Reported / Citable
Background
Edward and Linda Diaz purchased a Thor motorhome from a California dealer for over $400,000 in 2021. At purchase they signed a ‘Product Warranty Registration Form’ acknowledging Thor’s limited warranty and structural limited warranty, both of which contained an Indiana forum-selection clause and an Indiana choice-of-law provision. The Warranty Guide also waived jury trial.
In 2023, the Diazes sued Thor and related defendants under the Song-Beverly Consumer Warranty Act, alleging defects Thor and its repair facilities had failed to fix. Thor moved to stay the action and enforce the Indiana forum-selection clause. To address concerns about Song-Beverly’s mandatory California protections, Thor offered to stipulate that the Act would apply to the Diazes’ claims as pled and that Thor would not oppose Indiana courts applying the Act. The trial court accepted the stipulation and stayed the case.
The Diazes appealed.
The Court’s Holding
The Court of Appeal reversed. Following the recent published decisions in Lathrop v. Thor Motor Coach (now under California Supreme Court review) and Hardy v. Forest River (also under review), the court held that out-of-state forum-selection clauses like Thor’s are unenforceable against Song-Beverly claims even when paired with a stipulation that California law would apply.
The Song-Beverly Act creates unwaivable statutory rights for California consumers. A warranty that purports to require litigation in Indiana — where the consumer must travel, retain counsel admitted in that jurisdiction, and litigate within an unfamiliar legal system — operates as a practical waiver of California rights even if a stipulation purports to preserve substantive law. The fundamental problem is the impracticality and burden of out-of-state litigation, which depresses consumer enforcement and undermines the Act’s protective purpose.
Stipulations to apply California law cannot save the clauses because they do not address the burden the forum itself imposes. The trial court therefore erred in enforcing the forum-selection clause and staying the action.
Key Takeaways
- Out-of-state forum-selection clauses in California consumer warranties are generally unenforceable against Song-Beverly claims, even when accompanied by stipulations preserving California law.
- The Song-Beverly Act’s unwaivable statutory rights extend not only to substantive provisions but to the practical ability of California consumers to enforce them.
- Manufacturer stipulations to apply California law are insufficient because they do not address the burden of out-of-state litigation.
- The decision aligns with Lathrop and Hardy and is consistent with the broader California trend protecting consumer-warranty enforcement.
- The California Supreme Court is reviewing both Lathrop and Hardy; counsel should monitor for further guidance.
Why It Matters
This decision continues the strong line of California appellate authority refusing to enforce out-of-state forum-selection clauses in consumer warranties for products sold to California buyers. For RV manufacturers, automakers, and other consumer-product makers that have historically funneled warranty litigation to home-state courts, the message is clear: California consumers cannot be effectively forced to litigate Song-Beverly claims outside California.
For consumer-warranty practitioners, the case is part of a powerful and rapidly developing body of authority. Counsel should anticipate similar rulings in other Song-Beverly cases involving out-of-state forum-selection clauses. The pending Supreme Court reviews in Lathrop and Hardy may shape the ultimate doctrine, but for now California consumers have strong protection against being forced into out-of-state forums for Song-Beverly claims.