Fiat Chrysler Says Drivers In Hacking Suit Agreed To Arbitrate

By: Emily Field, Source: Law 360

Law360, New York (July 11, 2016, 11:24 PM ET) — Fiat Chrysler on Monday told an Illinois federal court that two drivers leading a proposed class action over an alleged defect they say could allow criminals to easily hack into their vehicles’ electronics systems agreed to arbitrate their claims when they bought their cars at a steep discount.
Named plaintiffs Kelly and George Brown bought their 2014 Jeep Cherokee on a friend-of-employee discount and signed a contract with a provision that any warranty dispute would be resolved through arbitration, FCA US LLC said. The scope of that agreement extends to all of their claims against the carmaker, according to Fiat.For example, the Browns contend that Fiat Chrysler violated the Missouri Merchandising Practices Act by misrepresenting and failing to disclose the alleged defect, the auto company said.

“In fact, one of plaintiffs’ alleged misrepresentations was FCA US’s statement after discovery of a hacking vulnerability in the vehicles that described the alleged defect and the remedy, which FCA US originally released as an extended warranty remedy and not a safety recall,” the company said.Although the arbitration agreement doesn’t extend to the other named plaintiffs, Brian Flynn and Michael Keith, or to its co-defendant Harman International Industries, which builds the Uconnect infotainment system in Fiat Chrysler cars, the automaker asked the court to stay the case until arbitration is over.

“Here, the claims asserted by plaintiffs Flynn and Keith and by the Brown plaintiffs are identical,” the car company said. “These claims, moreover, are intertwined such that bifurcation into arbitration and litigation would be illogical.”

The drivers sued after an article in Wired detailed how two cybersecurity experts — Charlie Miller and Chris Valasek — took control of a Jeep Cherokee’s various functions from miles away while the article’s author drove around St. Louis, at first changing the radio and climate controls, before disabling the transmission on the interstate.

The group of drivers claim that the Uconnect system in their cars contains a defect that allows it to send commands to the vehicle’s operating systems without any security measures in place to ensure that only valid commands from the driver, and not from remote-third parties, are followed.

What’s more, Fiat and Harman have known since at least 2011 that the system was hackable but hid it from consumers until the Wired article was released in July, when days later they issued a recall and security update, the drivers said.

Both Fiat and Harman urged the Illinois federal judge to nix the suit in mid-February. Fiat argued that the suit was based on a “hypothetical, speculative event” that has never actually occurred in real-world conditions. The automaker also rejected the consumers’ claim that its software patch wasn’t enough.

But the drivers shot back in March that they’ve already been injured because the defect was hidden from them by the companies, they wouldn’t have bought the cars had they known about it and the vehicles have now lost value.

Representatives for the parties didn’t immediately respond to requests for comment late Monday.