an express agreement to do so.” Momot v. Mastro, [17] 652 F.3d 982, 988 (9th Cir. 2011) (citations and internal quotation marks omitted). “When 18 the parties’ contract delegates the arbitrability question to an arbitrator, a court may not 19 override the contract” and “possesses no power to decide the arbitrability issue.” Henry 20 Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 529 (2019). This remains “true 21 even if the court thinks that the argument that the arbitration agreement applies to a 22 particular dispute is wholly groundless.” Id. at 529 . 23 Harley argues “the Court need not address the threshold question of whether a valid 24 and enforceable arbitration agreement exists . . . ,” because the parties “agreed to arbitrate 25 . . . ‘the applicability of this arbitration clause.’” Id. at 11–12. Based on the language of 26 the Arbitration Provision, the Court finds an express agreement to arbitrate gateway issues 27 of arbitrability. The Delegation Clause of the Arbitration Provision provides that: [28] 1 Any Claims, including but not limited to the applicability of this arbitration clause, shall be resolved by neutral binding arbitration on an individual basis 2 without resort to any form of class action or any other collective or representative proceeding before the American Arbitration Association [3] (“AAA” or “Arbitration Forum”). You may obtain a copy of the rules by 4 calling (1-800-778-7879) or visiting their Web site. [5] 6 Ex. A to Mistry Decl. at 8. Here, the language of the Delegation Clause clearly and 7 unmistakably delegates to the arbitrator questions of arbitrability, because it states that 8 “[a]ny claims, including but not limited to the applicability of this arbitration clause, shall 9 be resolved by binding neutral arbitration.” Id. In addition, the Clause incorporates the 10 AAA rules and provides instructions on how to obtain a copy of such. Id. In Brennan v. 11 Opus Bank, the Ninth Circuit held “that incorporation of the AAA rules constitutes clear 12 and unmistakable evidence that contracting parties agreed to arbitrate arbitrability.” 796 13 F.3d 1125, 1130 (9th Cir. 2015). The parties in Brennan were sophisticated but the Court 14 did “not foreclose the possibility that this rule could also apply to unsophisticated parties 15 or to consumer contracts.” Id. Several courts have subsequently held that Brennan 16 likewise applies to unsophisticated parties and consumer contracts. See, e.g., Cordas v. 17 Uber Techs., Inc., 228 F. Supp. 3d 985, 992 (N.D. Cal. 2017) (applying Brennan to a 18 consumer contract involving an arbitration requirement in Uber Technologies, Inc.’s terms 19 and conditions); McLellan v. Fitbit, Inc., No. 3:16-CV-00036-JD, 2017 WL 4551484 , at 20 *2 (N.D. Cal. Oct. 11, 2017) (“The ‘greater weight of authority has concluded that the 21 holding of [Brennan] applies similarly to non-sophisticated parties.’”); Miller v. Time 22 Warner Cable Inc., No. 16-cv-00329-CAS-ASX, 2016 WL 7471302 , at *5 (C.D. Cal. Dec. 23 27, 2016) (holding that “incorporation of AAA’s rules clearly and unmistakably shows the 24 partis’ intent to delegate the issue of arbitrability to the arbitrator” in the context of a 25 consumer subscriber agreement with Time Warner Cable, Inc.); Maybaum v. Target Corp., 26 No. 22-cv-00687-MCS-JEM, 2022 WL 1321246 , at *5 (C.D. Cal. May 3, 2022) (“[T]he 27 majority of courts have concluded that Brennan applies equally to sophisticated and 28 unsophisticated parties.”). Therefore, based on the express language of the Delegation 1 Clause and incorporation of the AAA rules, the agreement clearly and unmistakably 2 delegates issues of arbitrability to the arbitrator. See First Options of Chicago, Inc. v. 3 Kaplan, 514 U.S. 938, 943 (1995) (“[T]he question [of] ‘who has the primary power to 4 decide arbitrability’ turns upon what the parties agreed about that matter.”). 5 In Henry Schein, the Supreme Court held that valid clauses delegating arbitrability 6 must be enforced. 139 S. Ct. at 529–30. However, “before referring the dispute to an 7 arbitrator, the court determines whether a valid arbitration agreement [delegating 8 arbitrability] exists.” 139 S. Ct. at 529 (citing 9 U.S.C. § 2 ). In addition to evaluating the 9 terms of the agreement, “courts may examine a course of conduct demonstrating assent . . 10 . .” Erwin v. Citibank, N.A., No. 16-cv-03040-GPC-KSC, 2017 WL 1047575 , at *4 (S.D. 11 Cal. Mar. 20, 2017) (citing Momot, 652 F.3d at 988 ). However, because the text of the 12 Contract expressly delegates arbitrability, as held in Rent-A-Ctr., the Court must be careful 13 to only address challenges to Delegation Clause and not the Arbitration Provision as a 14 whole. 561 U.S. 63 , 72 (2010) (“Section 2 [of the FAA] operates on the specific ‘written 15 provision’ to ‘settle by arbitration a controversy’ that the party seeks to enforce. 16 Accordingly, unless [the party opposing arbitration] challenged the delegation provision 17 specifically, we must treat it as valid under § 2, and must enforce it under §§ 3 and 4, 18 leaving any challenge to the validity of the Agreement as a whole for the arbitrator.”). If 19 the Clause is valid, all remaining validity challenges must be arbitrated. 20 Plaintiff argues that he did not agree to the Arbitration Provision with Harley, and 21 that the Provision is unconscionable. To the extent permitted, the Court addresses 22 Plaintiff’s arguments below. 23 i. Unconscionability 24 “When considering an unconscionability challenge to a delegation provision, the 25 court must consider only arguments ‘specific to the delegation provision.’” Mohamed v. 26 Uber Techs., Inc., 848 F.3d 1201, 1210 (9th Cir. 2016) (quoting Rent-A-Ctr., 561 U.S. at 27 73). In Nevada, courts generally require that both procedural and substantive 28 unconscionability “be present in order for a court to exercise its discretion to refuse to 1 enforce a contract or clause as unconscionable.” Burch v. Second Jud. Dist. Ct. of State ex 2 rel. Cty. of Washoe, 118 Nev. 438, 443 (2002). Plaintiff argues the Arbitration Provision 3 is both procedurally and substantively unconscionable. Oppo. at 11. 4 Plaintiff argues the Arbitration Provision is procedurally unconscionable, because it 5 gave Plaintiff no opportunity to negotiate the terms, making it an unenforceable adhesion 6 contract. Id. at 13. Plaintiff further argues that he “has no background, training, or 7 experience in the legal system or in ADR procedures, and had no idea what he was actually 8 giving up by signing the ‘Agreement.’” Id. Plaintiff contends this was a “take it or leave 9 it” Contract and that as the weaker party, he was “under economic coercion to proceed with 10 the with the transaction.” Id. 11 As to substantive unconscionability, Plaintiff points to numerous terms in the 12 Arbitration Provision. Id. at 14. Plaintiff argues the arbitration award limits both his 13 damages and attorneys’ fees. Id. at 15–19. Plaintiff further argues there is discretionary 14 language regarding the arbitrator’s ability to award attorneys’ fees, “which directly 15 undermines the fact that the causes of action pursued by Plaintiff here require attorneys’ 16 fees and costs . . . .” Id. at 22. Plaintiff also contends that enforcement of the Arbitration 17 Provision is unilateral because: (1) Harley is not a party to the agreement but attempts to 18 enforce it based on an alleged assignment of rights; and (2) the corporate entity is permitted 19 to bring a court action to recover the vehicle, but there is no other scenario in which the 20 corporation would seek claims against the consumer under the Arbitration Provision. Id. 21 at 19–21. Essentially, Plaintiff is arguing only he can be compelled to arbitrate under the 22 Provision, making it unilateral. See id. Plaintiff argues the bar on class actions and 23 collective proceedings along with the severability clause also make the Provision 24 unilateral. Id. at 21. 25 None of Plaintiff’s arguments specifically challenge the Delegation Clause at issue. 26 Assuming arguendo that Plaintiff’s procedural unconscionability argument applies to the [28] 1 Delegation Clause—and that Plaintiff could succeed on that argument6—Plaintiff would 2 also have to establish substantive unconscionability to prevail. Plaintiff’s arguments for 3 substantive unconscionability refer to several portions of the Arbitration Provision, but 4 none of them challenge the text of the Delegation Clause. Because the Plaintiff fails to 5 challenge the Delegation Clause specifically, the Court cannot address Plaintiff’s unrelated 6 substantive unconscionability arguments. See Rent-A-Ctr., 561 U.S. at 86 (“A claim that 7 an entire arbitration agreement is invalid will not go to the court unless the party challenges 8 the particular sentences that delegate such claims to the arbitrator, on some contract ground 9 that is particular and unique to those sentences.”). Without such a challenge to the 10 Delegation Clause, Plaintiff is “bound to pursue his validity claim in arbitration.” Id. at 11 87. 12 Plaintiff’s argument that the unconscionable portions of the Arbitration Provision 13 cannot be severed—rendering the entire Provision unconscionable—also fails, because 14 delegation clauses can be severed from potentially invalid arbitration agreements. See id. 15 at 85 (“Courts may now pluck from a potentially invalid arbitration agreement even 16 narrower provisions that refer particular arbitrability disputes to an arbitrator.”). As such, 17 Plaintiff cannot establish substantive unconscionability, which is required for Plaintiff’s 18 unconscionability defense. Accordingly, the Court does not find unconscionable the 19 Delegation Clause in the Arbitration Provision. [21] 22 6 Plaintiff’s procedural unconscionability argument is undermined by the opt-out 23 provision, which allows Plaintiff sixty (60) days to opt-out of the Arbitration Provision altogether, with no effect on the remaining terms of the Contract. See Ex. A to Mistry 24 Decl. at 8. Accordingly, even if Plaintiff were to succeed on his substantive 25 unconscionability claims, given Plaintiff’s opportunity to opt-out, it is unlikely that the Court would find the Arbitration Provision procedurally unconscionable. See Obstetrics 26 & Gynecologists William G. Wixted, M.D., Patrick M. Flanagan, M.D., William F. 27 Robinson, M.D. Ltd. v. Pepper, 101 Nev. 105, 107 (1985)) (citing Wheeler v. St. Joseph Hosp., 63 Cal. App. 3d 345, 133 (1976)) (“The distinctive feature of an adhesion contract [28] 1 ii. Agreement to Delegate Arbitrability 2 “In the ‘absence of clear and unmistakable evidence that Plaintiffs agreed to 3 arbitrate arbitrability with nonsignatories,’ the district court has authority to decide the 4 issue of whether a non-signatory can compel arbitration. Aliff v. Vervent, Inc., No. 20-cv5 00697-DMS-AHG, 2020 WL 5709197 , at *7 (S.D. Cal. Sep. 24, 2020) (quoting Kramer, [6] 705 F.3d at 1127 ). Courts have found no agreement to arbitrate arbitrability when there 7 was no notice of or opportunity to reject the terms of arbitration, and when the express 8 terms of the agreement were limited to specific parties. See Knutson v. Sirius XM Radio 9 Inc., 771 F.3d 559 , 568–70 (9th Cir. 2014) (applying California law and finding no mutual 10 assent where the plaintiff was not provided notice of the terms, or an opportunity to reject 11 or unambiguously manifest his assent to the terms); Aliff, No. 20-cv-00697-DMS-AHG, [12] 2020 WL 5709197 , at *7 (rejecting the argument that the plaintiff agreed to arbitrate 13 arbitrability with the loan servicer, because the terms of the arbitration provision were 14 limited to the plaintiff and the lender and did not include the loan servicer). This case is 15 distinguishable. Based on Plaintiff’s written signature on the Contract, his failure to opt16 out of the Arbitration Provision, and the express language of the Provision itself, there is 17 clear and unmistakable evidence that Plaintiff agreed to arbitrate arbitrability with non18 signatory, Harley. 19 First, Plaintiff does not dispute that he signed the Contract containing the Delegation 20 Clause. Plaintiff’s unconscionability argument that “he had no idea what he was actually 21 giving up by signing the ‘Agreement,’” could arguably go to Plaintiff’s capacity to consent 22 to the terms. See Oppo. at 13. However, Plaintiff has not set forth any circumstances under 23 which his full legal capacity to contract with Harley would be questioned. See Gen. Motors 24 v. Jackson, 111 Nev. 1026, 1031 (1995) (explaining that a person “has full legal capacity 25 to incur contractual duties . . . unless he is” under guardianship, an infant, mentally ill or 26 defective, or intoxicated). Here, Plaintiff argues he did not know what he was giving up 27 by signing the Contract, but he is not arguing that he was incapable of knowing what he 28 was giving up. See id. (“Capacity involves whether [the person] had the ability to 1 understand the agreement,” but if “a person possesses sufficient mental capacity to 2 understand the nature of the transaction and is left to exercise his own free will, his contract 3 will not be invalidated because he was of a lesser degree of intelligence than his co4 contractor, because he was fearful, worried or nervous, or lacked the ability to concentrate 5 . . . .”). Plaintiff’s written signature on the Contract containing the Delegation Clause 6 evidences a manifestation of Plaintiff’s assent to the terms therein. See Bergman v. 7 Electrolux Corp., 558 F. Supp. 1351, 1353 (D. Nev. 1983) (signatures on a written 8 agreement manifested mutual assent). 9 Second, Plaintiff does not argue that he exercised his right to opt-out of the 10 Arbitration Provision. The Provision contains an “Opt-out option” allowing Plaintiff sixty 11 (60) days to opt-out of the Provision altogether. Ex. A to Mistry Decl. at 8. Plaintiff could 12 have either: (1) called the number provided to request an opt-out form; or (2) sent a letter 13 to the listed address, indicating his choice to opt-out and referencing his name, address, 14 and account number. Id. The opt-out option undermines any argument that Plaintiff did 15 not assent to the terms of the Delegation Clause contained in Arbitration Provision. 16 Plaintiff could have moved forward with the Contract without being bound to arbitration 17 and was given simple and specific instructions on how to do so. Because Plaintiff signed 18 the Contract and had the opportunity to reject the Arbitration Provision altogether, his 19 course of conduct demonstrates assent to the terms therein. 20 Moving to the language of the Arbitration Provision, as explained supra, the parties 21 delegated arbitrability to the arbitrator. See supra Part III.D. The Provision also expressly 22 subjects Plaintiff and Eaglemark’s “successors, assigns, parents, subsidiaries, or affiliates” 23 to its terms. Id. Harley contends that Eaglemark and Harley-Davidson Credit Corp. 24 (“HDCC”), the assignee as alleged by Harley,7 are its wholly owned subsidiaries, making [25] 7 The Court does not conclude that HDCC is the assignee of the Contract because this 26 determination is not necessary to decide Harley’s Motion. Furthermore, Plaintiff does not 27 address Harley’s argument that the Contract was assigned to HDCC. Plaintiff challenges only the assignment of the Contract from Eaglemark to Harley, but there is no argument [28] 1 it the parent to both companies. See Motion at 4; Mistry Decl. at 1, ¶ 4. Plaintiff does not 2 challenge that Harley is Eaglemark’s or HDCC’s parent.8 Accordingly, by the express 3 terms of the Contract, Plaintiff agreed to arbitrate arbitrability with any parent company of 4 Eaglemark, which includes Harley. The Arbitration Provision must be enforced according 5 to its terms. See Mohamed, 848 F.3d at 1209 (citing Rent-A-Ctr., 561 U.S. at 67) (“In 6 accordance with Supreme Court precedent, we are required to enforce these agreements 7 ‘according to their terms’ and, in the absence of some other generally applicable contract 8 defense, such as fraud, duress, or unconscionability, let an arbitrator determine arbitrability 9 . . . .”); McLellan, No. 3:16-cv-00036-JD, 2017 WL 4551484 , at *2 (“The language of the 10 parties’ agreement is the primary evidence of whether they intended to delegate 11 arbitrability.”); see also Eighth Jud. Dist. Ct., 131 Nev. 713 , 721 (2015) (holding non12 signatory defendants could enforce arbitration, explaining that “[b]y its terms, the long13 form arbitration agreement covers claims not only against CPS but also ‘against its officers, 14 directors, managers, employees or agents.’”). Whether Plaintiff is bound by Harley to 15 arbitrate his claims, however, is for the arbitrator to decide. The Court’s sole finding is 16 that Plaintiff agreed to delegate issues of arbitrability to the arbitrator for purposes of 17 Harley’s Motion to Compel Arbitration. 18 E. Request to Stay Action Pending Arbitration 19 Where a plaintiff files suit “in any of the courts of the United States upon any issue 20 referable to arbitration under an agreement in writing for ... arbitration, the court in which 21 such suit is pending, upon being satisfied that the issue ... is referable to arbitration ... shall 22 on application of one of the parties stay the trial of the action until such arbitration.” 9 23 U.S.C. § 3 . A court’s power to stay proceedings is incidental to the inherent power to 24 control the disposition of its cases in the interests of efficiency and fairness to the court, 25 counsel, and litigants. Landis v. N. Am. Co., 299 U.S. 248 , 254–55 (1936). A stay may be [26] 27 8 Again, Plaintiff only challenges the assignment of the Contract from Eaglemark to Harley. Plaintiff fails to address Harley’s argument that Eaglemark and HDCC are its [28] 1 granted pending the outcome of other legal proceedings related to the case in the interests 2 of judicial economy. Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857 , 863–64 (9th 3 Cir. 1979). Discretion to stay a case is appropriately exercised when the resolution of 4 another matter will have a direct impact on the issues before the court, thereby substantially 5 simplifying the issues presented. Mediterranean Enters., Inc. v. Ssangyong Corp., 708 6 F.2d 1458 , 1465 (9th Cir. 1983). In determining whether a stay is appropriate, a district 7 court “must weigh competing interests and maintain an even balance.” Landis, 299 U.S. 8 at 254–55. “[I]f there is even a fair possibility that the stay ... will work damage to some 9 one else, the stay may be inappropriate absent a showing by the moving party of hardship 10 or inequity.” Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059 , 11 1066 (9th Cir. 2007) (citation and internal quotation marks omitted). 12 Here, because the parties delegated the issue of arbitrability to the arbitrator, the 13 Court has not decided which, if any, of Plaintiff’s claims are subject to arbitration. The 14 authority to decide whether any claims fall within the scope of the Arbitration Provision 15 has been expressly delegated to the arbitrator. In the interest of justice and in order to avoid 16 duplicative proceedings, the Court finds a stay of the claims against Harley is proper under 17 the circumstances here, pending a decision on the arbitrability of Plaintiff’s claims. 18 Accordingly, the Court GRANTS-IN-PART a stay of the case. 19 The matter is stayed as to Plaintiff’s claims against Harley only. There are no 20 arguments that Plaintiff’s claims against Equifax are subject to arbitration or that the claims 21 against Equifax should be stayed. Accordingly, Plaintiff’s claims against Equifax may 22 proceed. McLellan, No. 3:16-cv-00036-JD, 2017 WL 4551484 , at *5 (quoting Moses H. 23 Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 20 (1983)) (“Parallel proceedings 24 may raise the risk of inconsistency, but the FAA contemplates ‘requir[ing] piecemeal 25 resolution when necessary to give effect to an arbitration agreement.’ Moreover . . . Fitbit 26 has not shown that the outcome of the arbitration proceedings will have any effect on this 27 Court’s consideration of Dunn’s claims.”). Plaintiff and Harley must file a Joint Status 28 Report within ten (10) days of the arbitrator’s decision regarding the arbitrability of 1 || Plaintiffs claims. CONCLUSION 3 For the above reasons, the Court rules as follows: 4 l. Harley’s Motion to Compel Arbitration is GRANTED. 5 2. Harley’s Motion to Stay is GRANTED-IN-PART as to Plaintiff's claims 6 || against Defendant Harley only. Plaintiff's claims against Defendant Equifax will proceed. 7 3. Harley and Plaintiff must file a Joint Status Report within ten (10) days of 8 || the arbitrator’s decision regarding arbitrability. 9 IT IS SO ORDERED. " 10|| DATED: June 9, 2022 il HON. ROGER T. BENITEZ United States District Judge [28] -17-