Toyota Can’t Enforce Dealer Arbitration Agreements (11th Cir.)

In a recent unpublished opinion, the Eleventh Circuit refused Toyota’s request to compel arbitration against one of its customers.  This decision is consistent with several others, including in the Ninth Circuit.

In Drayton v. Toyota Motor Credit Corp., plaintiff sued Toyota for violating the TCPA and Florida’s analog statute. Toyota moved to compel arbitration, pointing to the purchase contract entered into between plaintiff and her local dealership.

Toyota, like most automotive manufacturers, does not sell vehicles directly to its customers.  So as is typical of vehicle purchase transactions, Toyota was not a party to the purchase agreement.  And Florida law, like many other states, does not ordinarily allow non-signatories to enforce contracts.

Toyota sought to exploit an exception, arguing that under the equitable estoppel doctrine, plaintiff could not seek to hold a party to the terms of an agreement while simultaneously trying to avoid the agreement’s arbitration clause.  The problem?  Plaintiff was not seeking to hold Toyota to the terms of the agreement.  Her claims stemmed from Toyota attempting to collect a consumer debt.

The Eleventh Circuit’s decision continues the consumer friendly trend of disallowing automotive manufacturer attempts to avoid liability by pointing to the forced arbitration clauses in their dealers’ contracts. E.g., Kramer v. Toyota Motor Corp., 705 F.3d 1122 (9th Cir. 2013); Soto v. Am. Honda Motor Co., 946 F. Supp. 2d 949 (N.D. Cal. 2012).