EBAY, INC vs. AMAZON.COM, INC

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

EBAY, INC.,

Plaintiff,

vs.

AMAZON.COM, INC., and DOES 1-25,

Defendants.

Case No. 2018-1-CV-336315

TENTATIVE RULING RE: MOTION TO COMPEL ARBITRATION

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on April 19, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
According to the allegations of the Complaint, filed on October 17, 2018, plaintiff eBay, Inc. (“eBay” or “Plaintiff”) operates one of the world’s largest online marketplaces. (Complaint, ¶ 16.) Defendant Amazon.com (“Defendant” or “Amazon”) is a tech giant that sells virtually anything imaginable. (Id. at ¶ 18.) In contrast to eBay, Amazon sells products directly on its marketplace, often competing directly against its third-party sellers. (Ibid.)

eBay alleges that over the past several years Amazon has perpetrated a scheme to infiltrate and exploit eBay’s internal member email system. (Complaint, ¶ 1.) Amazon did this to recruit high-value eBay sellers to Amazon. (Ibid.) Amazon’s scheme violated eBay’s User Agreement and policies, and induced eBay sellers to do the same because the rules prohibit eBay members from using eBay’s “M2M” email system to solicit people to sell off the platform. (Id. at ¶ 2.)

The Complaint sets forth the following causes of action: (1) Intentional Interference with Contractual Relations; (2) Intentional Interference with Prospective Economic Relations; (3) Fraud; (4) Violation of California Penal Code, § 502(c); and (5) Violation of California Business and Professions Code, § 17200. Defendant now moves to compel arbitration.

III. DEFENDANT’S REQUEST FOR JUDICIAL NOTICE
IV.
Defendant requests judicial notice of 12 versions of eBay’s User Agreement, with effective dates from August 12, 2014, through September 21, 2018. The request for judicial notice is unopposed.

The Court can take judicial notice of the different versions of the User Agreement pursuant to Evidence Code §452, subd. (h) because the User Agreement is referenced and relied on throughout the Complaint. (See Ingram v. Flippo (1999) 74 Cal.App.4th 1280, 1285, fn. 3 [taking judicial notice of documents referred to in the complaint under Evidence Code section 452, subd. (h)].) The request for judicial notice is GRANTED.

V. DISCUSSION
VI.
“A party who claims that there is a written agreement to arbitrate may petition the superior court for an order to compel arbitration.” (Banner Entertainment, Inc. v. Superior Court (Alchemy Filmworks, Inc.) (1998) 62 Cal.App.4th 348, 356 (“Banner”); see also Code Civ. Proc., § 1281.2) “[T]he petitioner bears the burden of establishing the existence of a valid agreement to arbitrate, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Banner, supra, 62 Cal.App.4th at p. 356.)

Defendant asserts Plaintiff’s User Agreement contains an arbitration clause. Defendant argues that, although Defendant is not a signatory to the User Agreement, it can invoke the arbitration clause on two bases: (1) under a theory of equitable estoppel; and (2) under the agency exception. As will be discussed, the first argument is dispositive.

As explained in one case:

Generally speaking, one must be a party to an arbitration agreement to be bound by it or invoke it. There are exceptions to the general rule that a nonsignatory to an agreement cannot be compelled to arbitrate and cannot invoke an agreement to arbitrate, without being a party to the arbitration agreement.

One pertinent exception is based on the doctrine of equitable estoppel. Under that doctrine, as applied in both federal and California decisional authority, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations. By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.

(Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 706, internal citations and quotation marks omitted.)

Stated another way:

[I]f a plaintiff relies on the terms of an agreement to assert his or her claims against a nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause of that very agreement. In other words, a signatory to an agreement with an arbitration clause cannot have it both ways; the signatory cannot, on the one hand, seek to hold the non-signatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny arbitration’s applicability because the defendant is a non signatory.

(Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 220, quotation marks omitted.)

Defendant argues each of Plaintiff’s causes of action relies on the User Agreement. In opposition, Plaintiff does not dispute the existence of the arbitration clause, but asserts its claims against Defendant are not intertwined with the User Agreement and it is not enough for an arbitration agreement to “exist” in documents referenced in a complaint. Plaintiff also argues its claims fall outside the scope of the arbitration clause, which expressly applies only to disputes between eBay and its users.

Plaintiff’s argument that its claims are not encompassed by the arbitration clause is without merit. Defendant is seeking to enforce the arbitration clause as a nonsignatory to the User Agreement, not as a party to the User Agreement or a third-party beneficiary. It is logical that Defendant would not be included in the User Agreement under these circumstances. The cases relied on by Plaintiff for this argument are inapposite because the discussions in those cases regarding which parties had agreed to arbitrate were separate from the issue of whether equitable estoppel applied. (See, e.g., Mundi v. Union Sec. Life Ins. Co. (9th Cir. 2009) 555 F.3d 1042, 1045 [“We turn therefore to USLIC’s argument that arbitration should be compelled on the basis of equitable estoppel.”]; see also Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1122, 1128 [“Toyota also argues that it may compel arbitration even though it is a nonsignatory to the Purchase Agreements because Plaintiffs are equitably estopped from avoiding arbitration.”].)

Plaintiff argues equitable estoppel does not apply because its claims against Defendant are not intimately founded in and intertwined with the User Agreement. Plaintiff states the first cause of action is the only claim that requires the existence of a contract, but the contracts at issue in that claim are User Agreements of eBay sellers Amazon was targeting, not User Agreements of its own representatives. Plaintiff contends the other causes of action do not require the presence of a contract at all. Plaintiff reiterates that simply referencing an agreement in a complaint is insufficient to show reliance on the agreement.

Defendant shows in its papers how each of Plaintiff’s claims relies on and is intertwined with the User Agreement. Plaintiff alleges at the beginning of the Complaint that Amazon’s scheme “violated eBay’s User Agreement and policies. . . .” (Complaint, ¶ 2.) Plaintiff’s policies are incorporated into the User Agreement. (Id. at ¶ 21.)

Plaintiff alleges in the first cause of action that “Amazon had its reps prevent performance by eBay’s member-sellers under their User Agreements with eBay; make eBay’s member-sellers’ performance under such agreements more difficult; and/or cause eBay member sellers to breach such contracts.” (Complaint, ¶ 44.) In the second cause of action, Plaintiff alleges “Amazon reps engaged in wrongful conduct by, among other things, fraudulently entering into User Agreements with eBay without any intent of abiding by promises in those Agreements []; [and] breaching their own User Agreements with eBay. . . .” (Id. at ¶ 52.) In the third cause of action, Plaintiff alleges that “[a]s a condition to becoming eBay members and thereby gaining access to the M2M system, Amazon reps promised to abide by the terms of eBay’s User Agreement, despite never intending to do so.” (Id. at ¶ 59.) In the fourth cause of action, Plaintiff alleges that “eBay allows interested buyers and sellers to communicate using eBay’s M2M system, on the condition that those buyers and sellers become eBay members and agree to eBay’s User Agreement.” (Id at ¶ 68.) In the fifth cause of action, Plaintiff alleges “Amazon and its reps engaged in fraudulent business acts and practices by, among other things, fraudulently gaining use of eBay’s M2M system by agreeing to eBay’s User Agreement without intending to comply with its terms; thereafter using eBay’s M2M system to send communications designed to solicit eBay member-sellers to move to Amazon, in violation of the User Agreement; inducing eBay member-sellers to breach their User Agreements with eBay; and using deceptive techniques to evade detection of the scheme by eBay.” (Id. at ¶ 76.)

Each of the five causes of action is “intimately founded in and intertwined” with the User Agreement. Each cause of action relies on a violation of the User Agreement and it does not appear Plaintiff would have any claims absent its reliance on the User Agreement. Therefore, equitable estoppel applies and Defendant can enforce the arbitration clause as a nonsignatory.

Having found the arbitration clause to be enforceable, the Court now turns to its terms. The arbitration cause is broad, requiring binding arbitration for “any and all disputes or claims . . . that relate in any way to or arise out of this or previous versions of the User Agreement, your use of or access to the Services, the actions of eBay or its agents, or any products or services sold, offered, or purchased through the Services. . . .” Based on the broad scope of the arbitration clause, the Court finds it covers each of the claims in this action.

Accordingly, Defendant’s motion to compel arbitration is GRANTED.

The Court will prepare the final order if this tentative ruling is not contested.

Print Friendly, PDF & Email
Copy the code below to your web site.
x 

Leave a Reply

Your email address will not be published. Required fields are marked *