Court of Appeal (Cal.) Says Car Dealer Who Waived Right to Arbitrate Class Action Plaintiff’s Case Did Not Waive Right to Arbitrate Putative Classmembers’ Claims; Denial of Class Cert. Affirmed

In Barnes v. Bakersfield Dodge, Inc., 2014 WL 5392963 (Cal.App. 5 Dist. 2014), the Court of Appeal found in an unpublished decision that a previous order finding that a car dealer had waived its right to arbitrate a class-action plaintiffs’ claim did not mean that the car dealer had waived its right to arbitrate the claims of members of the putative class. Accordingly, the Court of Appeal affirmed the trial court’s denial of class certification.

The trial court’s order states: “Proposed class representatives and individual plaintiffs Lyle Barnes and Karen Barnes are not subject to the defense of the arbitration clause and class action waiver clause contained in their retail installment sales contract while the proposed class members are so subject…. The survival of this contract defense, at this point in time, against the proposed class members substantially undermines a finding of predominant common questions of law and fact, and a finding plaintiffs are class representatives with typical claims or defenses of the class.” (Unnecessary capitalization omitted.) Plaintiffs contend the trial court’s decision is not supported by substantial evidence. They assert the only evidence supporting a finding that the proposed class members’ claims are subject to an arbitration agreement was the declaration of Dodge’s business manager, who stated: “In my position as Business Manager, I am familiar with the form Retail Installment Sales Contract (‘RISC’) used by Bakersfield Dodge, Inc. Since at least July of 2006 the form RISCs used for all consumer sales transactions at Bakersfield Dodge, Inc., have contained an arbitration clause. To my knowledge, every consumer who purchased a vehicle from Bakersfield Dodge at any time since July 2006 signed a RISC containing an arbitration clause.” Plaintiffs claim this evidence is inadmissible hearsay, and complain that Dodge did not present the proposed class members’ contracts or “any other evidence of the terms of these alleged arbitration clauses.” They present no reasoned argument or citation of legal authority in support of their assertions. They simply posit that the evidence is hearsay and conclude the trial court erred when it determined that, without evidence, every proposed class member would be subject to arbitration. We disregard plaintiffs’ assertion that the evidence was hearsay due to lack of reasoned argument supported by legal authorities. The trial court found common questions of law and fact did not predominate and plaintiffs did not have claims and defenses typical of the class because the class members are subject to arbitration of their claims and plaintiffs are not. We find no error in the trial court’s conclusion. Defendants produced evidence that every vehicle sales contract Dodge entered into with consumers during the relevant time period contained an arbitration clause. Whatever the terms of the arbitration agreements in the class members’ contracts, the class members’ claims are subject to the defense that the claims must be arbitrated pursuant to their contracts; they may give rise to issues that will not arise in plaintiffs’ case, including: whether there was a proper demand for arbitration by one party and a refusal to arbitrate by the other party; whether the arbitration agreement covers the current dispute; whether the particular arbitration agreement is valid and enforceable; whether there was a waiver of the right to arbitrate; whether there was any other reason not to enforce the arbitration agreement; and whether the particular arbitration agreement precludes arbitration or litigation as a class. These are all questions the proposed class members do not have in common with plaintiffs because plaintiffs are no longer subject to an arbitration agreement. For the same reason, plaintiffs’ claims and defenses are not typical of those of the proposed class. Additionally plaintiffs cannot effectively represent any of the class members who must arbitrate their claims, if plaintiffs’ claims are being adjudicated in a different forum. Plaintiffs have failed to meet their burden of demonstrating that substantial evidence does not support the trial court’s decision.