[00:00:03] Speaker 01:
Good morning, Your Honors.

[00:00:04] Speaker 01:
Theodore Boutrous for Hyundai Motor America.

[00:00:07] Speaker 01:
I'd like to reserve three minutes for rebuttal and I'll keep an eye on the clock.

[00:00:10] Speaker 01:
This court has already confronted the exact issues in this appeal and decided how they should be resolved.

[00:00:17] Speaker 01:
In Mohammed versus Uber, the court held an agreement delegating, quote, disputes arising out of or relating to the enforceability, revocability, or validity of the arbitration provision to an arbitrator

[00:00:29] Speaker 01:
was clear and unmistakable, and thus the issues of arbitrability were for the arbitrator, not the court.

[00:00:37] Speaker 01:
The court rejected the plaintiff's attempt to manufacture an ambiguity by pointing to a separate provision permitting courts to decide the arbitrability of class actions.

[00:00:46] Speaker 01:
There was a carve-out for class actions and representative actions.

[00:00:50] Speaker 01:
And the Muhammad court said that did not create any ambiguity, that that was artificial.

[00:00:56] Speaker 01:
And the party's agreement here is materially indistinguishable from the one in Muhammad, so the result should be the same.

[00:01:03] Speaker 01:
The case should be compelled to arbitration.

[00:01:05] Speaker 02:
Let me add to this.

[00:01:09] Speaker 02:
The second sentence of the arbitration agreement, there's a phrase saying, then the court shall decide whether this agreement permits class proceedings.

[00:01:20] Speaker 02:
What's your best argument that that is unambiguous?

[00:01:24] Speaker 01:
That, Your Honor, is exactly what the language was in the Uber Mohammed case.

[00:01:31] Speaker 01:
And our argument is, Your Honor, that was a carve-out, an exception.

[00:01:35] Speaker 01:
So it's absolutely clear.

[00:01:36] Speaker 01:
As the court said in Mohammed, the quote was, the agreement clearly and unmistakably delegates the question of arbitrability to the arbitrator, except as pertains to the arbitrability of class action.

[00:01:47] Speaker 01:
So here it's very clear.

[00:01:48] Speaker 02:
All the issues.

[00:01:50] Speaker 02:
But each side has a different perspective on that, does it not?

[00:01:54] Speaker 01:
Well, that's true, and that was true in Mohammed.

[00:01:56] Speaker 01:
That was true in the six decisions involving this exact agreement where district courts, including the Benveniste case, which we submitted last week in a 28-J letter, all of them rejected the interpretation that the plaintiffs make here.

[00:02:11] Speaker 01:
And again, that was the exact... I argued the Mohammed versus Huber case.

[00:02:15] Speaker 01:
That was the exact argument 10 years ago.

[00:02:17] Speaker 01:
that the plaintiffs made, and this court said that's artificial.

[00:02:21] Speaker 01:
The plaintiffs' argument that that creates an ambiguity is artificial because it's clearly an exception.

[00:02:26] Speaker 01:
All issues of arbitrability go to the arbitrator.

[00:02:29] Speaker 01:
The agreement's clear.

[00:02:30] Speaker 01:
There's no challenge to that delegation clause, so it must be enforced under rent-a-center.

[00:02:36] Speaker 01:
And then it says, however, the issue of one issue, the question of class arbitration and the availability of class proceedings must be decided by the court.

[00:02:47] Speaker 01:
In the district court here, I should say of all the decisions

[00:02:52] Speaker 01:
I've ever seen, this one drips with disdain for arbitration, the hostility towards arbitration.

[00:02:58] Speaker 01:
The court said it was like a weapon and threatened rule 11 sanctions against Hyundai for filing a motion that six district courts have now granted because the court made clear it thought arbitration was bad and worse than being in court.

[00:03:14] Speaker 01:
That's what the Federal Arbitration Act.

[00:03:15] Speaker 04:
But the agreement was bad.

[00:03:16] Speaker 04:
He took issue with terms of the agreement.

[00:03:19] Speaker 01:
With terms of the agreement, but if you, Your Honor, he said it would be shocking to a consumer that they would have to, that they would be arbitrating issues relating to their vehicles and relating to, say, a defect.

[00:03:31] Speaker 04:
In fairness, he was pointing out that I think there was a concession at oral argument.

[00:03:35] Speaker 04:
There's no arbitration clause in the contract to buy the car, but there is in this blue link agreement that purports to cover everything and replace everything.

[00:03:43] Speaker 01:
All other agreements.

[00:03:44] Speaker 01:
That is correct, Your Honor.

[00:03:45] Speaker 01:
That's what, in part, the judge was pointing to.

[00:03:48] Speaker 04:
That's what he didn't like.

[00:03:50] Speaker 04:
That's what he found shocking.

[00:03:51] Speaker 01:
Yes.

[00:03:52] Speaker 01:
They think that was what was really the impetus for that.

[00:03:54] Speaker 01:
But that goes to the scope of the agreement, which is an issue for the arbitrator under the arbitrability provision in the delegation clause.

[00:04:02] Speaker 01:
And so the question of whether the agreement covers defects in the vehicle is an issue of scope.

[00:04:09] Speaker 01:
Clearly, under the contract, that goes to the arbitrator.

[00:04:13] Speaker 04:
So it's difficult though because there's also an argument regarding procedural and substantive unconscionability and it's tough to reach that issue without deciding what the scope of the agreement is.

[00:04:22] Speaker 04:
And I read your brief as being inconsistent about what the scope of the agreement is.

[00:04:27] Speaker 01:
You are the unconscionability and that's an enforceability and a validity argument that also is an issue for the arbitrator It's an issue.

[00:04:36] Speaker 01:
That's what Mohammed said Yes, your honor absolutely it covers all issues toward all theories relating to it's very explicit on this relating to the

[00:04:51] Speaker 01:
the blue link system, including the connection services and the like, and to complaints or torts or other causes of action, breach of warranty like here, that the owner of the vehicle would have with respect to the vehicle.

[00:05:06] Speaker 01:
So like here with respect to the tow hitch, those would be covered by the arbitration agreement.

[00:05:13] Speaker 01:
There's nothing unusual about that.

[00:05:14] Speaker 04:
Can I ask you to respond to the following?

[00:05:17] Speaker 04:
Because I want to make sure that I understand your position on this.

[00:05:19] Speaker 04:
I think the agreement,

[00:05:20] Speaker 04:
Again, no arbitration agreement in the contract for the car, we understand, although that's not part of our record, but I think that is now uncontested.

[00:05:30] Speaker 04:
Is that right?

[00:05:30] Speaker 01:
That's correct, Your Honor, and I don't think it matters, but I can explain why.

[00:05:35] Speaker 04:
I do, but at any rate, so this blue link agreement reduces the statute of limitations from four years to one.

[00:05:41] Speaker 04:
I think that's uncontested.

[00:05:43] Speaker 04:
It waives remedies otherwise available under California law.

[00:05:48] Speaker 04:
It limits liability, Hyundai's liability to $500, I think.

[00:05:53] Speaker 04:
It purports to replace all other agreements that the customer has with Hyundai.

[00:05:57] Speaker 04:
The exception to arbitration provision is for the IP and copyright claims.

[00:06:01] Speaker 04:
I don't know of any case law, but I invite you to let me know.

[00:06:05] Speaker 04:
You may well.

[00:06:06] Speaker 04:
Where any customer has ever sued a manufacturer for copyright or IP claims.

[00:06:11] Speaker 04:
So that seems one sided to me.

[00:06:13] Speaker 04:
but that's for both of you to respond to.

[00:06:16] Speaker 04:
And then I think there's an admission on page one, a statement to be more neutral, on page one of your reply brief that indicates that the reason there's no arbitration provision in the contract is that a recent California Supreme Court case wouldn't have allowed that under California law.

[00:06:36] Speaker 04:
Why should we find these aren't significant when we think about substantive unconscionability?

[00:06:41] Speaker 01:
First, Your Honor, I want to emphasize those unconscionability issues are issues for the arbitrator under the delegation.

[00:06:48] Speaker 04:
I understand.

[00:06:49] Speaker 04:
And if I don't agree with you about that threshold issue, then what about this?

[00:06:52] Speaker 01:
Then let me address the unconscionability.

[00:06:54] Speaker 01:
Okay.

[00:06:55] Speaker 01:
Fair enough.

[00:06:56] Speaker 01:
There would be no limit for a personal injury tort case regarding personal injury under the arbitration agreement.

[00:07:04] Speaker 01:
that it would be litigate arbitration.

[00:07:07] Speaker 01:
This is another assumption that the district court made.

[00:07:10] Speaker 01:
Arbitrators render large judgments all the time.

[00:07:14] Speaker 04:
I can... I appreciate that, absolutely.

[00:07:15] Speaker 04:
But this does seem to me to replace all other agreements and send everything to arbitration.

[00:07:22] Speaker 04:
And there's this $500 limit on liability.

[00:07:24] Speaker 04:
And I don't see any limiting principle here anywhere.

[00:07:27] Speaker 01:
Your honor, I don't think that in a tort case, again, that would be for the arbitrator to determine whether... You have raised that, planted that flag.

[00:07:36] Speaker 01:
You're with me on that.

[00:07:36] Speaker 04:
I understand that.

[00:07:38] Speaker 04:
But the agreement seems to me to be quite extraordinary.

[00:07:41] Speaker 01:
I think it's the Rebich case from this court talked about how the sort of looking at the parade of horribles how it would play out is not the proper Approach but I don't think they're approach when we're looking at what I've ticked off is and invited you to respond to his white aren't some of these provisions Procedurally and submittably unconscionable let me just walk through that all right procedural your honor here There's no question that an agreement was formed

[00:08:05] Speaker 01:
The district court found that the agreement was not hidden, that it was bold.

[00:08:10] Speaker 01:
This court's decision in the Patrick case talks about the click wrap and sign up and intent.

[00:08:15] Speaker 01:
So we have an agreement to arbitrate.

[00:08:17] Speaker 01:
The district court found no evidence of pressure or the inability to read the agreement.

[00:08:23] Speaker 01:
It is a contract of adhesion with respect to the Blue Link services but purchases of the vehicle did not, were not required to sign up for Blue Link and we have an ongoing proceeding in the district court with individuals who did not sign up for Blue Link.

[00:08:38] Speaker 01:
So you have some degree as this court has said of, with adhesion of procedural issues but not tremendous because people bought the vehicle without signing up.

[00:08:50] Speaker 01:
And so the district court focused on the Substantive none of the issues that we see most of the issues the court mentioned are not part of the case here There's a limit on liability some of the other issues the court mentioned the big ones that they're not part of the case here we shouldn't consider them because They haven't been argued by the plaintiff the point we were looking at the agreement as a whole

[00:09:14] Speaker 01:
The court can look at the agreement as a whole, but it's a very fair arbitration agreement.

[00:09:19] Speaker 04:
Well, I might beg to differ with you, but if you could go back to the scope of the agreement, it starts by saying, welcome to the Hyundai Blue Book link for your Hyundai vehicle or Genesis Connected Services.

[00:09:29] Speaker 04:
The scope of this seems to be the blue link.

[00:09:32] Speaker 04:
And then in the middle of the arbitration provision, and this is what upset, I think, the district court.

[00:09:37] Speaker 04:
as you, I think, fairly acknowledged his language makes clear that you took a dim view of it.

[00:09:44] Speaker 04:
But the word vehicle, of course, is in the middle of the arbitration clause.

[00:09:47] Speaker 04:
What about that?

[00:09:48] Speaker 01:
Your Honor, it's in the agreement.

[00:09:50] Speaker 01:
It's clear.

[00:09:51] Speaker 01:
There's nothing ambiguous about vehicle.

[00:09:53] Speaker 01:
And I hear what the court's saying.

[00:09:54] Speaker 04:
Well, can I push back on that a little bit?

[00:09:55] Speaker 04:
Because given that, you know, all the canons of construction and it's in the middle of the arbitration provision that refers to blue link services and the whole contract welcomes me to blue link services, why wouldn't I consider that to be parts of the vehicle that relate to the blue link services?

[00:10:12] Speaker 01:
Well, your event really goes and this kind of was where we began and the district was troubled by the fact that this was an agreement that wasn't the purchase agreement.

[00:10:20] Speaker 01:
But this isn't like he referenced this Disney case.

[00:10:23] Speaker 01:
This is totally different.

[00:10:24] Speaker 01:
This the blue link service is not some he called it a concierge service.

[00:10:28] Speaker 01:
This is an ability to control your vehicle with an app.

[00:10:33] Speaker 01:
The vehicle's a big computer, and so you're able to start the engine.

[00:10:37] Speaker 01:
It's directly connected.

[00:10:39] Speaker 01:
Judge Sellness said it in the Miranda case.

[00:10:41] Speaker 01:
It directly connects to, no pun intended,

[00:10:45] Speaker 01:
the functioning of the vehicle.

[00:10:47] Speaker 01:
And so it's not like out of the blue, I'm really full of puns today, that all of a sudden you're subject to arbitration regarding the vehicle.

[00:10:55] Speaker 04:
I isn't out of the blue.

[00:10:55] Speaker 04:
There's no arbitration provision in the agreement to buy the car.

[00:10:59] Speaker 04:
But there is here in the blue link services, which as you say is optional, and the footnote in your brief tells me that there's no arbitration provision because California law wouldn't have allowed Hyundai to include an arbitration provision in the vehicle contract.

[00:11:12] Speaker 01:
I don't think that's well hunt the reason I think you want me to read the vehicle Well actually we Hyundai is not the seller of the vehicle the dealer is yes, so Hyundai can't put a provision Is that the import of your footnote?

[00:11:26] Speaker 01:
The dealers could put an arbitration agreement in the in the purchase in the sales agreement What is the import of your footnote the first footnote?

[00:11:33] Speaker 01:
I think that's what we were referring to your honor me.

[00:11:35] Speaker 04:
That's what you meant.

[00:11:36] Speaker 01:
That's what we meant that You're talking about the reply brief

[00:11:39] Speaker 04:
So why is it is it so maybe I'll just leave it at that if yeah, if it is your position that's uncontested There's no arbitration of a provision in the in the contract by the carpet.

[00:11:48] Speaker 04:
There isn't the blue link.

[00:11:49] Speaker 04:
Is that right?

[00:11:50] Speaker 01:
I'm just gonna see your honor here Yeah, our point reference is a 2025 all we're all we're talking about there Your honor is that the manufacturer couldn't invoke?

[00:12:01] Speaker 01:
An arbitration agreement in the dealer agreement for sale.

[00:12:04] Speaker 01:
We're not saying that arbitration wouldn't be appropriate in a sales agreement That's what I didn't suggest you

[00:12:09] Speaker 04:
Okay, I think we've covered that point.

[00:12:11] Speaker 01:
Yeah, we couldn't enforce an arbitration agreement, and that's the first direct... If you could finish that sentence, that would be helpful to me.

[00:12:16] Speaker 01:
Yes, we couldn't enforce an arbitration agreement in the dealer sales agreement because the manufacturer's not a party to that agreement.

[00:12:24] Speaker 01:
And so what I want to go back to is I see what's troubling the court.

[00:12:27] Speaker 01:
that this agreement is not some disconnected, unrelated agreement to the vehicle.

[00:12:33] Speaker 01:
It's all about operating the vehicle.

[00:12:35] Speaker 01:
Emergency roadside assistance is providing these complementary services that are directly connected to the function of the vehicle.

[00:12:44] Speaker 01:
That's why all these district courts had no problem saying the delegation clause sends these issues to the arbitrator.

[00:12:52] Speaker 01:
Again, Mohammed is binding on this court.

[00:12:55] Speaker 01:
It's very clear.

[00:12:56] Speaker 01:
The issues Your Honor is discussing go to the arbitrator, and this court must assume that the arbitrator would be fair and raise the same issues Your Honor is raising.

[00:13:06] Speaker 04:
I've taken up a lot of your time, but don't worry.

[00:13:08] Speaker 04:
There'll be more where that came from.

[00:13:11] Speaker 04:
Let me just check with Judge Smith.

[00:13:12] Speaker 04:
Do you have questions at this point?

[00:13:13] Speaker 04:
I'll wait for later.

[00:13:14] Speaker 04:
Judge Forrest?

[00:13:15] Speaker 04:
Not at this point.

[00:13:16] Speaker 01:
Okay.

[00:13:16] Speaker 01:
Thank you, Your Honor.

[00:13:17] Speaker 01:
I'll come back.

[00:13:19] Speaker 01:
Thank you.

[00:13:31] Speaker 03:
Good morning, Your Honors.

[00:13:32] Speaker 03:
Steven Taylor for the plaintiffs from Bloomberg Law.

[00:13:36] Speaker 04:
Could you pull that microphone up and just do your very best to speak into it so Judge Smith can hear you?

[00:13:40] Speaker 03:
Yes, Your Honor.

[00:13:40] Speaker 04:
Thank you.

[00:13:41] Speaker 03:
Good morning.

[00:13:42] Speaker 03:
Stephen Taylor for the plaintiffs from Lemberg Law.

[00:13:46] Speaker 03:
The Blue Link app has nothing to do with someone's tow hitch harness.

[00:13:50] Speaker 03:
Nobody who bought the Palisades with the optional harness would expect that a complimentary concierge service offered by Honda would require them to arbitrate all claims related to the vehicle.

[00:14:02] Speaker 03:
and dramatically curtail their rights vis-a-vis Hyundai.

[00:14:06] Speaker 04:
You say complementary, you say that several times and then there's reference to, is it monthly charges or how does this work?

[00:14:12] Speaker 03:
When I say complementary, I mean free.

[00:14:15] Speaker 04:
But is it entirely free or there are monthly service charges that people have to pay?

[00:14:19] Speaker 03:
In the terms of service, it says this is a three-year free product that is offered and then they will start charging after that period supposedly.

[00:14:29] Speaker 03:
Thank you.

[00:14:30] Speaker 03:
They say they will start charging.

[00:14:31] Speaker 04:
That clears it up.

[00:14:32] Speaker 04:
Thank you.

[00:14:33] Speaker 03:
And the complimentary is important because people aren't paying for this.

[00:14:37] Speaker 03:
They believe it is a complimentary concierge service.

[00:14:40] Speaker 03:
The district court below was rightly concerned with the surprise someone would have with having a complimentary service which would then entrap or entangle all their rights and Hyundai's obligations regarding the entire vehicle purchase, its reliability, its mechanical soundness.

[00:14:57] Speaker 04:
Opposing counsel says that the Mohamed case is binding and directly on point.

[00:15:01] Speaker 03:
The Muhammad case is not on point for them.

[00:15:05] Speaker 03:
The Muhammad case says that there is, the Muhammad case says that where there is a venue provision, a venue provision, not a delegation exception, which is what we have here.

[00:15:16] Speaker 03:
When there's a venue provision saying that courts and northerners to the California retain jurisdiction for certain claims, that doesn't confuse or make the delegation to the arbitrator unmistakable.

[00:15:30] Speaker 03:
This is not a venue provision.

[00:15:32] Speaker 03:
What the agreement says is that the district court or a court when a motion in a class action proceeding will determine

[00:15:39] Speaker 03:
if the agreement permits class proceedings.

[00:15:42] Speaker 03:
That is not venue.

[00:15:43] Speaker 03:
That is saying that the court determines whether it's a class proceeding.

[00:15:46] Speaker 03:
And when we dig into that, we'll see what the district court found so troubling.

[00:15:51] Speaker 03:
How does the district court determine whether or not class claims are permitted under this agreement?

[00:15:57] Speaker 03:
The court has to go to the scope to see if the claims are wrapped up by the class action waiver that's in this agreement.

[00:16:05] Speaker 03:
If the court looks at in the arbitration provision on the page that discusses these matters, there's language that says, you and Honda agree that claims must be brought in individual capacity, but then it says, if this paragraph is found to be unenforceable in its entirety, then the entirety of this arbitration provision shall be null and void.

[00:16:30] Speaker 03:
So the agreement in one part says the court shall determine whether or not class proceedings can proceed under this agreement.

[00:16:37] Speaker 03:
Then below it says if the court finds that class proceedings can go forward, then the arbitration provision is null and void.

[00:16:45] Speaker 03:
In order for the court to make that secondary determination, it has to look at the scope of the claims at issue.

[00:16:51] Speaker 03:
It has to determine whether a problem with a tow hitch harness is encompassed by this agreement for blue link services.

[00:16:59] Speaker 03:
And once the court is at that level, this idea that all issues have been delegated to the arbitrator, it falls apart.

[00:17:07] Speaker 03:
And in Mohammed specifically, the court was not focused on that.

[00:17:10] Speaker 03:
The court was focused on a venue provision where the court found that, look, okay, you always got to go to a court to enforce arbitration clause, or you may have to, and that's why we have a venue provision.

[00:17:24] Speaker 03:
And that's why the court said this distinction was artificial.

[00:17:28] Speaker 03:
The cases that this court should point to are the Baker and the Parata decision out of California appellate courts.

[00:17:39] Speaker 03:
And there what we're looking at is if the purported agreement is inconsistent about delegating all issues to the arbitrator,

[00:17:51] Speaker 03:
then there is not clear and unmistakable retention by the arbitrator of exclusive authority.

[00:17:59] Speaker 03:
And that's what we have here.

[00:18:00] Speaker 03:
This agreement is not clear and unmistakable on this issue.

[00:18:04] Speaker 02:
You seem to be focusing on, I suppose, Mr. Boutros as well, the scope.

[00:18:10] Speaker 02:
If I understood Mr. Boutros' argument, he's basically saying this is a dealer issue, other people.

[00:18:15] Speaker 02:
Hyundai is really not directly involved.

[00:18:18] Speaker 02:
You're saying not true, this is Hyundai, this is a kind of an issue, deals with the operation of the car.

[00:18:26] Speaker 02:
There's a, if you will, mis-joinder of issues.

[00:18:29] Speaker 02:
Do I understand your position correctly?

[00:18:32] Speaker 03:
Well, I'd say scope is important in several different parts of the arguments here.

[00:18:37] Speaker 03:
Scope is important when we're talking about whether or not the delegation provision is clear and unmistakable.

[00:18:45] Speaker 03:
because you have to get to the scope of any class action waiver and class proceedings to determine if the court retained jurisdiction.

[00:18:54] Speaker 03:
And this agreement clearly contemplates that a court is going to be looking at those issues.

[00:18:59] Speaker 03:
And again, another issue with Mohammed, Mohammed has language in there that says,

[00:19:06] Speaker 03:
Look, if part of a class action, if a class action waiver is found void or unenforceable, that issue stays with the court, okay?

[00:19:16] Speaker 03:
And it specifically refers to the class action waiver and some other waivers that are in there.

[00:19:21] Speaker 03:
This agreement doesn't do that.

[00:19:23] Speaker 03:
This agreement is very broad.

[00:19:25] Speaker 03:
It says that the court retains a jurisdiction to determine whether the agreement permits class proceedings.

[00:19:34] Speaker 03:
That's a Rule 23 analysis.

[00:19:36] Speaker 03:
That's an analysis to determine, it's also, you can also say it's an analysis to determine whether the class action waiver is void or applies to the claims in the case.

[00:19:48] Speaker 03:
So.

[00:19:48] Speaker 02:
Can I switch to a slightly different subject?

[00:19:52] Speaker 02:
And that's whether or not, this is a contract of adhesion.

[00:19:57] Speaker 02:
Judge, Kristen laid out a number of items

[00:20:01] Speaker 02:
that at least by some people's standards would say, oh, wow, that's tough.

[00:20:06] Speaker 02:
How does that work?

[00:20:06] Speaker 02:
The cap on damages is one year, et cetera, et cetera.

[00:20:10] Speaker 02:
Who determines whether this is a contract of adhesion, the court or the arbitrator?

[00:20:17] Speaker 03:
Great question.

[00:20:18] Speaker 03:
So the court can determine or it needs to determine if this is a contract of adhesion in the first instance when looking at whether the delegation to the arbitrator is valid or binding.

[00:20:34] Speaker 03:
That's the first thing, to look at just the delegation provision.

[00:20:37] Speaker 03:
And the issue here is that it is, we say it is procedurally and substantively, well first we say there's no clear unmistakable intent to delegate.

[00:20:46] Speaker 03:
Then as the court said below, it's procedurally and substantively unconscionable for this delegation provision and the arbitration provision to be enforced.

[00:20:57] Speaker 04:
Proceed.

[00:20:58] Speaker 04:
Can I stop you there?

[00:20:59] Speaker 04:
Sure.

[00:21:00] Speaker 04:
Or just ask a, maybe if you could flesh this out in response to Judge Smith's questions.

[00:21:06] Speaker 04:
We have to find both, procedural and substantive unconscionability.

[00:21:09] Speaker 04:
Correct.

[00:21:09] Speaker 04:
And on substantive unconscionability, the district court was concerned about the,

[00:21:14] Speaker 04:
statute of limitations being reduced from four years to one years.

[00:21:17] Speaker 04:
Correct.

[00:21:17] Speaker 04:
But I think we said that's okay, that it takes more than that.

[00:21:21] Speaker 04:
No.

[00:21:22] Speaker 04:
I think we've said it takes more than that.

[00:21:24] Speaker 04:
What other provisions, and this can be kind of a slippery slope about what's procedural and what's substantive.

[00:21:29] Speaker 04:
I just would like to hear what you have to say about what about this is substantively unconscionable.

[00:21:34] Speaker 03:
Just on the it takes more, and I believe they cite the Tompkins case for that, it takes more when that one year statute of limitation goes both ways.

[00:21:45] Speaker 03:
This does not go both ways.

[00:21:47] Speaker 03:
This applies just to the plaintiffs, not to Hyundai.

[00:21:50] Speaker 03:
There is no limitation for the statute of limitations for them.

[00:21:53] Speaker 03:
But if I can go ahead and address other substantive unconscionability.

[00:22:00] Speaker 03:
What the court found below and what is correct is that the, by taking the entire vehicle and putting it into the arbitration clause, in the manner that this is done through, you know, third tier click links, it is substantively unconscionable because no one would expect to have something like their toe hitch.

[00:22:24] Speaker 04:
You're talking about surprise, aren't you talking about procedural unconscionability?

[00:22:28] Speaker 03:
Yeah, but I think there's overlap here.

[00:22:30] Speaker 03:
So the surprise is certainly part of the procedural unconscionability, but it's also substantively unconscionable to say that your blue-linked terms of service will require you to arbitrate things with your muffler, your tow hitch, your transmission.

[00:22:46] Speaker 04:
What about the limitation of liability or waiver of remedies?

[00:22:51] Speaker 03:
On the waiver of...

[00:22:57] Speaker 03:
Cap on damages mr.. So the cap on damage is actually less than 500 So it's it's 500.

[00:23:03] Speaker 03:
It's the the greater of $500 or whatever you paid for a free service We didn't mention in our brief it is in the the terms of service your honor What are you actually advancing on on appeal for what is substantively unconscionable?

[00:23:17] Speaker ?:
I?

[00:23:17] Speaker 03:
What is subsequently unconscionable is the one year statute of limitations and the final provision language, which says that all other agreements are void.

[00:23:27] Speaker 03:
Okay, so the very last paragraph of the agreement says that this is the entirety agreement between us and HMA.

[00:23:34] Speaker 03:
It voids their new vehicle limited warranty.

[00:23:37] Speaker 03:
It voids any implied warranties.

[00:23:38] Speaker 03:
It voids everything.

[00:23:40] Speaker 03:
They argue that this is an integration clause or it can be construed as an integration clause.

[00:23:45] Speaker 03:
It doesn't say it's an integration clause.

[00:23:47] Speaker 03:
This provision makes sense perhaps as an integration clause if the Blue Link terms of service only apply to Blue Link, which they clearly do.

[00:23:56] Speaker 03:
But as they're trying to apply it to the entire vehicle that these people purchase, this final provision vitiates

[00:24:04] Speaker 03:
All other agreements that whether implied or explicit that Hyundai has made and the promises, there is a new vehicle limited warranty.

[00:24:16] Speaker 03:
It does provide services.

[00:24:18] Speaker 03:
It is unconscionable, subsequently unconscionable to say that, okay, that is now gone.

[00:24:24] Speaker 03:
I don't expect Hyundai to come up here and say,

[00:24:27] Speaker 03:
you know we're going to do that right they haven't told any of their customers that that's what the blue link services do but that's what this agreement says uh... it is unconscionable and you know once once we get into if if plaintiffs or consumers are in arbitration or in the arbitration form and this court says okay this agreement controls they will have that provision and that provision will say all your other agreements are void so if you didn't bring your claim within a within a year uh... it's time barred

[00:24:54] Speaker 03:
And if your claim is based on your express warranty, well, that doesn't matter either because these terms of service say those don't matter and this doesn't incorporate them or say that they're valid.

[00:25:07] Speaker 00:
We agreed with you that one or more of these terms were substantively unconscionable.

[00:25:13] Speaker 00:
Why couldn't we sever them?

[00:25:14] Speaker 03:
Well, that's a great question.

[00:25:17] Speaker 03:
So what are we severing?

[00:25:18] Speaker 03:
So if we sever the one-year statute of limitations and we say, okay, that's unconscionable,

[00:25:23] Speaker 03:
We want to take that out.

[00:25:24] Speaker 03:
Well, there are circumstances where you wouldn't sever that.

[00:25:28] Speaker 03:
That would be fine.

[00:25:29] Speaker 00:
So let's just say, let's play that out.

[00:25:31] Speaker 00:
So in this case, we conclude that of the laundry list of possibilities of things that are substantively unconscionable, that's the only one we find, the limitations period.

[00:25:40] Speaker 00:
And your argument is that wouldn't be severable as just one provision that we think is improper?

[00:25:46] Speaker 03:
So one, I would argue that there are multiple provisions that are improper.

[00:25:50] Speaker 00:
I understand that that's your, but go with my hypothetical.

[00:25:52] Speaker 03:
Yes.

[00:25:52] Speaker 00:
If that's the only one that we find is unconscionable, can we sever it?

[00:25:57] Speaker 00:
And if your argument is no, why not?

[00:26:00] Speaker 03:
My argument would be that you would have to sever the reference to the vehicle.

[00:26:04] Speaker 03:
You would have to sever the reference in the scope of the agreement to the vehicle to make it.

[00:26:10] Speaker 00:
What does that have to do with the limitations period?

[00:26:14] Speaker 00:
Limitations period is out, then everybody gets to bring whatever claims they have under the, you know, whatever the generally applicable limitations period is.

[00:26:22] Speaker 00:
What does your vehicle language have anything to do with that?

[00:26:25] Speaker 03:
Well, what your vehicle language has to do with that is that once we're in the realm of striking parts of the agreement or saying part of it is unenforceable, the court has already taken on the role of interpreting the agreement, which gets us past the delegation provision.

[00:26:42] Speaker 03:
And so I understand that this doesn't address your point about the vehicle language.

[00:26:48] Speaker 03:
But my point here, my response to your first question, Your Honor, is once the court is in the position where it's striking out parts of this agreement,

[00:26:55] Speaker 03:
we've already stopped delegating it to the arbitrator.

[00:26:59] Speaker 00:
Yes, agreed.

[00:27:00] Speaker 03:
So now we're in the world where we're just looking at the scope of the agreement to determine whether or not the issues that are brought up in this case are within the scope of the arbitration clause.

[00:27:10] Speaker 03:
So even if the court were to sever part of it, I think once the court is taking that step, we're not in arbitration anymore.

[00:27:15] Speaker 03:
We're just looking at whether or not the claims in this case are within the scope of the agreement.

[00:27:20] Speaker 00:
Sure.

[00:27:20] Speaker 00:
And I think, I mean, that's a separate question, right?

[00:27:22] Speaker 00:
And I guess maybe when we would, I'm not quite sure what order we would

[00:27:26] Speaker 00:
analyze these issues in, but whether this dispute comes within the scope of the arbitration agreement is a separate question from if we find one or more of these terms unconscionable, are they subject to severance or not?

[00:27:40] Speaker 00:
And I guess we don't have to answer that second bucket of questions if we say this isn't even within the scope of the agreement.

[00:27:47] Speaker 00:
So my hypothetical is built on the assumption that we're within the scope of the agreement.

[00:27:51] Speaker 03:
Correct, Your Honor.

[00:27:52] Speaker 03:
So I think once, but, you know, once we start, again, once we start striking things, then the court has already taken the role in enforcing or... I agree.

[00:28:00] Speaker 00:
But I want an answer to the hypothetical.

[00:28:02] Speaker 00:
So we conclude, and I, you know, I can't speak for the three of us yet, and I don't even know that I'm speaking for me yet.

[00:28:07] Speaker 00:
This is a hypothetical, right?

[00:28:10] Speaker 00:
We say that we can deal with the arbitability questions.

[00:28:16] Speaker 00:
We say that this dispute is within the scope of the arbitration contract.

[00:28:20] Speaker 00:
And now we have to see if the contract is valid in terms of unconscionability.

[00:28:24] Speaker 00:
And we go through that laundry list and we say, this limitations period, that's bad.

[00:28:29] Speaker 00:
That is substantially unconscionable.

[00:28:32] Speaker 00:
Can we strike that?

[00:28:33] Speaker 00:
And if not, why?

[00:28:35] Speaker 03:
Sure.

[00:28:35] Speaker 03:
I think you can strike it.

[00:28:36] Speaker 03:
But then I also don't think that impacts whether or not my plaintiff's claims are subject to this arbitration agreement.

[00:28:44] Speaker 04:
Well, we have to find substantive unconscionability and procedural unconscionability.

[00:28:47] Speaker 04:
And so the hypothetical asks you to address

[00:28:49] Speaker 04:
Correct.

[00:28:50] Speaker 04:
And we only get to the sliding scale if we've got some substantive unconscionability.

[00:28:54] Speaker 03:
Correct.

[00:28:54] Speaker 03:
So I would point to the final provision language, which is also substantive unconscionability, which is also substantively unconscionable.

[00:29:02] Speaker 00:
Can that one be stricken?

[00:29:04] Speaker 03:
So now we're striking two parts of the agreement.

[00:29:07] Speaker 04:
The part of the agreement that says that it replaces all other agreements or the part?

[00:29:11] Speaker 03:
Correct.

[00:29:12] Speaker 03:
And, you know, so we cite this in our brief, Your Honor.

[00:29:14] Speaker 03:
Once we get to a point in an agreement where it's become so one-sided, severing things doesn't cure the agreement.

[00:29:22] Speaker 00:
Yeah, I'm trying to sort of figure out our case law in that space, which is why I'm asking these questions, because I think you could read our case law there to say if there's one discrete thing that you can strike, good enough, severance will work.

[00:29:33] Speaker 00:
Anything more than that, and then it's permeating the agreement.

[00:29:36] Speaker 00:
And I think you could read our case letter and say, no, it's a little bit more involved than that, and you've got to do a little bit more analysis on permeation.

[00:29:42] Speaker 00:
How do you read the cases?

[00:29:44] Speaker 03:
I don't think there's a bright line.

[00:29:46] Speaker 03:
So I think you do arrive at some point.

[00:29:48] Speaker 03:
I think here, once you're striking something like the, I think you could strike, you know, the statute of limitations is a discrete thing.

[00:29:54] Speaker 03:
The final provision language vitiates everything.

[00:29:58] Speaker 03:
I mean, it is incredibly broad as to what claims people are losing, what rights they're losing.

[00:30:03] Speaker 04:
And... But what if we struck it?

[00:30:06] Speaker 04:
What if we struck it?

[00:30:07] Speaker 04:
And then I had a claim about a breach of warranty or extended service contract.

[00:30:11] Speaker 04:
What would control?

[00:30:13] Speaker 04:
Would it be...

[00:30:14] Speaker 04:
Would it be these terms in terms of limitation of liability or would it be something else?

[00:30:18] Speaker 03:
It would be whatever the warranty was, however the context it was made and whatever the state law was about that warranty.

[00:30:24] Speaker 04:
I guess the question would be... But then you'd have conflicting provisions in this hypothetical warranty or extended warranty contract that I'm making up, right?

[00:30:34] Speaker 04:
Let's say it would not have a limitation on liability, but this one does, so I don't know which one would

[00:30:40] Speaker 04:
How striking, I'm just asking you to play out this hypothetical about striking the last provision that says it replaces all other agreements.

[00:30:47] Speaker 03:
How would that work?

[00:30:49] Speaker 03:
So if you strike this last provision, then these other things come into play.

[00:30:53] Speaker 03:
So then someone all of a sudden does have the rights under their express warranty, which they obviously do, and that's what they purchased when they got the vehicle.

[00:31:01] Speaker 03:
And someone's claims would just have to be determined under that warranty, which is what happened in the report.

[00:31:05] Speaker 04:
But I think you'd still have what I'm trying

[00:31:08] Speaker 04:
get you to grapple with is that I think you'd still have other provisions of this agreement that would be in conflict.

[00:31:14] Speaker 04:
Correct.

[00:31:14] Speaker 04:
I don't know which would control.

[00:31:15] Speaker 03:
Well, at court we have to determine which one would control.

[00:31:19] Speaker 04:
All right.

[00:31:21] Speaker 04:
Judge Smith, do you have more questions?

[00:31:23] Speaker 04:
No.

[00:31:23] Speaker 04:
Judge Forrest, do you have more questions?

[00:31:24] Speaker 04:
I don't think we have more questions.

[00:31:25] Speaker 03:
Okay.

[00:31:25] Speaker 03:
Thank you very much, Your Honor.

[00:31:33] Speaker 01:
Let me bring this back to Mohammed, because it is directly on point.

[00:31:40] Speaker 01:
Council, there was a class action waiver provision in the Uber agreement, basically exactly like the one here.

[00:31:48] Speaker 01:
And even though the agreement in Uber said that

[00:31:52] Speaker 01:
All issues go to the arbitrator.

[00:31:54] Speaker 01:
It then said, notwithstanding that, the class action waiver question, whether class proceedings could occur, is to be decided by the court.

[00:32:03] Speaker 01:
That's exactly the agreement here.

[00:32:05] Speaker 00:
And counsel's wrong that the court only... I mean, I understand that you want to say that those are functionally the same.

[00:32:11] Speaker 00:
But, I mean, I'm going to go back and look at Muhammad again and study it closely.

[00:32:16] Speaker 00:
I don't see that the two contracts, the contract there and the contract here, are set up in the same way.

[00:32:22] Speaker 00:
We're talking about language, in our case, that is connected to the provision that we care about.

[00:32:29] Speaker 00:
It's the same paragraph.

[00:32:31] Speaker 00:
These things are going to go to an arbitrator, except for a court is going to decide this one aspect.

[00:32:36] Speaker 00:
That seems different than the setup in Mohammed.

[00:32:39] Speaker 01:
It was virtually identical, Your Honor.

[00:32:41] Speaker 01:
It said notwithstanding all these other provisions.

[00:32:44] Speaker 00:
And you're, I mean, you said you're a counsel in that case.

[00:32:47] Speaker 00:
And so those provisions, those two ideas that you're pointing to from the Muhammad contract, they're in the same paragraph, they're in the same provision?

[00:32:53] Speaker 01:
I don't, I can't remember if they were in the same paragraph, but they were in the arbitration provision.

[00:32:58] Speaker 00:
I get that, but if you had two different, if you had like, here's our delegation clause and then five or six or seven paragraphs later, we've got a venue provision.

[00:33:06] Speaker 00:
that's not specific to the delegation issue.

[00:33:09] Speaker 00:
It's just a venue provision that's more generally applicable.

[00:33:11] Speaker 00:
I think that's different than this case.

[00:33:14] Speaker 01:
That is different, but they also rely on the severability clause.

[00:33:18] Speaker 01:
That's what the district court looked at here, because it mentioned a court deciding an issue.

[00:33:22] Speaker 01:
And of course, the court could decide that a provision is invalid, the class waiver proceeding.

[00:33:30] Speaker 01:
And that's what the court in Uber, I would point, Your Honor, Judge Forrest, to pages

[00:33:36] Speaker 01:
Page 1209 talks about both the venue provision and the class waiver.

[00:33:41] Speaker 01:
And it says, the court also identified an inconsistency between the without limitation language, same as here, and the carve out provision in the 2013 agreement granting court jurisdiction over challenges to the Pago waiver, which was the class action waiver.

[00:33:57] Speaker 01:
It was all together.

[00:33:58] Speaker 01:
And then the court said, these conflicts are artificial.

[00:34:01] Speaker 01:
It's the exact same thing.

[00:34:03] Speaker 01:
And so there's just no question.

[00:34:04] Speaker 01:
That's what six courts, or at least five courts, one didn't really address with this issue.

[00:34:10] Speaker 01:
And the question is, the district court said it was, how do I figure out what to do?

[00:34:13] Speaker 01:
It's very simple.

[00:34:14] Speaker 01:
The Benveniste case that we sent to 28J and the latest decision was very simple.

[00:34:22] Speaker 01:
We don't need Blackstone to figure this out.

[00:34:26] Speaker 01:
There's all arbitrability issues go to the arbitrator except that the court, if there's a motion to compel, decides whether class proceedings in the arbitration would be allowable.

[00:34:38] Speaker 01:
This isn't a Rule 23 issue.

[00:34:39] Speaker 01:
And here, there's three different statements, two of them in all caps that say no class proceedings.

[00:34:46] Speaker 01:
So this is very simple.

[00:34:48] Speaker 01:
Mohammed is very clear.

[00:34:49] Speaker 01:
It involves both the venue provisions and the class waiver provisions.

[00:34:53] Speaker 01:
The court said there was no conflict because the agreement just created an exception for the class waiver.

[00:35:00] Speaker 01:
So it's exactly like this case.

[00:35:02] Speaker 01:
And I did want to, on the scope issue, when we get to scope, if the court does not follow Mohammed, and I think the court must, on scope, once we get to that, if there's a dispute about the scope, the presumption of arbitrability under the FAA says that you go with arbitration.

[00:35:23] Speaker 01:
On the the severability point same issue came up in Muhammad the district court had said you couldn't sever Muhammad severed the provision that it found and said severability was was appropriate the statute of limitations could be severed, but it does as we've

[00:35:38] Speaker 01:
Conceded include tolling so it's not just a one-year you're out of court on the liability provision They haven't challenged that that's not in the arbitration I have conflicting notes about what they did or did not raise in the district court.

[00:35:52] Speaker 04:
I'll have to go back Yeah, but the the district court has this very sweeping Statement that's hard to know what is packed in there

[00:35:58] Speaker 01:
And the district court really only relied on two things on substantive accountability.

[00:36:04] Speaker 01:
The statute of limitations, which again, it's a one year, but it's subject to the tolling rules and discovery rule.

[00:36:11] Speaker 01:
And then the scope.

[00:36:12] Speaker 01:
and said it was unfair to have it be such a broad scope.

[00:36:16] Speaker 04:
He also mentioned somewhere, but it's not in the same paragraph, so he also mentions concern about the one-sidedness.

[00:36:23] Speaker 04:
He viewed it as one-sided, so I want to give you an opportunity to respond about the IP and copyright claims.

[00:36:29] Speaker 01:
Your Honor, I think that is a carve out.

[00:36:33] Speaker 01:
It's not an issue here.

[00:36:34] Speaker 01:
This isn't an IP case.

[00:36:36] Speaker 01:
So theoretically someone could argue if they had an IP claim against Hyundai in a future case that's unfair and that should be stricken and severed.

[00:36:46] Speaker 01:
But it would go to the arbitrator who we must assume would be as fair as this Court.

[00:36:51] Speaker 04:
But when we look at whether or not these provisions are, whether this contract is one-sided,

[00:36:56] Speaker 04:
Is it your position that we only look at the provisions that are applicable to these plaintiffs?

[00:37:00] Speaker 01:
Yes.

[00:37:01] Speaker 04:
And we don't consider that this other provision that the district court was concerned about is one sided?

[00:37:05] Speaker 01:
I don't consider that.

[00:37:06] Speaker 01:
I think so, Your Honor.

[00:37:07] Speaker 01:
Here- You have authority for that.

[00:37:09] Speaker 01:
I think, Your Honor, we look at the provisions that are at stake.

[00:37:15] Speaker 01:
I do think, to be fair, courts sometimes do look at the

[00:37:18] Speaker 01:
in the arbitration provisions, more broadly.

[00:37:21] Speaker 01:
But it's not, and we're looking at that, that it's one-sided.

[00:37:25] Speaker 01:
It is true that it's probably rare that a consumer would bring an IP-related case.

[00:37:33] Speaker 01:
That doesn't sound outrageous and shocking.

[00:37:37] Speaker 01:
That's the test.

[00:37:38] Speaker 04:
You're kind of way over time.

[00:37:41] Speaker 04:
But my question wasn't rhetorical.

[00:37:42] Speaker 04:
Do you know of any authority where we've done that?

[00:37:46] Speaker 01:
I believe it's the Rebich case.

[00:37:48] Speaker 01:
Where we said that we won't look at other provisions.

[00:37:51] Speaker 01:
This could happen, this could happen, this could happen.

[00:37:53] Speaker 01:
The parade of horribles.

[00:37:54] Speaker 01:
And I don't think they're horrible.

[00:37:56] Speaker 04:
But my question was different.

[00:37:57] Speaker 04:
My question was I was asking you about this IT provision.

[00:38:01] Speaker 04:
You know the one that I meant.

[00:38:01] Speaker 04:
Yes.

[00:38:03] Speaker 04:
And he said, hey, that's just one-sided.

[00:38:05] Speaker 04:
I am paraphrasing, of course.

[00:38:06] Speaker 04:
Yes.

[00:38:06] Speaker 04:
And I think you responded by saying, well, that's not an issue here.

[00:38:09] Speaker 04:
And my question was, well, wait a minute.

[00:38:11] Speaker 04:
Do we only look at the provisions that are at issue here in order to determine if the agreement is one-sided?

[00:38:15] Speaker 04:
And your response is, I'm looking for authority for that.

[00:38:18] Speaker 01:
I believe that's the correct approach, Your Honor.

[00:38:21] Speaker 01:
But I do believe courts sometimes do look at other provisions that hypothetically could be applied in a one-sided way.

[00:38:27] Speaker 04:
Because I'm not hearing you give me any authority for the proposition that we don't.

[00:38:31] Speaker 01:
That's fair.

[00:38:32] Speaker 01:
Okay.

[00:38:33] Speaker 04:
I wasn't trying to cut you off, okay?

[00:38:37] Speaker 04:
Anything else from Judge Smith no judge for us.

[00:38:41] Speaker 04:
Thank you for your patience with our question.

[00:38:42] Speaker 04:
Thank you for your questions your honor We'll take that case under advisement Thank both counsel for their very helpful and effective advocacy and we'll go on to the last case on the calendar