PAZOUKI, et al. vs TESLA, INC., A TEXAS CORPORATION

26CV178254: PAZOUKI,, et al. vs TESLA, INC., A TEXAS CORPORATION 09/03/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation (Defendant) CRS# 076909773173 in Department 518

Tentative Ruling - 09/01/2026 Mark Fickes

The Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation on 05/27/2026 is Granted.

Proposed Ruling

Defendant Tesla, Inc.'s motion to compel binding arbitration is GRANTED, and the action is STAYED pending completion of arbitration, for the reasons set forth below.

Background

On November 7, 2021, Plaintiffs Fatameh Pazouki, an individual, and Fatameh Pazouki M.D., A Professional Medical Corporation (collectively, "Plaintiffs") ordered a 2021 Tesla Model X, VIN 5YJXCBE52MF326007 (the "Vehicle"), through the website of Defendant Tesla, Inc. ("Tesla"). (Declaration of Raymond Kim in support of the motion (May 27, 2026) ("Kim Decl.") ¶¶ 3–4, Ex. 1.) To place the order, a customer clicks a button labeled "Place Order." (Kim Decl. ¶ 4; Declaration of Raymond Kim in support of the reply (Aug. 25, 2026) ("Kim Reply Decl.") ¶ 3.)

Tesla's evidence is that the order page displayed, together with that button, text advising the customer that placing the order manifested agreement to Tesla's Motor Vehicle Order Agreement ("Order Agreement"), which appeared as a hyperlink that opened the Order Agreement in a new window. (Kim Decl. ¶ 4.) With its reply, Tesla submitted a copy of the order page, which displays the statement, "By placing this order, I agree to the Model X Order Agreement, Terms of Use, Luxe Package Terms & Conditions, and Privacy Notice," on the same screen as, and above, the "Place Order" button. (Kim Reply Decl. ¶ 4, Ex. 3.)

Page 3 of the Order Agreement contains an Agreement to Arbitrate, which provides in pertinent part:

Agreement to Arbitrate. Please carefully read this provision, which applies to any dispute between you and Tesla, Inc. and its affiliates, (together "Tesla"). If you have a concern or dispute, please send a written notice describing it and your desired resolution to resolutions@tesla.com. If not resolved within 60 days, you agree that any dispute arising out of or relating to any aspect of the relationship between you and Tesla will not be decided by a judge or jury but instead by a single arbitrator in an arbitration administered by the American Arbitration Association (AAA) under its Consumer Arbitration Rules. . . .

We will pay all AAA fees for any arbitration, which will be held in the city or county of your residence. . . . If you prefer, you may instead take an individual dispute to small claims court. You may opt out of arbitration within 30 days after signing this Agreement by sending a letter to [Tesla]. . . . If you do not opt out, this agreement to arbitrate overrides any different arbitration agreement between us, including any arbitration 26CV178254: PAZOUKI,, et al. vs TESLA, INC., A TEXAS CORPORATION 09/03/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation (Defendant) CRS# 076909773173 in Department 518 agreement in a lease or finance contract.

(Kim Decl. ¶ 6, Ex. 1, p. 3.)

Plaintiffs did not send a letter opting out of the Agreement to Arbitrate. (Kim Decl. ¶ 7.)

On December 31, 2021, Plaintiffs took delivery of the Vehicle and executed a Retail Installment Sale Contract ("RISC") financing the purchase, which contains its own arbitration provision. (Kim Decl. ¶¶ 8–13, Ex. 2.)

On March 24, 2026, Plaintiffs filed a complaint alleging two causes of action under the Song- Beverly Consumer Warranty Act: breach of express warranty and breach of implied warranty. (Declaration of Ali Ameripour ("Ameripour Decl.") ¶ 2, Ex. 3.) On May 27, 2026, Tesla moved to compel arbitration under the Order Agreement or, in the alternative, the RISC, and to stay this action. Plaintiffs oppose.

Request for Judicial Notice

Tesla's unopposed request for judicial notice of Plaintiffs' complaint is GRANTED. (Evid. Code, § 452, subd. (d).) The Court takes judicial notice of the existence and filing of the complaint, not of the truth of the matters asserted within it.

Legal Standard

Anagreement to submit disputes to arbitration "is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract." (Code Civ. Proc., § 1281; see 9 U.S.C. § 2.)

“On petition of a party alleging the existence of a written arbitration agreement and the other party's refusal to arbitrate, "the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists," unless it determines that “[t]he right to compel arbitration has been waived” or that “[g]rounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2.)

The party moving to compel arbitration bears the burden of proving the existence of a valid agreement to arbitrate by a preponderance of the evidence. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413; Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787.) A party opposing the petition then bears the burden of proving any defense, such as unconscionability. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247.) These are distinct inquiries: the existence of an agreement is the moving party's burden, while unconscionability and other defenses are the opposing party's. (Rosenthal, supra, 14 Cal.4th at p. 413.)

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

26CV178254: PAZOUKI,, et al. vs TESLA, INC., A TEXAS CORPORATION 09/03/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation (Defendant) CRS# 076909773173 in Department 518 The Federal Arbitration Act (FAA) governs the Agreement to Arbitrate, which is administered under the AAA's Consumer Arbitration Rules and arises from the sale of a motor vehicle, a transaction involving interstate commerce. (9 U.S.C. § 2; Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 906.) The California Arbitration Act supplies the procedural framework for this motion. (Code Civ. Proc., §§ 1281, 1281.2.)

Discussion

Plaintiffs contend, first, that no arbitration agreement was formed because Tesla did not establish that Plaintiffs received reasonably conspicuous notice of the Order Agreement's terms or objectively manifested assent to them, and, second, that any arbitration provision is unconscionable. (Opp. at pp. 3–6.) The Court addresses formation first, then unconscionability.

Formation of the Arbitration Agreement

A court cannot compel a party to arbitrate a dispute it did not agree to arbitrate. (Fleming v. Oliphant Financial, LLC (2023) 88 Cal.App.5th 13, 19.) An arbitration agreement is governed by ordinary principles of California contract law: it is subject to the same rules of construction as any other contract, and the parties' consent, communicated to one another, is a basic element. (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1221.) Where a contract is formed through an online interface, mutual assent depends on whether the website put the user on reasonably conspicuous notice of the terms and whether the user unambiguously manifested assent to them, an inquiry that turns on the design and content of the page presented to the user, including the prominence of the notice and its relationship to the action said to constitute assent. (Sellers v.

JustAnswer LLC (2021) 73 Cal.App.5th 444, 463, 473; Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 862–867.) In both Sellers and Long, the courts applied that standard to find the notices insufficiently conspicuous and declined to enforce the terms; the standard, not those fact-specific outcomes, governs here.

The moving party retains the burden of proving formation. That burden is not satisfied simply because the opposing party submits no declaration. Where the challenge is to the sufficiency of the proponent's showing of conspicuous notice, the proponent must make that showing. (Rosenthal, supra, 14 Cal.4th at p. 413; Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165-166.)

Plaintiffs' criticism of the moving papers is well taken. Tesla's opening evidence described the order page only narratively, stating what text "would have appeared" and placing the advisory "immediately below the 'Place Order' button." (Kim Decl. ¶ 4.) Standing alone, that narrative did not depict the interface actually presented, and so did not permit the Court to assess conspicuousness under the governing standard. (Sellers, supra, 73 Cal.App.5th at pp. 472-473.)

With its reply, however, Tesla submitted the order page itself. (Kim Reply Decl. ¶ 4, Ex. 3.) A court has discretion to consider evidence submitted with a reply that fills an evidentiary gap

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

26CV178254: PAZOUKI,, et al. vs TESLA, INC., A TEXAS CORPORATION 09/03/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation (Defendant) CRS# 076909773173 in Department 518 identified by the opposition, provided the opposing party has notice and an opportunity to respond. (Jacobs v. Coldwell Banker Residential Brokerage Co. (2017) 14 Cal.App.5th 438, 449.) Because Exhibit 3 responds directly to the gap Plaintiffs raised, namely the absence of the interface, the Court exercises its discretion to consider it and will afford Plaintiffs an opportunity to address it at the hearing.

Considered on the complete record, Tesla carries its burden. Exhibit 3 shows the statement "By placing this order, I agree to the Model X Order Agreement," displayed on the order screen above the "Place Order" button and identifying the Order Agreement as a hyperlink. (Kim Reply Decl. Ex. 3.) That textual notice, placed with the action button and expressly tying the act of ordering to assent to the identified, hyperlinked terms, is what distinguishes an enforceable online agreement from an inconspicuous one. (Sellers, supra, 73 Cal.App.5th at pp. 472-473.) A reasonably prudent user placing the order would understand that doing so manifested agreement to the Order Agreement. To the extent the opening declaration described the advisory as appearing below the button, the screenshot controls and shows it above the button on the same screen. (Kim Reply Decl. Ex. 3.)

Plaintiffs neither deny placing the order nor dispute the authenticity of the order page. Their argument is directed to the sufficiency of Tesla's showing, which Exhibit 3 satisfies. Tesla has therefore established the existence of a valid agreement to arbitrate contained in the Order Agreement. Because Plaintiffs' Song-Beverly claims arise out of the purchase and condition of the Vehicle, they fall within the Agreement to Arbitrate's reach, which extends to "any dispute arising out of or relating to any aspect of the relationship between you and Tesla." (Kim Decl. ¶ 6, Ex. 1, p. 3.)

Unconscionability

Acourt may refuse to enforce an unconscionable provision in a contract, including an arbitration agreement. (Armendarizv. Foundation Health Psychcare Services, Inc.(2000) 24 Cal.4th 83, 114.) Unconscionability has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results. (Ibid.)Both must be present before an arbitration provision is deemed unenforceable, but they need not be present in the same degree; a sliding scale applies, under which the more substantively oppressive the term, the less evidence of procedural unconscionability is required, and vice versa. (Ibid.)The party opposing arbitration bears the burden of proving unconscionability. (Pinnacle,supra,55 Cal.4th at p. 226.)

Procedural Unconscionability

Procedural unconscionability concerns the manner in which a party's consent was obtained and turns on oppression or surprise. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.) The Order Agreement is a consumer form contract presented on a take-it-or-leave-it basis, and its adhesive character establishes some degree of procedural unconscionability. (Sanchez, supra, 61 Cal.4th

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

26CV178254: PAZOUKI,, et al. vs TESLA, INC., A TEXAS CORPORATION 09/03/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation (Defendant) CRS# 076909773173 in Department 518 at p. 914.) That degree is low here. The adhesive nature of a contract does not, by itself, render it unenforceable. (Ibid.) Two features further reduce oppression and surprise: the Agreement to Arbitrate was set off on page 3 of the four-page Order Agreement under a heading directing the reader to "carefully read this provision," and the customer had 30 days to opt out of arbitration by letter without affecting the purchase. (Kim Decl. ¶¶ 6–7, Ex. 1, p. 3.) Plaintiffs offer no evidence that they attempted, and were unable, to negotiate the terms or to opt out. The Court finds a low degree of procedural unconscionability.

Substantive Unconscionability

Substantive unconscionability focuses on whether a term is overly harsh or one-sided. (Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 88.) Plaintiffs identify a single asymmetry: the provision directs a consumer with a dispute to give Tesla written notice and a 60-day period to resolve it before arbitrating, without imposing an express, reciprocal pre-arbitration notice obligation on Tesla. (Opp. p. 5; Kim Decl. Ex. 1.) A lack of mutuality in an arbitration agreement's obligations can support a finding of substantive unconscionability. (Armendariz, supra, 24 Cal.4th at pp. 117–118.)

The asymmetry here is slight. The pre-arbitration notice step is a modest, consumer-favorable mechanism for informal resolution, not a limitation on the consumer's remedies or forum. The remainder of the provision runs in the consumer's favor: Tesla pays all AAA fees, the arbitration is held in the consumer's own county, the consumer may opt out entirely, and either party may instead proceed in small claims court. (Kim Decl. Ex. 1.) Taken as a whole, the provision is not overly harsh or so one-sided as to shock the conscience. (Pinnacle, supra, 55 Cal.4th at p. 246.) The Court finds a low degree of substantive unconscionability.

Weighing the two elements together, the Court finds only a low degree of procedural unconscionability and a low degree of substantive unconscionability, with no showing that the pre-arbitration notice term operates oppressively. That combination does not meet the threshold required to deny enforcement. (Armendariz, supra, 24 Cal.4th at p. 114.) The Agreement to Arbitrate is not unconscionable.

The Alternative Basis for Arbitration

Because the Order Agreement is enforceable and, by its terms, "overrides any different arbitration agreement between us, including any arbitration agreement in a . . . finance contract," the Court compels arbitration under the Order Agreement and does not reach Tesla's alternative reliance on the RISC or Plaintiffs' arguments concerning the parties identified in that contract. (Kim Decl. ¶ 6, Ex. 1, p. 3; Opp. pp. 5–6.)

Neither statutory exception to an order compelling arbitration applies. Tesla did not waive its right to arbitrate, and, for the reasons stated, no ground for rescission of the agreement, including unconscionability, exists. (Code Civ. Proc., § 1281.2.)

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

26CV178254: PAZOUKI,, et al. vs TESLA, INC., A TEXAS CORPORATION 09/03/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation (Defendant) CRS# 076909773173 in Department 518

ORDER

Tesla's motion to compel binding arbitration is GRANTED. Arbitration is compelled under the Order Agreement.

Because a party has requested a stay, the action is STAYED, rather than dismissed, pending completion of arbitration. (Code Civ. Proc., § 1281.4; see Smith v. Spizzirri (2024) 601 U.S. 472, 475–476.)

Theinitial case management conference is VACATED.

The Court SETS a status conference regarding the status of arbitration for September 8, 2027, and expects the parties to have completed arbitration by that date. No less than 15 days before the conference, the parties shall file a joint statement that either advises the Court of the status of the arbitration or explains why there is good cause to continue the conference if the arbitration remains pending.

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The case is ordered stayed pending binding arbitration as to the entire action.

All other scheduled hearings set in this department are ordered vacated.

Further Status Conference Re Arbitration is scheduled for 09/08/2027 at 02:30 PM in Department 518 at Hayward Hall of Justice.

PLEASE NOTE: Pursuant to California Rule of Court 3.1308, subdivision (a)(1), this tentative ruling will become the order of the Court unless it is contested before 4:00 PM on the court day preceding the noticed hearing.

To contest a tentative ruling, a party should do the following:

First, the party must notify Department 518, by email at Dept518@alameda.courts.ca.gov and copy all counsel of record and self-represented parties. The contesting party must state in the subject line of the email the case name, case number and motion.

Second, the party shall log into the eCourt Public Portal, search for this case (e.g., by case number), select the case name, select the "Tentative Rulings" tab, click the "Click to Contest this Ruling" button, enter the party's name and a brief statement of the party's reason for contesting the tentative, and click "Proceed."

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

26CV178254: PAZOUKI,, et al. vs TESLA, INC., A TEXAS CORPORATION 09/03/2026 Hearing on Motion to Compel Arbitration filed by TESLA, INC., A Texas Corporation (Defendant) CRS# 076909773173 in Department 518

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