Vi Tran v. Hyundai Motor America

Farmers Ins. Exchange (1991) 231 Cal.App.3d 481, 489.) Notwithstanding Tran’s failure to oppose, the court has reviewed the language of the agreements at issue as well as the circumstances of their alleged execution. For the reasons stated here, the court concludes the petition must be denied as to the Owner’s Handbook. As for the CSA, the court concludes that the claimed defects are inextricably intertwined with the Bluelink services such that the action is subject to mandatory arbitration under the CSA’s arbitration agreement.

The operative initial complaint alleges nine causes of action: (1) breach of express warranty; (2) breach of implied warranty of merchantability; (3) violations of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.); (4) false advertising (Bus. & Prof. Code, § 17500); unfair competition (Bus. & Prof. Code, § 17200); fraud; negligent misrepresentation; negligence; and injunctive relief. The complaint names as defendants Hyundai; Firstelement Fuel, Inc.; California Fuel Cell Partnership; and Doe defendants.

The complaint alleges defendants systematically deceived consumers “regarding the Hyundai Nexo hydrogen fuel cell vehicle and its supporting infrastructure.” (Complaint, ¶ 1.) Regarding vehicle-specific defects, the complaint alleges three categories of defect: (1) the “Vehicle’s parking sensor system poses significant safety risks by deactivating without warning”; (2) the “Vehicle’s GPS navigation system malfunctions by direction Plaintiff to hydrogen stations miles away instead of nearby locations; and (3) the “Vehicle’s Bluelink system (the GPS, safety features, and Bluetooth) never functioned properly, and persistent infotainment system defects.” (Id., ¶¶ 3- 4.)

The Owner’s Handbook

Tran alleges she received an express warranty from Hyundai when purchased the subject vehicle. (Complaint, ¶ 19-23.) Hyundai attached a copy of the Owner’s Handbook to a declaration in support of the petition to compel arbitration. (Declaration of Anthony Goel, exh. D.) A representative of Hyundai declares that the handbook would have been provided to Tran when she bought the vehicle. (Declaration of Anthony Goel, ¶ 6.)

An arbitration provision appears in the Owner’s Handbook. It states, in relevant part, that the parties “each agree that any claim or disputes between us (including between you and any of our affiliated companies) related or arising out of your vehicle purchase, advertising for the vehicle, use of your vehicle, the performance of the vehicle, and any service relating to the vehicle, the vehicle warranty, representations in the warranty, or the duties contemplated under the warranty . . . shall be resolved by binding arbitration at either your or our election even if the claim is initially filed in a court of law.” (Declaration of Anthony Goel, exh. D at p. 12.) The provision also states: “This agreement evidences a transaction involving interstate 11

commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1-16.” (Id. at p. 14.) The Owner’s Handbook is not signed. There is no evidence that Tran was made aware of the text of the warranties in this document or the arbitration provision contained therein before she purchased the subject vehicle from the dealer.

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.)

No Mutual Assent

There was no mutual assent supporting a valid arbitration agreement based on the Owner’s Handbook. Tran did not sign the Owner’s Handbook, and Hyundai provides no evidence Tran knew about the Owner’s Handbook when purchasing the subject vehicle. Under certain circumstances, such as those involving an unsigned employee 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”].)

The court finds that there is no evidence of assent by Tran to the Owner’s Handbook’s arbitration provision.

Equitable Estoppel

Hyundai argues that notwithstanding Tran’s lack of assent and lack of knowledge regarding the arbitration provisions, she is now barred by equitable estoppel from challenging these provisions in the vehicle warranty because he has affirmatively asserted the warranty by seeking repairs from Hyundai 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 Handbook 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 12

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 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 handbook.

The proposition that a manufacturer can compel arbitration in virtually every Song- Beverly case simply by inserting language into an owner’s handbook—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 handbook 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 Bluelink CSA

In contrast to the Owner’s Handbook, Hyundai contends that Tran signed the CSA agreement (including its arbitration provision). Hyundai’s Defendant’s Director of Connected Ops & Owner Apps/Web declared Tran would have had to click a box on a computer or tablet acknowledging that she “ ‘read and agree[d] to the Blue Link Terms & Conditions.’ ” (Declaration of Vijay Rao, ¶¶ 15, 23, Ex. B.) The arbitration provision in the CSA is broad:

(a) Hyundai and you agree to arbitrate any and all disputes and claims between us arising out of or relating to this Agreement, Connected Services, Connected Services Systems, Service Plans, the Vehicle, use of the sites or products, services, or programs you purchase, enroll in or seek product/service support for, whether you are a Visitor or Customer, via the sites or through mobile application, 13

except any disputes or claims which under governing law are not subject to arbitration, to the maximum extent permitted by applicable law. This agreement to arbitrate is intended to be broadly interpreted and to make all disputes and claims between us subject to arbitration to the fullest extent permitted by law . . . The agreement to arbitrate otherwise includes, but is not limited to: Claims based on contract, tort, warranty, statute, fraud, misrepresentation or any other legal theory; claims that arose before this or any prior Agreement (including, but not limited to, claims relating to advertising).

(Rao Decl., Ex. C at ¶ 14.)

As explained in the Declaration of Vijay Rao, “Bluelink refers to an optional telematics technology with various functions, features, and services, such as Connected Care, a comprehensive safety and car care system. Bluelink’s functions, features, and services, include, but are not limited to, on-demand diagnostics and alerts, service link, enhanced roadside assistance, automatic emergency assistance, remote, start, remote door lock and unlock, and remote car finder.” (Rao Decl. at ¶ 6.) Based on the court’s review of the complaint, it appears that Bluelink services are an integral part of Tran’s action.

The complaint alleges three categories of defect: (1) the “Vehicle’s parking sensor system poses significant safety risks by deactivating without warning”; (2) the “Vehicle’s GPS navigation system malfunctions by direction Plaintiff to hydrogen stations miles away instead of nearby locations; and (3) the “Vehicle’s Bluelink system (the GPS, safety features, and Bluetooth) never functioned properly, and persistent infotainment system defects.” (Id., ¶¶ 3-4.) At least two of those allege defects appear to implicate the Bluelink system.

Based on the allegations at issue in this case, as well as Tran’s failure to oppose the petition to compel arbitration, the court concludes Tran’s complaint is subject to mandatory arbitration under the Bluelink CSA.

Conclusion

The petition to compel arbitration is GRANTED, based on the terms of the Bluelink Connected Services Agreement. This action is STAYED in its entirety pending the outcome of arbitration. (Code Civ. Proc. § 1281.4; 9 U.S.C. § 3.) A case status review regarding arbitration will take place on February 11, 2027, at 11:00 a.m. in Department 10. The court will prepare the order.

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