Appeals panel OKs arbitration in buyer's tiff with store
Reprints
Print
Respond
A California Court of Appeal panel has ordered the buyer of a 2006 Toyota Sequoia to arbitrate her dispute with the dealership that sold the vehicle.
The panel rejected arguments brought by Andrea Naasz that the arbitration provision in her standard sales contract is unconscionable and unenforceable.
The decision conflicts with a December ruling by another California Court of Appeal panel that said a store cannot force arbitration of a customer's individual and class-action claims. That panel permitted a lawsuit to proceed against the dealership and a third-party lender.
The new decision came in a suit by Naasz and her co-signer. Naasz was upside down on a 2004 Chrysler Pacifica when she traded it for the Sequoia at West Covina Toyota in February 2010 and wanted lower monthly payments, according to legal documents.
Their lawyer, Angela Patrick of San Diego, said her clients intend to seek California Supreme Court review, which could resolve conflicting interpretations of the law.
After Naasz picked up the car, the store told her the lender required a larger down payment but said the store would lower the price, the court said. Naasz and her co-signer signed a new backdated retail sales contract. The document had a standard arbitration provision that included a waiver of class-action rights.
The car developed problems that authorized repair facilities were unable to fix, and Toyota Motor Sales U.S.A. refused to buy back the car.
The plaintiffs sued under the California sales finance, consumer protection, warranty and unfair competition laws, raising individual and class claims. The suit alleged Naasz was tricked into buying a lemon, that she and the co-signer were misled into signing the new sales contract, and that the sales and finance staff never mentioned arbitration.
A Los Angeles County judge granted West Covina Toyota's request to compel arbitration.
The three-judge Court of Appeal panel agreed. The panel rejected the plaintiffs' argument that the provision is invalid because the California Supreme Court has found waivers of class claims and litigation to violate state law.
The appellate panel said the Federal Arbitration Act, which pre-empts obstacles to arbitration, trumps state prohibitions against class-action waivers.
The panel said West Covina Toyota's arbitration provision was marked on the back of the sales contract, and the contract was not unduly harsh or unfair, it said.
The dealership's lawyers did not respond to requests for comment.
Where it stands: Calif. Court of Appeal panel affirms arbitration in the buyer's dispute with the dealership. The buyer will pursue state Supreme Court review, her lawyer says.
You can reach Eric Freedman at freedma5@msu.edu.
