Party Seeking Arbitration Only Has Initial Burden Of Establishing Prima Facie Case Of Existence Of Arbitration Agreement.
In a dispute concerning student debt, plaintiff student argued defendant loan servicer failed to establish the dispute was encompassed by the arbitration agreement. Reversed: “In denying defendant’s petition to compel arbitration, the trial court improperly required defendant to prove that plaintiff’s lawsuit is encompassed by the arbitration clauses.” Rodriguez v. Navient Solutions, Inc., B258981 (2/2 Aug. 24, 2015) (Boren, Ashmann-Gerst, Hoffstadt) (unpublished). The burden of the party petitioning for arbitration is only to offer prima facie evidence of the written agreement, after which the burden shifts to opposing party to prove a defense to enforcement or that the agreement can’t be interpreted to cover the claims. Rosenthal v. Great Western Financial Securities Corp., 14 Cal.4th 394, 413 (1996).
The Court of Appeal also addressed the issue of unconscionability. Perhaps the most important factor supporting the conclusion that the arbitration provision was not unconscionable was that plaintiff had 60 days to decline arbitration after the date of the first loan disbursement.
COMMENT: On May 27, 2013, I posted about unpublished cases addressing the burden of proof of a party seeking to compel arbitration. While it seems clear that the party seeking arbitration only has the burden of making a prima facie showing of the existence of the existence of an arbitration agreement, more abstruse issues may arise, such as whether that places the burden of authenticating the arbitration agreement on the moving party.
Regarding the Court’s conclusion plaintiff student “had ample time to review the arbitration clause over the course of 60 days, and confer with a lawyer about whether he should reject it or agree to it,” one can only wonder if a real live student has ever been known to do that. Still, the message is clear: an opt-out provision is a powerful tool for strengthening an arbitration provision.