by Brian Wolfman
Typically, consumers buy or lease new (and used) cars from car dealers, not car makers. When Toyota owners sued Toyota over faulty anti-lock brakes recently, Toyota sought to compel arbitration, invoking the arbitration clauses in purchase contracts that the individuals plaintiffs had with various Toyota dealers. Believe it or not, that gambit is not terribly unusual. There's a body of case law arising from attempts by defendants to enforce arbitration clauses against non-signatories and, as in the Toyota case, by non-signatories. The results are not uniform, and they depend on the facts (as most things do!), including the nexus, if any, between the contract and the underlying dispute and the type of relationship, if any, between the signatories and the non-signatories.
In any event, the Ninth Circuit's new decision in Kramer v. Toyota Motor Corporation -- which said no to Toyota's attempt to take advantage of the arbitration clauses in the consumer-dealer contracts -- is worth a look. Among other things, the Ninth Circuit rejected Toyota's argument that it should be able to invoke the arbitration clause because the plaintiffs' claims concerning the faulty brakes are "intertwined with" the subject matter of the plaintiffs' purchase agreements with the dealers.
This discussion leaves me wondering: Why don't car companies enter into some kind of "agreement" with buyers and lessors of their cars that purports to require arbitration of future tort claims, while retaining the dealer as the (principal) seller or lessor of the cars?
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