Kalasho v. BMW of North America, LLC, 520 F.Supp.3d 1288

Plaintiffs Kalasho and Putrus leased a 2019 BMW M5 from a dealer and received a written warranty; the vehicle allegedly developed multiple defects during the warranty period.
Plaintiffs sued BMW of North America, LLC in state court under the Song‑Beverly Consumer Warranty Act and California’s Unfair Competition Law; BMW NA removed the case to federal court.
BMW NA moved to compel arbitration based on an arbitration clause in the Lease between Plaintiffs and the dealer/assignee (BMW Financial Services NA, LLC); BMW NA is not a signatory to the Lease.
The Lease’s arbitration clause broadly covered disputes relating to the vehicle/lease and included language stating arbitration would be governed by the FAA and not by any state law concerning arbitration.
The court authenticated the Lease and overruled Plaintiffs’ evidentiary objections, but found the clause’s express exclusion of California arbitration law (CAA) unlawful because it waives statutory protections enacted for a public purpose; paragraph 38 was void while the remainder of the Lease remained valid.
Because the arbitration clause was void, BMW NA’s motion to compel arbitration and stay the case was denied.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Validity of arbitration clause that disclaims California arbitration law	Clause expressly waives CAA protections and is unenforceable under Cal. Civ. Code §3513	Clause choice‑of‑law/incorporation does not waive CAA; no clear waiver	Court: Clause expressly excludes state arbitration law; waiver of CAA (a public‑purpose statute) is unlawful => paragraph 38 void
Whether BMW NA (non‑signatory) may enforce the Lease arbitration clause	BMW NA, as non‑signatory, cannot invoke arbitration	BMW NA claims affiliate/assignee status and equitable estoppel allow enforcement	Court: Did not compel arbitration because the clause is void; without a valid arbitration clause BMW NA has no basis to compel arbitration
Authentication and hearsay objections to Lease and declarations	Dealer declarations insufficient to authenticate; documents hearsay	Declarations establish personal knowledge and business records; Lease is a legally operative document (not hearsay)	Court: Overruled objections; authenticated Lease and treated it as admissible non‑hearsay evidence

Momot v. Mastro, 652 F.3d 982 (9th Cir.) (FAA’s primary purpose is enforcement of arbitration agreements)
Ashbey v. Archstone Prop. Mgmt., Inc., 785 F.3d 1320 (9th Cir.) (party seeking to compel arbitration must show existence and scope of an agreement)
Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (U.S.) (FAA mandates district courts to direct parties to arbitration where agreement exists)
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S.) (doubts about arbitrability resolved in favor of arbitration)
United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (U.S.) (arbitration clause should not be denied unless clearly inapplicable)
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S.) (federal courts apply ordinary state‑law contract principles to arbitration agreements)
AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S.) (state rules that conflict with FAA objectives may be preempted)
Azteca Constr., Inc. v. ADR Consulting, Inc., 18 Cal. Rptr. 3d 142 (Cal. Ct. App.) (CAA procedures for neutral arbitrator selection were enacted for a public purpose)
Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 1145 (9th Cir.) (operative legal documents may be admissible as non‑hearsay)
Cable Connection, Inc. v. DIRECTV, Inc., 190 P.3d 586 (Cal. 2008) (analysis of whether state arbitration law conflicts with FAA)