Kevin B. Williams v. American Arbitration Association, Inc., et al.

• Court: District Court, N.D. California
• Decided: November 25, 2025
• Docket: 4:25-cv-05319
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 KEVIN B. WILLIAMS, Case No. 25-cv-05319-JST

8 Plaintiff, ORDER DISMISSING FIRST 9 v. AMENDED COMPLAINT

10 AMERICAN ARBITRATION Re: ECF No. 8 ASSOCIATION, INC., et al., 11 Defendants.

12 13 Before the Court is Plaintiff Kevin B. Williams’s first amended complaint (“FAC”). ECF 14 No. 8. Pursuant to the review required under 28 U.S.C. § 1915(e)(2), the Court will dismiss the 15 complaint with leave to amend. 16 I. STANDARD OF REVIEW 17 Section 1915(e)(2) requires the Court to screen in forma pauperis proceedings to 18 determine if the action is frivolous or malicious, fails to state a claim on which relief may be 19 granted, or seeks monetary relief against a defendant who is immune from such relief. 28 U.S.C. 20 § 1915(e)(2). “The standard for determining whether a plaintiff has failed to state a claim upon 21 which relief can be granted under [Section] 1915(e)(2)(B)(ii) is the same as the Federal Rule of 22 Civil Procedure 12(b)(6) standard for failure to state a claim.” Watison v. Carter, 668 F.3d 1108, 23 1112 (9th Cir. 2012) (citing Lopez v. Smith, 203 F.3d 1122, 1127–31 (9th Cir. 2000)). If the Court 24 determines that the action “fails to state a claim on which relief may be granted,” it must dismiss 25 the case. 28 U.S.C. § 1915(e)(2)(B)(ii); see also Barren v. Harrington, 152 F.3d 1193, 1194 (9th 26 Cir. 1998). 27 Fed. R. Civ. P. 8(a)(2) requires only “a short and plain statement of the claim showing that 1 statement need only give the defendant fair notice of what the . . . claim is and the grounds upon 2 which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal quotations and citation 3 omitted). While Rule 8 does not require detailed factual allegations, it “demands more than an 4 unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 5 678 (2009). A pleading that offers only labels and conclusions, or a formulaic recitation of the 6 elements of a cause of action, or naked assertions devoid of further factual enhancement does not 7 suffice. Id. 8 II. DISCUSSION 9 For the purpose of screening under 28 U.S.C. § 1915(e)(2), the Court “accept[s] all factual 10 allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the 11 nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Williams filed this 12 action against Defendants American Arbitration Association, Inc. (“AAA”) and Autodeals 13 Hayward, Inc., over arbitration fees he paid to AAA in connection with a consumer dispute 14 between Autodeals Hayward and Williams’s son. ECF No. 1 ¶ 2; ECF No. 8 at 1-3. He argues 15 that Autodeals Hayward violated a consumer arbitration agreement by refusing to pay his son’s 16 arbitration fees. ECF No. 8 ¶ 6. He also alleges that AAA wrongfully disqualified him as his 17 son’s legal representative in those arbitration proceedings. Id. ¶¶ 16, 28–29. Williams brings 18 claims for: (1) breach of the arbitration agreement; (2) violation of the Federal Arbitration Act 19 (“FAA”); (3) conversion; (4) declaratory relief; and (5) violation of the Unruh Civil Rights Act, 20 Cal. Civ. Code § 51 et seq. For the reasons explained herein, the Court finds that Williams fails to 21 state a claim for relief with respect to each of his claims. 22 A. Breach of the Arbitration Agreement 23 The elements of a cause of action for breach of contract under California law are: “(1) the 24 existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) 25 defendant’s breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty, LLC v. 26 Goldman, 51 Cal. 4th 811, 821 (2011). “To properly plead breach of contract, ‘[t]he complaint 27 must identify the specific provisions of the contract allegedly breached by the defendant.’” 1 588 (9th Cir. 2017) (quoting Donohue v. Apple, Inc., 871 F. Supp. 2d 913, 930 (N.D. Cal. 2012)). 2 Williams asserts that Autodeals Hayward breached an arbitration agreement “by refusing to pay 3 required fees, forcing Plaintiff to advance $3,200.” ECF No. 8 ¶ 12. He quotes the arbitration 4 agreement, which provides that Autodeals Hayward would “pay your filing, administration, 5 service or case management fee and your arbitrator or hearing fee, all up to a maximum of 6 $5,000.” Id. ¶ 5. The FAC therefore identifies the arbitration agreement as the relevant contract 7 and alleges that Autodeals Hayward breached that contract by failing to cover the costs of 8 arbitration. See ECF No. 8 ¶¶ 5–6, 12–13. 9 While the FAC does not explain the context within which the contract was formed or 10 identify the other party to Autodeals Hayward’s arbitration agreement, pro se pleadings are 11 construed liberally. See Hebbe v. Pliler, 627 F.3d 338, 342 n.7 (9th Cir. 2010). Williams’s first 12 complaint explained that Williams’s son purchased a car from Autodeals Hayward and 13 subsequently entered arbitration concerning alleged misrepresentations and defects in the vehicle. 14 ECF No. 1 ¶¶ 11–12. “Exercis[ing] its discretion to tolerate informalities by the pro se litigant,” 15 the Court reads the two complaints together and reasonably infers that Williams’s son entered into 16 the arbitration agreement with Autodeals Hayward when he purchased the car. Bullock v. 17 Sweeney, 644 F. Supp. 507, 508 (N.D. Cal. 1986), aff’d, 823 F.2d 554 (9th Cir. 1987). Given this 18 information, Williams has alleged the second and fourth elements of a contract breach: Williams’s 19 son performed his side of the contract when he paid for the car, and he was allegedly injured when 20 Autodeals Hayward refused to pay his arbitration fees. 21 Williams was not a party to the alleged contract was between Williams’s son and 22 Autodeals Hayward, however. He therefore may only bring a claim for breach of contract if he is 23 an intended third-party beneficiary. See GECCMC 2005-C1 Plummer St. Off. Ltd. P’ship v. 24 JPMorgan Chase Bank, Nat. Ass’n, 671 F.3d 1027, 1033 (9th Cir. 2012). “To prove intended 25 beneficiary status, ‘the third party must show that the contract reflects the express or implied 26 intention of the parties to the contract to benefit the third party.’” Id. (quoting Klamath Water 27 Users Prot. Assoc. v. Patterson, 204 F.3d 1206, 1211 (9th Cir.1999)). “The contract need not 1 benefit from the contract.’” GECCMC, 671 F.3d at 1033 (quoting Klamath, 204 F.3d at 1211). 2 Courts examine the “precise language of the contract for a ‘clear intent’ to rebut the presumption 3 that the [third parties] are merely incidental beneficiaries.” GECCMC, 671 F.3d at 1033–34 4 (quoting Orff v. United States, 358 F.3d 1137, 1147 n.5 (9th Cir. 2004)). “[P]ermitting the third 5 party to bring its own breach of contract action against a contracting party” must also be 6 “consistent with the objectives of the contract and the reasonable expectations of the contracting 7 parties.” Goonewardene v. ADP, LLC, 6 Cal. 5th 817, 821 (2019). 8 Williams does allege that he is a third-party beneficiary of the contract, but his claim is 9 conclusory. See ECF No. 8 ¶ 13. The quoted portion of the arbitration agreement concerning the 10 payment of arbitration fees does not show an intent to benefit a third party. See ECF No. 8 ¶ 5. It 11 emphasizes that Autodeals “will pay your” fees, apparently referring to the other party to the 12 contract, i.e., Williams’s son. Id. The complaint fails to plead that Williams is a third-party 13 beneficiary of the contract and the claim therefore fails. 14 Williams also suggests that he is entitled to enforce his son’s contractual rights under the 15 doctrine of equitable subrogation, but that doctrine does not apply where, as here, Williams 16 voluntarily paid a fee on behalf of someone else. See In re Bevan, 327 F.3d 994, 997 (9th Cir. 17 2003) (noting that “[e]quitable subrogation is generally appropriate where (1) the subrogee made 18 the payment to protect his or her own interest, [and] (2) the subrogee did not act as a volunteer,” 19 among other requirements (quoting Mort v. United States, 86 F.3d 890, 894 (9th Cir.1996))). 20 Williams’s claim for breach of the arbitration agreement is dismissed. 21 B. Violation of the Federal Arbitration Act 22 Williams alleges that “the AAA’s exclusion of Plaintiff as an authorized representative 23 contravened the FAA’s policies ensuring arbitration’s fundamental attributes of informality and 24 access.” ECF No. 8 ¶ 16 (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 348 (2011)). 25 He therefore argues that the state rules concerning the unauthorized practice of law (“UPL”), upon 26 which AAA relied in disqualifying him, are preempted by the FAA. Id. ¶ 17. He alleges that the 27 AAA’s rules expressly permit a consumer to be represented by an “authorized representative” in 1 The FAA preempts state rules that “stand[] as an obstacle to the accomplishment and 2 execution of the full purposes and objective of Congress.” Concepcion, 563 U.S. at 352 (quoting 3 Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). And “[t]he overarching purpose of the FAA . . . is 4 to ensure the enforcement of arbitration agreements according to their terms . . . .” Id. at 344. The 5 parties may therefore incorporate restrictions into the arbitration agreement that would be 6 preempted if imposed by the state. See Cronus Invs., Inc. v. Concierge Servs., 35 Cal. 4th 376, 7 385 (2005) (“To ensure that arbitration agreements are enforced according to their terms, the FAA 8 preempts all state laws that apply of their own force to limit those agreements against the parties' 9 will or to withdraw the power to enforce them.” (emphasis in original)). Although Williams 10 alleges that the AAA Rules allow parties in arbitration to be represented by an authorized non- 11 lawyer, he does not allege that the parties agreed to be governed by the AAA Rules. See ECF No. 12 8 ¶¶ 9–10. Without alleging that the imposition of state UPL rules contradicted the contract’s 13 terms, Williams cannot state a claim for FAA preemption. 14 Williams’s argument that the arbitrator’s application of state UPL rules was preempted by 15 the FAA is also not tethered to a cognizable claim for relief. He does not allege that the arbitration 16 award was affected by his disqualification or should be vacated. And while he requests 17 reimbursement of the arbitration fees he paid and other associated costs, he does not allege that 18 those costs were caused by the allegedly erroneous application of state UPL laws. See ECF No. 8 19 at 6–7. Rather, he alleges incurring costs for “arbitration filing and case management fees” and 20 “preparation, service of process, communications, and transportations,” which he or his son 21 presumably would have incurred whether he had been disqualified as his son’s representative or 22 not. Id. And even if Williams did incur damages because he was disqualified, he does not 23 identify any authority providing him with a cause of action against an arbitrator for damages 24 because the arbitrator wrongfully applied a preempted state rule. Finally, although Williams seeks 25 declaratory or injunctive relief, any such claims are moot because he does not allege that he 26 intends to return to arbitration. 27 Williams’s claim alleging preemption by the FAA is dismissed. 1 C. Conversion 2 “The elements of a claim for conversion under California law are: (1) the plaintiff’s 3 ownership or right to possession of property; (2) the defendant’s conversion by a wrongful act or 4 disposition of property rights; and (3) damages.” Cottrell v. AT&T, Inc., No. 19-cv-07672-JCS, 5 2020 WL 4818606, at *5 (N.D. Cal. Aug. 19, 2020) (quoting Welco Elecs., Inc. v. Mora, 223 Cal. 6 App. 4th 202, 208 (2014)). 7 Williams alleges that “AAA wrongfully retained $3,200 despite acknowledging that 8 Autodeals was responsible for costs.” ECF No. 8 ¶ 19. But first, Autodeals Hayward’s agreement 9 to cover Williams’s son’s arbitration costs does not create an obligation for AAA to refund those 10 costs to Williams. And second, as the Court explained previously, this claim barred by the 11 economic loss rule, which “requires a purchaser to recover in contract for purely economic loss 12 due to disappointed expectations, unless he can demonstrate harm above and beyond a contractual 13 promise.” Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979, 988 (2004). Williams seeks 14 reimbursement of arbitration costs, which Autodeals Hayward agreed to cover in the arbitration 15 agreement. He does not allege harm “above and beyond a contractual promise.” Id. 16 The Court dismisses Williams’s conversion claim. 17 D. Violation of the Unruh Civil Rights Act 18 Williams alleges that the AAA violated the Unruh Civil Rights Act, Cal. Civ. Code § 51 et 19 seq., in disqualifying him from representing his son and daughter-in-law because he was not a 20 licensed attorney. He claims that “[t]his classification between attorneys and non-attorneys, where 21 AAA’s own rules allow both, constitutes arbitrary discrimination within the meaning of Unruh.” 22 ECF No. 8 ¶ 25. 23 The Unruh Civil Rights Act provides that all individuals within California are “entitled to 24 the full and equal accommodations, advantages, facilities, privileges, or services in all business 25 establishments of every kind whatsoever,” regardless of characteristics including “sex, race, color, 26 religion, ancestry, national origin, disability, medical condition, genetic information, marital 27 status, sexual orientation, citizenship, primary language, or immigration status.” Cal Civ. Code 1 personal characteristic similar to those listed in the statute,” including “‘geographical origin, 2 physical attributes, and personal beliefs,’” and not merely based on “‘economic characteristics.’” 3 Semler v. Gen. Elec. Cap. Corp., 196 Cal. App. 4th 1380, 1392 (2011) (quoting Harris v. Cap. 4 Growth Invs. XIV, 52 Cal. 3d 1142, 1160 (1991), superseded on other grounds by Cal. Civ. Code 5 § 51(f)). The personal characteristics protected by the Act are “traits, conditions, decisions, or 6 choices fundamental to a person’s identity, beliefs, and self-definition.” 7 , 36 Cal.4th 824, 842–843 (2005). Courts have therefore concluded that 8 discrimination based on occupation or profession, “as long as it is not a stratagem designed to 9 disguise discrimination based on personal characteristics protected under the Unruh Civil Rights 10 Act,” is not prohibited by the Act. Roth v. Rhodes, 25 Cal. App. 4th 530, 539 (1994); see id. 11 (“The election to practice a particular profession represents a professional and, frequently, an 12 economic choice, rather than a personal characteristic of the type enumerated in the [A]ct.”); but 13 see White v. Square, Inc., 7 Cal.5th 1019, 1032 (2019) (declining to “express any view on whether 14 a defendant violates the [Unruh] Act by discriminating on the basis of occupation”). 15 While it may be possible for occupation or profession to qualify as a personal characteristic 16 under the Act in some circumstances, Williams has failed to plead any facts establishing that his 17 non-lawyer status is such a personal characteristic. He has failed to state a claim under the Unruh 18 Civil Rights Act and the Court dismisses this claim. 19 E. Declaratory Relief 20 Finally, Williams seeks declaratory relief concerning his claims that his disqualification as 21 his son’s representative violated the Unruh Civil Rights Act and was preempted by the FAA. See 22 ECF No. 8 ¶¶ 20, 26; see also ECF No. 1 ¶ 26. But declaratory relief is a remedy, not a cause of 23 action. See Lane v. Vitek Real Estate Indus. Grp., 713 F. Supp. 2d 1092, 1104 (E.D. Cal. 2010). 24 When the underlying claims are dismissed, the declaratory relief cause of action must be 25 dismissed as well. Shaterian v. Wells Fargo Bank, N.A., 829 F. Supp. 2d 873, 888 (N.D. Cal. 26 2011). Accordingly, the Court dismisses the claim for declaratory relief. 27 CONCLUSION 1 to amend solely to cure the deficiencies identified in this order. Any amended complaint shall be 2 || filed within 28 days of entry of this order. ! 3 IT IS SO ORDERED. 4 Dated: November 25, 2025 . ° JON S. TIGA 6 nited States District Judge 7 8 9 10 11 a 12

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Z 18 19 20 21 22 23 24 25 26 ' On November 21, 2025, Defendant Autodeals Hayward filed an answer to the first amended complaint. ECF No. 13. The same day, Defendant American Arbitration Association moved to 97 || dismiss. ECF No. 15. “Because the Court is mandated to screen Plaintiff's complaint at this juncture, and because the Court dismisses that complaint, there is no operative complaint in this 28 action” and the Court strikes the answer and the motion to dismiss. Adams v. Ally Auto, No. 2:22- CV-02173-RFB(DJA), 2024 WL 325277, at *1 (D. Nev. Jan. 26, 2024).