Is a car buyer’s ability to recover attorneys’ fees and costs under California’s Consumer Legal Remedies Act (the “CLRA”) limited by the seller’s timely tender of an attempted “cure”? Three recent cases address the issue in different ways, running the gamut from “no effect” to rejecting any award for attorneys’ fees. Benson v. S. California Auto Sales, Inc., 239 Cal. App. 4th 1198 (2015); Goglin v. BMW of N. Am. LLC, 4 Cal. App. 5th 462 (2016); Gonzales v. CarMax Auto Superstores LLC, 845 F.3d 916 (9th Cir. 2017).
The CLRA (Cal. Civ. Code Section 1750, et seq.) allows recovery of money damages and injunctive relief against sellers of consumer goods who commit unfair and deceptive practices. A prevailing consumer can recover attorneys’ fees and costs, while a prevailing seller can do so only if the consumer did not prosecute the action in good faith. “Who prevailed” often turns on whether the seller tendered an offer to “correct, repair, replace, or otherwise rectify” the offending goods within the required 30-day period from the purchaser’s pre-litigation notice. These three recent decisions provide some guidance, but their teaching is also somewhat inconsistent.
Benson denied a purchaser’s request for $182,273 of attorneys’ fees and costs after the purchaser rejected the seller’s pre-litigation tender. Benson sent a 30-day pre-litigation notice related to the defective vehicle. The dealer timely responded, offering … (read more…)
Every financial institution dreads the discovery by a class action lawyer of a technical, albeit harmless, glitch in a widely used consumer contract that triggers exposure under a federal or state statute. The “express consent” requirement for auto-dialed calls under the infamous Telephone Consumer Protection Act (“TCPA”) provides just one example. Correspondingly, the class action attorney whose portal is crossed by a prospective client with such a contract has immediate visions of the Mother Lode. Under many of these draconian statutes, like the TCPA, liability is virtually automatic and the potential recovery exponentially greater than any conceivable harm. The class action is filed before anyone has time to blink or, more importantly, open the customer’s file.
Alas, once that customer’s file is opened, the class counsel’s glee turns to dread because the consumer contract contains an arbitration clause. In arbitration, class counsel confronts the task of actually learning something about the client’s real complaint and presenting it before a neutral. Dreams of early retirement following a large class fee award evaporate. Attorneys for the financial institution defendant immediately file a motion to compel arbitration under the Federal Arbitration Act (“FAA”). Assuming the court disregards class counsel’s checklist of standard attacks on the enforceability of such a clause, the case is ordered to arbitration on an individual basis. One would think the next step is to commence the arbitration, but not so fast! Keep in mind that class counsel is not interested in a resolution of the individual claim and would rather take a long shot by appealing the order compelling arbitration.
But an order to compel arbitration can’t be appealed, can it? The answer is not straightforward, either in the federal or California appellate systems.
Appeals in the Federal Court System. Section 16 of the FAA governs appeals of arbitration-related orders in federal courts. 9 U.S.C. § 16. Section 16(b)(1) provides that there shall be no appeal from an order under Section 3 of the FAA granting a stay of an action pending arbitration. So, in the typical case where the defendant responds to an action pending in federal court by filing a motion to compel arbitration, the granting of the order will stay the entire case and there can be no immediate appeal. (We will put aside the separate question of the appealability of separate petitions to compel arbitration under Section 4 of the FAA, which must have an independent basis of jurisdiction in federal courts and are subject to ordinary limitations on interlocutory review under 28 U.S.C. § 1292(b)).
Yet, the … (read more…)