Automobile Manufacture Cannot Leverage Purchaser’s Agreement With Dealer To Compel Arbitration

In Guan v. BMW of North America, LLC, a California District Court, acknowledging a split of authority, held that an automobile manufacturer could not compel arbitration of a purchaser’s claims regarding defects in a new car based on a provision in the purchase agreement that required arbitration of claims between the purchaser and the dealer or the dealer’s “employees, agents, successors or assigns.” The court held that, “while acknowledging there exists a split of authority as to whether a vehicle manufacturer can enforce such an arbitration provision on the basis of equitable estoppel or as a third-party beneficiary, finds more persuasive the reasoning of the decisions addressing essentially the same arguments raised here by BMW and finding the manufacturer cannot enforce the provision.”

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