Lathrop v. Thor Motor Coach, Inc. ( 2024 )

Filed 10/7/24
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
KENNETH W. LATHROP et al., B331970
Plaintiffs and Appellants, (Los Angeles County Super. Ct.
No. 22NWCV01494)
v.
THOR MOTOR COACH, INC.,
et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of
Los Angeles County, John A. Torribio, Judge. Reversed with
directions.
Lawrence J. Hutchens and Shay Dinata-Hanson for
Plaintiffs and Appellants.
Horvitz & Levy, Lisa Perrochet, Shane H. McKenzie, and
Claire W. Sears; Bravo Law Group, Dolores E. Gonzales and
James R. Robertson, for Defendants and Respondents.
INTRODUCTION
Kenneth and Janet Lathrop bought a motorhome
manufactured by Thor Motor Coach, Inc. from a dealer in
California. The Lathrops sued the dealer and Thor under the
Song-Beverly Consumers Warranty Act (Civ. Code,
§ 1790 et seq.) 1 and the Consumer Legal Remedies Act (CLRA)
(§ 1750 et seq.). Thor filed a motion under Code of Civil
Procedure section 410.30 to stay the action based on a forum
selection clause in Thor’s warranty designating Indiana as the
exclusive forum. The warranty also stated that the Lathrops
waived their right to a jury trial and that Indiana law would
govern all disputes.
Thor acknowledged that the jury trial waiver was
unenforceable under California law and that the choice-of-law
clause was unenforceable because any waiver of the provisions of
the Song-Beverly Act or the CLRA was contrary to public policy.
To address these problems, Thor offered to stipulate the
substantive provisions of the Song-Beverly Act and the CLRA,
and “all other unwaivable California substantive rights,” would
apply in an Indiana court. The trial court granted the motion to
stay, and the Lathrops appealed.
We conclude that the trial court erred in placing the burden
on the Lathrops to show enforcing the forum selection clause was
unreasonable and that Thor did not meet its burden to show
litigating in Indiana would not substantially diminish the
Lathrops’ rights in violation of public policy. We also conclude
that enforcing the forum selection clause in reliance on Thor’s
1 Undesignated statutory references are to the Civil Code.
2
proposed stipulation would violate California public policy and
that, even if it didn’t, Thor’s proposed stipulation was insufficient
to protect the Lathrops’ unwaivable statutory rights. Therefore,
we reverse.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Lathrops Purchase a Motorhome Manufactured
by Thor
In May 2021 the Lathrops bought a new Thor motorhome
for $212,391.78 from Mike Thompson RV in Santa Fe Springs,
California. The Lathrops made a $20,000 downpayment and
signed a retail installment sales contract for the balance. The
Lathrops also signed a two-page Thor Motor Coach Product
Warranty Registration Form (Warranty Registration Form). The
second page stated: “IMPORTANT! The purchaser(s) and
selling dealership signatures below indicate their understanding
and acceptance of [Thor’s] terms and conditions . . . .” Below that
statement were nine bullet points, including:
• Before I purchased my motorhome, I received, read and
agreed to the terms and conditions of the Thor Motor
Coach Limited Warranty and the Thor Motor Coach
Structural Limited Warranty. I understand I can read
and print a copy of the Owner’s Manual and Limited
Warranties from the Thor Motor Coach website.
• I understand and agree to the forum selection clause
and choice of law clause set forth in the Thor Motor
Coach Limited Warranty and the Thor Motor Coach
Structural Limited Warranty.
3
• I AGREE THAT ANY AND ALL ACTIONS OF ANY
KIND RELATED TO OUR MOTORHOME SHALL
BE DECIDED BY A JUDGE RATHER THAN BY A
JURY.
• I UNDERSTAND THAT EXCLUSIVE
JURISDICTION FOR DECIDING LEGAL
DISPUTES RELATING TO ALLEGED BREACH OF
EXPRESS WARRANTY AND IMPLIED
WARRANTIES THAT ARISE BY OPERATION OF
LAW AS WELL AS THOSE RELATING TO
REPRESENTATIONS OF ANY NATURE RESTS IN
THE COURTS WITHIN THE STATE OF
MANUFACTURE, WHICH IS INDIANA.
One week later, the Lathrops picked up their motorhome at
Mike Thompson RV and received an owner’s manual and a
16-page Warranty Guide. 2 Included in the Warranty Guide was
a four-page Thor Motor Coach Limited Warranty (Limited
Warranty). The Limited Warranty, under the heading “Legal
Remedies,” contained forum selection and choice-of-law
provisions:
EXCLUSIVE JURISDICTION FOR DECIDING
LEGAL DISPUTES RELATING TO ALLEGED
BREACH OF EXPRESS WARRANTY AND BREACH
OF IMPLIED WARRANTIES ARISING BY
OPERATION OF LAW AS WELL AS THOSE
RELATING TO REPRESENTATIONS OF ANY
2 The two-page Warranty Registration Form the Lathrops
received and signed one week earlier “originates from” the
Warranty Guide, but the dealer photocopied it and presented it to
the Lathrops as a separate document.
4
NATURE MUST BE FILED IN A STATE OR
FEDERAL COURT WITHIN THE STATE OF
MANUFACTURE, WHICH IS INDIANA. ALSO, THIS
LIMITED WARRANTY SHALL BE INTERPRETED
AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF INDIANA. ANY AND ALL
CLAIMS, CONTROVERSIES AND CAUSES OF
ACTION ARISING OUT OF OR RELATING TO THIS
LIMITED WARRANTY, WHETHER SOUNDING IN
CONTRACT, TORT, OR STATUTE, SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF
INDIANA, INCLUDING ITS STATUTE OF
LIMITATIONS, WITHOUT GIVING EFFECT TO ANY
CONFLICT-OF-LAW RULE THAT WOULD RESULT
IN THE APPLICATION OF THE LAWS OF A
DIFFERENT JURISDICTION.
B. The Lathrops File This Action, and the Trial Court
Grants Thor’s Motion To Stay
In December 2022 the Lathrops filed this action against
Thor, Mike Thompson RV, and U.S. Bank National Association
(the assignee of the sales contract). The Lathrops alleged the
defendants violated the Song-Beverly Act by not performing
necessary repairs to correct defects in their motorhome within a
reasonable time or in a reasonable number of attempts and by
not returning the Lathrops’ money or replacing the motorhome.
The Lathrops also alleged Thor violated the CLRA by inserting
an unconscionable provision in the Limited Warranty and by not
providing the Limited Warranty at the time of sale.
5
Thor filed a motion (joined by the other defendants) under
Code of Civil Procedure section 410.30 to stay the action on the
ground of inconvenient forum. Thor argued the forum selection
clause in the Limited Warranty required the Lathrops to file any
action for breach of warranty in Indiana. Acknowledging a
buyer’s rights under the Song-Beverly Act and the CLRA were
“essentially unwaivable,” Thor stated that, to “allay any concerns
in that regard,” it would offer the following stipulation:
“By this motion, THOR, MIKE THOMPSON
RECREATIONAL VEHICLES, and U.S. BANK NATIONAL
ASSOCIATION stipulate that (1) the substantive provisions of
the Song Beverly Consumer Warranty Act (CA Civil Code
section 1790, et seq) and the CA Consumers Legal Remedies Act
(CA Civil Code section 1750, et seq), along with all other
unwaivable California substantive rights, will apply to Plaintiffs’
currently enumerated claims when pursued in an action against
them in Indiana; and (2) these Defendants will not oppose a
request that the Indiana court utilize the Song Beverly Consumer
Warranty Act and Consumers Legal Remedies Act to adjudicate
those allegations. Further, should Plaintiffs wish, THOR, MIKE
THOMPSON RECREATIONAL VEHICLES, and U.S. BANK
NATIONAL ASSOCIATION will enter into a separate written
stipulation to that effect.”
The Lathrops opposed the motion, arguing that the forum
selection clause was permissive, not mandatory; that they did not
freely and voluntarily agree to it; and that it was unconscionable.
The Lathrops stated they did not accept Thor’s stipulation offer
and argued the offer did not make the forum selection clause
enforceable.
6
The trial court granted the motion to stay. The court found
the Lathrops signed the Warranty Registration Form, which
included a mandatory forum selection clause giving Indiana
exclusive jurisdiction over the Lathrops’ causes of action. The
court stated the clause appeared in large, bold type “right above
the signature line.” The court ruled enforcing the forum selection
clause was not “unreasonable given the circumstances of this
case.” The Lathrops timely appealed from the order granting the
motion to stay the action. 3
DISCUSSION
A. Applicable Law and Standard of Review
“‘California favors contractual forum selection clauses so
long as they are entered into freely and voluntarily, and their
enforcement would not be unreasonable.’” (Verdugo v.
Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 146 (Verdugo); see
Smith, Valentino & Smith, Inc. v. Superior Court (1976)
17 Cal.3d 491, 496; Rheinhart v. Nissan North America, Inc.
(2023) 92 Cal.App.5th 1016, 1031.) “This favorable treatment is
attributed to our law’s devotion to the concept of one’s free right
to contract, and flows from the important practical effect such
contractual rights have on commerce generally.” (America
Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 11
(America Online).) A court will typically enforce a forum
selection clause unless it is “unfair or unreasonable.” (EpicentRx,
3 An order staying an action under Code of Civil Procedure
section 410.30 on the ground of forum non conveniens is
appealable. (Code Civ. Proc., § 904.1, subd. (a)(3); Olinick v.
BMG Entertainment (2006) 138 Cal.App.4th 1286, 1293, fn. 6.)
7
Inc. v. Superior Court (2023) 95 Cal.App.5th 890, 899
(EpicentRx), review granted Dec. 13, 2023, S282521; see Verdugo,
at p. 147.)
“Nonetheless, ‘California courts will refuse to defer to the
selected forum if to do so would substantially diminish the rights
of California residents in a way that violates our state’s public
policy.’” (Verdugo, supra, 237 Cal.App.4th at p. 147; see
EpicentRx, supra, 95 Cal.App.5th at p. 899, review granted.)
“The party opposing enforcement of a forum selection clause
ordinarily ‘bears the “substantial” burden of proving why it
should not be enforced.’ [Citations.] That burden, however, is
reversed when the claims at issue are based on unwaivable rights
created by California statutes. In that situation, the party
seeking to enforce the forum selection clause bears the burden to
show litigating the claims in the contractually designated forum
‘will not diminish in any way the substantive rights
afforded . . . under California law.’” (Verdugo, at p. 147; accord,
EpicentRx, at p. 900; Rheinhart v. Nissan North America, Inc.,
supra, 92 Cal.App.5th at p. 1031.)
We review an order enforcing a forum selection clause for
abuse of discretion. (Schmidt v. Trinut Farm Management, Inc.
(2023) 92 Cal.App.5th 997, 1006; Verdugo, supra,237 Cal.App.4th at p. 148.) We review de novo whether the trial
court applied the correct legal standard in exercising its
discretion. (Esparza v. Safeway, Inc. (2019) 36 Cal.App.5th
42, 59.)
8
B. The Trial Court Applied the Wrong Standard in
Ruling on Thor’s Motion To Enforce the Forum
Selection Clause
The Lathrops argue the trial court erred in requiring them
to “demonstrate that enforcement of the clause would be
unreasonable,” rather than requiring Thor to show litigating in
Indiana would not diminish the Lathrops’ rights under California
law. Because their causes of action were based on unwaivable
statutory rights, the Lathrops are correct.
The Song-Beverly Act, California’s lemon law, “protects
consumers who purchase defective vehicles or other goods.”
(Niedermeier v. FCA US LLC (2024) 15 Cal.5th 792, 800.)
A consumer’s rights under the Song-Beverly Act are unwaivable.
(See § 1790.1 [“Any waiver by the buyer of consumer goods of the
provisions of [the Song-Beverly Act], except as expressly provided
in this chapter, shall be deemed contrary to public policy and
shall be unenforceable and void.”]; Rheinhart v. Nissan North
America, Inc., supra, 92 Cal.App.5th at p. 1034 [the Song-Beverly
Act’s “antiwaiver provision is extremely broad; it is not limited to
warranties or any particular timeframe during the purchase
process, but encompasses all mandated remedies afforded to
buyers”].)
The CLRA “prohibits ‘unfair methods of competition and
unfair or deceptive acts or practices’ in transactions involving the
sale of goods or services to any consumer.” (Gutierrez v. Carmax
Auto Superstores California (2018) 19 Cal.App.5th 1234, 1249;
see § 1770.) Like the Song-Beverly Act, the CLRA contains an
anti-waiver provision. (See § 1751 [“Any waiver by a consumer of
the provisions of this title is contrary to public policy and shall be
unenforceable and void.”]; America Online, supra, 90 Cal.App.4th
9at p. 5 [section 1751 “voids any purported waiver of rights under
the CLRA as being contrary to California public policy”].)
Therefore, in cases brought under the Song-Beverly Act or
the CLRA, the party seeking to enforce a forum selection clause
has the burden to show litigating in a different forum will not
diminish the plaintiff’s unwaivable rights. (See Rheinhart v.
Nissan North America, Inc., supra, 92 Cal.App.5th at pp. 1034-
1035 [in a case under the Song-Beverly Act, the automobile
manufacturer had to “show that enforcing [a release] would ‘“not
diminish in any way [the buyer’s] substantive rights
afforded . . . under California law”’”]; America Online, supra,90 Cal.App.4th at p. 11 [“Where the effect of transfer to a
different forum has the potential of stripping California
consumers of their legal rights deemed by the Legislature to be
nonwaivable, the burden must be placed on the party asserting
the contractual forum selection clause to prove that the CLRA’s
antiwaiver provisions are not violated.”].)
Rather than analyzing whether Thor met that burden, the
trial court applied the rules applicable to enforcing a forum
selection clause where unwaivable statutory rights are not
involved. In its order granting Thor’s motion to stay, the trial
court quoted Lu v. Dryclean-U.S.A. of California, Inc. (1992)
11 Cal.App.4th 1490, 1493: “‘Given the importance of forum
selection clauses, both the United States Supreme Court and the
California Supreme Court have placed a heavy burden on a
plaintiff seeking to defeat such a clause, requiring it to
demonstrate that enforcement of the clause would be
unreasonable under the circumstances of the case.’” The trial
court stated it would “limit its analysis to determining whether
[the forum selection clause’s] enforcement is unreasonable given
10
the circumstances of this case.” The court also stated: “There is
no public policy which would compel denial of a forum selection
clause in a contract which has been entered into freely and
voluntarily by the parties who have negotiated at arms’ length.”
The court did not mention the Song-Beverly Act or the CLRA; did
not mention that those statutes provide unwaivable rights; and
did not state that, when unwaivable rights are involved, the
defendant has the burden to show litigating in a different forum
will not diminish those rights.
Thor tries mightily to explain away the trial court’s error
by attempting to rewrite the court’s order to say what it doesn’t
say. Thor contends that, when the court mentioned the plaintiff’s
“heavy burden,” the trial court was merely “laying out the
general principles” and that “the court did not state that, in this
case, plaintiffs bore the initial burden.” That contention might
have had a modicum of merit had the court gone on to articulate
more specific principles that applied to this case, but the court
did not do that. Thor also contends the “trial court was aware
that the ‘“burden is reversed when the claims at issue are based
on unwaivable rights created by California statutes”’ because [the
Lathrops] emphasized that point in bold font in their trial court
briefing and defendants agreed.” But Thor, in its motion to stay,
argued the opposite: “Because the forum selection clause in
Thor’s limited express warranty is mandatory and because an
Indiana court can provide the relief [the Lathrops are] seeking,
the burden falls on [the Lathrops] to demonstrate that
enforcement of the clause is unreasonable.” Only in its reply
brief did Thor state it did “not dispute” the burden “lies with a
moving Defendant.” The trial court agreed with the argument in
Thor’s motion.
11
Thor also argues it “would be improper to assume the trial
court ignored the parties’ briefs and applied an improper burden
analysis, when its discussion hinged on the defendants’
stipulation, which is the key to defendants meeting their burden
where unwaivable rights are in play.” Assuming Thor is
referring to the trial court’s written order (there is no transcript
of the hearing on the motion to stay), the court only briefly
mentioned the offer to stipulate and did not discuss its
significance, did not mention unwaivable rights, and did not
suggest Thor had the burden to show the forum selection clause
was enforceable.
Although we “presume the trial court knew and properly
applied the law absent evidence to the contrary” (McDermott Will
& Emery LLP v. Superior Court (2017) 10 Cal.App.5th 1083,
1103), the trial court’s order granting Thor’s motion to stay is
clear evidence to the contrary. The trial court erred in failing to
consider whether Thor met its burden to show litigating in
Indiana would not diminish the Lathrops’ unwaivable rights
under the Song-Beverly Act or the CLRA.
C. Thor Failed To Show Litigating in Indiana Would
Not Substantially Diminish the Lathrops’
Unwaivable Statutory Rights
To meet its burden, Thor had to show an Indiana court
would provide “the same or greater rights than California” or
would “apply California law on the claims at issue.” (Verdugo,
supra, 237 Cal.App.4th at p. 157.) Because the Limited
Warranty contained not only an Indiana forum selection clause
but also an Indiana choice-of-law clause, an Indiana court could
12
enforce several terms of the Limited Warranty that would be
unenforceable under the Song-Beverly Act. 4
The Limited Warranty offered the Lathrops less protection
than the Song-Beverly Act. For example, under the Limited
Warranty Thor could require the buyer to deliver the motorhome
to a service facility in Indiana or “another authorized service
center or dealership for certain repairs”; the Song-Beverly Act
requires a manufacturer to provide service facilities and repair
facilities “reasonably close to all areas where its consumer goods
are sold” (§ 1793.2, subd. (a)). In addition, the Limited Warranty
disclaimed consequential and incidental damages; the Song-
Beverly Act allows a buyer to recover those damages (§ 1794,
subds. (a), (b)(2); Cal. U. Com. Code, §§ 2714, 2715). And the
Limited Warranty provided that, if a defect is incurable, the
buyer’s “sole and exclusive remedy” is “diminished value
damages”; the Song-Beverly Act requires a seller to replace the
vehicle or “make restitution in an amount equal to the actual
price paid” (§ 1793.2, subd. (d)(2)(B)).
Given the consumer-protection deficit between the terms of
the Limited Warranty and the Song-Beverly Act, Indiana did not
provide the Lathrops the same or greater rights than California.
(See America Online, supra, 90 Cal.App.4th at p. 15 [forum
selection clause in a contract with a Virginia choice-of-law clause
was unenforceable in a CLRA class action because “Virginia’s law
provides significantly less consumer protection to its citizens
than California law provides for our own”]; see also Verdugo,
supra, 237 Cal.App.4th at p. 160 [trial court erred in enforcing
4 Indiana has a lemon law similar to California’s, but unlike
the Song-Beverly Act, it does not apply to motorhomes. (See Ind.
Code § 24-5-13-5, subd. (4).)
13
Texas forum selection and choice-of-law clauses where the
employer failed “to show the remedies Texas law provides are
‘adequate,’ let alone that enforcing the forum selection clause
would not diminish,” the employee’s unwaivable rights under the
Labor Code].)
Litigating in Indiana under Indiana law would deprive the
Lathrops not only of their rights under the Song-Beverly Act, but
also their right to a jury trial. Because a predispute jury trial
waiver, such as the one in the Warranty Registration Form, is
unenforceable under California law (see Grafton Partners v.
Superior Court (2005) 36 Cal.4th 944, 951), California courts
refuse to enforce forum selection clauses that result in a waiver of
the right to a jury trial. (See EpicentRx, supra, 95 Cal.App.5th at
p. 908 [“the trial court properly declined to enforce the forum
selection clauses because they constituted implied predispute
jury trial waivers—waivers of an inviolate, fundamental, and
constitutionally protected right”], review granted;5 Handoush v.
Lease Finance Group, LLC (2019) 41 Cal.App.5th 729, 741 [“the
trial court erred in enforcing the forum selection clause in favor
of a New York forum where the clause includes a predispute jury
trial waiver, which [Grafton Partners v. Superior Court] instructs
is unenforceable under California law”].) 6
5 The Supreme Court granted review in EpicentRx, supra,
95 Cal.App.5th 890, review granted, to decide whether a forum
selection clause is enforceable when a party’s right under
California law to a jury trial for that party’s civil claims would
not apply in the forum identified by the clause.
6 Thor argues “the right to a jury trial is coextensive in
Indiana and in California,” but Thor provides no authority a
14
D. Thor’s Offer To Stipulate Did Not Cure the Problem
1. Requiring the Lathrops To Accept Thor’s
Stipulation Would Violate Public Policy
Acknowledging Indiana does not provide the same or
greater rights than California, Thor argues “a party seeking to
enforce a forum selection clause may stipulate that California law
will apply in the new forum, which is sufficient to establish that
enforcement of the forum selection clause will not diminish a
plaintiff’s non-waivable rights.” The Lathrops argue that,
because “Thor’s stipulation offer amounted to an evasion
of . . . consumers’ unwaivable rights, . . . endorsing the stipulation
itself is contrary to California public policy.” The Lathrops
contend that, if the court allows Thor to stipulate to sever clauses
Thor knows are unenforceable in California, Thor “will not be
deterred from drafting the illegal clauses in the first place.” No
California case yet has directly addressed whether a stipulation
to apply California law renders an otherwise unenforceable forum
selection clause enforceable. We hold it does not.
Because Thor’s offer to stipulate (which the Lathrops did
not accept) was essentially a request the trial court sever the
unenforceable portions of the Warranty Registration Form and
Limited Warranty and enforce the remainder, we look to case law
governing severance of unlawful or unconscionable provisions in
a contract. (See § 1599 [“Where a contract has several distinct
objects, of which one at least is lawful, and one at least is
predispute jury waiver is unenforceable under Indiana law. (See,
e.g., Heston v. International Medical Group, Inc. (S.D.Ind. 2020)
477 F.Supp.3d 829, 832-833 [enforcing a jury trial waiver
provision in insurance policy under Indiana law].)
15
unlawful, in whole or in part, the contract is void as to the latter
and valid as to the rest.”].) In that context, the court should ask
“whether the contract’s unconscionability can be cured purely
through severance or restriction of its terms, or whether
reformation by augmentation is necessary.” (Ramirez v. Charter
Communications, Inc. (2024) 16 Cal.5th 478, 516; see Armendariz
v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th
83, 124-125.) However, “[e]ven if a contract can be cured, the
court should also ask whether the unconscionability should be
cured through severance or restriction because the interests of
justice would be furthered by such actions.” (Ramirez, at p. 516;
see Armendariz, at p. 124 [“The overarching inquiry is whether
‘“the interests of justice . . . would be furthered”’ by severance.”].)
“In conducting this analysis, the court may also consider the
deterrent effect of each option.” (Ramirez, at p. 517.)
Assuming without deciding the unenforceable provisions of
the Warranty Registration Form and Limited Warranty can be
cured purely by severance or restriction, approving Thor’s
proposed stipulation, and requiring the Lathrops to accept it,
would not further the interests of justice. Thor acknowledges its
choice-of-law provision and jury waiver are unenforceable under
the Song-Beverly Act, yet it routinely includes those provisions in
its Limited Warranty when it sells a motorhome in California.
When a customer files an action in California and argues the
provisions are unenforceable, Thor offers to stipulate not to
enforce the unenforceable provisions, in exchange for the court
enforcing the Indiana forum selection clause. 7 Even if Thor’s
7 Federal district courts have transferred actions under
title 28 United States Code section 1404(a), to the Northern
16
stipulation protects the rights of the plaintiffs who are savvy
enough to obtain experienced legal representation, file in
California, and argue the forum selection clause implicates their
unwaivable statutory rights, other California consumers,
compelled by the forum selection clause, may file suit in Indiana
and only later discover that Indiana’s lemon law does not cover
motorhomes and that they have given up unwaivable California
statutory rights. Still others may be deterred from pursuing
their claims at all.
Accepting Thor’s proposed stipulation and enforcing its
forum selection clause would also create an incentive for Thor to
District of Indiana in reliance on Thor’s (or its subsidiary Jayco
Inc.’s) stipulation in a number of cases. (See Torres v. Jayco, Inc.
(C.D.Cal., Mar. 6, 2024, No. EDCV 24-0065-KK-SHKx) 2024
WL 1559730, p. 4; Zastawnik v. Thor Motor Coach, Inc. (C.D.Cal.,
June 16, 2023, No. CV 22-08663-PSG-AS) 2023 WL 5167363, p. 3;
Frisby v. Thor Motor Coach, Inc. (C.D.Cal., Jan. 24, 2023,
No. CV 22-2047-MWF (SHKx)) 2023 WL 1420434, p. 4; Jung v.
Thor Motor Coach, Inc. (C.D.Cal., Jan. 20, 2023, No. EDCV 22-
1763 JGB (KKx)) 2023 WL 1475109, pp. 6-7; Pinkevich v. Thor
Motor Coach, Inc. (C.D.Cal., Nov. 16, 2022, No. 2:22-cv-05985-
ODW (Ex)) 2022 WL 19333282, p. 3; Derosa v. Thor Motor Coach,
Inc. (C.D.Cal., Sept. 30, 2020, No. 2:20-cv-04895-SVW-PLA)
2020 WL 6647734, p. 4; Baxter v. Thor Motor Coach, Inc.
(E.D.Cal., Apr. 20, 2020, No. 2:19-cv-01532 JAM-CKD) 2020
WL 1911549, p. 4.) Three federal district courts have rejected
proposed stipulations and denied motions to transfer venue. (See
Scott v. Airstream, Inc. (S.D.Cal., Feb. 7, 2024, No. 23-cv-01808-
AJB-MSB) ___ F.Supp.3d ___ [2024 WL 1122439, p. 4]; Gorga v.
Thor Motor Coach, Inc. (N.D. Cal., Feb. 6, 2024, No. 23-cv-03603-
RFL) 2024 WL 1090650, p. 2; Waryck v. Thor Motor Coach, Inc.
(S.D. Cal., Jan. 13, 2023, No. 22-cv-1096-L MDD) 2023
WL 3794002, p. 5.)
17
continue to include admittedly unenforceable provisions in its
warranties and would deter Thor from revising its warranty to
comply with California law. (See Ramirez v. Charter
Communications, Inc., supra, 16 Cal.5th at p. 517 [“severing
multiple unconscionable provisions from an agreement and
enforcing the remainder could ‘create an incentive for an
employer to draft a one-sided arbitration agreement in the hope
employees would not challenge the unlawful provisions, but if
they do, the court would simply modify the agreement to include
the bilateral terms the employer should have included in the first
place’”]; Mills v. Facility Solutions Group, Inc. (2022)
84 Cal.App.5th 1035, 1045 [same]; see also Armendariz v.
Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at
p. 124, fn. 13 [“An employer will not be deterred from routinely
inserting [an unlawful] clause into the arbitration agreements it
mandates for its employees if it knows that the worst penalty for
such illegality is the severance of the clause after the employee
has litigated the matter. In that sense, the enforcement of a form
arbitration agreement containing such a clause drafted in bad
faith would be condoning, or at least not discouraging, an illegal
scheme, and severance would be disfavored unless it were for
some other reason in the interests of justice.”].) Several federal
district courts in California have refused to transfer cases against
Thor or related companies to districts in other states for this very
reason. (See, e.g., Scott v. Airstream, Inc. (S.D.Cal., Feb. 7, 2024,
No. 23-cv-01808-AJB-MSB) ___ F.Supp.3d ___ [2024 WL
1122439, p. 4] [“accepting [the motorhome manufacturer’s]
proposed stipulations would likewise contravene California public
policy because it would not deter the drafter from including such
a clause”]; Gorga v. Thor Motor Coach, Inc. (N.D.Cal., Feb. 6,
18
2024, No. 23-cv-03603-RFL) 2024 WL 1090650, p. 2 [“Accepting
[Thor’s] stipulations and enforcing the forum selection clause
would encourage and condone [Thor’s] decision to continue using
warranty agreements that it is aware contravene California
public policy.”]; Waryck v. Thor Motor Coach, Inc. (S.D.Cal.,
Jan. 13, 2023, No. 22-cv-1096-L MDD) 2023 WL 3794002, p. 5
[“accepting [Thor’s] stipulations or severing the clauses would . . .
contravene California public policy,” and the court “should not
condone” such a “scheme”].)
Thor argues including the Indiana choice-of-law provision
in the Limited Warranty was not improper because, although the
provision is unenforceable under the Song-Beverly Act, it is
enforceable under other statutes, such as California Uniform
Commercial Code section 1301, subdivision (a).8 Thor asserts
California consumers who cannot sue under the Song-Beverly
Act—because they purchased a motorhome outside California,
from a private seller, or for business purposes—may bring
“California Uniform Commercial Code warranty claims . . . .” But
Thor does not explain why it provides consumers who are covered
by the Song-Beverly Act (undoubtedly the majority of purchasers
in California) with a warranty that complies with the California
Uniform Commercial Code but not the Song-Beverly Act. 9
8 Which states: “Except as otherwise provided in this
section, when a transaction bears a reasonable relation to this
state and also to another state or nation, the parties may agree
that the law either of this state or of the other state or nation
shall govern their rights and duties.”
9 Nor does Thor explain why its Limited Warranty does not
contain different choice-of-law terms for buyers covered by the
19
Thor also argues it “is not surprising that warranty
agreements . . . intended to apply in all 50 states . . . may include
provisions—like the jury waiver provision—that are not
enforceable in some individual states.” Thor contends its
warranty “puts California consumers on notice that California
substantive law may apply, including the right to a jury trial or
California’s lemon law,” by including language required by the
federal Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq.)
stating: “This limited warranty gives you specific legal rights.
You may also have other rights, which vary from state to state
and province to province.” 10 But a disclosure the consumer “may
also have other rights” is not a disclosure a provision “may not
Song-Beverly Act and buyers who are not, which the warranty
does for other terms. For example, the Limited Warranty
provides a one-year warranty generally, but a 90-day warranty
for motorhomes purchased for business purposes.
10 Magnuson-Moss “requires disclosures in connection with
written warranties, regulates the substantive content of
warranties, and establishes a federal cause of action for breach of
a written or an implied warranty (15 U.S.C. § 2310(d)), among
other provisions. Magnuson-Moss does not substitute federal law
for state law of consumer product warranties, but instead
supplements state law.” (Orichian v. BMW of North America,
LLC (2014) 226 Cal.App.4th 1322, 1330.) The Federal Trade
Commission intended the “other rights” disclosure to “negate the
assumption (often incorrect) that the warranty sets forth the
buyer’s only recourse” and to inform consumers they may pursue
other theories of liability, including the implied warranty of
merchantability. (40 Fed.Reg. 60179 (Dec. 31, 1975); see
16 C.F.R. § 701.3(a)(9) (2015).)
20
apply to you.” The “other rights” disclosure, which appears below
the Indiana choice-of-law clause, does not inform a California
consumer that Indiana law may not govern or that the consumer
may bring a cause of action under California’s Song-Beverly Act
or the CRLA. 11 Moreover, the “other rights” disclosure in the
Legal Remedies section of the Limited Warranty does nothing to
notify California consumers they may have the right to a jury
trial; the jury waiver appears in the Warranty Registration Form,
which does not have an “other rights” disclosure.
Thor relies on Verdugo, supra, 237 Cal.App.4th 141, which
discussed the possibility a defendant might be able to stipulate to
apply California law, but did not squarely decide whether such a
stipulation would make a forum selection clause enforceable. In
Verdugo an employee asserted causes of action under the Labor
Code against her employer, who moved to stay the action based
on a Texas forum selection clause in her employment agreement.
(Verdugo, at p. 146.) The employer argued enforcing the forum
selection clause would not diminish the employee’s unwaivable
rights because under Texas choice-of-law principles a Texas court
would likely apply California law to the employee’s wage-and-
hour causes of action, notwithstanding a Texas choice-of-law
clause in the employment agreement. (Id. at p. 158.) The court
in Verdugo rejected the employer’s argument, stating the
employer “could have eliminated any uncertainty on which law a
11 In contrast, under the section on limitation and disclaimer
of implied warranties, the Limited Warranty contains the
following disclosure, also required by Magnuson-Moss (see
16 C.F.R. § 701.3(a)(7) (2015)): “Some states and provinces do not
allow limitations on how long an implied warranty lasts, so the
above limitation may not apply to you.”
21
Texas court would apply by stipulating to have a Texas court
apply California law in deciding Verdugo’s claims, but [the
employer] did not do so.” (Ibid.) The court concluded the
employer’s “failure to stipulate that California law applies,
coupled with its efforts to minimize the significance of the public
policy underlying [the employee’s] Labor Code rights,”
undermined the employer’s contention a Texas court would likely
apply California law. (Id. at p. 159.) Although the court in
Verdugo mentioned the defendant’s unwillingness to stipulate to
apply California law in the new forum as a reason not to enforce
a forum selection clause, the court did not have occasion to decide
whether such a stipulation would have met the defendant’s
burden to show litigating in the different forum would not
diminish the plaintiff’s unwaivable rights.
Thor cites several cases where federal district courts,
relying on stipulations offered by Thor, have transferred actions
under title 28 United States Code section 1404(a) to the Northern
District of Indiana; the Lathrops cite a smaller number of cases
that have refused to transfer cases on public policy grounds (see
footnote 8). The persuasive value of these cases, however, is
limited: Opposing a motion to transfer based on a forum
selection clause is generally more difficult in federal court, where
“the plaintiff bears the burden of showing why transfer to the
bargained forum is unwarranted.” (Scott v. Airstream, Inc.,
supra, ___ F.Supp.3d at p. ___ [2024 WL 1122439, p. 2]; see
Frisby v. Thor Motor Coach, Inc. (C.D.Cal., Jan. 24, 2023, No. CV-
22-2047-MWF (SHKx)) 2023 WL 1420434, p. 4 [“Plaintiff has not
met his burden in demonstrating that the forum-selection clause
is unenforceable based on the public policy factor in [M/S
Bremen v. Zapata Off-Shore Co. (1972) 407 U.S. 1].”].)
22
2. Even if Thor’s Proposed Stipulation Did Not
Violate Public Policy, It Was Insufficient
Even if a stipulation to apply California law rather than
Indiana law could salvage an otherwise unenforceable forum
selection clause, Thor’s proposed stipulation was not sufficient.
Thor agreed “the substantive provisions” of the Song-Beverly Act
and the CLRA “along with all other unwaivable California
substantive rights will apply to [the Lathrops’] currently
enumerated claims when pursued in an action against them in
Indiana.” This stipulation, however, created several
opportunities for unwaivable rights mischief in Indiana.
For example, Thor’s inclusion of the modifier “substantive”
creates the potential for disputes over which rights are
substantive and which are procedural. Thor asserts the phrase
“other unwaivable California substantive rights” includes the
right to a jury trial (which, as discussed, the Warranty
Registration Form waived), but an Indiana court could rule that
right is not a “substantive right.” (See Handoush v. Lease
Finance Group, LLC, supra, 41 Cal.App.5th at p. 737 [“Whether
the right to a jury trial in a civil case is a substantive or
procedural right is an open question.”]; 12 Hayworth v. Bromwell
12 California’s “predispute jury waiver rule contain[s] both
substantive and procedural elements. On the one hand, the
‘“rule—which allocates tasks between a judge and a jury—
describes ‘merely a form and mode of enforcing’ the law,”’ which
suggests it is procedural in nature. [Citation.] On the other
hand, the ‘“rule on pre-dispute jury trial waivers embodies the
state’s substantive interest in preserving the ‘right to a jury trial
in the strongest possible terms’ [citation], an interest the
California Constitution zealously guards, see Cal. Const.
23
(1959) 239 Ind. 430, 435 [“While the right itself is a substantive
matter, the method or manner in which it may be waived or
exercised is clearly a procedural question.”].) In addition, an
Indiana court could apply Indiana law to cap the Lathrops’
damages or apply a higher burden of proof on the ground those
issues are not “substantive.” (Compare Ind. Code § 24-5-0.5-4
[damages for an uncured or incurable willful deceptive act capped
at $1,000 under Indiana’s Deceptive Consumer Sales Act] with
§ 1794, subds. (c), (e)(1) [buyer may recover a civil penalty of up
to two times actual damages under the Song-Beverly Act].) And,
by limiting the proposed stipulation to “currently enumerated
claims,” Thor’s offer to stipulate denied the Lathrops their
(procedural) right under California law to amend their complaint
to assert additional causes of action, including those based on
unwaivable statutory rights. (See Civ. Proc. Code, § 472,
subd. (a) [plaintiff may amend a pleading once without leave of
court before the defendant files a responsive pleading].)
And there’s more: Thor’s proposed stipulation also directs
an Indiana court to apply Indiana law in interpreting the
warranty. The Legal Remedies section of the Limited Warranty
contained two choice-of-law provisions: (1) a specific or narrow
provision stating the warranty “shall be interpreted and
construed in accordance with the laws of the state of Indiana”
art. I, § 6.”’” (EpicentRx, supra, 95 Cal.App.5th at p. 903, review
granted.) The court in Handoush v. Lease Finance Group, LLC,
supra, 41 Cal.App.5th 729 concluded that, even if the predispute
jury waiver rule was procedural, it served “‘“substantive state
policies”’ of preserving the ‘“right to a jury trial”’” and that
therefore the defendant had the burden of showing that enforcing
the forum selection clause would not diminish the plaintiff’s
substantive rights under California law. (Id. at p. 740.)
24
and (2) a general provision stating Indiana law applied to all
claims “arising out of or relating to” the warranty, “whether
sounding in contract, tort, or statute.” (See Narayan v. EGL, Inc.
(9th Cir. 2010) 616 F.3d 895, 898 [“narrow choice-of-law clauses,
providing under what law an agreement ‘shall be interpreted and
enforced,’ apply only to the interpretation and enforcement of the
contract itself; they do not ‘encompass all disputes between the
parties’”]; Benchmark Electronics, Inc. v. J.M. Huber Corp.
(5th Cir. 2003) 343 F.3d 719, 726 [choice-of-law provision
addressing only “the construction and interpretation of the
contract” did not govern claims for fraud and negligent
misrepresentation].) Thor’s proposed stipulation modified only
the second provision by stating California law would govern the
Lathrops’ causes of action under the Song-Beverly Act and the
CLRA. But the stipulation left intact the first provision, allowing
an Indiana court to interpret a provision in the warranty under
Indiana law in a way that might diminish or eliminate one of the
Lathrops’ unwaivable statutory rights under California law. For
example, under the Song-Beverly Act the Lathrops can seek
incidental and consequential damages, but the warranty (which
the first choice-of-law provision requires the Indiana court to
interpret under Indiana law) precludes the Lathrops from
recovering those damages. Faced with this conflict between the
Song-Beverly Act and the warranty provision limiting damages,
an Indiana court will not be able to apply conflict-of-law rules:
Thor’s proposed stipulation did not alter the provision in the
Limited Warranty prohibiting a court in Indiana from engaging
in a conflict-of-law analysis that would result in the court
applying the law of a state other than Indiana.
25
Finally, Thor cannot guarantee an Indiana court will apply
California law to the Lathrops’ Song-Beverly and CLRA causes of
action. As stated, Thor offered to stipulate it would “not oppose a
request that the Indiana court utilize the Song Beverly Consumer
Warranty Act and Consumers Legal Remedies Act to adjudicate
those allegations.” But even if Thor said it would not oppose the
Lathrops’ request that a court in Indiana apply the Song-Beverly
Act and the CLRA, Thor did not say it would join that request,
and ultimately it will be up to the courts in Indiana to decide
whether to honor all or part of the proposed stipulation.
Claiming “Indiana courts routinely apply California law in cases
just like this one,” Thor cites (not Indiana state court cases, but)
three federal cases from the Northern District of Indiana, two of
which applied the Song-Beverly Act or the CLRA (before granting
motions by the defendants in those cases to dismiss or for
summary judgment on those claims). 13 But none of these cases
sheds light on how an Indiana court would interpret Thor’s
13 See Raymond v. Thor Motor Coach Inc. (N.D.Ind., Aug. 2,
2023, No. 3:21-CV-222 JD) 2023 WL 4930105, p. 4 (granting the
defendant’s motion for summary judgment on Song-Beverly
claims because the plaintiff, a California resident, bought the
motorhome outside California); Truitt v. Forest River, Inc.
(N.D.Ind., Sept. 7, 2021, No. 3:20-CV-964 JD) 2021 WL 4061591,
p. 9 (granting the defendant’s motion to dismiss Song-Beverly
claims for the same reason as the court did in Raymond and
granting the defendant’s motion to dismiss the CLRA claims for
failing to allege sufficient facts to support a plausible inference
the defendant knew of the alleged defect). In the third case, the
plaintiff cited a case decided under the Song-Beverly Act, but did
not assert a claim under that act. (See Popham v. Keystone RV
Company (N.D.Ind., Sept. 19, 2016, No. 3:15-CV-197-TLS) 2016
WL 4993393, p. 6.)
26
stipulation or apply California law in this case, nor did any of
them mention a forum selection clause or whether the case was
originally filed in California.
DISPOSITION
The order granting Thor’s motion to stay is reversed, and
the trial court is directed to enter a new order denying the
motion. The Lathrops’ motion to augment the record is granted,
and Thor’s motion for judicial notice is granted. The Lathrops
are to recover their costs on appeal.
SEGAL, J.
We concur:
MARTINEZ, P. J.
FEUER, J.
27