— Hyundai Palisade tow hitch problems caused a class action lawsuit that Hyundai argues should not even be in court.
The automaker alleges the plaintiffs signed arbitration agreements, meaning all claims and allegations should be presented to an arbitrator, not a federal court judge.
The class action lawsuit includes 2020–2022 Hyundai Palisade SUVs that were recalled in August 2022 to repair the tow hitch wiring modules. The plaintiffs paid $475 to $750 for optional tow hitch and tow wiring harness module accessories to operate an attached trailer’s turn signals and brake lights.
But the Palisade tow hitch wiring harness modules were recalled because fires were possible from short circuits.
Hyundai said, “debris and moisture accumulation on the tow hitch harness module printed circuit board may cause an electrical short, which can result in a fire and that a fire while parked or driving can increase the risk of injury.”
The recall had Hyundai disabling the tow hitch wiring as an interim repair until dealers had enough replacement parts. The final repair included adding a wire extension kit to protect against water damage, and a new 15-amp fuse was also added.
Hyundai also offered Palisade customers reimbursements for "out-of-pocket expenses incurred to obtain a remedy for the recall condition."
As is common in many automotive class action lawsuits, the plaintiffs contend their vehicles have lost value even if the recall repairs fixed the tow hitch problems.
Hyundai Palisade Lawsuit — Motion to Compel Arbitration
According to Hyundai, the Palisade class action lawsuit shouldn't exist because the three customers who sued signed up for optional Bluelink services. Contained in the agreements were arbitration agreements allegedly forcing the plaintiffs to arbitrate any claims about their Palisades.
When they signed the Bluelink service agreement, the plaintiffs were required to click a box acknowledging they had read and agreed to the Bluelink terms and conditions which included the arbitration clause.
The arbitration clause says, “You agree that, by entering into this Agreement, you and Hyundai are each waiving the right to a trial by jury or to participate in a class or representative action to the maximum extent permitted by law.”
Judge Hernán D. Vera denied Hyundai's motion to compel arbitration after reading a section which says, “all issues are for the arbitrator to decide,” yet it goes on to say in the same section, “[h]owever if putative class or representative claims are initially brought by either party in a court of law, and a motion to compel arbitration is brought by any party, then the court shall decide whether this agreement permits class [action] proceedings.”
"So which is it? Does an arbitrator or the Court decide if a Plaintiff in a putative class action must go to arbitration? Or does the Court first decide the question of whether the agreement permits class treatment (presumably including the question of class certification) and, if so, then leave the case to proceed as a class action in arbitration? The language is the very opposite of “clear and unmistakable.” To the contrary, it is convoluted at best and contradictory at worst." — Judge Hernán D. Vera
The judge ruled the Hyundai Palisade arbitration agreement is "rife with both procedural and substantive unconscionability—that if interpreted as Hyundai cynically suggests would potentially cause enormous surprise and prejudice to its broader customer base."
In denying the motion to compel, Judge Vera ruled, "Hyundai’s interpretation of the arbitration agreement is patently absurd."
The Hyundai Palisade class action lawsuit was filed in the U.S. District Court for the Central District of California: Hageman, et al., v. Hyundai Motor America.
The plaintiffs are represented by Lemberg Law, LLC.
