More vehicles are now being sold directly to the public than ever before, in one way or another bypassing the dealership system. Tesla, of course, has always sold their vehicles directly to customers, others are now copying their distribution system. Or at least peeling back the contact customers have with dealers.
This places more emphasis on contracts and agreements. As a matter of fact, agreements at every stage of the buying process guide the entire transaction.
Like Tesla, one clause or side agreement – that has become increasingly popular is the arbitration clause – meaning that owners who experience problems must bring claims to an arbitration hearing and not the court system. In California, that means losing some of the protections of our Lemon Law.
First, What is Arbitration?
Arbitration is a private process where a third party renders a decision for the parties. The decision is binding and final. Arbitration is like taking the dispute to a private court, with the arbitrator as judge.
Arbitration moves faster than litigation. The process is certainly less rigid and the time and place is dictated by the parties, not by the exigencies of a crammed court docket.
That may look attractive but the reality is that final decision cannot be appealed. Also, there is no jury of your peers to hear your story and make the decision as there would be in court. There are other downsides to binding arbitration, not the least of which could be you’re being forced to attend a hearing nowhere near your home.
It goes without saying that an arbitrator may apply California Lemon Law differently than a judge in court would. That is a distinct handicap for every consumer.
The U.S. Senate recently [finally] took note of Tesla’s arbitration policies:
We are incredibly troubled by Tesla’s reported use of forced arbitration clauses in consumer and employee contracts. Such provisions deny consumers their right to bring cases in court and shield Tesla from public scrutiny and accountability. Several recent reports and lawsuits have described a culture of “severe and pervasive harassment” faced by workers at Tesla, and on February 15, the National Highway Traffic Safety Administration (NHTSA) found Tesla’s Full Self-Driving Beta software could “infringe upon local traffics laws or customs” and increase the vehicle’s crash risk . . . We are deeply concerned that the arbitration agreements you impose on your workers and consumers have kept . . . potential safety flaws from the public eye and limited regulatory authorities’
Understand, Tesla’s and this new generation of arbitration clauses and agreements mean you will not be able to file a lawsuit even if you discover dangerous, illegal, or life-threatening issues after you buy or lease - even if the vehicle has a deadly defect or you realize the manufacturer has done something illegal, such as engaging in false advertising. The only choice – if you sign the agreement and do nothing else – is to go to arbitration.
This is not advantageous for the consumer. It certainly is not good for the public; vehicle defect matters that go to arbitration (private) instead of through the court system (public) means there is no way for any of us to get accurate statistics concerning a manufacturer’s quality issues.
A Possible Solution
First and most obviously, READ YOUR CONTRACTS. At the very least, flip through and scan every heading. If, as with Tesla, the arbitration clause is in the body of the contract and you therefore have no choice but to sign, note that there is an opt-out clause. The first thing you do after you drive home is follow the opt-out directions to the letter. Keep a copy.
If the arbitration agreement is separate, as in the image above from Stellantis, don’t sign if you do not have to. If you really believe you aren’t leaving with the new vehicle unless you, follow the opt-out instructions as soon as possible. Keep a copy.
We strongly believe it is in the best interests of the consumer and the public to opt out of Tesla and Stellantis’s arbitration agreements.
We Work Hard on Your Behalf
The Gayle Law Group has represented many Los Angeles residents over the years. We've represented purchasers and lessees of cars, electric and hybrid vehicles, trucks, SUVs, motorcycles, RVs, and more in California. We will help you as well.
We care about every one of our clients and work hard to get impressive results for them. We are as dependent on our vehicles as any Californian is – we know how it feels to have a vehicle that won’t operate the way it should.
We pride ourselves on keeping our clients advised every step of the way. You will never be in the dark wondering what’s happening in your case. You’ll know every step of the way.
Gayle Law Group, Your California Lemon Law Firm
We care about every one of our clients and work hard to get impressive results for them. We are as dependent on our vehicles as any Californian – we know how it feels to have a vehicle that won’t operate the way it should.
We pride ourselves on keeping our clients advised every step of the way. You will never be in the dark wondering what’s happening in your case. You’ll know every step of the way.
Our goal is to get you out of your lemon vehicle so you can get a safe and reliable one as quickly as possible. We know how important it is to you, how you are hamstrung without a reliable vehicle.
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Based in Los Angeles and serving all of California, The Gayle Law Group has successfully represented numerous clients throughout the state over the years. Our experience spans across various vehicle-related cases, including those involving cars, electric and hybrid vehicles, trucks, SUVs, motorcycles, RVs, and more. No matter where you reside in California, we are here to provide the necessary legal support.