Summary
The Ninth Circuit affirmed the denial of FCA US, LLC’s motion to compel arbitration in a class action alleging defects in vehicle headrests. The court held that FCA, a nonsignatory to the lease agreement containing the arbitration clause and delegation provision, could not enforce those provisions because the agreement did not clearly and unmistakably authorize arbitration with FCA. The court also rejected FCA’s alternative arguments based on the plain language of the agreement and equitable estoppel under California law.
Topics
Practice areas
Questions Presented
- Whether a nonsignatory manufacturer could enforce the delegation clause in an arbitration agreement between a vehicle lessee and dealership to require an arbitrator to decide whether the manufacturer's dispute with the lessee was arbitrable.
- Whether the plain language of the lease arbitration agreement required Olson to arbitrate his claims against FCA.
- Whether FCA could enforce the lease arbitration agreement through equitable estoppel under California law.
Holdings
- FCA could not enforce the delegation clause because Olson's arbitration agreement did not provide clear and unmistakable evidence that he agreed to arbitrate arbitrability with third parties such as FCA. With limited exceptions, a nonsignatory cannot enforce an arbitration agreement against a signatory, and no applicable exception existed here.
- The plain language of the lease did not require Olson to arbitrate any claims against FCA.
- FCA could not use equitable estoppel under California law to compel Olson to arbitrate his claims against FCA because those claims were based on statutory rights and FCA's manufacturer warranty, not on contractual provisions in Olson's lease.
Key quotations
“With limited exceptions, non-parties to an arbitration agreement cannot enforce the agreement’s terms against a signatory.” (10)
“That cannot be right.” (15)
“For the foregoing reasons, we affirm the district court’s denial of FCA’s motion to compel arbitration.” (20)
Factual background
Jeffrey Olson leased a Jeep Grand Cherokee from an automobile dealership and signed a lease containing an arbitration agreement and delegation clause. The agreement limited arbitrable disputes to those between Olson and the dealership, its employees, agents, successors, or assigns. Olson later became the named plaintiff in a class action against FCA, the vehicle manufacturer, alleging headrest defects and violations of California warranty and consumer-protection law. FCA was not a signatory to the lease and did not claim to be the dealership's employee, agent, successor, or assign.
Procedural history
Shawn Alger initially filed a putative class action against FCA asserting California warranty and consumer-protection claims. The district court certified the class and later substituted class member Jeffrey Olson as the named plaintiff. After Olson's substitution, FCA moved to compel arbitration based on an arbitration agreement in Olson's lease with an automobile dealership. The district court denied the motion, and the Ninth Circuit affirmed. The opinion was filed April 7, 2026, amended May 21, 2026, and the petitions for panel rehearing and rehearing en banc were later denied.