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Ciprianni v. Omni La Costa Resort & Spa

United States District Court, S.D. California

April 6, 2017

MICHAEL CIPRIANNI, et al., Plaintiffs,
v.
OMNI LA COSTA RESORT & SPA, et al., Defendant.

          ORDER GRANTING DEFENDANTS' MOTION [DOC. 32] TO COMPEL ARBITRATION

          HON. M. JAMES LORENZ UNITED STATES DISTRICT JUDGE

         Pending before this Court is Defendants Omni La Costa Resort & Spa, LLC., Omni Hotels Management Corporation, and LC Investment 2010, LLC's (“Defendants”) motion to compel Plaintiffs Michael and Vanessa Cirprianni (“Plaintiffs”) to submit their claims to arbitration. The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d.1). For the reasons stated below, the Court GRANTS Defendants' motion.

         I. Background

         This case arises out of an injury sustained in July 2015 by Plaintiff Michael Ciprianni while using a fitness machine at a fitness facility (the “Resort”) owned and operated by Defendants. Plaintiffs joined the Resort in 2009. At that time, Plaintiffs executed an Agreement [Doc. 32-3] that set forth the terms and conditions of membership. Of relevance to the present motion, the Agreement mentioned an arbitration provision, bound Plaintiff to all written membership policies, and contained a change of terms provision reserving to Defendants the right to amend membership policies from time to time. (See Agreement.) In 2011, Defendants modified membership policy by enacting the 2011 Bylaws [Doc. 32-4], which contained an Arbitration Agreement. Defendants sent all Resort members a copy of the 2011 Bylaws and posted them on the member pages of the Resort's website. (Miringoff Decl. [Doc. 32-2] ¶ 5.)

         Plaintiffs filed a complaint with the Superior Court of California on March 21, 2016, alleging negligence and premises liability. (See Compl. [Doc. 1-2 Ex. A].) Defendants subsequently removed to this Court and answered. (See Removal Notice [Doc. 1]; Answer [Doc. 7].) Defendants now move to compel arbitration. (See Mot. [Doc. 32].) Plaintiffs oppose, arguing (1) the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”) does not govern this dispute; (2) compelling arbitration would be unduly prejudicial; (3) Defendant waived any alleged right to compel arbitration; and (4) the 2011 Arbitration Clause is not valid. (See Opp'n [Doc. 33].) The Court will address these arguments in turn.

         II. Applicability of the Federal Arbitration Act

         Outside of the maritime context, the FAA governs only if the contract concerns interstate commerce. 9 U.S.C. § 1. Plaintiffs argue that this case does not concern interstate commerce because it involves only a “consumer contract for membership services provide[d] by a resort and spa located in California entered into by Plaintiffs in California and all services were provided in California.” (Opp'n 6:27-7:2.)

         In enacting the FAA, Congress intended to reach the full range of transactions covered by the Commerce Clause. Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003). Thus, even if a specific economic activity alone would not affect interstate commerce in a substantial way, it suffices to trigger the interstate commerce jurisdictional hook of the FAA if the aggregate practice of which that economic activity is a part affects interstate commerce. Id. at 56-57. Furthermore, if some activity of one of the parties, even if not directly the subject of the contract or transaction at issue, has a nexus to interstate commerce, the FAA applies. See Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 282 (holding the FAA applied to a local service contract between a homeowner and termite control company because the termite control company was multi-state in nature and used out of state material in performing on the contract).

         Applying this broad standard, the Court finds that the contract between the parties involves interstate commerce. Defendants are unquestionably multi-state in nature as they are citizens of Delaware and Texas that offer services nationwide to customers of diverse citizenship. Furthermore, it would seem beyond dispute that Defendants utilize some out of state materials and/or services in the operation of the Resort. Accordingly, the Court finds that the facts of this case trigger the FAA and therefore preempt any conflicting state law. 9 U.S.C. §2; Volt Information Scis., Inc. v. Board of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989).

         III. Undue Prejudice

         It is undisputed that Defendants Juan Manuel Anaya and San Diego Fitness Services, neither of whom are signatories to the Agreement, are not bound by the Arbitration Agreement. Thus, granting Defendants' motion could require Plaintiffs to litigate their claims against the Omni Defendants in arbitration while litigating their claims against Defendants Juan Manuel Anaya and San Diego Fitness Services before this Court. Plaintiffs contend this would cause them undue prejudice and, for this reason, asks the Court to deny Defendants' motion.

         This argument is problematic in that Plaintiffs do not cite to any authority that supports it. Furthermore, it is clearly established law that under the FAA “an arbitration agreement must be enforced notwithstanding the presence of other persons who are parties to the underlying dispute but not to the arbitration agreement.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983). Accordingly, the Court finds that the presence of defendants Juan Manuel Anaya and San Diego Fitness Services cannot defeat this motion to compel arbitration as to the Omni Defendants.

         IV. Waiver

         Plaintiffs contend Defendants waived their right to arbitrate by not bringing the instant motion sooner. In support of their argument, Plaintiffs rely entirely on California law. Having decided the FAA governs here, the Court will apply federal law. In the Ninth Circuit, “[t]he party arguing waiver of arbitration bears a heavy burden of proof.” Britton v. Co-op Banking Group, 916 F.2d 1405, 1412 (9th Cir. 1990) (internal citations omitted). To carry this burden, the opposing party must show that the ...


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