On January 7, 2022, the Ninth Circuit Court of Appeals issued a memorandum decision upholding a victory in the trial court over an effort to compel arbitration of claims filed by a class of RV buyers who allege the RVs have defective frames that are prone to cracking and warping. The case is Ellington v. Eclipse Recreational Vehicles (9th Cir., Jan. 7, 2022, No. 21-55021) 2022 WL 72351. Jeremy Robinson, a partner at Casey Gerry, briefed and argued the appeal.
The defendants in that case—the manufacturer of the RVs and the manufacturer of the frames—tried to compel the plaintiff Ty Ellington to arbitrate all of his claims individually (meaning the case could not proceed as a class action) by way of a finance contract signed by Mr. Ellington and the dealership, who is not a party to the case. The defendants claimed that even though they were not a part of that contract, they could nevertheless enforce parts of it under the doctrine of equitable estoppel. Judge John Holcomb of the Central District of California denied the defendants’ motion to compel arbitration and the Ninth Circuit recently affirmed that order. And while this may seem to be a technical and somewhat esoteric issue of law, it actually comes up frequently and getting a favorable win from the Ninth Circuit is a big step toward protecting consumer rights.
Key to the case was the impact of a recent decision by the California Court of Appeal in Felisilda v. FCA US LLC, 53 Cal.App.5th 486 (2020). Felisilda has caused a lot of confusion at the trial court level because its reasoning is internally inconsistent, and courts have struggled to discern the scope of its holding. But the Ninth Circuit found Felisilda to be inapplicable because of key factual differences in the case.
In Ngo v. BMW of North America, LLC (9th Cir., Jan. 12, 2022, No. 20-56027) 2022 WL 109004, a companion case that was consolidated with Ellington for oral argument, the Ninth Circuit issued a published opinion more fully explaining its reasoning for rejecting the application of Felisilda to a similar case and also refusing to compel arbitration on the basis of a third-party beneficiary argument. The plaintiff in Ngo was ably represented by Jennifer Bennett of Gupta Wessler.