Mandatory arbitration clauses are common in
franchise agreements, including motor vehicle franchise agreements.
Whether a manufacturer can enforce such a provision requires an
analysis of competing state and federal statutes and a determination
of whether the vehicles sold fall within the statutory definition of
a “motor vehicle.” In an opinion addressing the various statutory
regimes, a federal district court in New York held the Motor Vehicle
Franchise Contract Arbitration Fairness Act, 15 U.S.C. 1226 did not
limit a franchisor’s effort to arbitrate a dispute concerning
dealer agreements for snowmobiles and all-terrain vehicles (ATVs). At
the same time, the court held that the Fairness Act did serve to
block arbitration of claims regarding the same dealer’s motorcycle
franchise.
Champion Auto Sales, LLC v. Polaris Sales Inc.,
2013 U.S. Dist. Lexis 65219 (E.D.N.Y. Mar. 27, 2013).
Full casenote on Day Pinkney LLP's website here.
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