As the result of a court ruling, Toyota can’t compel the arbitration of class claims brought by customers who seek damages for diminution in the market value of their vehicles as a result of alleged defects that lead to incidents of sudden, unintended acceleration. U.S. District Court Judge James Selna in California made this significant ruling. As has been widely reported, Toyota became the target of numerous personal injury and consumer protection lawsuits after being forced to recall millions of vehicles due to reports of sudden acceleration problems. As we have reported, the cases were consolidated for multi-district litigation in U.S. District Court for the Central District of California.

The MDL court addressed Toyota’s motion to compel arbitration against 20 putative class representatives whose economic loss claims are scheduled for a bellwether trial set to begin on July 31, 2013. The arbitration provisions that were at issue are in new and used vehicle purchase and lease agreements. Toyota is not a party to any of those agreements. The court concluded that Toyota, by its “full engagement” in mounting a defense in the case, waived its right to arbitration with respect to 15 of the Plaintiffs. The court said in its order:

By continuing to actively defend the present MDL and, more specifically, the economic loss claims, without a whisper of the intent to seek an order compelling arbitration, Toyota has engaged in numerous acts that are inconsistent with the right to compel arbitration.

With respect to the remaining five bellwether Plaintiffs, the court decided that Toyota, as a non-signatory, could not enforce the arbitration agreements found in their purchase and lease agreements with Toyota dealers.

Source: Associated Press