United States District Court, D. Arizona
Ebone Leroy East, No. CV-19-00168-PHX-GMS Plaintiff,
CD Baby Incorporated, et al., Defendants.
Murray Snow Chief United States District Judge
before the Court is Plaintiff Ebone Leroy East's Motion
for Preliminary Injunction (Doc. 13) and Motion for Default
Judgment (Doc. 19), as well as Defendant's Motion to
Dismiss for lack of jurisdiction (Doc. 14). Because a valid
arbitration agreement exists between Plaintiff and
Defendants, the Court will dismiss the lawsuit.
2012, Plaintiff Ebone East entered into an agreement with CD
Baby, Inc. to distribute and sell his album, King of
Terror. (Doc. 14, Ex. 1 ¶ 3). Mr. East previously
entered into a similar agreement with CD Baby to distribute
his 2006 album, Block Runnas The Mix Tape.
(Id. ¶ 4).
commenced this action earlier this year by filing a complaint
against CD Baby and various other corporate entities. (Doc.
1). In his complaint, he alleges that CD Baby fraudulently
and negligently misrepresented the terms of their agreement,
and that he is entitled to a large percentage of the total
sales of his music through CD Baby. He seeks 100 million
dollars in damages. But because Mr. East signed a valid
arbitration agreement with CD Baby that encompasses this
dispute at issue here, the Court must dismiss this lawsuit.
Federal Arbitration Act (“FAA”) broadly provides
that written agreements to arbitrate disputes arising out of
transactions involving interstate commerce “shall be
valid, irrevocable, and enforceable” except upon
grounds that exist at common law for the revocation of a
contract. 9 U.S.C. § 2. Absent a valid contract defense,
the FAA “leaves no place for the exercise of discretion
by a district court, but instead mandates that district
courts shall direct the parties to proceed to arbitration on
issues as to which an arbitration agreement has been
signed.” Chiron Corp. v. Ortho Diagnostic Sys.,
Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The district
court's role under the FAA is “limited to
determining (1) whether a valid agreement to arbitrate exists
and, if it does, (2) whether the agreement encompasses the
dispute at issue.” Id.
Agreement between Mr. East and CD Baby encompasses the
dispute at issue in this case. The Agreement provides that
“You and CD Baby . . . agree to arbitration . . . as
the exclusive form of dispute resolution . . . for all
disputes and claims arising out of or relating to this
agreement or your use of the services.” (Doc. 14, Ex.
A, ¶ 19). The Agreement also provides that “[a]ll
claims that you bring against CD Baby must be resolved in
accordance with this Dispute Resolution section.”
the FAA's savings clause, “state law that arose to
govern issues concerning the validity, revocability, and
enforceability of contracts generally remains applicable to
arbitration agreements.” Kilgore v. KeyBank Nat.
Ass'n, 718 F.3d 1052, 1058 (9th Cir. 2013).
“Thus, generally applicable contract defenses, such as
fraud, duress, or unconscionability, may be applied to
invalidate arbitration agreements without contravening §
2.” Id. California substantive law applies
according to the terms of the Agreement. (Doc. 14-1 at 14).
argues that enforcing the agreement to arbitrate against him
would be unconscionable, because it was an adhesion contract
and Plaintiff had no reasonable opportunity to
negotiate. Under California law, “a contract or
clause is unenforceable if it is both procedurally and
substantively unconscionable.” Ting v.
AT&T, 319 F.3d 1126 1147 (9th Cir. 2003). “To
establish procedural unconscionability, Plaintiff must
demonstrate that he was surprised by some aspect of the
agreement, or that his consent to its terms was obtained
under coercion or duress.” Lang v. Skytap,
Inc., 347 F.Supp.3d 420, 427 (N.D. Cal 2018). And to
establish substantive unconscionability, Plaintiff must
demonstrate that the contract term is “unduly harsh,
oppressive, or one-sided.” Sanchez v. Carmax Auto
Superstores Ca., LLC, 224 Cal.App.4th 398, 403 (2014).
That an agreement was offered on a take-it-or-leave-it basis
does not alone establish procedural unconscionability.
Lang, 347 F.Supp.3d at 428. Rather, “[o]nly
when [the agreement's] provisions are unfair does it
become unenforceable.” Dotson v. Amgen Inc.,
181 Cal.App.4th 975, (2010). Because Plaintiff does not claim
that he was surprised by the agreement, or that he was
“lied to, placed under duress, or otherwise manipulated
into signing the arbitration agreement, ” there is
minimal procedural unconscionability. Baltazar v. Forever
21, Inc., 62 Cal.4th 1237, 1245, (2016) (finding minimal
procedural unconscionability where contract of adhesion but
no surprise, coercion or duress). And because Plaintiff does
not challenge any specific aspect of the arbitration
agreement as unfair, unduly harsh, or surprising, he has
failed to establish unconscionability. See Sanchez,
224 Cal.App.4th at 402-03.
Agreement at issue in this case requires that this dispute
between Plaintiff and Defendants be resolved by an
arbitration panel. The Court must therefore dismiss the
IS THEREFORE ORDERED that Defendants' Motion to
Dismiss for lack of ...