McGee v. Mercedes-Benz USA LLC

Background

Michaele Lenea McGee filed the action in California state court on October 1, 2025. She asserted two claims against Mercedes-Benz USA LLC (MBUSA) under the Song-Beverly Consumer Warranty Act, alleging breaches of express and implied warranties related to her lease of a 2024 Mercedes-Benz EQS450. MBUSA removed the case to federal court and moved to compel binding arbitration.

McGee leased the vehicle on May 27, 2024, from Mercedes-Benz of Walnut Creek. The lease identified Mercedes-Benz of Walnut Creek as the lessor and provided that, after assignment, Mercedes-Benz Vehicle Trust or its successors and assigns would be the assignee. The lease’s arbitration provision covered claims or disputes arising from or relating to the lease, any resulting transaction or relationship, and disputes involving the vehicle distributor, including MBUSA. The provision expressly identified MBUSA as a “Third Party Beneficiary.”

Parties’ Arguments

MBUSA argued that it could enforce the lease’s arbitration provision. McGee opposed arbitration, arguing that MBUSA was not an intended third-party beneficiary and could not use equitable estoppel to compel arbitration because her claims were not sufficiently connected to the lease.

Court’s Analysis

The Federal Arbitration Act generally makes written arbitration agreements enforceable. The court explained that enforcement requires an agreement to arbitrate and a dispute within that agreement’s scope. A non-signatory may enforce an arbitration agreement under California law if it is an intended third-party beneficiary or if equitable estoppel applies.

The court resolved the motion on the intended-beneficiary ground and did not decide whether equitable estoppel also would allow MBUSA to compel arbitration. Under California law, a non-signatory is an intended third-party beneficiary when the contract and relevant circumstances show that the third party would benefit from the contract, that providing the benefit was a motivating purpose of the contracting parties, and that enforcement would be consistent with the contract’s objectives and the parties’ reasonable expectations.

The court found all three requirements satisfied. First, the lease expressly stated that MBUSA was a third-party beneficiary and could compel arbitration. Second, the lease’s express reference to MBUSA showed that the contracting parties intended to benefit MBUSA. Third, the arbitration provision covered claims relating to the lease or any resulting transaction or relationship, and the court concluded that McGee’s relationship with MBUSA arose out of the lease. The court also distinguished the cases cited by McGee because those cases involved arbitration provisions that did not expressly name the vehicle manufacturer as a beneficiary.

Disposition

The court GRANTED MBUSA’s motion to compel arbitration. It STAYED the case pending arbitration under the Federal Arbitration Act. The parties were ORDERED to file a Notice and Request to Lift Stay within 30 days after arbitration is completed. The court also vacated the scheduled motion hearing and continued the case-management conference, but it did not decide the merits of McGee’s warranty claims.