ORDER GRANTING DEFENDANTS' MOTION TO STAY ACTION PENDING ARBITRATION

VIRGINIA PHILLIPS, District Judge

Defendants Dealer Computer Services Inc.'s and Universal Computer Consulting Holding, Inc.'s Motion to Stay Action Pending Arbitration came before the Court for hearing on March 7, 2005. After reviewing and considering all papers filed in support of, and in opposition to, the Motion, as well as the arguments advanced by counsel at the hearing, the Court GRANTS Defendants' Motion to Stay Action.

I. BACKGROUND

Plaintiffs contend Defendants concealed that Universal Computer Consulting Holding, Inc. ("UCCH") and its subsidiary Dealer Computer Services, Inc. ("DCS") are not affiliated with Ford Motor Company ("Ford") in order to engage in price-fixing. [See, e.g., FAC ¶¶ 26-27, 30-31, 34.] Plaintiffs also maintain Defendants UCCH and DCS committed fraud by misrepresenting or failing to disclose material information on computer hardware and software Plaintiffs obtained from DCS. [Id. ¶ 54.]

Plaintiffs assert three claims, for which they seek class certification: (1) violation of the Sherman Antitrust Act, brought by Plaintiffs Fuller's White Mountain Motors ("Fuller's") and Larry McLeod Ford Lincoln Mercury ("McLeod") as representatives of a subclass of dealers who contracted for Vehicle Locator Services ("VLS") with DCS (the "VLS Subclass"); (2) violation of California's Cartwright Act, brought by the same Plaintiffs as representatives of the putative VLS Subclass; and (3) fraud, brought by the putative VLS Subclass, as well as Plaintiff Dan Wiebold Ford ("Wiebold") as representative of a subclass of dealers who contracted for a Dealer Management System ("DMS") with DCS (the "DMS Subclass"), and Plaintiffs McLeod, Doyle Motor Company ("Doyle"), and Harold Witte Ford Company ("Witte") as representatives of a subclass of dealers who contracted for a Computerized Publication Display System ("CPD") with DCS (the "CPD Subclass").

On December 20, 2004, UCCH and DCS filed a Motion to Stay Action Pending Arbitration with a Memorandum of Points and Authorities in Support of Motion. UCCH and DCS argue that all of Plaintiffs' claims against them are subject to arbitration and that the Court therefore must stay this action. [Defs.' Mem. at 7, 9-10.] Plaintiffs filed their Opposition ("Pls.' Opp'n") on February 18, 2005. Defendant Ford also filed an Opposition on February 18, 2005. On February 25, 2005, UCCH and DCS filed a Reply to Plaintiffs' Opposition ("Reply to Pls.") and a Reply to Ford's Opposition ("Reply to Ford").

II. LEGAL STANDARD

"The FAA provides that any arbitration agreement within its scope `shall be valid, irrevocable, and enforceable.'" Chiron, 207 F.3d at 1130 (quoting 9 U.S.C. § 4). Under the FAA,

[i]f any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

In deciding a motion to stay a proceeding pending arbitration, a court must determine "(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." See Chiron, 207 F.3d at 1130 (citations omitted) (motion to compel arbitration); Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1048-49 (9th Cir. 1996) (motion to stay proceeding).

Both of these determinations — the validity and scope of the arbitration agreement — are to be made by the court. See ATT Techs., Inc. v. Communications Workers, 475 U.S. 643, 649 (1986) ("Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.").

Federal substantive law governs the question of arbitrability.Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999). "State law is not entirely displaced from FAA analysis, however." Comb v. Paypal, Inc., 218 F. Supp. 2d 1165, 1170 (N.D. Cal. 2002). A federal court determining arbitrability must apply the law governing the underlying contract. Id. The court must "interpret the contract by applying general state-law principles of contract interpretation, while giving due regard to the federal policy in favor of arbitration by resolving ambiguities as to the scope of arbitration in favor of arbitration."Wagner, 83 F.3d at 1049 (citing Intel Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908, 914 (9th Cir. 1993)). See also Perry v. Thomas, 482 U.S. 483, 492 n. 9 (1987) ("Thus state law, whether of legislative or judicial origin, is applicable if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally.").

Where some portions of an action are arbitrable and others are not, the decision to stay those claims not subject to arbitration is in the court's discretion. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 n. 22 (1983) ("In some cases, of course, it may be advisable to stay litigation among the non-arbitrating parties pending the outcome of the arbitration. That decision is one left to the district court . . . as a matter of its discretion to control its docket."); U.S. for Use and Benefit of Newton v. Neumann Caribbean Int'l, Ltd., 750 F.2d 1422, 1426-27 (9th Cir. 1985). In deciding whether to stay non-arbitrable claims, a court considers economy and efficiency, id., "the similarity of the issues of law and fact . . . to those that will be considered during arbitration, [and] the potential for inconsistent findings absent a stay." Bischoff v. DirecTV, Inc., 180 F. Supp. 2d 1097, 1115 (C.D. Cal. 2002).

III. DISCUSSION

A. Claims One and Two — Antitrust Claims Brought by the Putative VLS Subclass

Moving Defendants concede that Fuller's and McLeod, Plaintiffs bringing the two antitrust claims, did not agree to arbitration in their VLS agreements with DCS. [Defs.' Mem. at 4.] According to Defendants, however, at least some of the putative VLS Subclass members these Plaintiffs seek to represent did have arbitration agreements with DCS. [Id. at 14.] Defendants therefore request that the Court stay these claims pending arbitration of the antitrust claims of the other VLS Subclass members. [Id.]

The Court declines to tie Plaintiffs' antitrust claims to arbitration of the claims of potential VLS Subclass members. Before certification, "unnamed class members are not technically part of the action." 5 James Wm. Moore et al., Moore's Federal Practice § 23.64 (before certification, unnamed class members not considered for purposes of mootness or voluntary dismissal of class claims). No class has been certified in this action, nor is a motion for class certification pending before the Court. Thus, Defendants' argument for a stay of these claims on the basis of putative class members' arbitration agreements is premature. Indeed, if a class is eventually certified on these claims, it possibly may not include any members who reached arbitration agreements with Defendants.

B. Claim Three — Fraud Claim Brought by the Putative VLS, DMS, and CPD Subclasses

1. Do the Putative Subclass Representatives Have Agreements to Arbitrate Claims Against Defendant DCS?

Neither McLeod nor Fuller's, representatives of the putative VLS Subclass, entered into arbitration agreements for VLS-related disputes. [Defs.' Mem. at 4.] Thus, as an initial matter, the fraud claim brought by Plaintiffs McLeod and Fuller's on the VLS agreements is not subject to arbitration.

Plaintiff Wiebold, representative of the putative DMS Subclass, agreed to arbitrate DMS-related disputes with DCS, and Plaintiffs McLeod, Doyle, and Witte, representatives of the putative CPD Subclass, agreed to arbitrate CPD-related disputes with DCS. [See Declaration of Dan Agan ("Agan Decl.") Exs. D at 47, E at 58, F at 74-75, G at 84.] Thus, the fraud claims against DCS brought by these Plaintiffs on the DMS and CPD contracts are potentially subject to arbitration.

2. Do the Agreements to Arbitrate Claims Against DCS Apply to Claims against UCCH, DCS'S Parent Company?

Plaintiffs insist that any agreements to arbitrate they may have with DCS do not apply to claims against UCCH, DCS's parent company, with whom they have no express arbitration agreements. [Pls.' Opp'n at 24.] Plaintiffs assert that UCCH's ability to resort to the arbitration agreements in the DMS and CPD contracts is not governed by the federal policy favoring arbitration and then note Defendants' failure to point to cases in this circuit permitting non-signatories to enforce arbitration agreements. [Id.]

The Court disagrees with Plaintiffs' contention that the fraud claims against UCCH are not subject to the arbitration agreements. First, Doyle's and Witte's contracts with DCS expressly require arbitration of claims against UCCH. [See Agan Decl. Exs. E at 58, G at 84.]

Second, as to the remaining Plaintiffs, a non-signatory's recourse to an arbitration agreement is governed by federal law.See Letizia v. Prudential Bache Sec., Inc., 802 F.2d 1185, 1187 (9th Cir. 1986). The Ninth Circuit has confirmed that non-signatories may enforce arbitration agreements. Id. More specifically, "[w]hen the charges against a parent company and its subsidiary are based on the same facts and are inherently inseparable, a court may refer claims against the parent to arbitration even though the parent is not formally a party to the arbitration agreement." J.J. Ryan Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315, 320-21 (4th Cir. 1988). In contrast to Plaintiffs' suggestion, [Pls.' Opp'n at 24], this principle has been applied by federal courts in this circuit. See, e.g., Wilmot v. McNabb, 269 F. Supp. 2d 1203, 1208 (N.D. Cal. 2003); see also Metalclad Corp. v. Ventana Envtl. Organizational P'Ship, 109 Cal. App. 4th 1705, 1716-19 (2003) (permitting non-signatory parent company to enforce arbitration agreement of its subsidiary).

Plaintiffs' fraud claims against DCS and UCCH are "based on identical factual allegations," and UCCH therefore may enforce the arbitration agreements in Plaintiffs' contracts with DCS to the same extent as DCS itself, if those agreements are valid.Wilmot, 269 F. Supp. 2d at 1208.

3. Are the Agreements to Arbitrate Valid?

Plaintiffs maintain that even if agreements to arbitrate claims against DCS and UCCH exist, these agreements are not valid because they were fraudulently induced and are also unconscionable. [Pls.' Opp'n at 16, 22.] As previously noted, these defenses to enforcement of the arbitration agreements are controlled by state law generally, within the parameters of federal substantive law on arbitrability. See 9 U.S.C. § 2; Doctor's Assocs., Inc. v. Casarotto, 527 U.S. 681, 687-88 (1996); Perry, 482 U.S. at 492 n. 9; Simula, Inc., 175 F.3d at 719.

a. Fraud

The FAA limits a court's consideration of fraud as a defense to enforcement of an arbitration agreement:

if [a] claim is fraud in the inducement of the arbitration clause itself — an issue which goes to the `making' of the agreement to arbitrate — the federal court may proceed to adjudicate it. But the statutory language [of the FAA] does not permit the federal court to consider claims of fraud in the inducement of the contract generally.

The Court notes Plaintiffs' assertions that they would have fought the arbitration provisions had they known Defendants' true relationship to each other. [Declaration of Gene Witte ("Witte Decl.") ¶¶ 9-10; Declaration of Lloyd R. Fuller ("Fuller Decl.") ¶¶ 7-8.] Plaintiffs, however, do not aver fraud relating specifically to the arbitration clauses. Rather, Plaintiffs' allegations of fraud are indistinguishable from Plaintiffs' broader attack on the contracts with DCS. Thus, in this instance, Plaintiffs' contention of fraudulent inducement does not permit abrogation of the contracts' broad "arising out of, or relating to" arbitration provisions.

b. Unconscionability

Under California law,

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. [P]rocedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. But they need not be present in the same degree.

If an agreement is one of adhesion, it is procedurally unconscionable. See Nyulassy v. Lockheed Martin Corp., 120 Cal. App. 4th 1267, 1280 n. 11 (2004). "The term contract of adhesion signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it." Armendariz, 24 Cal. 4th at 113 (citation and brackets omitted).

Plaintiffs contend that the arbitration provisions in their contracts with DCS are procedurally unconscionable because the dealers "were in a position of unequal bargaining power and were presented with the arbitration provisions without the opportunity for meaningful negotiation." [Pls.' Opp'n at 17.] Although Plaintiffs attempt to narrow their focus to the arbitration provisions, their argument is that the contracts as a whole were contracts of adhesion. Plaintiffs state in their Opposition that "the arbitration clauses were . . . presented ( along with the rest of the contract) on a `take it or leave it' basis." [Id. at 19 (emphasis added).] The supporting evidence they cite indicates that the contracts, rather than the arbitration provisions in particular, were extended to dealers without the possibility of negotiation. [See, e.g., Witte Decl. ¶ 6 ("[The DCS representative] informed me that . . . Witte Ford, Inc. could take the agreement as is with all the terms presented or refuse the agreement.").]

The Ninth Circuit recently declined to adjudicate a plaintiff's contention that an arbitration clause was procedurally unconscionable because "the agreement in which it is found constitutes a contract of adhesion." Nagrampa v. Mail Coups, Inc., ___ F.3d ___, No. 03-15955, 2005 WL 639142, at *2 (9th Cir. March 21, 2005). The court held that "[an] arbitrator," rather than a court, "must decide whether an agreement that contains an arbitration clause is a contract of adhesion because this issue pertains to the making of the agreement as a whole and not to the arbitration clause specifically." Nagrampa, 2005 WL 639142, at *3.

Plaintiffs' contention of procedural unconscionability rests on the argument that the contracts with DCS as a whole are adhesive. Under Nagrampa, this is not a defense to arbitration. "Accordingly, [the Court] need not reach the question of whether the agreement is substantively unconscionable." See Nagrampa, 2005 WL 639142, at *4.

IV. CONCLUSION

In sum, the following claims are not subject to arbitration: (1) the Sherman Antitrust Act claim against all Defendants brought by McLeod and Fuller's; (2) the California Cartwright Act claim against all Defendants brought by McLeod and Fuller's; and (3) the fraud claim against DCS and UCCH brought by McLeod and Fuller's on the VLS contracts. The following claims are subject to arbitration: (1) the fraud claim against DCS and UCCH brought by Wiebold on the DMS contract, and (2) the fraud claim against DCS and UCCH brought by Plaintiffs McLeod, Doyle, and Witte on the CPD contracts.

In light of Defendant Ford's pending motion for summary judgment, the Court reserves decision on whether to stay Plaintiffs' claims against Ford; however, the Court stays Plaintiffs' non-arbitrable claims against DCS and UCCH because of the similarity of the issues involved and the possibility of inconsistent rulings.

IT IS SO ORDERED.