In Kaiser v. BMW of North America, LLC, 2013 WL 100218 (N.D.Cal. 2013), a consumer complained that a vehicle manufacturer improperly sought to offset its lemon law liability by charging the consumer for unreasonable wear and tear on the vehicle.  Judge Ryu allowed the claim to proceed past the pleading stage.   The basic facts were as follows:

Shortly thereafter, Kaiser received a telephone call from a BMW agent seeking to arrange a time for return of the Vehicle and payment of the refund. (SAC ¶ 22.) During the call, the agent indicated that she would inspect the Vehicle to ensure that there was no excessive wear and tear. (SAC ¶ 22.) The call prompted Kaiser to research his rights under California Lemon Law. (SAC ¶ 23.) His research led him to the case Jiagbogu v. Mercedes–Benz USA, 118 Cal.App. 4th 1235, 1243 (2004), which he believes indicates that a manufacturer can reduce a lemon car’s repurchase price only by the statutory mileage formula set forth in section 1793.2(d)(2)(C). (SAC ¶ 23.) However, when Kaiser brought the Vehicle to the BMW dealer for repurchase on September 8, 2011, BMW’s agent informed him that the agreed repurchase price would be reduced by $3,224.34 to account for “excessive wear and tear.” (SAC ¶ 25.) Kaiser objected that state law did not permit this reduction, declined the repurchase offer, and indicated to a BBB Dispute Resolution specialist that he wished to proceed to arbitration with BMW. (SAC ¶¶ 25, 26.)

After rejecting the manufacturer’s offer, the consumer instituted BBB arbitration, purportedly based on the BBB’s advertisement that it acts as a neutral entity with legal expertise which provides unbiased advice and claims warranty services. The BBB issued an arbitration award that also purported to charge the consumer for unreasonable wear and tear on the vehicle. The consumer sued the manufacturer and BBB.  The District Court rejected BBB’s argument of arbitral immunity, and found that the consumer had stated a claim for injury-in-fact under the UCL.

BBB contends that Kaiser’s UCL claim is barred by the doctrine of arbitral immunity because it is “premised on Kaiser’s dissatisfaction with the Arbitration Decision.” (Def.’s Mot. 11.) Arbitral immunity provides that “ ‘arbitrators are immune from civil liability for acts within their jurisdiction arising out of their arbitral functions in contractually agreed upon arbitration hearings.’ “ Sacks v. Dietrich, 663 F.3d 1065, 1069 (9th Cir.2011) (quoting Wasyl, Inc. v. First Boston Corp., 813 F.2d 1579, 1582 (9th Cir.1987)). Like judicial immunity, this doctrine aims “ ‘to protect the decision-maker from undue influence and protect the decision-making process from reprisals by dissat-isfied litigants .’ “ Id. (quoting Wasyl, Inc., 813 F.2d at 1582). Immunity does not extend to all acts of an arbitrator; it covers only those acts “ ‘within the scope of [the arbitrator’s] duties and within their jurisdiction.’ “ Id. (quoting Wasyl, Inc., 813 F.2d at 1582). Whether a claim triggers immunity turns on “ ‘whether the claim at issue arises out of a decisional act.’ “ Id. at 1070 (quoting Pfannenstiel v. Merrill Lynch, Pierce, Fenner & Smith, 477 F.3d 1155, 1159 (10th Cir.2007)). If the claim effectively challenges a decisional act of an arbitrator, immunity applies. Id.  The gravamen of Kaiser’s UCL claim, as set forth above, is that BBB entered into a scheme with BMW, and aided and abetted BMW in violating the California Lemon Law. The alleged scheme, in which “BBB and BMW cooperated … to obtain financial gain,” “was used by BMW and others to seek improper reductions in lemon car repurchases, including repurchase of Kaiser’s car.” (SAC ¶¶ 71–72.) This claim is not grounded in Kaiser’s dissatisfaction with or in an attempt to challenge BBB’s arbitration. It instead is based upon an alleged conspiracy between BBB and BMW to defraud consumers through, inter alia, deceptive advertising. Arbitral immunity therefore does not bar the claim.

The District Court injury-in-fact adequately pleaded.

Kaiser’s UCL claim alleges that BBB misrepre-sented that it acts as a neutral entity with legal expertise which provides unbiased advice and claims war-ranty services. It thereby gained Kaiser’s trust so that he used BBB’s warranty claims processing program. Once Kaiser had signed on to the program, BBB took a position that, in violation of California’s Lemon Law, BMW may make deductions for excessive wear and tear from the statutorily mandated repurchase price. According to Kaiser, this stance validated BMW’s position, and supported BMW’s ability to deprive Kaiser of the refund to which he was entitled. It also caused Kaiser to pay storage costs for the Vehicle and forced him to continue paying off the principal and interest on his car loan. Kaiser has alleged sufficient facts to claim that he has suffered economic injury which resulted, at least in part, from BBB’s actions. He therefore meets the injury in fact standing requirement for his UCL claim. See Kwikset Corp., 51 Cal.4th at 324–325; Hall v. Time, Inc., 158 Cal.App. 4th 847, 854 (2008) (holding that allegation by Plaintiff that he “expended money due to the defendant’s acts of unfair competition” pleads economic harm sufficient to establish UCL standing).  ¶  . . . In the present matter, Kaiser alleges that BBB is secondarily liable under the unlawful prong of the UCL for BMW’s violation of California’s Lemon Law, because BBB allegedly “aided and abetted” BMW’s refusal to provide him with the repurchase compensation legally due for the Vehicle. Kaiser therefore has stated an adequate claim under the “unlawful” prong of the UCL. . .Kaiser alleges that BBB engaged in a knowing scheme with BMW aimed at depriving Kaiser of the full mandated repurchase price for defective cars to which Kaiser believes he is entitled pursuant to California’s Lemon Law. If true, this conduct was unethical and oppressive to Kaiser, the consumer, and caused him significant harm. The alleged conduct is also devoid of any utility or benefit for the public as a whole. Kaiser therefore has stated a valid “unfair” UCL claim.