California’s new consumer arbitration statute, Senate Bill 82 (“SB 82”), codified at California Civil Code section 1670.15 and effective January 1, 2026, requires that the dispute resolution terms in a consumer agreement be limited to the use, payment, or provision of the specific good, service, money, or credit covered by that agreement, and voids any waiver of that limitation. A federal court ruling issued on September 3, 2026 shows what that limitation looks like in practice, and signals that courts may reach the same result even without relying on SB 82 at all. In Sperling v. Hyundai Motor America, Inc., No. 8:26-cv-00410-JVS-ADS, 2026 LX 540056 (C.D. Cal. Sept. 3, 2026), a federal judge in the Central District of California denied Hyundai’s bid to force a group of consumers into arbitration over defective automatic emergency braking systems in their vehicles based on an arbitration agreement in the terms of service for Hyundai’s connected-car service—notwithstanding the clause’s facially applicable language. The decision illustrates a broader trend: courts are increasingly unwilling to read an arbitration clause to reach disputes about a different product or service than the one the underlying agreement actually covers, regardless of whether SB 82 technically applies.
The dispute, and why the arbitration clause did not reach it.
The plaintiffs in Sperling alleged that the automatic emergency braking systems in certain 2025 and 2026 Hyundai Tucson and Santa Cruz vehicles caused sudden, unintended braking, and brought consumer protection, warranty, and fraud claims on behalf of a proposed nationwide class. Hyundai moved to compel arbitration based on an agreement its customers had signed to use Bluelink, Hyundai’s connected-car service offered through a courtesy trial subscription, which included a broadly worded arbitration clause covering disputes relating to “the Vehicle, its performance, or an alleged breach of any implied or express warranties.”
The court denied the motion to compel arbitration on two independent grounds, following the Ninth Circuit’s recent decision in Hageman v. Hyundai Motor America, Inc., No. 24-7823, 2026 LX 141143 (9th Cir. Mar. 25, 2026), interpreting that same contract. First, the agreement contained a “delegation clause”—a provision stating that an arbitrator, not a court, decides threshold questions about whether a dispute is even subject to arbitration. Courts will enforce a delegation clause only if it reflects the parties’ “clear and unmistakable” intent to send that threshold question to an arbitrator. The court found the clause fell short of that standard because a carve-out for class proceedings made it internally ambiguous, so the court, not an arbitrator, decided whether the dispute was arbitrable at all. Second, and more strikingly, the court followed Hageman, holding that even a valid arbitration clause did not reach the plaintiffs’ claims. The Bluelink agreement, by its own terms, governs a connected-car convenience service, not the vehicle as a whole, and reading it to sweep in unrelated product defect claims would produce an absurd result that no reasonable consumer would have expected when signing up for a courtesy trial subscription.
The SB 82 connection.
Sperling was decided as a matter of ordinary contract interpretation, not under SB 82. But the reasoning tracks the exact problem SB 82 was written to solve. State Senator Tom Umberg, the bill’s author, explained that the legislation was aimed at “infinite” arbitration clauses that companies have used to sweep in disputes far removed from what a consumer actually agreed to, pointing to a widely reported case in which a wrongful death claim from an allergen-contamination incident at a Walt Disney World restaurant was nearly forced into arbitration because the decedent’s spouse had once signed up for a Disney+ trial.
Sperling shows a federal court reaching, on its own, the same result SB 82 would require: an arbitration clause limited to the specific good or service the agreement actually covers, using traditional contract principles and the doctrine against absurd results rather than the statute. That matters because companies defending broad arbitration clauses have been counting on the Federal Arbitration Act’s (“FAA”) preemption of state-law restrictions on arbitration to neutralize SB 82, much as it has trumped other California attempts to regulate arbitration agreements. Sperling and Hageman suggest that bet may not pay off the way businesses hoped, because even if a court eventually holds SB 82 itself preempted, federal courts are already construing consumer arbitration clauses along essentially the same lines SB 82 would dictate, without reliance on the statute. An overly broad arbitration clause can fail on ordinary contract-interpretation grounds regardless of what happens to SB 82, which means a preemption victory may turn out to be largely academic.
What this means for businesses using consumer arbitration clauses.
Companies relying on arbitration clauses in consumer-facing agreements should draw lessons from Hageman and the arrival of SB 82:
- Scope matters as much as enforceability. A clause that is otherwise valid can still fail to capture the dispute a company wants arbitrated, particularly when it is being stretched to cover a different product, service, or relationship than the one the agreement concerns.
- Delegation clauses need to be internally consistent. A delegation clause sending arbitrability questions to the arbitrator is only enforceable if it is “clear and unmistakable.” Carve-outs and exceptions buried in a delegation provision, such as sending class-proceeding questions back to the court, can keep a delegation clause from meeting that standard. This often arises where companies carve out matters small enough to be resolved in small claims court.
- FAA preemption is not a guaranteed backstop. Even where preemption arguments against SB 82 succeed, courts retain, and are actively using, ordinary contract-law doctrines to reject overreaching arbitration clauses.
- Now is the time to review consumer arbitration language. With SB 82 in effect and courts already skeptical of sweeping clauses, businesses should confirm their arbitration and delegation provisions are tailored to the specific product or service at issue before a dispute arises, not after filing a motion to compel.
How Shartsis Friese can help.
Shartsis Friese has specific expertise advising clients on consumer arbitration provisions, drafting and defending arbitration clauses against enforceability challenges, and litigating motions to compel arbitration in state and federal court. If you have questions about how Hageman, SB 82, or related developments affect your arbitration agreements or your litigation strategy, we would be glad to talk.
This post is for general informational purposes only and does not constitute legal advice. If you have questions about a specific arbitration issue, please contact us directly.
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