Pearl River Delta Law

Home » Arbitration » Consumer product warranties and mandatory arbitration

Consumer product warranties and mandatory arbitration

The 9th United States Circuit Court of Appeals handed car owners a victory by striking down a requirement that they arbitrate warranty disputes with dealers. Reversing a lower court ruling, the court agreed with a Porsche 911 Turbo owner that her sales contract requiring her to submit warranty claims to mandatory arbitration violated the federal Magnuson-Moss Warranty Act, which governs consumer product warranties. “Written warranty provisions that mandate pre-dispute binding arbitration are invalid,” Judge Stephen Reinhardt wrote. This decision is at odds with rulings by two other federal appeals courts that upheld similar arbitration clauses. That raises the prospect that the decision may be reconsidered by the 9th Circuit, or appealed to the U.S. Supreme Court. Reinhardt said that the law’s purpose is “to protect consumers from predatory warrantors” and shield them from “involuntary agreements that they cannot negotiate”. See more on Thomson Reuters. The decision, including the dissenting opinion written by Judge N. Randy Smith, can be found here.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: