Kramer v. Toyota Motor Corp

In Kramer v. Toyota Motor Corp. (9th Cir. 2013) 705 F.3d 1122, purchasers and lessees of Toyota vehicles brought a class action against the Toyota manufacturer, alleging the manufacturer violated California consumer statutes and breached warranties by allegedly including a defective braking system in the vehicles. (Id. at p. 1124.) Each class member signed a purchase agreement containing an arbitration clause with a Toyota dealer. (Id. at pp. 1124-1125.) Although the manufacturer was not a party or a signatory to those purchase agreements, the manufacturer sought to enforce the arbitration agreements under the equitable estoppel doctrine. Applying California law, the Ninth Circuit held the doctrine was inapplicable. (Id. at pp. 1128-1137.) The court reasoned that the plaintiffs' claims against the manufacturer were not founded on any provision in the purchase agreements, and instead arose based on the manufacturer's independent duties owed to the customers. (Id. a p. 1132.) The Ninth Circuit rejected the manufacturer's argument that the plaintiffs' claims were necessarily intertwined with the purchase agreements because the lawsuit was predicated on the fact that a vehicle purchase occurred. (Ibid.) The court explained that although the plaintiffs' causes of action presume a vehicle sale, the claims do not rely upon the existence of the purchase agreement and instead the causes of action arose under California consumer protection laws that were independent of the underlying dealer agreements. (Ibid.)