July 25, 2024
A Sixth Circuit judge pressed General Motors on Thursday about why it waited three years to argue that some plaintiffs were bound by arbitration agreements in a class action over allegedly defective transmissions, saying a major car company should be aware most consumers sign such contracts.
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GM is appealing the certification of 26 classes of drivers who say their vehicles had faulty transmissions that could cause shudders and hard shifts, sometimes making the vehicles difficult to stop.
In certifying the classes in March 2023, U.S. District Judge David M. Lawson determined GM waived its right to compel arbitration “by engaging in this litigation and seeking dispositive rulings from the court on the plaintiffs’ claims — some of which were forthcoming in its favor.” GM raised arbitration against absent class members in its answer to the third amended complaint, according to proceedings.
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Douglas McNamara, of Cohen Milstein Sellers & Toll PLLC., representing the class, said GM could have pled the arbitration defense sooner.
“And that’s the problem here. They never pled it in the affirmative answer,” McNamara told the panel, which was down to two judges Thursday with the absence of U.S. Circuit Judge R. Guy Cole Jr.
Judge Moore asked McNamara about GM’s argument that discovery is needed to determine who has arbitration agreements.
McNamara said the reason GM doesn’t know who has arbitration agreements is that the dealers are the ones who issue them. He said GM shouldn’t be able to “glom on” to dealers’ agreements.
“They could have always pled it. They didn’t, and that’s why it was waived,” McNamara said.
McNamara said GM’s estimate that 40% — which he said GM “made up” — of class members signed arbitration agreements still leaves about 480,000 plaintiffs to survive the numerosity threshold for certification.
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McNamara said there is no state supreme court that definitively said a defect needs to manifest to support a warranty claim.
“In fact, it doesn’t really make any sense. If you can show now that you have a present economic injury, because you bought a vehicle that you paid too much for because of defects, because it has diminished value —why do we need to wait for a manifested defect?” McNamara said.
McNamara said all the class members have standing because they all overpaid for their vehicles.
Read 6th Circ. Judge Questions GM’s Arbitration Argument Delay.