Ford ‘Entitled’ to Compel 3G Telematics Claims to Arbitration, Says Opening Brief

The four plaintiff-appellees who allege that Ford duped them into buying or leasing its vehicles with inoperable 3G modems following AT&T’s “decommissioning” of its 3G network in 2022 should have submitted their claims to arbitration “as provided by the individual arbitration agreements they each entered into,” said the automaker’s opening brief Wednesday (docket 23-3966) in the 9th U.S. Circuit Court of Appeals.

Ford’s appeal seeks to reverse the district court’s Nov. 7 denial of its motion to compel the appellees’ 3G telematics claims to arbitration (see 2312040038). Ford’s motion to compel was based on the sales contracts or lease agreements that the four appellees signed, plus the “connected services” agreements three of them signed to operate their FordPass and Lincoln Way roadside apps. But the district court sided with the appellees, who argued that the defendant can’t enforce those agreements, or that they don’t provide for mandatory arbitration.

The appellees wrongly filed a class action against Ford for breach of warranties, violation of California’s consumer protection statutes and fraudulent omission, instead of submitting their claims to arbitration, said the carmaker’s opening brief. The appellees argue that they can “ignore their agreements to arbitrate because they are only suing Ford, not the dealerships from which they bought or leased their vehicles,” it said.

The U.S. District Court for Southern California erred in its agreement with the appellees’ argument, said the brief. In so doing, it committed a “misstep” that “undermines the enforceability of arbitration agreements and disrupts the contractual expectations set forth between the parties,” it said.

Ford is “entitled” to compel arbitration, even though it didn’t sign the actual sale and lease contracts, said the brief. That’s because the company “is a principal of the signatory-dealerships” and a “third-party beneficiary” of the contracts, it said: “The doctrine of equitable estoppel applies.” The defendant reserves the right to dispute, at trial or arbitration, whether the appellees “can meet their burden of proving liability based on an agency relationship” with its dealerships, it said. But having already alleged that the dealers are Ford’s agents, the appellees can’t then “dispute that same fact in an effort to avoid arbitration,” it said.

The Ford Credit subsidiary also has the contractual right to compel arbitration of any disputes related to the lease contracts, “regardless of whether it is named as a formal defendant, including disputes raised only against nonsignatory third parties,” said the brief. Ford Credit agreed with Ford that the appellees’ claims should be submitted to arbitration, “a fact the district court improperly ignored,” it said. The 9th Circuit should reverse the district court’s order denying the motion to compel arbitration, it said.