Carlson v. BMW Financial Services NA, LLC

CourtDistrict Court, D. Minnesota
DecidedJanuary 13, 2025
Docket0:24-cv-03193
StatusUnknown

This text of Carlson v. BMW Financial Services NA, LLC (Carlson v. BMW Financial Services NA, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carlson v. BMW Financial Services NA, LLC, (mnd 2025).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

JOSHUA CARLSON, on behalf of Case No. 24-cv-3193 (LMP/TNL) himself and all others similarly situated,

Plaintiff, ORDER GRANTING MOTION TO v. COMPEL ARBITRATION

BMW FINANCIAL SERVICES NA, LLC, and BMW OF NORTH AMERICA, LLC,

Defendants.

Joshua Carlson, The Carlson Firm, PA, Edina, MN, for Plaintiff. Emily B. Suhr, Lewis Brisbois Bisgaard & Smith LLP, Minneapolis, MN; and Eric Y. Kizirian & Alexandra K. Christensen, Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, CA, for Defendants.

Non-negotiable form contracts with arbitration clauses have become standard in consumer contracts of all stripes. Insurance policies, credit card agreements, rental and lease agreements, the terms and conditions for any number of websites and software platforms—these days, each seem more likely than not to be a form contract containing an arbitration clause requiring the parties to those agreements to arbitrate their disputes rather than adjudicate them in court. Indeed, as the Eighth Circuit has recognized, “the bulk of contracts signed in this country are form contracts[,] a natural concomitant of our mass production-mass consumer society,” and any rule invalidating such contracts or deeming them unenforceable as a matter of law would cause “much of commerce [to] screech to a halt.” Cicle v. Chase Bank USA, 583 F.3d 549, 555 (8th Cir. 2009) (internal quotation marks and citation omitted).

Such is the case here. Plaintiff Joshua Carlson (“Carlson”) filed suit alleging that Defendants BMW Financial Services NA, LLC and BMW of North America, LLC (collectively, “BMW”) violated Minnesota law by engaging in a scheme to install substandard tires that are designed to fail prematurely on new BMW vehicles, including a vehicle Carlson leased. See generally ECF No. 1-1. BMW, citing an arbitration clause in the agreement Carlson signed to lease his vehicle, moves to compel Carlson to arbitrate his

dispute. ECF No. 6. Because a valid and enforceable agreement to arbitrate exists between BMW and Carlson, and because Carlson’s claims fall within the scope of the agreement, the Court grants BMW’s motion and stays these proceedings pending arbitration. BACKGROUND Carlson, an attorney licensed to practice in the state of Minnesota, leased a new

2022 BMW X3 (the “Leased Vehicle”) from BMW of Minnetonka in July 2022. ECF No. 1-1 (“Complaint”) ¶ 18; see generally ECF No. 7-3 (“Lease”). The Lease contains an arbitration clause which includes a sub-header in all-capital letters and in red, boldface font that reads, “PLEASE REVIEW – IMPORTANT – AFFECTS OUR LEGAL RIGHTS.” ECF No. 7-3 at 10. The arbitration clause states:

Either [BMW] or [Carlson] may choose to have any dispute between [them] decided by arbitration and not in a court or by jury trial. If a dispute is arbitrated, [Carlson] will give up [his] right to participate as a class representative or class member on any Claim [Carlson] may have against [BMW] including any right to class arbitration or any consolidation of individual arbitrations. Id. The arbitration clause goes on to define the term “Claim” and explains that either party may unilaterally elect to have any “Claim” resolved through arbitration:

“Claim” broadly means any claim, dispute or controversy, whether in contract, tort, statute or otherwise, whether preexisting, present or future, between [Carlson] and [BMW] . . . or between [Carlson] and any third parties if [Carlson] assert[s] a Claim against such third parties in connection with a Claim [Carlson] assert[s] against [BMW], which arises out of or relates to [Carlson’s] credit application, the lease, purchase or condition of the Vehicle, this Lease, or any resulting transaction or relationship (including any such relationship with third parties who do not sign this Lease). Any Claim shall, at [BMW’s] or [Carlson’s] election, be resolved by neutral, binding arbitration and not by a court action. Id. The arbitration clause also contains a class action waiver: Notwithstanding any other provision of this Lease or Arbitration Clause, if either [BMW] or [Carlson] elect[s] to arbitrate a Claim, neither [BMW] nor [Carlson] will have the right: (a) to participate in a class action, mass action, private attorney general action or other representative action in court or in arbitration, either as a class representative or class member; or (b) to join or consolidate Claims with claims of any other persons. Id. In this action, Carlson alleges that the tires appeared already to be “worn” when he initially received the Leased Vehicle. ECF No. 1-1 ¶ 19. Carlson sought information from BMW regarding the make, model, and type of tires that are installed at manufacture, but he received “no satisfactory information” from BMW. Id. At some point, Carlson took the Leased Vehicle to MotorWerks BMW (“MotorWerks”), a certified BMW dealership, for routine maintenance and was told that the tires were “unsafe and needed immediate replacement,” even though Carlson was less than two years into the Lease and had only driven the Leased Vehicle approximately 22,000 miles. Id. ¶ 20. After raising concerns with MotorWerks and BMW regarding the “premature failure” of the tires, Carlson was informed that BMW does not provide a warranty for the tires. Id. ¶¶ 21, 23. Carlson then contacted Pirelli, the tire manufacturer, who told Carlson that it manufactures tires for

BMW vehicles to BMW’s “requested specifications,” which Carlson asserts are “specifically designed to have no tire tread warranty whatsoever.” Id. ¶ 22. Carlson then contacted BMW again, who informed Carlson that tires could fail at any time and that, under the terms of the Lease, he was required to replace the Leased Vehicle’s tires with ones that are “authorized and made to BMW specifications.” ECF 1-1 ¶ 25; see ECF No. 7-3 at 7 (“[Carlson] agree[s] to maintain, service, repair, and recondition the Vehicle during

the Lease Term with new and genuine BMW manufacturer’s original equipment replacement parts . . . .”). Carlson filed a putative class action complaint in Minnesota state court, accusing BMW of violating Minnesota’s Consumer Fraud Act, Minn. Stat. § 325F.69, and Minnesota’s Deceptive Trade Practices Act, Minn. Stat. § 325D.44. ECF No. 1-1 ¶¶ 33–

43. In lieu of answering, BMW removed the action to federal court and brought a motion to compel arbitration, citing the arbitration clause in the Lease. ECF Nos. 1, 6. ANALYSIS The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., “establishes a liberal federal policy favoring arbitration agreements.” Epic Sys. Corp. v. Lewis, 584 U.S. 497,

505–06 (2018) (internal quotation marks and citation omitted). Accordingly, there is a presumption that arbitration agreements “are generally reasonable as a matter of contract law.” Wold v. Dell Fin. Servs., L.P., 598 F. Supp. 2d 984, 988 (D. Minn. 2009) (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006)). Because arbitration is a matter of contract, “a court can only compel arbitration of claims that the parties have agreed to arbitrate.” Id. (citing Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S.

52, 57 (1995)). Still, arbitration agreements may be found invalid and unenforceable “upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.

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Carlson v. BMW Financial Services NA, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carlson-v-bmw-financial-services-na-llc-mnd-2025.