Jeffrey Olson had leased a Jeep Grand Cherokee from an AutoNation dealership and later became the named plaintiff in a federal class action against FCA alleging that the vehicle's spring-loaded headrests were defective and deployed unexpectedly. The lease agreement between Olson and the dealership contained an arbitration clause with a delegation provision stating that questions about the arbitration agreement's scope must be decided in arbitration, but FCA was not a signatory to that contract.
The Ninth Circuit panel rejected FCA's argument that the delegation clause required sending the arbitrability question to an arbitrator rather than letting the court decide. Judge Michelle Friedland wrote that the arbitration agreement 'expressly limits the agreement to him and the dealership' and lacks 'clear and unmistakable evidence' that Olson agreed to arbitrate disputes with third parties like FCA. The court distinguished the Supreme Court's Henry Schein decision, noting it involved parties to the arbitration agreement.
FCA had moved to compel arbitration in the Eastern District of California, arguing that the delegation clause stripped the court of authority to determine arbitrability. District Judge Daniel Calabretta denied the motion, and FCA appealed. The case originated as a 2018 putative class action filed by Shawn Alger, with Olson later substituted as the named plaintiff after the court certified the class.
The ruling reinforces limits on when non-parties can enforce arbitration agreements and follows recent California Supreme Court precedent in Ford Motor Warranty Cases rejecting similar attempts by manufacturers to compel arbitration based on dealer agreements. The decision could impact other product liability cases where manufacturers seek to leverage arbitration clauses in contracts they didn't sign.