In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, & Products Liability Litigation
838 F. Supp. 2d 967
C.D. Cal.2012Background
- Toyota sought to compel arbitration under the FAA for claims of twenty-one Class Representatives; Morales dismissed without prejudice, leaving twenty Plaintiffs for arbitration analysis.
- Arbitration provisions at issue are in vehicle purchase and lease agreements with dealers; Toyota Defendants are not parties to those agreements.
- Court found Toyota waived its right to arbitrate for fifteen Plaintiffs due to conduct inconsistent with arbitration after Concepcion and during MDL litigation.
- Eleven months elapsed between SAMCC filing and motion; Toyota defended MDL vigorously without seeking arbitration, causing prejudice to Plaintiffs.
- For five remaining Class Representatives, Toyota, as a non-signatory, may not enforce the arbitration agreements; Court must consider whether equitable estoppel allows enforcement against non-signatories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court or arbitrator decides waiver of arbitration | Court should decide | Arbitrator should decide | Court decides waiver issue |
| Standard for finding waiver of the right to arbitrate | Waiver established by knowledge, inconsistent acts, prejudice | Waiver not shown | Strict three-part standard governs waiver; burden heavy but met for some Plaintiffs |
| Application of waiver standard to California vs non-California Plaintiffs | California and non-California claims follow waiver rules | Different timelines and law affect waiver | Waiver found for fifteen Plaintiffs; timing post-Concepcion supports waiver; remaining five analyzed separately |
| Whether equitable estoppel allows non-signatories to enforce arbitration | Equitable estoppel may permit enforcement against non-signatories | Non-signatories should not enforce arbitration; delegation provisions control | Equitable estoppel does not require arbitration for warranty/fraud claims; five non-signatory defenses not enforceable here |
Key Cases Cited
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (illustrates when to examine contract vs. arbitration clause itself)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (clear delegation to arbitrate issues of arbitrability required)
- Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (U.S. 2010) (delegation provisions limit court’s role and empower arbitrator on arbitrability)
- Concepcion v. Experian Information Solutions, Inc., 131 S. Ct. 1740 (U.S. 2011) (FAA preempts California Discover Bank rule; class waivers in consumer arbitration invalid under state law not applicable)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitration clause validity questions for arbitrator absent delegation)
- Nagrampa v. MailCoups, Inc., 469 F.3d 1257 (9th Cir. 2006) (courts decide arbitrability; FAA §4 limits merits review)
- Van Dusen v. Barrack, 654 F.3d 838 (9th Cir. 2011) (cautions not to delegate FAA threshold questions to arbitrator; comply with FAA text)
- Cox v. Ocean View Hotel, Corp., 533 F.3d 1114 (9th Cir. 2008) (waiver/threshold questions analysis under Howsam)
- Conte v. Remote Solution Co., Ltd., 398 F.3d 205 (2d Cir. 2005) (discussed in context of non-signatories and delegation; not controlling here)