Judge Mark H. Epstein, Case Number: 24SMCV02021, Date: 2025-01-09 Tentative Ruling

Judge: Mark H. Epstein, Case: 24SMCV02021, Date: 2025-01-09 Tentative Ruling

Case Number: 24SMCV02021 Hearing Date: January 9, 2025 Dept: I

Plaintiff filed this Song Beverly Act case against defendant. Defendant moves to compel arbitration and plaintiff opposes (in a brief that is 1 page overlong, which the court will overlook).

The party seeking to compel arbitration bears the burden of proving the existence of an arbitration agreement that encompasses the dispute. If that is shown, the motion will be granted unless the opposing party can establish a defense to the arbitration clause, such as unconscionability. The major issue here is whether there is an arbitration agreement between plaintiff on the one hand and Rivian—the manufacturer—on the other hand. Rivian (not to be confused with Rivian LLC) asserts two sources of such an agreement: the Purchase Agreement and the Warranty. There are problems with both.

As to the Purchase Agreement, Rivian admits it is not a signatory of that agreement (that would be Rivian LLC). It nonetheless argues plaintiff is bound by the arbitration clause therein even as to the suit against Rivian. Rivian argues that the usual issue involved in such contracts does not exist here. That issue is whether the Song Beverly cause of action stems from the warranty such that the warranty would not come into play but for the purchase agreement, and if so whether that means that the manufacturer gets the benefit of the arbitration clause. Some courts say yes (Felisilda v. FCA US LLC (2020) 53 Cal.App.5th 486) and some say no because the Song Beverly cause of action is not a warranty cause of action in the necessary sense (Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, review granted). The California Supreme Court has agreed to take up the issue. Rivian argues that it does not matter here, however, because the Warranty Agreement (with its separate arbitration provision) was expressly made a part of the Purchase Agreement. Because of that, Rivian argues, the issue being decided by the Supreme Court cannot defeat this motion whichever way the Court rules. This court is not so sure. The fact that the warranty is incorporated by reference is too thin a reed for this court to conclude that the arbitration clause therein was incorporated as well. That is especially so in that all of the benefits of the Warranty Agreement—or at least those pertaining to Song Beverly—would be given to plaintiff whether the Warranty Agreement was incorporated or not. The argument is clever, but not sufficient. The court sees no material difference between incorporating the Warranty Agreement by reference or giving the buyer the benefit thereof by law. The court also notes that the incorporation language is not as clear as Rivian would like. The language states that “The warranties for the Vehicle are available at Rivian.com/legal/warranty-vehicle (‘Warranty’) and are incorporated herein by reference.” That incorporates the warranty, but not actually the Warranty Agreement—the Warranty Agreement is merely the place one looks to see what the warranties are. And, of course, the suit is not a suit under the warranty per se. It is a suit brought under the Song Beverly Act, which imposes its own duties on the manufacturer.

As to the Warranty Agreement itself, the problem is different. Rivian is plainly a party to that document. And there is plainly an arbitration clause in that document. The problem here is that plaintiff never signed the Warranty Agreement. It would seem that the warranties set forth in the Warranty Agreement are the same as those that plaintiff was entitled to receive as a matter of law. Given that, the court has some difficulty seeing that it was truly a contract between plaintiff and Rivian in the normal sense. Plaintiff was entitled to the benefits of the warranties without the need to agree to anything. Inserting the clause would seem to be something for which there is no consideration. Of course, the court well understands that an arbitration agreement could benefit both parties. But let’s be real. That’s not what is happening here. This is an attempt by Rivian to get an arbitration agreement without true consent by giving up nothing. The court is not persuaded. The chain of logic is that the warranty is something that the manufacturer gives because it must and also because it will make it easier for the dealer to sell the car. But that is not itself a contract in the traditional sense between the manufacturer and plaintiff.

With that, we are back to the Purchase Agreement and more traditional notions by which plaintiff might be forced to arbitrate, namely things like equitable estoppel or third-party beneficiary. This is the issue now under review by the California Supreme Court. Pending the Court’s ruling, this court tends to follow the Ford Motor line of cases and find that there is no equitable estoppel binding plaintiff to arbitrate. The court will, of course, follow our Supreme Court’s ruling, but until that ruling issues, the court does not believe that this theory will prevail. The reason is that plaintiff’s claims are not inextricably bound up in the Purchase Agreement. Plaintiff is suing under the Song Beverly Act, to be specific, not the warranty directly. Neither is the third party beneficiary argument compelling. It is not clear from this contract that Rivian is a third party beneficiary. It manufactured the car, but plaintiff did not sign the contract to benefit Rivian. It bought the car from the dealer and the signatory to that contract was Rivian LLC—a related but different entity.

The fact of the matter is that Rivian—and other auto manufacturers—are not helpless here. The Purchase Agreement could have specifically named Rivian as a party to the arbitration clause or stated that any action against Rivian LLC or Rivian had to be arbitrated. In fact, the court has seen some vehicle purchase agreements that do just that. This one does not. And it would have been easier to do it here because Rivian LLC and Rivian are, perhaps, more closely tied than other dealers and manufacturers.

The bottom line is that it does not appear that Rivian has established an arbitration agreement between it and plaintiff. The motion is therefore DENIED. That said, the court will certainly reconsider its ruling if the Supreme Court follows Felisilda.