Hyundai and Kia Seek to Enforce Individual Arbitration Against Customers.

Hyundai and Kia Seek to Enforce Individual Arbitration Against California Customers

In what is being seen as a push to restrict customer rights, Hyundai and Kia are seeking to force individual arbitration against California vehicle owners who have filed complaints against the automaker. This would mean that any disputes or legal actions would be resolved outside of the courts, through a private arbitrator instead.

This move comes despite the fact that both automakers were already fined by the National Highway Traffic Safety Administration for failing to abide by customer safety laws.

Consumer advocates are concerned that this latest action will make it more difficult for customers to seek justice if they experience problems with their vehicles. The law firm representing the plaintiffs in the case, Sauder Schelkopf say that it appears that Hyundai and Kia are attempting to avoid taking responsibility for the defective cars.

Below is the official statement from the law firm handling the Cho, et al. v. Hyundai Motor Company case.

On March 23, 2022, the law firms of Sauder Schelkopf LLC and Walsh PLLC filed a class action lawsuit captioned Cho, et al. v. Hyundai Motor Company, LTD, No. 8:22-cv-00448 (C.D. Cal.) against Hyundai and Kia on behalf of owners and lessees with vehicles that are prone to excessive engine oil consumption, oil sludge and engine failure. The lawsuit alleges that certain Hyundai and Kia vehicles are experiencing oil consumption that results in ticking noises and possible failure of the engine’s internal components. When consumers present their vehicles to Hyundai and Kia for repair, they are informed that engine oil consumption is considered normal and are denied warranty coverage for the necessary repairs. As a result, current and former owners and lessees may be forced to pay for replacement engines and repairs out-of-pocket.

On June 28, 2022, Hyundai filed a motion to compel individual arbitration, where it argues that a Plaintiff, who purchased a 2022 vehicle, has claims that “do not belong in this Court because he is bound by an arbitration provision mandating individual arbitration.” Hyundai’s motion also does not even contend that the Plaintiff ever saw the arbitration clause at issue. If granted, a motion to compel individual arbitration sends the individual plaintiffs’ claims to private and binding arbitration. Arbitrations cannot be conducted on a class-wide basis, which means that Hyundai will only be held liable as to an individual plaintiff’s claims, instead of having to answer for a pervasive safety defect that plagues millions of its vehicles. In effect, the arbitration clause allows Hyundai to avoid liability almost entirely. Manufacturers, like Hyundai, bury these arbitration clauses in hundreds of pages of post-sale paperwork.

In 2013, The New York Times published an article whereby Hyundai agreed to drop the enforcement of the arbitration provision which brought attention to Hyundai’s arbitration policies. As a result, Hyundai eliminated binding arbitration policies from 2015 to 2019. Hyundai now attempts to reintroduce its arbitration clause in model year 2022 vehicles.

Millions of consumers, including those in Cho. v. Hyundai Motor Company, LTD, may never have their day in court over the oil consumption defect, or any other defect with their vehicles because of Hyundai’s attempt to enforce individual arbitration.

A Dangerous Precedent that Weakens Consumer Rights

This news is troubling for a number of reasons. First, it seems that Hyundai and Kia are trying to avoid taking responsibility for their actions by attempting to avoid class action lawsuits and making each customer bring an individual lawsuit. Second, by requiring arbitration, the automaker can essentially choose the arbitrator, meaning that owners may not get a fair hearing.

Finally, this could set a dangerous precedent for other companies who might seek to force customers into individual arbitration instead of dealing with complaints head-on through a class action with many customers at once.

We will continue to follow this story and provide updates as they become available. Please consider subscribing to this post so you don’t miss any critical news updates in the future.

Photo by Brock Wegner on Unsplash

Last Updated on August 11, 2022

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