The California Court of Appeal has rebuffed a car buyer’s proposed class-action suit against a Nissan store in Sunnyvale and ordered the case to arbitration.
The three-member panel unanimously rejected arguments by Suzanne Gillespie that arbitration provisions in documents she signed with Nissan Sunnyvale are unconscionable and unenforceable.
In October 2010, Gillespie bought a used 2007 Acura TL for her son for $18,900 and signed a retail installment sales contract to finance it, according to court documents.
However, her credit union offered a lower APR, so she returned to the store four days later and successfully renegotiated a lower loan rate. On that visit, she signed a second RISC incorporating the lower rate.
Both contracts had standard arbitration provisions, including a waiver of her right to arbitrate a dispute as a representative or member of a class.
She later sued the dealership and a third-party lender, alleging violations of California’s consumer protection and vehicle sales finance laws, unfair competition and related claims.
The suit accused the store of backdating the second RISC to the date of the original one, leading to an undisclosed finance charge, according to the decision.
It also asserted that the dealership: wrongly charged a new tire fee, although the Acura had used tires; collected an optional state electronic filing fee for registration without asking whether she wanted to pay it; misrepresented the extended warranty; and failed to provide mandatory disclosures for her credit scores.
Gillespie sought class-action status for other customers whose contracts had been backdated, were improperly charged tire fees or were automatically charged electronic filing fees without being told it was optional.
A Santa Clara Superior Court judge turned down a motion by the dealership and lender to send the case to arbitration.
But the Court of Appeal disagreed, noting that the California Supreme Court this year had upheld the validity of virtually identical arbitration language in an unrelated case. The waiver of the right to arbitrate class claims doesn’t violate the Federal Arbitration Act, the appeals panel said in an opinion written by Justice Patricia Bamattre-Manoukian.
In addition, the panel ruled that provisions concerning a second arbitration when either side disagrees with an initial arbitration decision, attorney fees and liability for filing fees and other costs are not unconscionable.
Plaintiffs’ lawyer Hal Rosner of San Diego said that in the past few years, California dealerships have changed all the contested provisions in Gillespie’s contracts, except the waiver of the right to arbitrate class-action claims.
The two sides will now decide whether to proceed to arbitration on Gillespie’s individual claims and, if so, with what arbitration group, or whether to negotiate a settlement, Rosner said.
He also said arbitration against dealerships in the state is now slower than using the courts and that consumers are losing the vast majority of cases in arbitration.
A dealership lawyer didn’t respond to requests for comment.