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The Appellate Court of Illinois has held that a designated arbitration administrator's refusal to resolve a consumer-submitted Magnuson-Moss warranty dispute does not deprive that consumer of the right to seek resolution of the dispute through litigation. The administrator refused to hear the claim because the vehicle had been repossessed.
In Jones v. Nissan North America, Inc., No. 2-07-0448, 2008 WL 4182518 ( Ill. Ct. App. Sept. 11, 2008), Jones purchased a vehicle from a Nissan dealer. Nissan provided a warranty for the vehicle. The warranty documents contained a dispute resolution agreement requiring the use of the Better Business Bureau's (BBB) Auto Line program – a two-step mediation and arbitration procedure – before filing a Magnuson-Moss Act (the Act) warranty claim in a court of law. See 15 U.S.C. § 2301, et seq.
After unsuccessful attempts to repair a problem with the vehicle, Jones filed a demand with the BBB for Auto Line resolution. BBB sent a notice requiring Jones to appear on an appointed date and time for inspection of the vehicle, and Jones missed that appointment. Jones tried to reschedule the inspection, but the BBB refused, closed his claim, and declined to reopen it. Soon after, Nissan's financing entity repossessed the vehicle for non-payment.
Jones then filed a Magnuson-Moss claim with the trial court. Nissan moved to compel use of the BBB procedure, and the trial court granted that motion. The BBB again refused to consider Jones's claim, this time because Jones no longer possessed the vehicle, which was a precondition to the use of the BBB dispute resolution procedure. Jones then filed a motion to reopen court proceedings, which the trial court denied.
On appeal, Jones argued that his failure to meet the BBB's Auto Line eligibility requirements should not be a bar to judicial resolution of his Magnuson-Moss warranty claim. Jones maintained that he "initially resorted" to the BBB procedure by filing the initial claim, which satisfied the requirements of the Act and did not prohibit his court action once the BBB declined to hear his claim.
The Court agreed. The Court acknowledged that the Act's plain language did not indicate whether ineligibility for the contractually-designated dispute resolution program based on dispossession could prohibit an aggrieved party from filing a court claim. Turning to the Act's legislative history, however, the Court found ample evidence that prohibiting court action under these circumstances would be contrary to Congress' legislative intent.
The Court noted, "Senator Magnuson stated that one of the bill's two objectives was to provide 'meaningful remedies for consumers in the event of a breach of a warranty or service contract obligation.'" It also explained that Senator Moss intended that the bill "provide[] the consumer with an economically feasible private right of action so that when a warrantor breaches his warranty or service contract obligations, the consumer can have effective redress."
According to the Court, "permitting ineligibility for a warrantor's informal dispute resolution procedure to bar a consumer's access to court under these circumstances is antithetical to Congress's intent" as expressed by the Act's authors. The Court found that a contrary holding would "effectively permit[] the BBB, an independent entity charged with helping consumers and warrantors resolve disputes without litigation, to rewrite the Act" in a manner Congress did not contemplate.
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