In this week’s Suits & Settlements, you’ll find the following reports:
Jeep Fire Defect Lawsuit Clears Procedural Hurdle. A Michigan federal judge has denied Stellantis subsidiary FCA US's attempt to force an Illinois couple to arbitrate claims that certain Jeep vehicles contain a defect that can cause dangerous underhood fires, according to Law360. The lawsuit alleges the automaker manufactured and sold defective Jeep vehicles that are prone to underhood fires, creating an unreasonable safety risk for owners. FCA sought to move the dispute out of federal court and into private arbitration, but the judge ruled the automaker failed to produce sufficient evidence that the consumers had agreed to an arbitration provision covering the claims. As a result, the case will remain in federal court and proceed through the normal litigation process. The ruling does not address whether the alleged defect exists or whether FCA is liable, focusing solely on where the dispute should be heard. Arbitration has become an increasingly common strategy in automotive litigation because it can limit the scope and cost of class-action lawsuits. By denying FCA's motion, the court cleared the way for the plaintiffs to continue pursuing their claims in open court, where discovery and other pretrial proceedings can move forward.
Washington Dealers Sue Scout Over Direct Sales Plan. The Washington State Auto Dealers Association has filed a federal lawsuit seeking to block Scout Motors from selling vehicles directly to consumers in the state, arguing the Volkswagen-backed startup's sales model violates Washington's dealer franchise laws, according to Automotive News. The suit, filed June 29 in the U.S. District Court for the Western District of Washington, contends Scout's direct-to-consumer strategy unfairly bypasses nearly 30 franchised Volkswagen, Audi and Porsche dealerships operating in the state. The dealer association argues Scout is sufficiently connected to Volkswagen Group that it should not be permitted to avoid the same franchise obligations that apply to other Volkswagen brands. Scout has maintained it operates as an independent company and has defended its decision to sell directly to consumers rather than through traditional dealerships. Washington joins a growing list of states—including California, Colorado and Florida—where dealers have challenged Scout's retail strategy in court. The outcome could have implications well beyond Scout, as automakers increasingly explore direct-sales models for new electric vehicle brands while dealer groups fight to preserve long-standing franchise protections. Industry observers say the case could help determine whether legacy manufacturers can launch separate brands that sell directly to consumers without violating existing dealer agreements.
Judge Tosses Tesla Insurance Class Action. Tesla’s insurance division has won dismissal of a proposed class action accusing it of underpaying uninsured and underinsured motorist benefits in Arizona, according to Law 360. U.S. District Judge Sharad H. Desai dismissed the lawsuit without prejudice after concluding the federal court lacked subject-matter jurisdiction, meaning the ruling did not determine whether Tesla General Insurance’s coverage and claims-handling practices violated Arizona law. Plaintiffs Athena Boggs and Jared Miiller alleged Tesla failed to provide required written offers of uninsured and underinsured motorist coverage matching their bodily-injury liability limits and improperly prevented them from combining, or “stacking,” coverage from multiple vehicles. The dispute followed a May 2025 crash in which the plaintiffs alleged Tesla paid $25,000 in underinsured-motorist benefits, less than they claimed was required. The proposed class was limited to holders of Tesla-issued Arizona policies, and the plaintiffs conceded the original complaint did not establish federal jurisdiction. They sought permission to amend the case by adding two additional insurance entities, but the judge denied that request and dismissed the complaint. Because the dismissal was without prejudice, the underlying claims could potentially be pursued in another court or through a new complaint, but Tesla has defeated this version of the federal class action.
Mitsubishi Wins Early Court Fight Against Former Dealer. Mitsubishi Motors North America has won an early court victory in a franchise dispute after a federal judge in New Jersey blocked a former dealership from continuing to present itself as an authorized Mitsubishi retailer, according to Law 360. The judge granted Mitsubishi a preliminary injunction after finding the automaker was likely to succeed in proving it lawfully terminated the dealership's franchise agreement over alleged failures involving staffing, technician training and inventory requirements. The order bars the former franchisee from using Mitsubishi trademarks or representing itself as an authorized dealer while the lawsuit proceeds. Mitsubishi argued that allowing the dealership to continue operating under its brand after termination could confuse consumers and damage the company's reputation. The court agreed that the automaker had shown a likelihood of success on its trademark and franchise claims and that an injunction was warranted to prevent ongoing harm. The case highlights the importance of franchise agreements between automakers and dealerships, where disputes over performance standards, facility requirements and brand representation can quickly escalate into federal litigation. While the underlying claims have not yet been fully resolved, the ruling gives Mitsubishi an important early win and underscores the broad legal protections manufacturers have in preventing terminated dealerships from continuing to use their names and trademarks.
Photo: ChatGPT Plus/CarPro.