Kona Owners Fight Hyundai’s Motion to Compel Arbitration in Class Action Lawsuit
In 2021, plaintiff Siamak Kermani filed Kermani v. Hyundai Motor America, et al. in the Los Angeles County courts. The case alleges that Hyundai violated several provisions of California’s Song-Beverly Consumer Warranty Act, commonly known as the state’s lemon law.
Hyundai fought to have the case taken out of court and into arbitration. Hyundai lost its motion to compel arbitration. Hyundai then filed an appeal, causing more delay. The California Court of Appeal disagreed with all of Hyundai’s arguments, affirmed the denial of the appeal, and remanded the case back to the state court for determination on the merits. A copy of the decision is here. Not satisfied with the two courts’ analyses and decisions against it, Hyundai rejects the Court of Appeals decision and now wants the Supreme Court of California to review the denial of the motion to compel arbitration and the rejection of its appeal. If nothing else, Hyundai is accomplishing significant delay.
Facts in the Kona Case
While the case is called Kermani v. Hyundai Motor America, it involves more than just the named plaintiff. The case also includes all other Hyundai owners or lessees who purchased, under warranty, a Hyundai vehicle with a defective battery system.
The Complaint alleges that in 2019, Kermani leased a 2019 Hyundai Kona Electric from a Hyundai dealership in California. Approximately a month later, Kermani returned to the dealership, announcing a desire to purchase the vehicle. At the time, Kermani’s Kona had just 502 miles on its odometer.
Hyundai and Kermani worked out a sales agreement. That agreement included Hyundai’s manufacturer’s warranty, as well as implied warranties that the 2019 Kona would be the same quality as other non-defective similar vehicles. The agreement also included implied warranties that the 2019 Kona would perform as its manual and instructions described.
Despite these warranties, Kermani soon found that the battery system contained “serious defects,” according to the Complaint. Attempts to have Hyundai repair the problems failed.
Why Does Hyundai Want Arbitration?
Arbitration is an alternative form of dispute resolution. It is often used rather than taking a claim to court because arbitration is faster and less expensive. In arbitration, a third-party arbitrator hears evidence from both sides and then makes a decision. The parties are bound by the arbitrator’s decision. Importantly, class actions cannot be pursued in an arbitration.
Arbitration can be useful in some legal claims. For lemon law claims, however, arbitration is often weighted in favor of automakers. Statistical analysis of arbitration rulings shows that vehicle owners are likelier to lose in arbitration, even with valid lemon law claims.
It is not unusual for purchase or lease agreements from car dealerships to contain arbitration clauses. Yet the existence of an arbitration clause doesn’t always guarantee the parties will go to arbitration.
In Kermani v. Hyundai Motor America, Hyundai filed a motion to compel arbitration. Had it succeeded, the motion would have ended the class action and sent just Mr. Kermani to an arbitration instead. Fortunately, the court denied Hyundai’s motion, and the opportunity to pursue the claims on behalf of all owners of the defective Kona’s as a class action remains intact.
What Hyundai Kona Owners Need to Know
Kermani v. Hyundai Motor America was filed as a class action lawsuit to give every similarly situated Kona owner a chance to participate. By combining vehicle owners into one class, attorneys hope to help these vehicle owners achieve compensation they may otherwise struggle to win on their own.
As of September 2023, the National Highway Traffic Safety Administration (NHTSA) lists 132 complaints related to the 2019 Hyundai Kona on its website. Many of these complaints focus on issues with the vehicles’ electrical system – and many raise questions about Hyundai’s behavior surrounding Kona battery issues. For example:
- In April 2023, a vehicle owner purchased a 2019 Kona from a Hyundai dealership, only to be told the dealership had to replace the battery first. Even after replacement, the vehicle’s emergency lights stayed on, so the owner returned to the dealership – only to hear that a fix would take six months.
- In March 2023, an owner took their 2019 Kona to the dealership for battery replacement, only to be told there was “front-end damage” to the battery and the cost would fall on the owner. The owner noted, however, that no warning lights from the car ever indicated a problem with battery damage.
- In October 2022, a 2019 Kona owner in Hawaii took their vehicle in to have the battery replaced, although they hadn’t had problems with it. The owner faced a long wait for the battery replacement. Hyundai claimed it was unaware of the owner’s problem.
- In September 2022, a 2019 Kona owner in Massachusetts had their car die without warning. After a battery replacement, the car died again a month later.
Taking on an automaker can be tough. Even with a strong case, automakers may fight to avoid taking responsibility for a vehicle issue. Talk to the experienced California lemon law attorney at Wirtz Law to learn more about your legal rights and options.
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