Court Urged to Deny BMW Motion to Compel 3G Telematics Case to Arbitration

Plaintiff Peter Grayson wants the U.S. District Court for New Jersey in Newark to deny BMW’s motion to compel his 3G telematics dispute to arbitration (see 2301310001) because the BMW Assist subscriber agreement he signed isn’t applicable to the inoperable telematics control unit (TCU) at issue in his case, said his opposition to the motion Tuesday (docket 2:22-cv-06103).

BMW answered Grayson’s class-action allegations Jan. 30, not by addressing why it did nothing to preserve its vehicles’ BMW Assist roadside safety features when it became aware of AT&T’s impending 3G shutdown, but by producing a copy of the subscriber agreement with Grayson's signature plainly visible alongside the arbitration terms. Grayson countered in his opposition that BMW “demands arbitration” based on an arbitration provision in the subscriber agreement, though the document he signed doesn’t cover “the vehicle or any equipment.”

The arbitration provision is limited to the “performance of obligations” under the subscriber agreement, “none of which include the components of the BMW vehicle at issue herein,” said his opposition. His class action questions the ongoing inoperability of a piece of hardware, the TCU, “that is a physical part of BMW cars,” it said. BMW is “wrong” to try to “stretch” the subscriber agreement’s arbitration clause to cover the vehicle’s TCU, it said.

The BMW Assist roadside assistance system “is separate and apart from the vehicle,” said the opposition. The vehicle can be bought and sold with or without BMW Assist, it said. “Regardless, the vehicles come with the TCU installed -- it is not an option and the buyer is not given any choice as to any feature of the TCU.”

The court isn’t "bound to accept" BMW’s “conflation” of the TCU and BMW Assist service “under the guise suggested by BMW’s counsel to construe the scope of arbitration broadly,” said the opposition. The arbitration clause in the BMW Assist service agreement “is limited to the services” under that agreement, it said. As such, BMW’s motion to compel arbitration of Grayson’s claims should be denied, it said.

BMW, quite aware that the TCU and the BMW Assist service are “distinctly sold separately,” figures “its only hope of stretching the service contract’s arbitration clause” to cover the TCU “is to conflate the two,” said the opposition. BMW designed the TCU to operate only on a 3G network, it said. Thus when 3G was phased out, BMW’s TCU “was rendered irreparable,” it said. BMW made the TCU operable only with 3G due to a desire to save on manufacturing costs, it said. By comparison, when AT&T announced it would sunset its 3G service effective in February 2022, other automakers like Mitsubishi designed around it, it said.

Further confirmation the problem is due to a physical component of the vehicle and not the BMW Assist service is the carmaker’s own announcements about the impending sunset of the 3G service, said the opposition. By its “own admissions,” the cessation of the BMW Assist service is because vehicles factory-equipped with 3G telematics devices or retrofitted 2G vehicles will no longer be able to support BMW Assist, it said.

BMW “tellingly” doesn’t argue that plaintiff Grayson “is mistakenly alleging that it is the TCU which is at fault,” said his opposition. Nor does BMW deny its BMW Assist services “are still being offered and received by other BMW owners whose TCU units are capable of receiving 4G or 5G signals,” it said. “BMW does not even pretend that the TCU equipment itself is still operable.”