Judge: Glenn R. Salter, Case: 21-1196642, Date: 2022-12-01 Tentative Ruling

Motion to Compel Arbitration

The defendant vehicle manufacturer, the sole defendant, filed a motion to compel arbitration of the plaintiffs’ “Lemon Law” claims.  It relies on an arbitration provision within the used vehicle sales agreement plaintiffs signed with the dealer when purchasing the vehicle.

It is axiomatic that a motion to compel arbitration may only be granted where there is an agreement to arbitrate the dispute between the parties.  Here, the parties agree the manufacturer is not a named party to the used vehicle sales agreement or to the arbitration provision within that agreement.

The manufacturer argues that arbitration must be compelled here because there is a provision within the arbitration agreement that obligates third parties (such as it) to arbitrate disputes concerning the vehicle even where the third party has not, as here, signed the sales agreement or accepted the arbitration provision.

Among other arguments, the plaintiffs assert that the manufacturer cannot rely on that provision because it has within its written warranty prohibited any third person from obligating it to anything not expressly stated in its written warranty.

The motion—and the debate surrounding the arbitration provision’s enforceability under these facts—raises several interesting questions.  However, the parties overlook a critical fact in their analysis.

The complaint seeks damages under California’s “Lemon Law” as well as its federal counterpart, the Magnuson-Moss Warranty Act.  (There is also a fraud cause of action, but its inclusion does not change the basic analytical framework here.)  This case involves the sale of a used vehicle, not a new one.  That is made clear in a review of the sales agreement, which is entitled a “used” vehicle sale.

In Rodriguez v. FCA US, LLC (2022) 77 Cal.App.5th 209 (rev. grtd. Jul. 13, 2022), the Court of Appeal held that the Song-Beverly Act (i.e., California’s Lemon law statute) does not apply to the sale of used vehicles.  Although review was granted, the California Supreme Court made it clear in its order that lower courts could still rely on Rodriguez for its persuasive value.  This court finds that case very persuasive and relies on it for that limited purpose.

If there is no cause of action under the California Lemon Law statute, then there is no arbitration provision that may be enforced pursuant to it.  And without a viable arbitration agreement, arbitration cannot be compelled.  On that basis, the motion to compel must be denied—at least as to the claims under state law.

To the extent a viable cause of action may be stated under the Magnuson-Moss Warranty Act (which is unclear based on Paragraph 15 of the manufacturer’s answer), the court is persuaded that the manufacturer has, through its warranty disclaimer above, abrogated any possible reliance on the arbitration provision.

The motion to compel arbitration is therefore DENIED.

Motion to Compel Further Production

The plaintiffs filed a motion to strike the objections and compel further responses to their Request for Production of Documents (Set One).  All discovery was stayed upon the filing of the motion to compel arbitration.  Given the court’s tentative ruling above, the statutory stay on all discovery has now been lifted.

Accordingly, and on the court’s own motion, the plaintiffs’ motion to compel further responses is CONTINUED to January 26, 2023, at 1:30 pm.  The parties are ORDERED to meet and confer meaningfully to resolve the discovery dispute.  If the parties are unable to do so, they shall submit to the court at least 9 court days prior to the continued hearing date a detailed JOINT statement as to the status of the discovery dispute.  Depending on what is provided, the court may consider appointment of a discovery referee to resolve the dispute.

To assist the parties in resolving the matter, the court’s initial review of the discovery requests suggests that Request for Production Nos. 8, 17-25, 56-57, and 67-71 should be granted, and that Nos. 58-60 should be denied.  The request for judicial notice as to Exhibit 1 should be denied, and the request for judicial notice as to Exhibit 2 should be deemed unnecessary for determination of the issues.

Notice

The plaintiffs shall give notice.