Kershaw Talley Barlow is proud to announce a significant appellate victory in the U.S. Court of Appeals for the Ninth Circuit, where Attorneys Jack Davis who drafted the brief and Ian Barlow and Attorney Stuart Talley who have been litigating the matter, working alongside co-counsel at Lieff Cabraser, helped secure a ruling that protects consumers from improper attempts to force arbitration.
The case arose from a class action lawsuit filed by a consumer who leased a Jeep Grand Cherokee and later alleged defects in the vehicle’s headrest system. Rather than litigate the claims in court, FCA US, LLC (Fiat Chrysler) sought to compel arbitration based on an arbitration clause contained in the plaintiff’s lease agreement with the dealership.
There was a fundamental problem with that argument, though: FCA was not a party to the lease agreement.
Two Courts Reject FCA’s Arbitration Arguments
Both the district court and the Ninth Circuit rejected FCA’s attempt. In affirming the lower court’s decision, the Ninth Circuit reinforced the longstanding legal principle that states arbitration is a matter of consent, and companies cannot force arbitration when no such agreement exists between the parties.
FCA argued that a “delegation clause” in the lease required that questions about arbitrability be decided by an arbitrator rather than the court. The Ninth Circuit disagreed, explaining that the clause applied only to disputes between the consumer and the dealership, not to third parties like FCA. The court found no “clear and unmistakable” evidence that the plaintiff had agreed to arbitrate disputes with the manufacturer.
The court also rejected FCA’s reliance on the U.S. Supreme Court’s decision in Henry Schein, Inc. v. Archer & White Sales, Inc. FCA contended that the ruling required courts to send arbitrability questions to arbitration whenever a delegation clause exists. The Ninth Circuit called that interpretation untenable, noting it would lead to “absurd results” that could allow virtually any third party to force arbitration, even without a contractual relationship.
Equally important, the court declined FCA’s attempt to invoke equitable estoppel. FCA argued that the plaintiff’s claims were intertwined with the lease agreement. The court disagreed, finding that the claims were based on independent legal rights under California law and the manufacturer’s own warranty, not the dealership contract.
Kershaw Talley Barlow Helps Protect Consumer Rights
This decision carries important implications for consumers and class action litigation. It should prevent manufacturers and other third parties from using arbitration clauses as a shield against accountability when they were never part of the underlying agreement. It also reinforces that arbitration cannot be imposed unilaterally. Instead, it must be based on actual consent.
For Kershaw Talley Barlow }, the ruling reflects our firm’s ongoing commitment to protecting consumers and holding large corporations accountable for negligence and wrongdoing observed Stuart Talley. By successfully opposing FCA’s motion, we helped preserve our client’s right to pursue their claims in court, as well as that right held by consumers in similar future situations.
Want to know more about our team from Kershaw Talley Barlow? Or do you need our help with a complex case or class action lawsuit against a corporation or another powerful defendant like a major automaker? Call (916) 520-6639 and schedule a free case consultation. We’re headquartered in Sacramento, but we can help clients nationwide.
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