Consumer Fraud

Toyota can’t force arbitration in sudden unintended acceleration cases, judge rules

Toyota can’t force arbitration of economic-loss claims filed by plaintiffs who allege the carmaker’s sudden-unintended-acceleration defects led to diminished market value for their vehicles, U.S. District judge James Selna has ruled.

Arbitration is a nifty tool widely used by big corporations like Toyota to force settlements in consumer cases before they can go to trial. Forced arbitration clauses are often tucked into the fine print of sales contracts, requiring consumers to forfeit their right to sue the company as a precondition of doing business.

“Toyota waived any right it may have had to compel arbitration of 15 of the 20 class representatives’ claims,” Judge James Selna tentatively ruled February 24 in his Santa Ana, California courtroom, where he is presiding over multi-district litigation involving sudden unintended acceleration in Toyota vehicles.

Earlier this month he reiterated that decision, saying that Toyota didn’t assert its right to compel arbitration until now, thereby encouraging plaintiffs to pursue costly and time-consuming litigation strategy.

“Toyota acted in a manner inconsistent with any right to compel arbitration,” Judge Selna said. “The resulting prejudice to the class representatives leads the court to find that Toyota waived any right to compel arbitration of the claims asserted by the 15 plaintiffs.”

For the other five cases, “Toyota, as a non-signatory, may not enforce the arbitration agreements found in the plaintiffs’ purchase and lease agreements with Toyota dealers,” Judge Selna said.

Three cases scheduled to be heard next year will serve as bellwether cases, which will help determine how the rest of the litigation will proceed.

Sources:

LawyersUSA
Bloomberg