1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 PETER FONG, et al., No. 2:22-cv-01291-MCE-KJN 12 Plaintiffs, 13 v. MEMORANDUM AND ORDER 14 U.S. BANCORP, et al., 15 Defendants. 16 By way of this action, Plaintiffs Peter Fong and Sut Fong (collectively, “Plaintiffs”), 17 on behalf of themselves and others similarly situated, seek to recover for injuries 18 sustained when valuables they stored in a safe deposit box with Defendants U.S. 19 Bancorp (“USB”) and U.S. Bank National Association (“USBNA”) (collectively, 20 “Defendants”)1 were discovered missing. Presently before the Court is Defendants’ 21 Motion to Compel Arbitration and Dismiss, or Alternatively, Stay Proceedings (ECF No. 22 10). For the following reasons, that Motion is GRANTED.2 23
26 1 USBNA is a wholly owned subsidiary of USB.
27 2 Because oral argument would not have been of material assistance, the Court declined to set a hearing date and decides this matter on the briefs. E.D. Local Rule 230(g). 28 1 BACKGROUND3 2 3 Defendants have offered California customers the use of “safe deposit boxes” 4 throughout the state for years. The boxes are, as the name implies, intended to provide 5 a safe place for customers to store or deposit valuables. These boxes are kept in 6 Defendants’ vaults, and two sets of keys—one set kept by Defendants and one set kept 7 by the customer—are required to open the boxes. In theory, Defendants cannot open a 8 box without a customer, and a stolen key cannot be used because Defendants identify 9 key holders prior to allowing them access to the boxes. 10 Plaintiffs are brothers and first-generation U.S. citizens. Their ancestors 11 immigrated to the United States, and California in particular, toward the beginning of the 12 last century. They worked on the railroads and the Golden Gate Bridge before Plaintiffs’ 13 grandparents moved into restaurant work. Eventually they started their own restaurant 14 business, which, through their hard work and grit, enjoyed some success. Plaintiffs’ 15 grandparents did not know how to invest in stocks or other securities, however. Instead, 16 they bought jewelry and other tangible valuables as a way to save and invest their 17 money. 18 The jewelry and other items Plaintiffs acquired over time were extremely valuable. 19 Plaintiffs’ grandparents taught them to be prudent and to safeguard these investments. 20 They also told Plaintiffs to always keep cash in a safe deposit box in case of an 21 emergency. Accordingly, to safeguard their family treasures, in 2000, Plaintiffs paid for a 22 safe deposit box at one of Defendants’ branches in Sacramento. 23 Plaintiffs dutifully paid the fees required to maintain the safe deposit box for over 24 twenty years, and they maintained several items of substantial monetary and sentimental 25 value in the safe deposit box including, among other things: 26 a. $85,000 in $100 bills issued in the 1980s and 1990s in excellent condition 27 3 Unless otherwise indicated, the following facts are taken, primarily verbatim, from Plaintiffs’ 28 Complaint. ECF No. 1. 1 b. $1,500 in $50 bills 2 c. $600 in $20 bills 3 d. A pouch of 14 individually wrapped American Eagle Gold Bullion Coins 4 e. Two $1,000 dollar bills from 1928 in excellent condition 5 f. Two very rare $500 dollar bills from 1928 in excellent 6 condition 7 g. Five $20 gold certificates from 1922 in excellent condition 8 h. Four 10oz Gold Bars 9 i. One satchel containing 45 pieces of natural, excellent cut investment diamonds 10 j. Natural pearl necklace 11 k. 18K gold engraved ring with large natural jade stone 12 l. 14K gold diamond studded ring with 1.5K round diamond 13 m. Four natural green translucent jade bangle bracelets 14 n. 24K thick yellow gold bangle bracelet with natural jade stone 15 o. Four 24K thick yellow gold necklaces (2oz) 16 p. Four 24K thick yellow gold pendants (4oz) 17 q. Two 24K gold bracelets 18 r. 24K gold bracelet with dragon carvings 19 s. Pair of gold earrings with gold pendant 20 t. Pair of gold earrings with jade pendant 21 u. Two Chinese Fu Natural Jade Necklaces with 24K gold 22 chain 23 v. Three 24K solid yellow gold necklaces 24 w. Men’s Gold Rolex Watch 25 x. Women’s Gold Rolex Watch 26 According to Plaintiffs, in 2013, an employee of Defendants had trouble with the 27 bank’s “guard key,” taking several tries to get the key to successfully turn in the lock of 28 Plaintiffs’ safe deposit box. Pls.’ Opp’n, ECF No. 15 at 2. Defendants subsequently 1 called Plaintiffs to advise them that the guard key for their existing box was damaged 2 and that they needed to move the box to a new location. Id. In November of that year, 3 Plaintiffs returned to the bank, relocated the box, and were provided a new set of keys. 4 Id. According to Christina Anderson, a Business Banking Relationship Manager for 5 Defendants who previously served from 2011 through 2014 as a Personal Banker, there 6 was indeed a mechanical issue with Plaintiffs’ original box, box number 3450, and, as 7 Plaintiffs indicate, they were reassigned box number 20038 in 2013. Supp. Anderson 8 Decl., ECF No. 22, ¶ 2. 9 As a Personal Banker, Ms. Anderson was tasked in 2013 with, among other 10 things, opening safe deposit boxes for customers, and she explains the procedures 11 Defendants required at the time and that she purportedly followed. Anderson Decl., ECF 12 No. 10-1, ¶ 2. More specifically, according to Ms. Anderson, Defendants “provided 13 Personal Bankers with an Operating Procedures Manual (‘Procedures Manual’) that 14 provide[d] detailed instructions to follow when opening customer accounts, loans, credit 15 cards, and safe deposit boxes.” Id., ¶ 3. Ms. Anderson avers that she “was given a 16 copy of the Procedures Manual when [she] started working [for Defendants], and 17 amended versions, as necessary.” Id. “The Procedures Manual always included a 18 section titled ‘Safe Deposit Box Opening Instructions.’” Id., ¶ 3, Ex. A. 19 Because it was not particularly common for customers to request to open a safe 20 deposit box, whenever Ms. Anderson assisted in the process, she purportedly 21 referenced the foregoing instructions and always followed specific steps: (a) establish 22 how many individuals required access to the safe deposit box; (b) open the account in 23 USBNA’s computerized database system; (c) ask the customer the preferred safety 24 deposit box size; (d) obtain two keys and ensure the functionality of both; (e) confirm the 25 physical box number corresponded to the number input into the computer system; (f) 26 print and provide documents to the customers, including the Consumer Safe Deposit 27 Box Contract (“Contract”), Your Deposit Account Agreement, Consumer Privacy Pledge, 28 and Consumer Pricing Information; (g) witness the customer sign the Contract and then 1 sign it on behalf of Defendants; (h) process the customer’s payment and give the 2 customer the safe deposit box keys; and (i) file the executed Contract. Id., ¶ 4. Having 3 reviewed the Contract signed by Plaintiffs in 2013, Ms. Anderson avers that she assisted 4 them in establishing the safe deposit box at issue here, that she always followed the 5 process set forth in Defendants’ instructions, and that she therefore adhered to those 6 instructions in opening the safe deposit box for Plaintiffs. Id., ¶ 5.4 7 Both Plaintiffs and Ms. Anderson did indeed sign the Contract in 2013. At the top 8 of the form, the Contract title is listed in bold. Also at the top of the page, above the 9 sections for Plaintiffs’ information and the parties’ signatures, the Contract states: 10 The undersigned Renter(s) hereby rent the safe deposit box described in this agreement. Renter(s) agrees to the terms of 11 the “Safe Deposit Lease Agreement”, as amended from time to time (the “Rules”), including the payment of rental fees in 12 advance. Rental fees are paid annually and subject to change. The Rules are incorporated herein by reference and made part 13 of this agreement. By signing, Renter(s) acknowledge receipt of two keys, a copy of the present Rules, and 14 understand that FDIC-insurance or the Bank’s insurance policy does not cover safe deposit boxes and their 15 contents. If Renter wants to insure the safe deposit box contents, it is Renter’s responsibility to obtain such insurance. 16 Id., ¶ 5, Ex. C (emphasis in original). 17 The Your Deposit Account Agreement contains the Rules. Id., ¶ 4(f), Ex. B. The 18 Rules in turn contain an arbitration agreement with a class action waiver: 19
20 ARBITRATION 21 This section does not apply to any dispute in which the amount in controversy is within the jurisdictional limits of, 22 and is filed in, a small claims court. These arbitration provisions shall survive closure of your account or 23 termination of all business with us. If any provision of this section is ruled invalid or unenforceable, this section shall 24 be rendered null and void in its entirety. 25 Arbitration Rules: In the event of a dispute concerning
26 4 Plaintiffs dispute whether they “opened” a new safe deposit box at this time because they contend they instead “moved” an existing box to a new location. Ms. Anderson testified that the 27 procedures she followed would have been the same regardless. Supp. Anderson Decl., ECF No. 22, ¶ 2. Accordingly, the semantics of how exactly Plaintiffs ended up with box number 20038 do not change the 28 Court’s analysis as it is set forth below. 1 your account or this Agreement, you or we may elect to arbitrate the dispute. At your election, the arbitration shall 2 be conducted by either JAMS or the American Arbitration Association (“AAA”) (or, if neither of these arbitration 3 organizations will serve, then a comparable substitute arbitration organization agreed upon by the parties or, if 4 the parties cannot agree, chosen by a court of competent jurisdiction.) If JAMS is selected, the arbitration will be 5 handled according to its Streamlined Arbitration Rules unless the claim is for $250,000 or more, in which case its 6 Comprehensive Arbitration Rules shall apply. If the AAA is selected, the arbitration will be handled according to its 7 Commercial Arbitration Rules. You may obtain rules and forms for JAMS by contacting JAMS at 1-800-352-5267 or 8 www.jamsadr.com and for the AAA by contacting the AAA at 1-800-778-7879 or www.adr.org. Any arbitration hearing 9 that you attend will take place in the federal judicial district in which you reside. Without regard to which 10 arbitration body is selected to resolve the dispute, any disputes between you and us as to whether your claim 11 falls within the scope of this arbitration clause shall be determined solely by the arbitrator, and not by any court. 12 Arbitration Process: Arbitration involves the review and 13 resolution of the dispute by a neutral party. The arbitrator’s decision will generally be final and binding. At 14 your request, for claims relating to consumer accounts, we will advance the first $375 of the filing and hearing fees 15 for any claim you file against us; the arbitrator will decide whether we or you will ultimately pay those fees. 16 Arbitration can only decide our or your dispute and cannot consolidate or join claims of other persons who 17 may have similar claims. There will be no authority or right for any disputes to be arbitrated on a class action 18 basis. 19 Effects of Arbitration: If either of us chooses arbitration, neither of us will have the right to litigate the dispute in 20 court or have a jury trial. In addition, you will not have the right to participate as a representative or member of any 21 class of claimants, or in any other form of representative capacity that seeks monetary or other relief beyond your 22 individual circumstances, pertaining to any dispute subject to arbitration. There shall be no authority for any 23 claims to be arbitrated on a class action or any other form of representative basis. Arbitration can only decide your 24 or our claim, and you may not consolidate or join the claims of other persons who may have similar claims, 25 including without limitation claims for public injunctive or other equitable relief as to our other customers or 26 members of the general public. Any such monetary, injunctive, or other equitable relief shall be limited solely 27 to your accounts, agreements, and transactions with us. Notwithstanding the foregoing, any question as to the 28 validity and effect of this class action waiver shall be 1 decided solely by a court of competent jurisdiction, and not by the arbitrator. 2 Id., at 19–20. 3 For their part, Plaintiffs aver that they also “had a habit of retaining, and . . . did 4 dutifully retain, all documents that [USB] provided to [them] concerning the safe deposit 5 box.” Peter Fong Decl., ECF No. 17, ¶ 9. According to Plaintiffs, they were never 6 provided with an arbitration agreement, nor did they discuss arbitration with any of 7 Defendants’ employees at any time. Id., ¶ 11. To confirm this, Plaintiffs searched their 8 files and were unable to locate any documents containing an arbitration provision. Id., ¶ 9 12. 10 In any event, years later, in November 2021, Plaintiffs learned that Defendants 11 had “drilled”5 into their safe deposit box without their knowledge or consent. Id., ¶ 23. In 12 fact, according to Plaintiffs, they only learned that their safe deposit box had been 13 breached because they were notified by a law enforcement officer, who conveyed that 14 he had seen numerous other drilled boxes as well. Id., ¶¶ 23–24. Plaintiffs rushed to 15 the bank branch. Id., ¶ 25. When they arrived, “a Bank employee dumped the contents 16 of the box onto the table. While some of the cash and certain jewelry were there, other 17 family heirlooms were missing; envelopes and silk pouches that once housed the 18 valuables, empty.” Id., ¶ 26. 19 Plaintiffs demanded that Defendants provide their missing property, but 20 Defendants did not or could not. Id., ¶ 27. Nor would Defendants provide an 21 explanation for the missing valuables. Id. Plaintiffs thus spoke with Defendants’ District 22 Manager and “learned that the bank had conducted an internal investigation into the 23 matter, including a review of internal security camera footage, but the bank refused to 24 disclose any specifics, or even permit [Plaintiffs] to review the security camera footage.” 25 Id., ¶ 28. According to Plaintiffs, they were then told to hire a lawyer. Id. In response, 26 Plaintiffs “sought the assistance of the Sacramento Police Department, the FBI, and the 27 5 “Drilling” refers to the manual opening of a safe deposit box without use of the appropriate keys 28 and, at least in this case, without the customers present. 1 Comptroller of the Currency, but they would not intervene.” Id., ¶ 29. Plaintiffs 2 eventually reached out to the Consumer Finance Protection Bureau (“CFPB”). Id., ¶ 30. 3 The CFPB opened a case, and Defendants provided a written response to Plaintiffs with 4 a copy to the CFPB advising that they had conducted their own investigation from which 5 they concluded no bank error had occurred. Id., Ex. 2. In that letter, Defendants stated, 6 in part: 7 Should you wish to request a copy of any available video surveillance, you may do so with a court issued subpoena in 8 writing to:
9 U.S. Bank Attn: Customer Care Unit 10 PO Box 64991 Saint Paul, MN 55164 11 12 Given this response, Plaintiffs contacted counsel and initiated this action seeking 13 to recover under theories of: (1) strict liability; (2) conversion; (3) trespass to chattels; (4) 14 negligence per se; (5) negligence; (6) promissory estoppel; (7) intentional infliction of 15 emotional distress; (8) unjust enrichment; and (9) unfair business practices in violation of 16 California’s Unfair Competition Law, California Business and Professions Code §§ 17200 17 et seq. The only question currently before the Court is whether Plaintiffs should be 18 compelled to arbitrate. 19 20 STANDARD 21 22 The Federal Arbitration Act (“FAA”) provides that “[a] written provision in . . . a 23 contract evidencing a transaction involving commerce to settle by arbitration a 24 controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and 25 enforceable, save upon such grounds as exist at law or in equity for the revocation of 26 any contract.” 9 U.S.C. § 2. Under the FAA, a party may seek a court order compelling 27 arbitration where another party refuses to arbitrate. Id. § 4. Valid arbitration agreements 28 must be “rigorously enforced.” Perry v. Thomas, 482 U.S. 483, 490 (1987). To that end, 1 the FAA “leaves no place for the exercise of discretion by a district court, but instead 2 mandates that district courts shall direct the parties to proceed to arbitration on issues as 3 to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 4 470 U.S. 213, 218 (1985) (emphasis in original). 5 “Section 2 [of the FAA] is a congressional declaration of a liberal federal policy 6 favoring arbitration agreements, notwithstanding any state or substantive or procedural 7 policies to the contrary.” Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 8 460 U.S. 1, 24 (1983). However, “the FAA’s ‘policy favoring arbitration’ does not 9 authorize federal courts to invent special, arbitration-preferring procedural rules.” 10 Morgan v. Sundance, Inc., 142 S. Ct. 1708, 1713 (2022) (citing Moses H. Cone, 11 460 U.S. at 24). This policy “is merely an acknowledgement of the FAA’s commitment to 12 overrule the judiciary’s longstanding refusal to enforce agreements to arbitrate and to 13 place such agreements upon the same footing as other contracts.” Granite Rock Co. v. 14 Int’l Broth. of Teamsters, 561 U.S. 287, 302 (2010) (citation and internal quotation marks 15 omitted). In other words, “[t]he policy is to make arbitration agreements as enforceable 16 as other contracts, but not more so.” Morgan, 142 S. Ct. at 1713 (citation and internal 17 quotation marks omitted); see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 18 20, 24–25 (1991) (stating that the FAA’s purpose was . . . to place arbitration 19 agreements upon the same footing as other contracts,” and recognizing a “liberal federal 20 policy favoring arbitration agreements”). “[A] court must hold a party to its arbitration 21 contract just as the court would to any other kind. But a court may not devise novel rules 22 to favor arbitration over litigation.” Morgan, 142 S. Ct. at 1713. 23 Generally, in deciding whether a dispute is subject to an arbitration agreement, a 24 court must answer two questions: (1) “whether a valid agreement to arbitrate exists,” 25 and, if so, (2) “whether the agreement encompasses the dispute at issue.” Chiron 26 Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If a party 27 seeking arbitration establishes these two factors, the court must compel arbitration. 28 9 U.S.C. § 4; Chiron, 207 F.3d at 1130. Accordingly, the Court’s role “is strictly limited to 1 determining arbitrability and enforcing agreements to arbitrate, leaving the merits of the 2 claim and any defenses to the arbitrator.” Republic of Nicaragua v. Standard Fruit Co., 3 937 F.2d 469, 478 (9th Cir. 1991). 4 In determining the existence of an agreement to arbitrate, the district court looks 5 to “general state-law principles of contract interpretation, while giving due regard to the 6 federal policy in favor of arbitration.” Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 7 1049 (9th Cir. 1996). “[A]lthough ‘courts may not invalidate arbitration agreements under 8 state laws applicable only to arbitration provisions,’ general contract defenses such as 9 fraud, duress, or unconscionability, grounded in state contract law, may operate to 10 invalidate arbitration agreements.” Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 11 (9th Cir. 2002) (quoting Doctors Ass’n, Inc. v. Casarotto, 517 U.S. 681, 687 (1996) 12 (emphasis in original)). However, courts cannot apply even generally applicable 13 defenses to contract enforceability, such as unconscionability, in a way that disfavors 14 and undermines arbitration. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 341–42 15 (2011). Finally, “as a matter of federal law, any doubts concerning the scope of 16 arbitrable issues should be resolved in favor of arbitration, whether the problem at hand 17 is the construction of the contract language itself or an allegation of waiver, delay, or a 18 like defense to arbitrability.” Moses H. Cone, 460 U.S. at 24–25. “An order to 19 arbitrate . . . should not be denied unless it may be said with positive assurance that the 20 arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” 21 United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 US. 574, 582–83 22 (1960). 23 24 ANALYSIS 25 26 Defendants contend that Plaintiffs’ claims are subject to a valid agreement 27 requiring resolution of their claims through binding arbitration and precluding Plaintiffs 28 from proceeding in a representative capacity. Plaintiffs oppose Defendants’ Motion on 1 several grounds. First, Plaintiffs contend that: (1) the Contract “does not ‘clearly and 2 unequivocally’ reference or incorporate any document containing an arbitration clause”; 3 (2) “Defendants cannot establish that [Plaintiffs] clearly and unequivocally consented to 4 the arbitration clause”; and (3) the arbitration clause was neither known to them or easily 5 available. Pls.’ Opp’n, ECF No. 15, at 7, 13, 14.6 Second, Plaintiffs argue that 6 Defendants waived their right to enforce the arbitration agreement in the first place. 7 Finally, Plaintiffs take the position that the arbitration agreement cannot be enforced as 8 to USBNA’s parent, USB, because USB is not party to the Contract. Each argument is 9 addressed in turn. 10 A. The parties entered into an enforceable arbitration agreement. 11 The United States Supreme Court has explained that “the first task of a court 12 asked to compel arbitration of a dispute is to determine whether the parties agreed to 13 arbitrate that dispute.” Mitsubishi Motors v. Soler Chrysler–Plymouth, 473 U.S. 614, 626 14 (1985). Whether an agreement to arbitrate exists is answered by applying state contract 15 law, even where the agreement is covered by the FAA. Pokorny v. Quixtar, 601 F.3d 16 987, 994 (9th Cir. 2010). 17 Here, the first issue for the Court is whether the Rules containing the arbitration 18 clause were incorporated into the parties’ Contract. Under California law, “[f]or the terms 19 of another document to be incorporated into the document executed by the parties, the 20 reference must be clear and unequivocal, the reference must be called to the attention of 21 the other party and he must consent thereto, and the terms of the incorporated 22 document must be known or easily available to the contracting parties.” Shaw v. 23 6 Plaintiffs do not argue that the arbitration agreement is unconscionable. Plaintiffs do raise 24 arguments, however, going to the font size and length of the various agreements, which the Court addresses below. Plaintiffs also do not explicitly contend that their claims fall outside the scope of the 25 arbitration clause. They do make a round-about argument that the class waiver provision can only apply to claims that are required to be arbitrated and that some of their claims should thus be permitted to move forward on a class basis in this forum. Pls.’ Opp’n, ECF No. 15 at 17. The Court disagrees, however, and 26 finds that all of Plaintiffs’ claims, regardless of whether they are couched in tort or statutory terms as opposed to contractual terms, are covered by the provisions of the arbitration clause because they all 27 derive from a “dispute concerning [Plaintiffs’] account or [the Rules].” Anderson Decl., ECF No. 10-1, ¶ 4(f), Ex. B, at 19–20 28 1 Regents of Univ. of Cal., 58 Cal. App. 4th 44, 54 (1997) (citations omitted). A defendant 2 is not required to specify that the incorporated document contains an arbitration clause 3 in order to make the incorporation valid. Wolschlager v. Fidelity Nat’l Title Ins. Co., 111 4 Cal. App. 4th 784, 791 (2003). “All that is required is that the incorporation be clear and 5 unequivocal and that the plaintiff can easily locate the incorporated document.” Id. 6 In this case, the Contract specifically references the Rules and states that by 7 signing, signors agree to be bound by the terms of those Rules and confirm they 8 received a copy of them. Anderson Decl., ECF No. 10-1, ¶ 5, Ex. C. The Contract 9 explicitly incorporates the Rules by reference and makes clear that they are a separate 10 document that are being made part of the Contract itself. Id. Thus, the reference to the 11 Rules, which contained the arbitration clause, was “clear and unequivocal.” 12 Further, the arbitration clause contained within the Rules was at the very least 13 “easily available” to Plaintiff. According to Ms. Anderson, it is standard policy and 14 procedure for employees of Defendants to give the Rules to the customer when a safe 15 deposit box was rented, she always followed those procedures, and she thus followed 16 them with respect to the transactions with Plaintiffs. Regardless of whether Plaintiffs 17 actually received the Rules or whether they read them, Plaintiffs could easily have 18 requested a copy. That is sufficient here. See Botorff v. Amerco, 2012 WL 6628952, at 19 *4 (E.D. Cal. Dec. 19, 2012) (relying on testimony as to a defendant’s standard 20 procedures to support the conclusion that an arbitration agreement was readily 21 available). Indeed, both federal courts and California state courts have enforced 22 incorporated arbitration agreements in circumstances similar to the facts of this case. 23 See, e.g., Reilly v. WM Fin. Servs., Inc., 95 F. App’x 851, 852–53 (9th Cir. 2004) 24 (affirming district court’s ruling that arbitration agreement was enforceable even though 25 the plaintiffs never received or saw a copy of the incorporated arbitration agreement as 26 long as the arbitration agreement was easily available to the plaintiffs); Lucas v. Hertz 27 Corp., 2012 WL 2367617, at *3 (N.D. Cal. June 21, 2012) (stating that the fact that the 28 plaintiff “either was never given a copy of the folder jacket or was given it after he signed 1 the rental agreement . . . is immaterial because the terms of an incorporated document 2 must only have been easily available to him; they need not have actually been 3 provided”); Koffler Elec. Mech. Apparatus Repair, Inc. v. Wartsila N. Am., Inc., 2011 WL 4 1086035, at *4 (N.D. Cal. Mar. 24, 2011) (holding that, under California law, a document 5 containing an arbitration clause that was not provided to the plaintiff, but was available 6 upon request, was properly incorporated by reference into a purchase agreement); 7 Wolschlager, 111 Cal. App. 4th at 789–91 (explaining that the party’s lack of awareness 8 of the arbitration clause does not prevent the clause’s enforceability so long as the 9 document containing the arbitration clause was “easily available” to the party). 10 Therefore, the fact that Plaintiffs aver they were not provided with the Rules has 11 no bearing on the enforceability of the arbitration agreement contained therein so long 12 as the Rules were available to Plaintiff upon request. Botorff, 2012 WL 6628952, at *5. 13 Plaintiffs have not provided any evidence to demonstrate that the Rules were not 14 available to them prior to signing the Contract. The Court thus concludes that the 15 arbitration agreement contained in the Rules was validly incorporated by reference into 16 the Contract that Plaintiffs signed and thus is enforceable against Plaintiffs.7 17 B. Defendants did not waive their right to compel arbitration. 18 Plaintiffs next contend that Defendants waived their right to rely on the arbitration 19 provision when they “directed [Plaintiffs] to seek relief in Court if they wanted to pursue 20 the matter.” Compl., ECF No. 1, ¶ 40. “[T]he party asserting waiver must demonstrate: 21 (1) knowledge of an existing right to compel arbitration and (2) intentional acts 22 inconsistent with that existing right.” Armstrong v. Michaels Stores, Inc., 59 F.4th 1011, 23 1015 (9th Cir. 2023). There is no question here that Defendants knew they had an 24 existing right to compel arbitration. The issue before the Court is thus whether 25 Defendants committed the requisite intentional acts:
26 7 Plaintiffs’ arguments as to the font size or lack of clarity of the arbitration clause are not well taken. The Court again notes that Plaintiffs have forgone bringing an unconscionability argument, so no 27 such defense is before it. In any event, the Court concludes that the documents were clear and emphasized the material provisions by explicitly referencing the Rules and including the arbitration 28 provisions in bolded font. 1 Because there is no “concrete test,” for assessing whether [a defendant] took acts inconsistent with its right to arbitration, 2 “we consider the totality of the parties’ actions.” Hill [v. Xerox Bus. Servs.], 59 F.4th [457,] 471 [9th Cir. 2023)] (quoting 3 Newirth [ex rel. Newirth v. Aegis Senior Cmtys., LLC], 931 F.3d [935,] 941 [(9th Cir. 2019)]). We ask whether those actions 4 holistically “indicate a conscious decision . . . to seek judicial judgment on the merits of the arbitrable claims, which would 5 be inconsistent with a right to arbitrate.” Id. at 473 n.19 (quoting Martin v. Yasuda, 829 F.3d 1118, 1125 (9th Cir. 6 2016)). Under our precedent, a party generally “acts inconsistently with exercising the right to arbitrate when it 7 (1) makes an intentional decision not to move to compel arbitration and (2) actively litigates the merits of a case for a 8 prolonged period of time in order to take advantage of being in court.” Newirth, 931 F.3d at 941. 9 Id. 10 The intentional act Plaintiffs contend is sufficient to waive Defendants’ arbitral 11 rights is the letter one of Defendants’ employees sent to Plaintiffs after Defendants 12 conducted an internal investigation of Plaintiffs’ complaints. That letter included 13 language directing Plaintiffs to seek a subpoena should they wish to request a copy of 14 video surveillance of the drilling of their safe deposit box. According to Plaintiffs, this 15 invitation to seek a court-ordered subpoena is enough of an intentional act inconsistent 16 with Defendants’ right to invoke arbitration for this Court to find Defendants waived that 17 contractual right. The Court disagrees. 18 The Court cannot construe the statement of one employee to bind Defendants to 19 a finding that it made “an intentional decision not to move to compel arbitration.” Id. 20 Indeed, this statement advised Plaintiffs only as to how they could procure a copy of a 21 surveillance video, not how they might initiate legal proceedings on the merits of their 22 substantive claims. Moreover, Defendants “did not actively litigate the merits of the case 23 for a prolonged period to take advantage of being in court.” Id. To the contrary, other 24 than stipulations to extend Defendants’ time to respond to the Complaint, Defendants’ 25 current Motion was their first filing with this Court. Defendants also made clear at the 26 parties’ Rule 26 conference that they would be pursuing the instant Motion. ECF No. 14 27 at 2. The Court concludes that Defendants “never [waffled] about whether to arbitrate or 28 1 stay in district court.” Armstrong, 59 F.4th at 1016. Plaintiffs’ waiver argument is thus 2 unpersuasive. 3 C. The arbitration agreement is enforceable against all Defendants. 4 Finally, Plaintiffs contend that the arbitration agreement should not be enforced as 5 to USB because it is not a signatory to the Contract. Only USBNA is party to the 6 agreement. However, “[c]ourts applying California law have routinely found that when 7 charges against a parent company and its subsidiary are based on the same facts and 8 are inherently inseparable, a court may refer those claims against the parent to 9 arbitration . . . even if the parent is not formally a party to the arbitration agreement.” 10 Marselian v. Wells Fargo and Co., 514 F. Supp. 3d 1166, 1172 (N.D. Cal. 2021) (internal 11 quotation marks and brackets omitted). “As the Fifth Circuit aptly explained, ‘[i]f the 12 parent corporation was forced to try the case, the arbitration proceedings would be 13 rendered meaningless and the federal policy in favor of arbitration effectively thwarted.’” 14 Id. (quoting Sam Reisfeld & Son Import Co. v. S.A. Eteco, 530 F.2d 679, 681 (5th Cir. 15 1976)). Accordingly, claims against both Defendants in this case are subject to 16 arbitration. 17 Plaintiffs’ authorities are not to the contrary. According to Plaintiffs, “a 18 nonsignatory may compel arbitration only when the claims against the nonsignatory are 19 founded in and inextricably bound up with the obligations imposed by the agreement 20 containing the arbitration clause.” Pls.’ Opp’n at 18 (quoting Goldman v. KPMG, LLP, 21 173 Cal. App. 4th 209, 219 (2009)). The problem with this argument is twofold. First, 22 none of the cases Plaintiffs cite involve a parent/subsidiary relationship between the 23 signatory and non-signatory to an arbitration agreement. Absent an agency relationship, 24 it makes sense that a non-signatory must show how the underlying contract containing 25 the arbitration clause is implicated in the first place. Second, all of Plaintiffs’ claims in 26 fact arise from the existence of an agreement to lease a safe deposit box. Accordingly, 27 all of the claims against both Defendants are “founded in and inextricably bound up with 28 the obligations imposed by the agreement containing the arbitration clause” and thus are 1 | arbitrable. 2 3 CONCLUSION 4 5 For the reasons set forth above, Defendants’ Motion to Compel Arbitration and 6 | Dismiss, or Alternatively, Stay Proceedings (ECF No. 10) is GRANTED. This case is 7 | hereby DISMISSED, and the Clerk of the Court is directed to close this case. The parties 8 | will advise the Court of the status of setting arbitration within thirty (30) days that this 9 | electronic order is filed. 10 IT IS SO ORDERED. 11 12 | Dated: August 16, 2023 ° Mater LEK Whig { AX Xo - SENIOR UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16