Pedram Bigdeli et al. v. Jaguar Land Rover North America, LLC

Under the Federal Arbitration Act (“FAA”), the court’s role is limited to determining “(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute as issue.” (Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130.) To determine “whether a valid contract to arbitrate exists,” courts apply “ordinary state law principles that govern contract formation.” (Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1093 [citations omitted]; see also Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165, 1170.)

Mutual Assent Here, there is no indication that Plaintiffs signed the Owner’s Manual or knew of its provisions at the time of sale. Therefore, there was no mutual assent supporting a valid agreement. Under certain circumstances, including those involving an unsigned handbook, a contract may be void if “a party, before making the agreement, lacks reasonable opportunity to learn its terms.” (Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 790 [addressing arbitration provision contained in an employee handbook] [citing Rosenthal v.

Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 421].) As noted in Norcia v. Samsung Telecommunications America, LLC (9th Cir. 2017) 845 F.3d 1279 (Norcia), another case involving an unsigned brochure (entitled “Product Safety & Warranty Information”): “Even if there is an applicable exception to the general rule that silence does not constitute acceptance, courts have rejected the argument that an offeree’s silence constitutes consent to a contract when the offeree reasonably did not know that an offer had been made.” (Norcia, 845 F.3d at p. 1285 [applying “basic principles of California contract law”].)

Recently, the Second District Court of Appeal in Kostandian v. American Honda Motor Co., Inc. (2026) 120 Cal.App.5th 872,5 considered whether a valid agreement to arbitrate existed under a warranty booklet. The court there found in the affirmative because the lease agreement included a final inspection at delivery sheet that the respondent signed and initialed confirming his receipt of the owner’s manual and warranty information. (Id. at p. 876.) The facts here are distinguishable from Kostandian.

There is no evidence that the warranty was presented in any manner to Plaintiffs. Additionally, Plaintiffs did not sign any documents confirming receipt of the Owner’s Manual. Thus, there is no evidence of assent by Plaintiffs to the arbitration provisions here. In sum, unlike Kostandian, there are no facts supporting an outward manifestation of assent. “California law is clear—‘an offeree, regardless of apparent manifestation of his consent is not bound by inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious.’” (Long v.

Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 862, internal citations omitted.)

Equitable Estoppel Defendant argues that notwithstanding Plaintiff’s lack of assent and lack of knowledge regarding the arbitration provisions, they are now barred by equitable estoppel from challenging these provisions in the vehicle warranty because they have affirmatively asserted the warranty by seeking repairs from Defendant and bringing this Song-Beverly Action.

A nonsignatory to a contract is generally “ ‘estopped from avoiding arbitration if [he] knowingly seeks the benefits of the contract containing the arbitration clause.’ [Citation.] Equitable estoppel, thus, ‘precludes a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that contract imposes.’” (Philadelphia Indemnity Insurance Co. v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 841 [citations omitted].) But warranties like that found in the Owner’s Manual are “governed by a different set of rules” in California: “A seller is bound by any express warranties given to the buyer, including statements in written warranty agreements, advertisements, oral representations, or presentations of samples or models. [Citations.]

Language in a written warranty agreement is ‘contractual’ in the sense that it creates binding, legal obligations on the seller [citation], but a warranty does not impose binding obligations on the buyer. Rather, warranty law ‘focuses on the seller’s behavior and obligation—his or her affirmations, promises, and descriptions of the goods—all of which help define what the seller in essence agreed to sell.’ [Citations.] A buyer may have to fulfill certain statutory conditions to obtain the benefit of a warranty.

See, e.g., Cal. Civ. Code[,] § 1793.02(c) (stating that ‘[i]f the buyer returns the [assistive device for an individual with a disability] within the period specified in the written warranty,’ the seller must adjust or replace the device (emphasis added)). But a warranty generally does not impose any independent obligation on the buyer outside of the context of enforcing the seller’s promises.” (Norcia, supra, 845 F.3d at p. 1288.)

Norcia was not an equitable estoppel case, because the plaintiff there did not attempt to enforce the warranty. But its reasoning is nonetheless persuasive. A warranty is an atypical contract. It is essentially one-sided, even though it is offered only after a buyer has agreed to pay for something pursuant to a sales contract. And it imposes obligations on a seller (or, in this case, on a manufacturer who passes the car into the stream of commerce through an

5 Appellant Honda Motor America also moved to compel arbitration pursuant to a lease agreement executed by its wholly owned subsidiary financing company that was named as a party therein. This case is also distinguishable because Defendant does not move to compel arbitration pursuant to any other agreement.

authorized dealer who is the actual “seller”), but no independent, free-standing obligations on a buyer. It is unreasonable to expect a car buyer to know or anticipate that the buyer is necessarily agreeing to arbitrate all claims against that manufacturer merely by receiving a preprinted warranty in an owner’s manual.

The proposition that a manufacturer can compel arbitration in virtually every Song- Beverly case simply by inserting language into an owner’s manual—without ever calling the buyer’s attention to that language—runs counter to the reasoning of Ford Motor Warranty Cases (2025) 17 Cal.5th 1122. In that case, the Supreme Court concluded that a manufacturer could not enforce an arbitration provision in a sales contract to which its authorized dealer and a car buyer both affirmatively assented (but to which the manufacturer itself was not a party). (Id. at p. 1126.)

Allowing a car manufacturer to perform an end-run around that decision simply by inserting an undisclosed and unsigned arbitration provision into an owner’s manual containing warranty terms would be an inequitable result. (UFCW & Employers Benefit Trust v. Sutter Health (2015) 241 Cal.App.4th 909, 929 [“ ‘The linchpin for equitable estoppel is . . . fairness.’ ”].) In contrast to other reported California decisions in which the equitable estoppel has been applied, the present case “does not present the unfairness that equitable estoppel is designed to avoid.” (Id. at p. 931.)

The court denies the motion to compel arbitration. Since the vehicle warranty does not create an agreement to arbitrate, the Court need not address Defendant’s arguments on waiver and unconscionability as there is no agreement to be enforced.

DISPOSITION The motion to compel arbitration is DENIED. The Court will prepare the order.

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